Advanced Management Control and Sustainable Development Lecture 11: REDEFINING CORPORATE ACCOUNTABILITY through IR Prof. Angelo Riccaboni University of Siena Department of Business and Law angelo.riccaboni@unisi.it

Agenda Corporate Reporting and Value Creation IR: Principles, Concepts, Elements The role of Management Accountants and the Challenges Ahead for IR

Corporate Reporting and Value Creation Business – one of the major causes for social, environmental and economic problems Values – help to shape perceptions of how value is created, distributed and reported. Societal perceptions of value help also shape individual perceptions of value Increase sense among stakeholders, that existing corporate reporting is getting increasingly less fit for the purpose. Business face capital constraint from a broader range o resources, and just financial ones This constraint need to be accounted, communicated to a greater series of stakeholders

Different issues such as : National and individual debts Large unemployment rates Growing disparity across societies Persistent fraud Unethical behaviour in managing public and private organizations have left large segments to the society frustrated with the existing social and economic order

IR – an example of managerial innovation where a number of initiatives, organizations, and individuals began to converge in response to the need for a consistent, collaborative, and internationally accepted approach to redesigning corporate reporting

IR: Principles, Concepts, Elements IIRC mission to create a globally accepted IR framework which brings together financial, environmental, social and governance information in a clear, concise, consistent and comparable format in order to help business to take more sustainable decisions and enable investors and other stakeholders to understand how an organization is really performing

Primary users of IR – providers of Financial Capital Key objectives of IR: Enhance accountability Enhance stewardship With respect to broad 6 capitals and promote understanding of their interdependencies IR benefit all stakeholders : Employees Customers Suppliers Business partners Local communities Regulators Policy makers

Aim of IR To support Integrated Thinking, Decision making and actions that focus on sustainable value creation for stakeholders Purpose of the Framework To establish fundamental concepts, guiding principles and content elements that govern the overall content of an IR

7 IR Elements IR Concepts IR Principles Offer an appropriate balance between flexibility and prescription Offer a sufficient comparability across organizations Purpose - to stimulate active consideration by organizations of the relationships between their operating and functional units 7 IR Elements Define its content and communicate the organization’s unique value-creation story The firm can build its BM story from a basic description of the BM through external factors affecting the BM and the management’s strategy IR Concepts The six capitals used and affected The organization’s BM The creation of Value over time

The role of Management Accountants Are not «just technical accountants» But they are also broad-based business thinkers who serve as trusted advisors inside organizations They lead to the process od communication and reporting by designing innovative documents that can capture the interest and attention of stakeholders Innovative reports – where values and capitals integrate with strategy and BM to generate and distribute added value in the short-medium-long terms The role of Management Accountants The Challenges Ahead For IR