(c) South Africa Institute of Chartered Accountants. Contact SAICA for permission to reproduce this article., Financial Reporting

Integrated reports in the public sector: a tool for accountability and transparency?

In a recent SAICA snap survey, 91% of respondents indicated that there is a need for integrated reporting in the public sector

SAICA established the Public Sector Integrated Reporting Project Group (PSIRPG) to explore and respond to the challenges related to integrated thinking and integrated reporting in the public sector. Although there is currently no compulsory requirement in the public sector for the production of an integrated report, a number of municipalities and state-owned enterprises prepare annual integrated reports.

As a starting point, the PSIRPG therefore carried out a survey to determine the current status of integrated report production and the need for guidance relating to these types of reports in the public sector.

52% of respondents to the survey indicated that their public sector entity prepares publicly available integrated reports. However, respondents emphasised that guidance is not sufficient for those planning to or currently preparing integrated reports.

One respondent emphasised that ‘it becomes compulsory for the public sector to produce high-quality integrated reports that reflect their creation of value in society’.These results affirm one of the PSIRPG’s assumptions that suitable guidance for the public sector is a necessity. 

But why an integrated report?

The main benefits that respondents have experienced when producing an integrated report include:

  • Improved external stakeholder communication;
  • Improved transparency
  • Better integration of environmental, social and governance considerations with financial requirements
  • Improved governance, and
  • Longer-term thinking

Public sector institutions are required to ensure the optimal impact of service delivery with scarce resources while working together with different entities and spheres of government to serve the public interest. In addition, these institutions have a responsibility to demonstrate accountability and transparency relating to how they operate to deliver services and utilise resources (such as financial, people, environmental). Effective communication on all of these aspects by public sector institutions to its stakeholders is critical to demonstrating these institutions’ commitment to building trust with its citizens. Integrated thinking and integrated reporting are becoming important skills and tools in supporting public sector institutions to achieve these objectives. A respondent reiterated that ‘good governance, transparency, accountability, shared value creation and sustainable development are imperative for development and progress in Africa’.   

Public sector institutions face a number of challenges, and integrated reporting should be able to assist with:

  • Responding to varied and divergent stakeholder needs
  • Focusing reporting on outcomes rather than outputs
  • Being mindful of a long-term view, and
  • Understanding the availability and usability of all resources required[4]

Next steps

The PSIRPG recognises that there is still significant research, education and awareness to be undertaken in the fields of integrated reporting, integrated reports, and integrated thinking from a public sector perspective. With this in mind, the initial focus of the PSIRPG will be on developing guidance on specific topics that enhances the current reporting requirements and conducting further research on fostering integrated thinking. The emphasis on integrated thinking is crucial, as this concept is vital to decision-making, resource allocation, operations and project management, risk and opportunity identification, communication, etc. 

‘The more that integrated thinking is embedded in an entity, the easier it is to prepare an integrated report, and the higher the quality of the report produced.’

Loshni Naidoo is a Project Director: Integrated Reporting at SAICA.

This article was originally published in ASA.