Integrated Reporting set for take-off in Singapore
Singapore will soon have a roadmap for <IR> adoption, backed by a sound body of academic and empirical evidence, following the creation this month of a market-led <IR> steering committee. “We are moving from concept to execution”, said Michael Lim, Chairman of the Singapore Accountancy Commission (SAC) at a specially convened <IR> Forum on 22 April co-hosted with the Institute of Singapore Chartered Accountants (ISCA).
Dr Ernest Kan, former ISCA President who chairs the steering committee, described <IR> as “the future of corporate reporting”. Members of the steering committee, which met for the first time in mid-April, include Mikkel Larsen, Managing Director and Head of Tax and Accounting Policy, DBS Bank, Willie Cheng, Chairman, Singapore Institute of Directors and Chng Lay Chew, CFO, Singapore Stock Exchange.
Paul Druckman, CEO, IIRC, who was in Singapore with Jonathan Labrey, Director, Policy and Strategy, IIRC, delivered the keynote speech at the forum, which was attended by around 120 representatives from Singapore’s leading business, investor, accounting and academic organisations.
Druckman said, “We are living in an age when Apple has a higher market capitalisation than the world’s seven largest car manufacturers combined. That fact reveals how much our economy, and the concept of value, has changed over the last thirty years. We need a system that supports a company’s ability to communicate how it is creating value in this new context, where knowledge and human resources are as powerful in driving value creation today as manufactured and physical assets were a generation ago.”
At the forum Michael Lim outlined his desire to position Singapore as a hub for <IR>, and as an influential and authoritative thought leader, describing <IR> as a “significant innovation.”
The SAC, together with a research team from the National University of Singapore (NUS), has developed a practice guide that seeks to provide practical implementation guidance on the International <IR> Framework Content Element “Risks and Opportunities”. In addition, the SAC-NUS research team is further developing a rating methodology that aims to assess the extent to which Singapore companies are disclosing risks and opportunities appropriately.
The SAC and the academic community in Singapore are also contributing to the evidence base underpinning the adoption of <IR>. Initial research examining the results of early adoption in South Africa conducted by Professor Gillian Yeo from Nanyang Business School, shows that, “in essence, holding other factors constant, if a firm improves in its <IR> Score across time, it is likely to experience an increase in market valuation”.
During their visit, Druckman and Labrey also met with officials from the Ministry of Finance and Temasek, Singapore's Sovereign Wealth Fund.
Labrey will shortly be relocating to Singapore for six months to galvanise the process of developing regional <IR> networks and ensuring that Asia’s many voices are reflected as the IIRC implements its strategy, as well as in global developments around the Framework and <IR> adoption.
Summaries of the research, as presented by its authors at the SAC forum, are available: 'Integrated Reporting and Corporate Valuation' and 'Risks & Opportunities Practice Guide and Rating Methodology'.