Good morning.

Reporting is continuing to evolve. Financial Reporting has been around for a very long time and now we see the evolution in reporting to include sustainability reporting or reporting on the social, commercial and environment aspects of business activities.

Financial and I will call it, sustainability reporting, have grown up in separate streams. It is only until recently that the concept or idea of Integrated Reporting has emerged.

At the same time, there is a fairly recent movement from Directors and CFO's for less complexity in reporting. Is integrated reporting and less complexity possible? Yes, I believe so.

What are we or should we be trying to achieve with reporting? It really should be transparency and accountability to the owners of the company and other stakeholders. Also, importantly, it should be driven by what information the users need to make informed decisions about the company, for example, whether to invest or perhaps whether to buy the company's products or services.

The move towards Integrated Reporting is attracting a lot of attention. Intuitively it makes a lot of sense, but what is it?

You may know that I am the Chairman of the FRC established Integrated Reporting Task Force. It has been established because the Government has an interest in this topic through its agency, the Financial Reporting Council. One of the first things the Task Force did was to ask its constituents and a broader audience of interested parties their thoughts about Integrated Reporting. Many comments were received but importantly there was much confusion about what exactly Integrated Reporting is.

Having been the CFO of Telstra for the last 8 years; reporting, transparency, and accountability have been important to me in that role. I have watched as reporting has become increasingly complex and therefore used less and less by key stakeholders. Many analysts and investors waited for the CFO presentation to understand what was really going on in the business. Retail shareholders are scared off by complexity, but also the sheer volume of material. Add to a set of financial statements, the directors' report and a set of financial highlights or explanations and a CFO presentation and comprehensive sustainability report, and you have enormous volume of complex material. The Australian Shareholders Association tell me very few attempt to read all this material and in fact give up and read none of it. This has to be of concern. It is why the FRC also has a Task Force looking into reducing the complexity of reporting. It is why the Group of 100, a group of CFO's, published 'Less is More'.

With Integrated Reporting now on many agenda's we have a chance to get this right for the users. We need transparency and accountability with a reduction in volume and complexity. Yes, it is a challenge but it is possible. Most users say to me, "make it simple, easy to use/understand and valuable to me".

I have posed the question as to "what is Integrated Reporting?" We as a Task Force have formed a view and passed this on to the International Integrated Reporting Council. So it is probably best to give you a snapshot of the FRC Task Force, where we are up to and what the FRC position is and the next steps.

The FRC is a Government appointed body representing different types of stakeholders. It oversees the Accounting Standards Board and the Audit and Assurance Standards Board and advises the Treasurer and Assistant Treasurer on aspects of Financial Reporting and Governance. The FRC saw the need to address reporting and its relevance to users. This is not limited to financial reporting although most activities have a financial consequence.

Where are we up to:-

1. The Task Force has been established.
2. We decided early to focus on influencing the global innovations in transparency and accountability and in particular integrated reporting and to develop an FRC position based on stakeholder views (obtained by survey and from FRC members)
3. The Task Force has responded to the International Integrated Reporting Council Consultation paper (this response is on the FRC website).

What is the FRC's position:-

• Integrated reporting is not incremental report.
• Integrated reporting is not two reports in the same document. This is report consolidation.
• Clarity is required about what exactly it is but it needs a conceptual framework that delivers consistency - the good news and the bad.
• The Annual Report is the right location for reporting integration, linking the social and environmental activities to the financial statement outcomes.
• Complexity and volume must be reduced in the total reporting package.
• Directors' liabilities must be addressed.
• Assurance must be addressed.

The next steps are to work with all stakeholders in Australia, particularly those engaged in trialling integrated reporting, and globally to develop a conceptual framework that addresses all stakeholder concerns and objectives today.

The FRC response to the IIRC discussion paper is on the FRC website where you can get more detail on the FRC's position and what we mean by a conceptual framework. Conceptual frameworks have been at the heart of accounting standards. Before you quickly rush to say Integrated Reporting is not like developing Accounting Standards, it is nevertheless a good model to follow to ensure measurement methodologies and what is reported are consistent. GRI has contributed to trying to achieve this with very good guidance. We then need to ensure there is no optionality in reporting. With all this we will get consistent reporting - the good news and the bad news and stakeholders will be properly informed. What follows of course is how assurance can be given that has the same or similar strength to that of an audit opinion. All this will need to be in place in Integrated Reporting, I believe, before Directors will sign an Integrated Report.

We must get the attention of all players responsible for reporting transparency and accountability, CSO's and CFO's and Directors. It must be a joint effort.

Let's keep focussed on what the users want here. They tell me they want reporting that is simple, easy and valuable:-

• Simple to understand
• Easy to read/access
• Valuable to them in making decisions about the entities commercial and social responsibilities. The basis of a sustainable business.

We must look innovatively at reporting through the customers eyes.

We have a way to go but we are reaching an understanding of what it might require.

This remains a work in progress but the momentum is building.

It is absolutely clear to me having now been a part of a number of forums on this topic that we must look at reporting holistically. The very fact that we have a Chief Sustainability Officer and a Chief Financial Officer responsible for reporting will put at risk successful integration.

As we go forward, the outcome of the trials will be very important but just as important is the need for a conceptual framework that provides consistency in reporting, true transparency and accountability.

Just imagine a world where the complexity of reports has reduced (they are simple), the report is integrated, and you can easily understand the activities past and future of a business and the financial impacts (easy to use and understand) and you can make well‑informed decisions about the business and/or company (valuable to you the user).

This is what we must achieve to bring reporting back to what was taught in first year university - make the report useful to the user!

I believe this can be achieved if we develop Integrated Reporting properly with all parties focussed on the users' requirements and keeping it simple, easy and valuable.