Foreword by Michael Andrew, Chairman, KPMG International.

The downturn that has affected nearly every part of the global economy has called into question some basic tenets of our economic system. We are still learning the lessons from a financial crisis that has shaken capitalism to its core, as we collectively strengthen our model for the future.

Good corporate reporting has an important role to play in helping to restore the trust that has been lost. Companies need to communicate more clearly, openly and effectively with investors and other stakeholders about how they plan to grow in a sustainable way. For their part, stakeholders are demanding greater transparency around strategy, business models and risks, and the commercial prospects of the enterprises and institutions with which they engage. The adoption of International Financial Reporting Standards in more than a hundred countries has brought increased comparability of financial information for the global capital markets. However, more generally there are valid concerns about increased complexity and disclosure overload in current financial reporting. Moreover, financial statements are only one element of the corporate reporting chain. Investors obtain key information from many other sources, including directors’ reports, earnings releases and analysts’ presentations.

Notwithstanding the importance of high-quality corporate reporting to the efficient operation of capital markets, the debate about change so far has been about making marginal – normally incremental – changes, rather than a more fundamental consideration of the adequacy of corporate reporting in meeting 21st century needs. One exception to this is integrated reporting, as currently being developed by the International Integrated Reporting Council. This represents a significant evolution of current corporate reporting and provides a longer-term vision for the future which is gaining momentum. But the debate is still young and it remains to be seen whether integrated reporting represents the best solution. This depends on the answers to some quite fundamental questions.

For example:
- Does it remain appropriate that the fiduciary duty of directors is primarily focused on shareholders?
- What change in the corporate reporting model do investors want to see?
- How will an evolving model affect the responsibilities of boards and audit committees. For example, do they have a responsibility to ensure that the directors’ report is fair and balanced?
- As the focus shifts to other forms of reporting, with more emphasis on forward-looking information and story-telling, will there be a need for more, or other, forms of assurance beyond the financial statement audit? For example, does there need to be assurance of key performance indicators, both financial and non-financial, that are the real drivers behind value creation?
- And what is the role of technology in making big data more accessible for stakeholders involved in corporate reporting?


This report offers a range of views from opinion leaders in their respective fields with regard to these themes, and their preferred direction for corporate reporting. We at KPMG sought to collect these opinions because we believe
it is time to debate these issues, to start developing a common view on the direction for corporate reporting over the next five to ten years.

If there is one point of consensus among the interviews that follow, it is that corporate reporting definitely needs to move on. It has to evolve if it is to be fit for purpose in a rapidly changing world.

The key question is: how?
I hope you will find our interviewees’ perspectives on this question interesting and stimulating.

Full report (PDF 36 pages in english):
www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/future-of-corporate-reporting.pdf