The Integrated Report (IR) is a tool derived from the corporate governance rules, in particular enhancement of corporate performance, as it represents an updated database about the company’s past, present and future framework, and helps the Board of Directors and the executive management make well-informed decisions to achieve the company’s objectives, and ultimately create value.
The integrated report is prepared with in-depth insights, which bring together the relevant information in order to create a bigger integrated picture about the business value, its resources and relationships and how it interacts with the community where it operates.
It is worth mentioning that the integrated report is an internal control tool within companies.
Given the importance of the integrated reporting, the International Integrated Reporting Council (IIRC) was established comprising regulators, investors, companies, standard setters, accounting profession and NGOs. IIRC aims at establishing a globally accepted framework for a process, which ultimately results in communications from the business entity about value creation. Such framework establishes the principles and concepts that govern the overall content of the integrated report.
In the State of Kuwait, Law No. 7 of 2010 concerning the Establishment of Capital Markets Authority and Regulation of Securities Activity was promulgated on 21 February 2010 and its Executive Regulations were issued under Resolution No. 72 of 2015 on 9 November 2015, which address the integrated reporting systems under the value creation framework. Module 15 – Corporate Governance – sets forth the following:
|Article 11-7||The Board of Directors shall strive to create values within the company over short, medium and long term through establishing the processes and procedures that enable achieving the company’s strategic objectives and improving performance rates. This will effectively contribute to creating the corporate value in the employees and motivating them to continuously seek to maintain the company’s financial soundness.|
|Article 11-8||The Integrated Reporting Systems are effective tools in achieving the company’s strategic objectives and accordingly, the value creation. Therefore, the company should constantly develop its internal integrated reporting systems in order to become more comprehensive. This will help the Board of Directors and the executive management make decisions in systematic and sound manner, and hence, achieve the shareholders’ interests.|
Article 11-9 of the above Executive Regulations sets out the significant characteristics of the integrated report as follows:
- Focus on strategy.
- Overview of the company’s structure and business model.
- Risks facing the company.
- Future direction and outlook.
- Conciseness, accuracy and materiality in presenting the information.
- Periodic reporting.
Added value to business entities from Integrated Reporting Services
- Comply with laws, regulations, resolutions and instructions issued by the regulators.
- Assist with enhancing and optimizing the performance.
Services provided by Baker Tilly
Development of the Integrated Report.