Does your Annual Report tell your whole value creation story?

According to recent KPMG guidance: “There is growing recognition that the range of issues and opportunities affecting long term business value is much broader than can be reflected in a set of current year financial measures. Annual Reports need to reflect this if they are to support investors’ capital allocation decisions effectively.”

The guidance also notes that: “Integrated Reporting provides a basis to address this by refocusing reporting around an organisation’s business model and operational priorities. The aim is to reflect the critical opportunities and challenges that affect the business - the same issues that management are dealing with on a daily basis within the organisation. Although designed to support the preparation of dedicated Integrated Reports, this approach can be applied by any company preparing an Annual Report - and indeed to other elements of corporate reporting.”

It concludes that: “For executives frustrated by apparent investor short-termism, this is an opportunity to provide a more complete picture of value, how it’s shaped by current and future events, and explain what management is doing to create and preserve it.” To learn more, read the KPMG’s guidance, Does your Annual Report tell your whole value creation story?

Top Technology Initiatives for 2012

Advances in information technology have empowered everyone to access and manage information anywhere at anytime. Although there are significant benefits that technology makes possible, such as greater flexibility, efficiency and productivity, there are also concerns with increased risks to information security. This was evident from the 2012 Top Technology Initiatives Survey of the American Institute of Certified Public Accountants (AICPA).


The survey found that securing the IT environment is this year’s top business technology priority. It also measured the confidence level in achieving technology priorities. For example, a large number of the survey respondents said they were confident that their organizations (or their clients’ organizations) have taken the actions necessary to secure the IT environment. However, respondents were the least confident with the following two aspects of IT Security: (1) Protecting all mobile devices (laptops, tablets, mobile phones, etc.) to prevent a data breach; and (2) Ensuring that data will be safe in the event of a cyber-attack or mobile device loss.

For more information, read the AICPA 2012 Top Technology Initiatives Survey Results. Also refer to the Top Technology Initiatives Archive.

COSO Internal Control - Integrated Framework

In November 2010, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) announced a project to review and update the 1992 Internal Control - Integrated Framework. COSO’s goal in updating the framework is to increase its relevance in the increasingly complex and global business environment so that organizations worldwide can better design, implement and assess internal control.

COSO engaged PwC as author of the update. In turn, PwC received valuable input from the Advisory Council and other stakeholders. The proposed Framework retains the core definition of internal control and the five components of internal control. A significant enhancement is the expression of concepts described in the original framework as 17 principles, accompanied by related attributes. These principles and attributes should assist organizations as they apply judgment in improving performance and managing risk in changing business and operating environments.

This Framework will provide organizations with significant benefits – for example, by increasing confidence that controls mitigate risks to acceptable levels and by providing reliable information to support sound decision-making. Furthermore, because the definition of internal control and its five underlying components are not changing, the codification of the principles and attributes will not impose additional burdens or a higher threshold for designing and maintaining an effective system of internal control.

COSO is now seeking feedback comments on the proposed Internal Control - Integrated Framework. A series of questions are included in the exposure draft for consideration by participants. The comment period closes March 31, 2012.

Sustainability: Environmental and Social Issues Briefing

Environmental and social issues are increasingly having an impact on the bottom line and future prospects of companies in many industries. They can present both opportunities and risks. In addition, they can have important implications for strategy, competitiveness, risk management, stakeholder relations and business resilience. A company’s board of directors has key oversight responsibilities in relation to environmental and social issues.


Board awareness and attention are essential in keeping abreast of the fast-evolving business impacts of these issues. Sustainability: Environmental and Social Issues Briefing highlights the environmental and social issues directors need to consider, providing an understanding of the potential business implications of these issues and offers questions that directors might ask in discharging their oversight responsibilities.

Global Companies to Lead Unique Integrated Reporting Pilot Program

The International Integrated Reporting Committee (IIRC) has announced that over 40 leading companies from around the world have been chosen as participants in the IIRC Pilot Programme initiative and the number is growing. These global companies, representing various sectors and industries, met for a two day kick-off event in Rotterdam on October 17-18, 2011. This marked the beginning of a two year journey with the IIRC where they will be given the opportunity to demonstrate global leadership in this emerging approach to corporate reporting. The full list of participating companies is available on the IIRC website.

Transocean: No Apologies Over Gulf Oil Spill

"Fourteen months after the Deepwater Horizon drilling rig exploded 50 miles southeast of Venice, La., killing 11 men and setting off the largest offshore oil spill in U.S. history, Transocean (RIG), the company that owned and ran the ill-fated 32,600-ton vessel, finally issued its official account of what happened and why. It produced a report on June 22 of no fewer than 854 pages, divided into two volumes, and spared no detail. The bottom line, though, isn’t complicated:It was BP’s (BP) fault." (Read the full story "Transocean: No Apologies Over Gulf Oil Spill" at Bloomberg Businessweek online.)

20 Questions Directors Should Ask about Information Technology Security

“The CICA’s Information Technology Advisory Committee developed this booklet to guide Boards of Directors in evaluating information technology (IT) security issues. It should also be of use to other bodies responsible for governance — in particular audit committees and strategic bodies such as IT steering committees, risk management committees, and CEO/CFO controls certification committees. Directors are expected to satisfy themselves that risks potentially jeopardizing the integrity of information, the availability of information and operational systems, the confidentiality of sensitive data, and compliance with regulatory bodies, are identified and reduced or eliminated. This booklet provides questions for Boards to ask senior management as well as the context needed to ask the questions and assess responses. In this document, IT Security (Security) is defined as the protection of data captured, processed, transmitted, reported and stored electronically. IT Security also covers the protection of related components such as application systems, system software, networks and hardware, as well as the supporting people, policies, procedures, processes and organization.” (Read the CICA publication 20 Questions Directors Should Ask about Information Technology Security.)

CICA/RBC Business Monitor Report (Q1 2011)

The majority of executive Chartered Accountants (CAs) (64%) expressed optimism about the Canadian economy in the first quarter of 2011, marking a notable increase of 23% over the previous quarter, according to the latest CICA/RBC Business Monitor (see the Backgrounder for details). Canadian interest rates and consumer confidence were the top two reasons cited among respondents for the surge in optimism to near record levels. In addition, 66% of respondents in the first quarter survey were optimistic about their company’s prospects over the next year, up 10% from the previous quarter. (Read the CICA Media Release.)

Defined benefit pensions at tipping point

A new survey of more than 150 Canadian pension plan sponsors from professional services firm Towers Watson indicates that just over half (51%) of the private sector defined benefit (DB) plan respondents have now converted their plans to defined contribution (DC) arrangements for current or future employees - up from 42% in 2008. The survey also reveals that recent improvements in economic conditions have had virtually no impact on executives’ perception of a DB funding crisis. The percentage of respondents who agree there is a pension funding crisis has remained at historic highs since the financial downturn of 2008. The survey found that more than half of respondents (56%) believe that the funding crisis will persist for the long term, compared with 34% who held this view in 2008 before the recession. Just under one third (32%) perceive funding challenges to be a cyclical phenomenon. (Read the article “Definedbenefit pensions at tipping point” at Towers Watson online.)

What's Next: Stay ahead of the future

What’s Next is a trends report offering clear, concise and non-sensationalist commentary on trends in society, business, science & technology, government and the environment. Each issue covers trends across twelve sectors and speculates about future risks and opportunities. The current issue of What’s Next is available free of charge on an online basis. Readers might also like to check out the Top Trends Blog.

Preparing for the Unexpected

Operational risk is an evolving discipline in which many global banks are either currently improving their scenario analysis processes or actively thinking about doing so. This executive summary is the outcome of a study by KPMG in conjunction with the ORX Association, the leading global operational risk data exchange and association in the industry. Visit the KPMG website and read the full report on Preparing for the Unexpected. Also, view KPMG's Financial Services Risk and Regulatory Centers of Excellence video.

FINTRAC ANNUAL REPORT 2010 - Ten Years of Connecting the Money to the Crime

During 2010, FINTRAC, as Canada’s financial intelligence unit, celebrated its tenth anniversary. (Refer to the publication FINTRAC ANNUAL REPORT 2010 - Ten Years of Connecting the Money to the Crime.)

FINTRAC made 579 (556 in 2008-09) disclosures of information relevant to investigations of money laundering, terrorist financing, and/or threats to the security of Canada. Turnaround time on cases improved 17%, and requests for assistance went up 36%. By using electronic media for case disclosures, it sharply reduced delivery times, and provided a more flexible product for law enforcement and intelligence partners to work with.

FINTRAC published a new series of strategic intelligence assessments focusing on terrorist groups and countries arousing national security concerns, as well as reports informing partners about current and emerging typologies and trends in money laundering and terrorist financing. It was also the Canadian lead for the FATF typology project about the use of new payment methods for money laundering purposes.

The Office of the Privacy Commissioner (OPC) issued a report praising the Centre's management of personal information, and recommended the appointment of a Chief Privacy Officer. FINTRAC was pleased to implement this and other OPC recommendations.

(See Highlights from FINTRAC's 2010 Annual Report.)

CICA/RBC Business Monitor Report (Q4 2010)

The quarterly CICA/RBC Business Monitor indicates that optimism about the Canadian economy among executive Chartered Accountants has stabilized and, like the previous quarter, respondents are much more likely to be optimistic about their own businesses (41% are optimistic about the Canadian economy over the next 12 months and 56% are optimistic about how their company will perform over the next 12 months). The Q4 2010 CICA/RBC Business Monitor webinar will take place on February 23, 2011 at 12:30pm (register online). RBC Assistant Chief Economist Dawn Desjardins will give an economic update and answer questions following the webinar. (Read the CICA Media Release.)

Quarter-end financial communications guidance provided by Canada’s CAs and CIRI

The Canadian Institute of Chartered Accountants (CICA) and the Canadian Investor Relations Institute (CIRI) have teamed up to produce a new publication entitled Quarter-End Financial Communications - Content to Consider, that offers some brief observations to assist management in preparing its summarized financial communications. (Read the CICA Press Release.)

Executive CAs more optimistic about own company than Canadian economy

More than half of executive chartered accountants (56%) are optimistic about how their company will perform over the next 12 months despite their lack of optimism in the Canadian economy, according to the latest CICA/RBC Business Monitor (Q3 2010). Only 39% of executive CAs surveyed are optimistic about how the Canadian economy will perform over the next 12 months, a steep decline from the 57% who had a positive view in the second quarter of 2010. When compared with CICA/RBC Business Monitor results from a year ago, optimism about the national economy is down 7%, marking the first year-over-year decrease since the first quarter of 2009. (Read the CICA Media Release.)

CICA Conference on Environmental, Social and Governance Issues

Environmental, social and related governance (ESG) issues are emerging as increasingly critical issues for the development of sustainable businesses in Canada and around the world. As a result, there are new risks, opportunities and strategies for which corporate leaders, senior management and business advisors must prepare. The Conference on Environmental, Social and Governance Issues will be held on December 6-7, 2010 at the Renaissance Toronto. It will focus on the most relevant and timely topics. Corporate leaders and experts will share their valuable insights and perspectives on what you need to know to respond to emerging expectations from investors, rating agencies, banks and other key stakeholders.

The top 10 risks for business 2010

In today’s business environment, conditions remain challenging for many, and risk retains its position high on every organization’s agenda. Businesses themselves are changing, which brings new risk horizons and, at the same time, they are grappling with the changes brought about by a post-downturn economy. The ability to anticipate threats, respond and continually adapt is as critical a part of the risk management process as it ever has been. The Ernst & Young Business Risk Report 2010 is part of an ongoing conversation about business risk — a conversation that has been taking place for several years, asking the question: How frequently are companies scanning their horizons and with what scope?

The Audit Committee Journey 2010

KPMG and the National Association of Corporate Directors (NACD) have released their 2010 public company audit committee survey. The purpose of the study, called The Audit Committee Journey, was to gain a perspective on audit committee issues from outside the boardroom. CEOs, chief internal auditors, controllers and others in management were surveyed. Their insights may help audit committees solidify their own views, enhance dialogue with management and shape future agendas. Risk management, uncertainty and financial statement issues are top concerns for audit committees in the year ahead. The developing issues of sustainability/corporate social responsibility, social media networks and IFRS may require more immediate consideration.

Internet Usage in New Zealand

New Zealand is also involved in the World Internet Project. AUT University, with support from the National Library of New Zealand and from InternetNZ, conducted its first survey in 2007, with the most recent data from 2009. The New Zealand World Internet Project 2010 surveyed more than 1200 people aged 12 years old and older about their Internet use. The survey found that most New Zealanders are increasingly using the Internet for activities such as social networking, buying and selling goods online, Internet banking, accessing information, learning and entertainment.

Internet Usage in Australia

The Australian component of the World Internet Project (WIP) is a collaborative project looking at the social, cultural, political and economic impact of the Internet and other communications technologies. The survey is carried out by the ARC Centre of Excellence for Creative Industries and Innovation at the Institute for Social Research, Swinburne University of Technology. Released in May 2010, CCi Digital Futures 2010: The Internet in Australia presents the findings from the 2009 Australian survey. The survey results show that the overwhelming majority of Australians are Internet users. In fact, 80% of Australians had used the Internet in the previous three months, up from 72% in 2007. By international standards, Australia’s level of Internet use is very high. In terms of home access, the vast majority of connections are now broadband (94%). Internet use still varies between different groups, although these differences have lessened since 2007.