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Question: Discuss About The British Professional The Accountancy Bodies? Answer: Introducation The International Integrated Reporting Council (IIRC) was incorporated in August 2010 with the sole purpose of creating a sense of awareness and responsibility amongst the corporate managers about sustainable environment and corporate social responsibility. IIRCs governing body was constituted with 40 members, who were heads of the FASB, IASB, IFAC and IOSCO, the CEOs of the Big Four, heads of some of the major British professional accountancy bodies and some CFOs from major MNCs, including HSBC, Nestle and Tata. As can be seen, the Governing Council had majority members from the accountancy profession, hence it was not surprising that the two main issues of environment and sustainability for which it was founded, took a backseat in its operational charter, (Barkoczy, 2012). The main role designated to IIRC was outlined by the governing council in its first Discussion Paper published in 2011 (IIRC, 2011). (Barkoczy, 2011) says the discussion paper provided the answer to integrated reporting by stating that, and I quote Integrated reporting brings together material information about an organizations strategy, governance, performance and prospects in a way that reflects the commercial, social and environmental context within which it operates. It provides a clear and concise representation of how an organization demonstrates stewardship and how it creates and sustains value (IIRC, 2011, p. 2). Unquote The IIRC justified its recommendation for a new reporting model, where companies would be required to put forward a separate Integrated Report. This single report, anticipated IIRC, would eventually become the companys Primary Report and would be replacing the existing reporting pattern (IIRC, 2011, p. 6). Purpose The purpose of developing this new form of reporting, to be known as Integrated Reporting, under the overall guidance of the International Integrated Reporting Council (IIRC), was to make the companies devote more time and attention towards sustainable environment practice. With ever expanding networks, communication channels and role of the corporate managers in managing the companies, the corporate world is regularly facing greater challenges. These are connected with over-consumption of the already limited natural resources, the consistent change in climatic conditions and the growing need of providing healthy food, clean water and better standard of living for the growing workers population, (Barkoczy, 2013) Continuing with the purpose of IIRC, Prince of Wales, while addressing the inaugural meet, had said, and I quote We are at present battling to meet 21st century challenges with, at best, 20th century decision making and reporting systems. The IIRCs remit is to create a globally accepted framework for accounting for sustainability. The intention is to help with the development of more comprehensive and comprehensible information about an organizations total performance, prospective as well as retrospective, to meet the needs of the emerging, more sustainable, global economic model. Unquote. This address by the Prince of Wales underlined the unmistakable signs of IIRCs idealism: accounting has been given the task to save the planet from the perils of financial blunders. Conflict In the viewpoint of this paper, all decisions which should be taken for tackling the issues discussed above should be based on clear and comprehensive data available. But in actuality, the different points raised by the Discussion Paper of IIRC have conflicting attributes, (Barkoczy, 2012). The paper has described six categories of capital: Financial Capital Manufactured Capital Human Capital Intellectual Capital Natural Capital Social Capital In this Discussion Paper of 2013, IIRC clarifies the concept of these categories. Financial Capital denotes the companys funds; Manufactured Capital describes the material objects created by mankind; The Human and Intellectual Capital portions are the trickiest categories and so are the Social and Natural Capital categories. Although the basic idea of Integrated Reporting was to focus on sustainability and environment and since welfare of mankind is the mainstay behind a well-functioning relationship between people, this is what should have been demonstrated in the existence of an effective governance policy, (Barkoczy et al, 2010). But the boundaries between various categories are quite vague and this has created more confusion than offering a solution. Reasons The basic idea of an Integrated Report was for the management to present, through the report, how the company, with the help of sustained activities, was able to bring about change in the values of the notified capitals, which should be measured by the change achieved in the values of the capitals. The companies are to adopt the Balance Sheet approach, as has been their practice, (Cch, 2013). The IIRC also emphasises on this method of reporting but with a difference. Apart from reporting the Financial Results, the managements were to report the assessment of the firms performance of assets other than those appearing in the conventional balance sheet. These should cover all those resources on which the company relies not only for financial prosperity but also for the prosperity of other values, (Marsden, 2010). These other values of the noted capitals includes the capital of society, including the environment. In this regard, it should be understood that most of the noted capitals rep orted in the integrated report may not be owned by the firm. IIRC in its Discussion Paper had proposed that an integrated report would be the companys primary report and shall replace the existing arrangements. In the later stage, IIRC dropped this proposal, although the council has not admitted it directly, (Marsden, 2010). Case Study Mtn Group Finally, what has been made clear by IIRC is that companies no longer are under the obligation of presenting a single integrated report. This is a big and highly significant retreat on the part of IIRC. Now, when we analyse the 2014 Integrated Report of the MTN Group Limited, which the Group made public with this title, we find that the company did not actually follow the guidelines of IIRC with respect to the various Capitals notified by the Council. Since MTN Group did not lay emphasis on these capitals, its Integrated Report has lost the status of being the Groups primary report. In fact, the presented report is just like the other reports which the Group has been releasing year after year. Thus the 2014 Integrated Report of the MTN Group is just an addition to those clutter of reports which IIRC had initially condemned in its Discussion Paper (IIRC, 2011, p. 4). Another significant result of IIRCs retreat from the declared policy is that the council accepts that companies may iss ue separate reports on the notified capitals, including the social and environmental accounting and sustainability. This is what the MTN Group has done with its 2014 Integrated Report. Hence, there is a greater need for a companys integrated report to cover the notified matters, which have far-reaching consequences for the whole of the society, as becomes clear when the actual contents of a report is analysed, (Nethercott, Devos Richardson, 2010). The basic problem which is being highlighted relates to the discrepancy coming in between the social costs, which refer to the loss being suffered by the society as a whole and the private costs, which are the losses being suffered only by the company. The change being sought by IIRC was to distinguish and then report on both the Social as well as the Private Costs, since under the conventional accounting methodology, only private costs are recognized. The companies following the IASB standards have been following the practice which states that all the social costs, such as pollution and environmental maintenance, have to be reported by the companies only after these costs have been converted to private costs, (Deutsch et al, 2011). Such costs, so far, were only related to the state levies, such as a fine imposed on the company for polluting the environment. Mtn Speaks Below are reproduced excerpts from the 2014 Integrated Report of MTN Group Limited. Our strategy is underscored by our strategic priorities. Strategic priorities are further developed into specific initiatives, delivery of which is quantified and evaluated against annual targets set by the Group exco at the start of the year. When determining material matters, we consider the size and contribution of each operation. 03 Our leadership, governance, reward and recognition Who is responsible profiles of our board of directors 34 Who is responsible profiles of our executive committee 36 How we are governed 37 Summarised corporate governance report 37 Risk management 46 Social and ethics committee chairmans report 50 Independent assurance report 52 How we remunerate our people 54 We provide supplementary information in associated reports on MTNs website. The sustainability and corporate governance reports, well as a full set of annual financial statements (AFS), are available at www.mtn.com/investors/FinancialReporting/Pages/IntegratedReports.aspx. Conclusion My claim that the MTNs concept of integrated reporting is founded on the capitalistic theory of the firm is based on the following aspects of its proposals. Capital allocation. The exco of MTN stresses the importance of efficient capital allocation; it writes: Integrated Reporting promotes a more cohesive and efficient approach to corporate reporting. . . to enable a more efficient and productive allocation of capital (IIRC, 2013a, p. 4). Primary focus: investors. The exco states that The primary purpose of an integrated report is to explain to providers of financial capital how an organization creates value over time (IIRC, 2013a, paragraph 1.7). Neglect of other stakeholders. The exco of MTN recognizes the existence of stakeholders other than investors and seeks to give the impression that it takes into account their needs. But it is abundantly clear that the company considers that reporting to stakeholders takes second place after reporting to investors and that its interest in stakeholders (other than investors) is solely as a means of assuring the future prosperity of the firm. There is no mention of how the company is going to maintain and improvise upon its Sustainability Target. In fact, all through the Chairmans as well as the CFOs report, they have not outlined any concrete policy about the future of environment and sustainability. If at all, any reference is made towards these issues, it is from the financial angle and the effects taken into account are solely those which affect the financial interests of the stakeholders. Hence the GRIs guidelines do define a report that sets out comprehensively the firms sustainability performance; they fulfil the conditions partially. The significant question is whether all conditions are met whether firms in issuing reports which they claim follow the GRIs Guidelines, do in fact faithfully apply these guidelines. It is obvious that the sustainability report of MTN is seriously defective. This raises grave doubts about the effectiveness of the assurance process. A possible explanation is that it is more difficult for the management to identify a matter that has been omitted than it is to comment on the truth of an item that has been included. But this does not alter the conclusion that in the case of MTN, the assurance process has been revealed to be inadequate. We cannot conclude from the above that the efforts of such public institutions as the GRI, the general guidance notes issued by them are a waste of time. As explained in the beginning of this paper, for the companies to publish their correct, complete and comparable information with regard to their performances in relation to sustainability, they must meet these two conditions: (a) An institution such as the IIRC or GRI should issue guidelines for the reporting standards, which when applied by the companies, would ensure that the reports published by the companies were complete and comparable. (b) Companies, while presenting their reports, apply the required standards correctly and consistently. It should be mandatory for the companies to meet both the conditions. What we find in the current scenario is that the framework proposed by the IIRCs relates only to condition (a). Although this framework is essential for ensuring comparability and would be helpful in assuring the completene ss of the report, it is regrettable that it is not being achieved by the companies. This then leads us to the conclusion that still much has to be done for ensuring that condition (b) is fully complied with, notably in the field of improving the effectiveness of the assurance process. References Barkoczy, S. (2011) Core tax legislation and study guide. North Ryde, NSW: CCH Australia Limited. Barkoczy, S. (2012) Australian Tax Case book. (9th ed.) North Ryde, NSW: CCH Australia Limited. Barkoczy, S. (2013) Foundations of Taxation Law. (5th ed.) North Ryde, NSW: CCH Australia Limited. Barkoczy, S., Rider, C., Baring, J. and Bellamy, N. (2010) Australian tax casebook. (10th ed.) North Ryde, NSW: CCH Australia Limited. Cch. (2013) Australian Master Tax Guide. Sydney: CCH Australia Limited. Deutsch, R., Friezer, M., Fullerton, I., Gibson, M., Hanley, P. and Snape, T. (2011) Australian tax handbook. Pyrmont, NSW: Thomson Reuters. Marsden, S. J. (2010) Australian Master Bookkeepers Guide. (3rd ed.) Sydney: CCH Australia Limited. Nethercott, L., Devos, K. and Richardson, G. 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