ValueReporting Framework

The ValueReporting Framework, now known as the Corporate Reporting Framework, is a business approach developed by PricewaterhouseCoopers (PWC) for measuring and managing corporate performance and structuring communications about that performance. It identifies information that all industries and companies share in common: market overview, strategy and structure, managing for value, and performance, all underpinned by relevant performance measures.

The traditional corporate reporting model no longer meets the needs of the companies that report on their performance to investors and other stakeholders. ValueReporting is PricewaterhouseCoopers’ innovative approach for performance measurement and corporate reporting. It was designed to meet investors’ needs for more and better information.

Public trust in those responsible for reporting corporate performance information has been shaken to its foundation. Investors and other stakeholders are demanding greater corporate transparency.

ValueReporting supplements traditional financial reporting. By helping companies provide a more detailed, transparent picture of their performance. Regarding market opportunities, strategy, risks, intangible assets, and other important non-financial value drivers.

Based on PricewaterhouseCoopers’ capital markets research, the Framework provides a structure for internal and external reporting of both financial and non-financial information along broad categories. Market Overview, Value Strategy, Managing for Value and Value Platform. Each is broken down into specific elements for more detailed and transparent reporting. The Value Platform category, for example, includes all activities and relationships that underpin how the company creates value. These include such intangible and non-financial measures as products, customers, people, innovation, supply chain and corporate reputation.

The ValueReporting Framework categories

  1. Business segmentation.
  2. The relationship between risk and return.
  3. The ability to generate cash.
  4. Reconcile the internal performance measures to results that are reported externally to stakeholders.

ValueReporting is a type of Integrated Reporting (IR).  IR is a process that results in communication, most visibly a periodic “integrated report”, about value creation over time. An integrated report is a concise communication about how an organization’s strategy, governance, performance and prospects lead to the creation of value over the short, medium and long term.”  It means the integrated representation of a company’s performance in terms of both financial and other value relevant information. Integrated Reporting provides greater context for performance data, clarifies how value relevant information fits into operations or a business, and may help embed long-term thinking into company decision making. While the communications that result from IR will be of benefit to a range of stakeholders, they are principally aimed at providers of financial capital allocation decisions.

Business frameworks like ValueReporting Framework are invaluable to evaluating and analyzing various business problems. You can download business frameworks developed by management consultants and other business professionals at Flevy here.

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