Integrated thinking and reporting helps small and medium entities drive value

Thinking beyond the financial elements of an organisation to other key areas of value creation can help small- and medium-sized entities (SMEs) develop a better understanding of their business and provide key insights for the future. Today, it is critical for organisations to think broadly about performance and strategy, and improve communication to shareholders, investors, customers and suppliers on what drives value for the organisation.

Creating Value for SMEs through Integrated Thinking: The Benefits of Integrated Reporting, published last week by the International Federation of Accountants (IFAC) and the International Integrated Reporting Council (IIRC), highlights how SMEs – and the professional accountants serving them – can benefit from integrated thinking and reporting.

“As the engines of economic development, SMEs are critically important to the world’s economy,” said IFAC Executive Director Sylvia Tsen. “They have significant value beyond the financial, which integrated thinking and reporting helps uncover. An integrated approach can help SMEs, including not-for-profits, increase their impact because it encourages an inclusive view of operations, risks and opportunities, and future outlook.”

Integrated reporting embraces the six capitals established by the IIRC’s International Integrated Reporting Framework: financial, human, intellectual, manufactured, natural, and social and relationship. Considering each holistically, organisations can build a clearer understanding of the factors necessary to build value over the short, medium, and long term, including how the business uses and affect its resources.

“Integrated reporting is well underway to becoming the global norm, so it has to work for all businesses, large and small,” said IIRC Chief Executive Officer Richard Howitt. “I am delighted how this new publication shows the considerable benefits for smaller organisations. The IIRC’s principles-based framework is deliberately flexible so that SMEs can apply it to their own specific circumstances.”

Whether advising an organisation or working within it, professional accountants are equipped with the skills and understanding to apply integrated reporting, help discover important insights, and provide stakeholders with a broader picture of how the business meets its strategic objectives. Additional resources to help professional accountants improve integrated thinking are available on the Global Knowledge Gateway, including Creating Value with Integrated Thinking: The Role of the Professional Accountant.

IFAC is the global organisation for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of more than 175 members and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.