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Date: 2019-01-24 Page is: DBtxt001.php L0700-TVM-and-IR


METRICS
INTEGRATED REPORTING (IR)


Integrated Reporting is an initiative of IIRC ... the International Integrated Reporting Council, a UK based a global coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs that is promoting communication about value creation as the next step in the evolution of corporate reporting. The IIRC’s mission is to establish integrated reporting and thinking within mainstream business practice as the norm in the public and private sectors. Its vision is to align capital allocation and corporate behaviour to wider goals of financial stability and sustainable development through the cycle of integrated reporting and thinking.

FRAMING THE PROCESS
This is more than PROFIT ... it incorporates also impact on PEOPLE and PLANET
IIRC Value Creation Process
This is a representation of PROCESS promulgated by IIRC (International Integrated Reporting Council) as the foundational construct for Integrated Reporting (IR).
The six (6) capitals used by IIRC are similar to the convention adopted by TVIA, with both embracing the idea that ALL capital should be brought into account.
The Framing of the Capitals
IIRC Integrated Reporting TVM Impact Accounting
A. Financial
B. Manufacturing
C. Intellectual
D. Human
E. Social and Relationship
F. Natural
SOCIAL CAPITALS
D. Human Capital
E. Relationship Capital
NATURAL CAPITALS
F. Natural Capital
ECONOMIC CAPITALS
B. Physical Capital
A. Financial Capital
.... Intangible Capitals
C.... Knowledge Capital
... ... Institutional Capital
... ... Cultural Capital
... ... Locational Capital
With IIRC the 'Value Creation Process' is centered on the business organization. While this is important, it is not sufficient. What goes on outside the business organization is arguably more important than what happens inside the organization.
With IIRC the business organization draws from the 6 capitals (inpits to the process) and impacts the 6 capitals (outcomes of the process).
With the business organization there are business activities ... whcih are similar to PROCESS in TVIA.
In addition the IIRC graphic has reference to these ideas: Mission and Vision: Risks and Opportunities, Governance, Strategy and Resource Allocation; Performance and Outlook.
In the TVIA thinking the goal is to have a tighter linke between the activities of the business and the financial accounting and the impact arising

Framing the Activities
IIRC Integrated Reporting TVM Impact Accounting
With IIRC all the activities flow through a business organization that is the focal point of the reporting.
Multiple business entities may be consolidated for reporting purposes, with the focal point remaining the reporting entity.
With TVM, many activities flow through the business organization that is reporting ... but the impact of externalities is also reported in a systematic manner.
There are multiple consolidations to report on the impact of ALL the capitals (Social, Natural and Economic).

Combining TVM with IR
With conventional accountancy and financial reporting supplemented by Integrated Reporting (IR), there is a focus on the production business. In combination with TVM, this can be expanded to include the impact on ALL the Capitals resulting from the Supply Chain and the subsequent Use and Post Use Waste Chain.
TVM Impact Accounting uses 'materiality' to keep the analysis simple and relevant
Similar framing is used for PRODUCTS and for PLACES.



The text being discussed is available at

and


TrueValueMetrics (TVM) is an Open Source / Open Knowledge initiative.
It has been funded by family and friends plus donations from well wishers who understand the importance of accountability and getting the management metrics right.
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