Pricing Convertible Securities - The Malaysian Institute Of Certified ...

The Malaysian Accountant FEATURE 13The following notes some of the important points from thediscussion paper:a) Integrated Reporting and the Integrated ReportIntegrated Reporting is seen as a process that enhances andpreserves long-term sustainability of firms in all its dimensions,ideally without sacrificing short-term performance.An Integrated Report on the other hand is a product that formsone part of the broader suite of a firm’s communicationactivities with its stakeholders.b) Principles governing the frameworkThe Discussion Paper prescribes three reporting principles:• Principles informing the report scope and boundary – firmsneed to define the scope and boundary of the integratedreport, which can involve determining:1. The entities to be represented in the report (e.g.subsidiaries, JVs, franchisees).2. The nature of the information to be provided for eachentity (e.g. full or pro-rata performance data, disclosureon the management approach applied to that entity, orgeneral narrative reporting on the relevant risks andopportunities associated with that entity).• Principles informing the selection of the report contentThere should be careful determination about theinformation to be included in the report, which necessitatesa high degree of judgment, care and skill. To be useful,information needs to be both relevant and faithfullyrepresented. Hence, consideration should be given to thefactors that may influence the assessment or decisionmakingof stakeholders and the firm. Items that are notmaterial to making such a decision should not be includedin the integrated report.• Principles informing the quality of the reported informationEvery effort should be made to ensure the information ispresented as effectively as possible. The informationpresented should meet appropriate quality criteria. Theprinciples cover important characteristics such ascomparability and consistency, verifiability, timeliness,understandability or clarityc) Suggested elements to be included in Integrated Report• Report profile (What is the scope and boundary of thereport?)The report should include a brief description of the scopeand boundary of the integrated report• Firm overview, business model, and governancestructure (How do we create value and make decisions?)This should allow stakeholders to make an informedassessment on the firm’s ability to create and sustain valueover the short-, medium- and long-term, and on howefficiently and effectively the firm’s executive team andgoverning structure have discharged their responsibilitiesto use the firm’s resources responsibly.• Understanding the operating context (What are thecircumstances under which we operate?)The report should provide information to allowstakeholders to assess the extent to which theorganisation’s ability to create and sustain value (in theshort-, medium- and long-term) is based on financial,social, environmental and economic systems and itsrelationships with key stakeholders.• Strategic objectives, competencies, KPIs and KRIs(Where do we want to go and how do we intend to getthere?)There should be a statement outlining a firm’s strategicobjectives and targets, an indication of the firm’scompetencies required to realise these objectives, and asuccinct list of KPIs and KRIs that will track performanceagainst the strategic objectives and competencyrequirements. This should cover the short-, medium- andlong-term periods.• Account of the firm’s performance (How have we faredover the reporting period?)w w w . m i c p a . c o m . m y M a r c h - A p r i l 2 0 1 2