CIMA’s progress on integrated reporting: making the right decisions

prepared by Carol Adams

The President of CIMA is quick to point out (first sentence in his statement) that the previous report was “voted best practice in reporting the business model and value creation at the International Integrated Reporting Council (IIRC) annual conference”.

The members and students of the Chartered Institute of Management Accountants’ (CIMA) provide over 90% of its annual income so this review of CIMA’s (Integrated) Annual Report 2014 considers them the key report audience.  They provide finance to CIMA believing that it will give them a career edge.

Connectivity

business decision making shutterstock_247574632 (2)

Source: Shutterstock

The clever title of the report ‘Making the right decisions’ speaks to the role of management accountants and identifies how CIMA seeks to be relevant (its stated mission).  It could also be emphasising a link with one of the key aims of preparing an integrated report – better decision making.

For me the report lacks a key ingredient – an assessment of the challenges and opportunities facing the (management) accounting profession.  Without this it is difficult to assess the appropriateness of its strategy to enhance the careers of members or the extent to which it is creating value for members and students.

The consultation involved in the development of the new Management Accounting (MA) Framework and CGMA Competency Framework which sets out the skills that management accountants need was clearly extensive.  But the report does not make explicit what these skills were and how they were related to the ‘market’ factors identified (i.e. rapid pace of globalisation and technological progress; businesses operating in an increasingly interconnected market; the aftermath of the GFC and a lack of public trust in business).  Its unfortunate that the rigour and substance behind the development of these frameworks is somewhat diminished by lack of an explicit connection with these factors.

So whilst I found the strategy appealing it was difficult to judge how much value it would add to its members / providers of finance.  I was unable to ascertain the extent to which CIMA members would be able to contribute to their employers’ success (and therefore their own careers) in say five or ten years’ time.

There are a few loose ends.  For example, readers are told that a global survey of business leaders found that “nine out of ten wanted a stronger partnership with finance in the decision-making process to help them manage their organisations better.”  I for one was left wondering why they didn’t have that already and how that information fed into CIMA’s strategy.

Material issues

Whilst the report identifies the numbers and spread of people consulted in developing its competency frameworks, it lacks information on how CIMA has engaged with members, employers and other stakeholders to identify material issues to be covered in the report and relevant KPIs.  Key material issues clearly include career enhancement and relevance of skills to employers, but KPIs that provide comprehensive information and short- medium- and long- term targets on this are lacking.

Value creation story

The report emphasises future value creation through the tools that have been developed but is somewhat vague on the how and why.

To my mind the balance of information is too focused on CIMA as a business and lacks important contextual information on the challenges and opportunities management accountants and management accounting as a profession face and the value management accountants add to their employers and will continue to do so in the future.

In the absence of any critical reflection the use of self-congratulatory terms such as ‘very successful’, ‘extremely successful’, ‘immense achievement’ and ‘outstanding effort’ smack of PR fluff.

The business model

The visual presentation of the business model notes ‘market’ factors (discussed above) and also has some clear objectives. But there is a lack of connectivity between these ‘market’ factors and CIMA’s objectives. For example, what skills do management accountants need to meet today’s business challenges and increase employability? This was a missing piece for me which made it difficult to assess CIMA’s strategy to create value for its members.

Research is acknowledged as an important part of the business model, but again more could be said about how it creates value for CIMA members.

As an aside, the trend by integrated reporters to include a visual of their business model which goes over two pages of a PDF report does not engage those of us who prefer to download and read PDFs.

Recommendations for increasing credibility

CIMA’s reporting is visually attractive, bold and effective.  But credibility of the content could be improved.  There is little self-reflection.  For example, whilst the report announces that governance has been reviewed to make it more ‘agile and accessible’, there is no critical reflection of the problems necessitating the review.

The following steps would help achieve this:

  • Increasing the use of relevant non-financial KPIs with longer trend data and quantified long term targets and some innovation in KPIs around “employability of our members”.
  • Outlining the process of engaging with stakeholders to determine material issues on which to report.
  • Avoiding PR fluff.
  • Highlight areas of weakness or poor performance where corrective action will be taken in the coming year(s).

 

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