business reporting leaders forum dec 2014 slides final.pdf · 2015. 2. 1. · only applies to the...

Business Reporting Leaders ForumAt KPMG Sydney on 1 December 2014 and

KPMG Melbourne 4 December 2014

Chief Financial Officers/ Finance

Directors / Chief Executive Officers Accounting / Legal Firms Investor Relations Officers

& Sustainability Officers Investors & Analysts Other Stakeholders

Andrew ColesOz Minerals

Michael BrayKylie DumbleJenny MerkleySimone SchlitterRachel ScullyKPMG

Matthew BellHelen AdairMeg FrickeErnst & Young

Brad PollockDeloitte

Regina FikkersPwC

Michael LongLend Lease

Diana McEwanStockland

Timothy NelsonAGL

Lauren OwensNational Australia Bank

Jason RobertsonDavid Jones

Jo Cain BECA/ AuASB

Ian MathesonAustralian Investor Relations Association

Diana D’AmbraAustralian Shareholders Association

Alison George (M)Regnan

Paul MurphyACSI

Pablo BerruttiColonial First State

Kerry LeeBusiness Council of Australia

Paul DaviesBanarraAlan DayehNetbalanceFisher GethinDerryn HeilbuthBWD CreativeSimon LongstaffSt James Ethics CentreJoycelyn MortonIFAC BoardPamela StarkThe Middleway Pty Ltd

James Rohan,Africa Zanella, Michael Rich

Attendees – a broad cross-section of the reporting supply chain in Australia

John Stanhope Aus. Post, AGLTony ColemanLonergan EdwardsPeter ColleyCFMEUAmanda WilsonRegnanPeter WilsonAHRIPeter MattheyCabrini Health AustraliaKen MorrisonPCALeah Watterson/ Nicola SteeleAust Instit of Company Directors

Academia SKE/ IIRC Accounting BodiesRegulators / Exchanges / Standard Setters/ Government

James GuthrieNonna Martinov-BennieKeith ReillyMacquarie University

Roger SimnettTrish StrongUniversity of NSW

Rosemary SaintyUniversity of Technology, Sydney

Liz PrescottIIRC

Nick RidehalghKPMG

Steve VamosSKE

Nicholas DissCPA Australia

Marina MichaelidesAASB

Julie HillSafe Work Australia

Doug NivenASIC

AgendaTimeSyd

TimeMelb

Subject Presenter

3.30 7.30 Welcome Steve Vamos (S)/ JohnStanhope (M)

3.40 7.40 Update on directors liability Leah Watterson, Nicci Steele (AICD)/ Michael Bray

3.55 7.55 Update on global <IR> developments Liz Prescott (IIRC)

4.10 8.10 Update on BRLF activities • Federal Government

• Director Liability• ‘Red tape’ review• Accountants Report to

G20• B20/ G20

Michael Bray/ John Stanhope

4.40 8.40 Assurance Nick Ridehalgh/ Marina Michaelides (AuASB)

4.50 8.50 BRLF plan for 2015 Nick Ridehalgh/ Michael Bray

5.00 9.00 Close Steve Vamos/ John Stanhope

Directors Liability

Leah Watterson, Nicci Steele (AICD)/ Michael Bray

Directors Liability

Honest & Reasonable Director Defence released in August 2014 by AICD

- Developed through the AICD Law, Reporting and Corporate Governance Committees.

- The defence impacts all directors – it is not just focused on listed company directors.

- Corporate reporting is only one component. The defence seeks to enhance corporate and director performance – it ‘lets directors be directors’ by allowing them to focus on governance, oversight, harnessing new opportunities and strategic performance.

- Defence aims to support directors who act honestly and reasonably in carrying out their duties. It does not alter their primary duty of care; just provides an additional defence.

- Paper identifies that the business judgment rule only applies to the duty of care and diligence. It does not apply to financial reporting, continuous disclosure, insolvent trading, misleading or deceptive conduct provisions or any other provision in the Corporations Act.

- The paper also sets out stepping stone cases where director duties under s180 (1) are alleged to have been contravened from a corporate obligation, and the BJR is not available.

- The defence should remove constraints on good directors and make them more effective, as it will change the board mindset viz personal risk.

- AICD are aware of calls by some to extend the BJR rather than legislating a broad-based director defence

Global developments in <IR>

Liz Prescott (IIRC)

IIRC Strategy Delivery Overview

Finalisation of Pilot Programme

Benefits of <IR> - Pilot feedback

PAUL DRUCKMAN, CEO, IIRC

Global <IR> Momentum

Harvard Business School study hails <IR> as enabler of financial stability

Brazil – BOVESPA Comply or Explain Requirement, growth of local network Sth Africa – IRC endorsement of

FrameworkJSE <IR> comply or explain

<IR> promoted by B100 and major Superannuation

Funds

UK – FRC’s Strategic Review

EU - Directive on disclosure of non-financial and diversity information by certain large companies and groups

European Commission hails <IR> as “step ahead”

Malaysian Prime Minister

declares business take up of <IR>

SINGAPORE –market-led network

established. Director support for

<IR>SEBI -: not ‘if’ but ‘when’ for

<IR>

JAPAN - <IR> a crucial part of “Revitalisation

Strategy”

Global <IR> Momentum

World Bank implements <IR> ICGN – 4th edition of the Principles recommends Boards provide an integrated report

Recommendation to G20 on <IR>

UNCTAD 2014 World Investment Report recognises “<IR> at the heart of Sustainable Stock Exchanges”

• Deliverables underway• Landscape and stakeholder mappings

• Possible focus areas for 2015+ include;

• Materiality

• CRD-convened dialogue with regulators (conference(s)) (National and/or regional)

• CRD-convened dialogue on corporate reporting and technology

• CRD-convened dialogue on assurance and reliability of information

Corporate Reporting Dialogue

CDPFASBGRIIPSASBInternational Org. for Standardization

CDSBIASBIIRCSASB

• Public Sector Pioneer Network

• IR Banking Network

• IR Insurance Network

• IR Pension Fund Network

• <IR> Technology Initiative

• Other priority sectors Healthcare (Pharma) Energy

Industry Networks

Update on BRLF Activities

John Stanhope, Michael Bray

Update on BRLF ActivitiesFederal Government

Assisting in bringing directors and investors together on director liability and ‘safe harbour’ for companies

Form an independent task force reporting to government on dismantling volume, complexity and red tape around specific aspects of disclosure to complement other aspects of corporate reporting reform (e.g. integrated reporting)

Endorse and adopt the recommendations of the ‘Big 6’ accounting firms regarding making corporate reporting more conducive to infrastructure and other long term investment, including finding the right implementation pathway for Australia (e.g. ‘if not, why not?’ ASX Corporate Governance Principle)

Update on BRLF ActivitiesBig 6 Accounting Firms – 2013 G20

1. Estimate by McKinsey and Standard & Poor's

Encouraging infrastructure investment poses many challenges for governments and developers –Over the next 15 years, the gap between available funds and demand for infrastructure development around the world could be as much as $500 billion annually1

Our

recommendations

The Panel recommends that the 2014 B20 make the following actionable recommendations to the G20.

Encourage corporate reporting innovations and initiatives that provide investors with a longer-term and broader perspective on shareholder value creation to complement the historical financial performance and current financial position perspective provided by financial statements. The B20 notes the particular relevance of integrated reporting as an example in this respect.

Each G20 Finance Minister should assess and address any practical, legal or statutory barriers to improved corporate reporting and work towards removing such barriers in order to make corporate reporting more conducive to infrastructure and other long-term investment.

Longer-term focus

Update on BRLF Activities2014 B20/ G20 - Australia

• In June, the B20’s Infrastructure and Investment working group report made a number of recommendations for the G20 leaders to consider which will make a substantial contribution to increased employment and inclusive, sustainable growth, but notes that closing the infrastructure gap requires continued action on many fronts.

• The B20 references its support for certain initiatives that are already underway (to assist in closing the infrastructure gap) including:

• A review by the (International) Integrated Reporting Council and International Accounting Standards Board in relation to making corporate reporting more conducive to infrastructure and other long-term investment, and eliminating or addressing current barriers.

Update on BRLF ActivitiesAuASB/ IIRC Assurance Workshops

Nick Ridehalgh/ Marina Michaelides (AuASB)


• 3 Australian co-hosted Assurance on <IR> roundtables held in October 2014 – BRLF (M), CPA Australia (M), CAANZ (S)

• Other IIRC roundtables in Belgium, Malaysia, Singapore, South Africa, Spain, UK and US

• Chairman of the AUASB also attended New York roundtable and the IIRC Annual Pilot Programme conference in September 2014 where multiple assurance panel discussions were held

• Feedback from the assurance roundtables have been used as the basis for AUASB response to IIRC on Assurance on <IR> An Introduction to the Discussion due on 1 December 2014

Assurance and the IIRC

■ Discussion paper andConsultation Draft

■ Suitable criteria

■ Aims of <IR>

■ Quality of information

■ Corporate reporting

■ Broad base of capitals

■ Value creation over time

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■ “Investment grade” reports

■ Assurance = enhanced confidence

■ Other mechanisms, e.g.:

■ Leadership

■ Internal systems

■ Internal audit

■ Stakeholder involvement

Credibility and trust

21

■ Start the debate

■ Roundtables

■ Responses – December

■ Summary early 2015

■ Next steps

Assurance on <IR>

22

Overview

■ Introduction to the Discussion

■ About <IR>

■ Benefits of assurance

■ Practical and technical challenges

■ Exploration of Issues

■ Fundamental assurance concepts

■ Analysis of the Framework

■ Assurance standards for <IR>

■ Methodology issues23

1. The nature of assurance

2. Competent practitioners

3. Robust internal systems

4. The cost of assurance

1. The nature of assurance

2. Competent practitioners

3. Robust internal systems

4. The cost of assurance

Implementation challenges

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1. Methodology issues

• Materiality

• Reporting boundary

• Connectivity

• Completeness

• Narrative reporting and future-oriented information

2. Levels of assurance

3. Using existing assurance

Technical challenges

25

Levels of assurance

“Reasonable”(audit)

“In my opinion … “

Limited(review)

“Based on the work I have done, nothing has come to my attention …”

0 %

100 % Absolute assurance (unattainable)

No assurance

CONSIDER:Types of disclosure• Quantified measurements• Factual narrative• Soft narrative• Quantified estimates• Qualitative estimates• Diagrams

Judgements, e.g.:• Connectivity• Quality of systems• 3rd party evidence

Role of stakeholder engagement

Completeness

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Key themes raised by attendees at Australian roundtables:

Acceptance that corporate reporting & <IR> is evolving and assurance will mature in line with market needs

Willingness to explore and innovate with assurance e.g. form of report

Uncertainty about what providers of financial capital want/need from assurance engagement on <IR>

therefore need for further consultation

Strong support to consider the broader issues of credibility and trust and the role that TCWG and assurance

will play in the short, medium and long term

Role of IAASB critical to maintain consistency and quality in assurance standards and guidance

Technical issues still need to be worked through: scope, suitability of criteria, subject matter, materiality,

connectivity, reporting boundary and completeness and the cost benefit vis a vis the nature and scope of

assurance engagement

High level of competency and strong skill base of assurance practitioners/firms in Australia that will

continue to be enhanced in breadth and depth for <IR>

Australian Company Director Liability issue coupled with the assurance practitioner view of opining on

forward looking information that extends to the ‘long term’ view

Role of internal audit in assurance on <IR> and the overall assurance strategy


Next Steps:

• IIRC will synthesise responses to Assurance on <IR> An Introduction to the Discussion submissions in early 2015 and provide a roadmap of next steps.

• IAASB has formed an Integrated Reporting Working Group which will report directly to IAASB and provide recommendations for standard setting activity. Merran Kelsall chairs this Working Group which had its first meeting in November.

• The Integrated Reporting Working Group will provide an update to the IAASB at its December meeting on market developments in <IR> and emerging assurance issues and proposed key milestones for the working group.

Wrap up

■ www.theiirc.org/assurance

■ Join the debate on the <IR> LinkedIn group

■ Submit a response to [email protected] by 1 December 2014

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http://www.theiirc.org/assurance

mailto:[email protected]

BRLF – 2015 Plan

Nick Ridehalgh/Michael Bray

BRLF 2015 Plan

• Brief discussion on:

• How to promote <IR> or Corporate Reporting Reform in Australia

• Areas of focus for BRLF in 2015

BRLF wrap up

Steve Vamos/ John Stanhope

business reporting leaders forum dec 2014 slides final.pdf · 2015. 2. 1. · only applies to the...

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