Integrated Financial Reporting—Integrated reporting (IR) represents a true paradigm shift in the field of financial reporting. Incorporating aspects of sustainability, corporate governance, and risk management into the financial reporting process differentiates this model from traditional financial reporting. Additionally, the continuous and forward-looking nature of this reporting model makes it stand apart from historical financial reporting, which is historical and focused on information and events that have already occurred.
Corporate Governance—In essence, corporate governance is how organizations interact both internally and with external partners and stakeholders. Specifically, the Board of Directors, which is in charge of governance and strategic thinking, must be able to conceptualize and understand the various linkages between organizational performance and the fiduciary responsibilities owed to external users of organizational information.
Sustainability—Sustainability, in and of itself, is a straightforward concept linked directly to the idea that organizations should operate in a manner that is environmentally considerate. Following the financial crisis of 2008, however, sustainability and the interaction of sustainability and business operations have continued to evolve. In short, sustainability is now viewed by many organizations and stakeholders as essential for organizational success, as opposed to a reporting requirement.
Stakeholder Theory and Reporting—Stakeholder theory represents the reality that organizations must report to, and are held accountable by, a multitude of organizations and users of organizational data. No business can exist or operate in vacuum, and management must be able to articulate and explain both the results of current operations, and the longer term objectives of the organization to financial and nonfinancial stakeholders alike.
Analytics—Often used interchangeably with big data, analytics is less about the quantitative analysis and resulting information itself, and more about the application of said analysis to business decision making and problem solving. In the context of strategic management accounting (SMA), analytics and the application of such tools and procedures play a critical role in the development of the SMA function. Importantly, embracing this trend and shift in the marketplace is imperative for the development of Finance 2.0, expanded upon with this writing.