We have helped raise the profile of integrated reporting in Malaysia, since it was identified as the way forward for effective disclosure of non-financial information in the Corporate Governance Blueprint 2011.
Integrated reporting milestones and drivers include the formation of the Integrated Reporting Steering Committee under MIA to drive its development. Importantly, it was proposed as one of the exemplary practices in the Public Consultation Paper of the Malaysian Code on Corporate Governance 2016 (MCCG), and was subsequently incorporated in the MCCG.
Currently, Integrated Reporting awareness remains nascent, and MIA is working hard to remedy this. Our joint MIA-Association of Chartered Certified Accountants Integrated Reporting Survey in 2016 found that 51% of the respondents reported no or little knowledge of integrated reporting, while just 13% have good or in-depth knowledge. On the bright side, 51% wish to learn more about integrated reporting, and we have hosted conferences and one-to-one engagement sessions with companies, to achieve a critical mass of around 35 public limited companies (plcs) that are either starting to practise integrated reporting, or are committed to adopting it in the future.
MIA has always believed that we ourselves have got to walk the talk, if we want to drive greater adoption of integrated reporting in Malaysia. The survey identified perceived costs of integrated reporting and lack of guidance on preparation as barriers to adoption. Hence in 2017, we embarked on our own inaugural MIA Integrated Report 2016/2017 to serve as a real-life integrated reporting model.
While each organisation will have its own individual journey to integrated reporting, these are the lessons that we can share from our experience.
One, the process was surprisingly much easier compared to producing a traditional and longer annual report. The concise format of integrated reporting enabled MIA to zoom in precisely on our business model and value creation story. We also prepared a structured framework and timeline to facilitate the integrated reporting process.
Two, tone at the top is critical. Right from the beginning, everybody in MIA’s senior management was involved in the integrated reporting process. We held a business model workshop, where we clarified and refined our business model and strategic objectives. Throughout the process of gathering and writing the content, the CEO and EDs contributed directly. The governing council and the internal audit functions provided oversight and identified potential disclosure risks. Many high-level eyeballs were involved in the final proofreading.
Three, we appointed a liaison from each business unit to champion integrated reporting and facilitate information gathering. This helped somewhat to break down the silos between and within the units, but we still have to work harder to overcome tunnel vision and instil connected strategic thinking. This is a moving target.
Four, we believe that our integrated reporting has genuinely enabled all stakeholders to understand MIA’s narrative and purpose. For our inaugural report, we told our story of 50 years of nation building, since we were established on Sept 30, 1967, under the Accountants Act 1967. We sought to answer this question: How has MIA developed and regulated the profession to produce sufficient competent accountants to support the economy and society?
Importantly, our integrated reporting is a two-way communications tool that helps us engage with our stakeholders, and strengthen our strategic collaboration and our brand recognition. We are pleased to receive feedback from our stakeholders, both compliments and constructive criticism. For example, a former chief regulator and MIA member recommended that we provide more information on practice review statistics in the future, because audit quality is a key benchmark for MIA as the profession’s regulator.
Coming back to the survey, 54% of the respondents said the widespread use of integrated reporting by companies in Malaysia would make it a more attractive place to do business. We hope that our integrated reporting will be a catalyst for further adoption, not just by plcs, but also small and medium enterprises that are the backbone of the economy and market, especially now as integrated reporting is a recommended best practice in the MCCG. Through integrated reporting, MIA hopes to escalate Malaysia’s competitiveness and hence, deliver on our purpose of nation-building.
- Dr Nurmazilah Mahzan is the CEO of Malaysian Institute of Accountants. The article first appeared on the International Integrated Reporting Council website.