An analysis of the top 30 companies listed on Bursa Malaysia shows that they have already disclosed some of the key elements of the International Integrated Reporting Council’s Integrated Reporting Framework (IRF) but there is still a lack of linkage between these elements.
Sridharan (Sri) Nair, the managing partner of PricewaterhouseCoopers (PwC) Malaysia, said PwC found that while there was a growing awareness of integrated reporting among companies in Malaysia, many of them still do not fully appreciate the value it brought to their business.
“Some may still view it as a compliance-driven add-on which results in more work when preparing their reports,” he said.
He said the very nature of integrated reporting which captured how companies created value both tangibly and intangibly over time, allowed companies to communicate their true worth to their stakeholders.
“This can be a significant competitive advantage, helping companies to focus on true value drivers of their business and articulate their own story instead of allowing the market to define the narration,” he added.
PwC’s news release further noted that Malaysian businesses have the basics of reporting covered but still had a long way to go in embracing integrated reporting, which is an evolution of corporate reporting based on the IRF.
The IRF recommends that reports include the following elements: organisational overview and external environment, strategy and resource allocation, business model, opportunities and risks, governance, performance and future outlook.
Notably, PwC’s analysis showed that risk disclosure was one of the lowest scoring areas among the companies surveyed with Malaysia lagging behind more developed markets.
It further noted that while all companies surveyed included a statement of risk management and internal control as required by Bursa Malaysia’s listing requirements, only 27 per cent reported their principal risks.
PwC Malaysia’s assurance leader Pauline Ho said that Malaysian companies were communicating a lot of information in their annual reports.
Howerver, much of the reporting was focused on historical performance with limited linkages to their stated goals and their views on the future prospects of the business.
“What is needed is a change of mindset. Companies need to move away from using annual reports as a compliance document but to use it as a platform to communicate their stories.
“The integrated thinking approach will enable companies to communicate their long term value in a clearer and more succinct manner,” Ho added.
