CFOs must improve non-financial reporting

MORE emphasis should be placed measuring the value of non-financial assets, a report has found.

The survey from the American Institute of CPAs and Chartered Institute of Management Accountants found that more than 50% of chief executives think their companies are not very good at measuring the value of non-financial assets.

“There is an unmet need in the measuring of non-financial information by organisations,” said CIMA chief executive Charles Tilly.

The accompanying research argues that people-orientated elements associated with business performance have become equally important as financial drivers and that more value is coming from people rather than financial assets.

According to the report, customer relationships, knowledge and human capital, technology, strategic vision and intellectual property are the crucial value drivers but are not adequately reflected in corporate reports.

“The value that people add will not appear in the quarterly reports and may not be apparent in the short run,” the report said.

Speaking at the launch of the report, Gary Kabureck, chief accounting officer of Xerox, said although the value of customers, employees and brand are hard to measure companies that understand those elements are more successful.

“Empowerment is key, employers have to drive the company, they have to have a shared vision,” Kabureck said.

Angelo Messina, chief financial officer of Otis Elevator, said that quarterly reporting hindered the dissemination of non-financial information and fostered short-termism among investors.

“I don’t know a CFO who does not want to do away with quarterly reporting,” Messina said. “It will always be there. The role of management accountants is to tell investors that it makes sense to invest in the long-term.”