INTEgrated REporting for SMEs Transparency, the INTEREST project supported by the ERASMUS+ European programme
 

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INTEREST core partners have been working for several years on research-based curriculum development projects aimed at helping SMEs to cope with the continuous renewal of social and economic challenges of the society.


Needs identification

Major projects, mostly supported by the EU, went on, and are still going on, in diverse fields from classic knowledge-competence-skill development of SMEs to handling generational changes, from family businesses to SME-mentor training developments or from legal-corporate support to sustainability issues.
Not only have the topics varied in this project chain but also pedagogical approaches have overarched traditional classroom training, e-learning and blended-learning courses, and mentor supports by internationally certified mentors.
The genesis of each project could be found in the precursors and the ramifications of each project, which gave birth to new project ideas.

One of the important fallouts of the mentioned cooperation chain was that accountability of the SMEs leaves much to be desired in general and that reporting practices hardly go beyond financial reporting in particular. In fact, more integrated reporting, incorporating the process of integrated thinking, on capabilities (knowledge, competences, skills, experience, etc.) is needed.


State of play analysis

The decision to invest in the INTEREST project was preceded by drawing up an overview of the state of play of IR (Integrated Reporting) of companies in Europe and SMEs in particular. This preparatory activity was carried out together with the members of the partnership. The selection of these partners went on the basis of their readiness to participate in this work and also on their track record in the field of Non-Financial Reporting (NFR).

  • It appread that large international consortia are currently pursuing in-depth research in the field, for instance:
    • IIRC,
    • International Integrated Reporting Council,
    • and IFAC, International Federation of Accountants.
  • We have also realised that the recent and ongoing projects focus on comparative research and on bringing alignment to corporate reporting in the world, among the multiple different and conflicting reporting frameworks.

In order to avoid replication of these consortia our partnership contacted several of them (and invited two of them to be partners) and wish to use their results to achieve our clearly distinguished goals: to develop practical and educational support services for SMEs in Integrated Reporting (IR).


Companies and SMEs

The partners realised that large/international companies are much more advanced in complex corporate reporting on their value creation processes than SMEs. The international network EFAA, European Federation of Accountants and Auditors for SMEs pursued investigation on the ‘trickle down’ effect from practices of large companies to smaller ones. This gave our partnership rich background material for the conceptualisation of this project.

One approach of the large companies is to prepare their reports on the basis of 6 capitals (Financial capital, Manufactured capital, Intellectual capital, Human capital, Social and relationship capital and Natural capital), which is still considered a relatively new but evolving field.
One of the objectives of this project is to develop a proposal for the SMEs’ reporting from the experience of the large undertakings.


INTEREST outputs
  1. Direct application to SMEs is not working, so the goal is to develop an adaptation scheme of the 6-capital-based integrated reporting to SMEs. An intellectual output of the INTEREST project in form of a Guide will produce an easily digestible suggestion for SMEs on how to prepare their Integrated Reports and develop an integrated thinking approach to value creation and decision making processes.
  2. Another intellectual outcome will be a mix of face-to-face, e-learning and work based learning modular training material for SMEs, SME accountants and students on IR, based on the 6 capitals. While the VET trainings will be subjected to institutional or national vocational qualifications, the courses targeting the students will be accredited through ECTS. The hidden purpose is to transform the mind-sets of SME senior management, accountants and students by adopting integrated thinking on the whole value creation process of an SME.
  3. Another task set out by the partnership is to elaborate on possible incentives to encourage SMEs to adopt IR. Meeting the information needs of investors, finance providers and other stakeholders is only one of the most convincing arguments. Others include better decision making, enhanced reputation and trustworthiness, and finally a focus on the longer-term sustainability of SMEs. We intend to point out how the practice of IR can help improve the economic, social and environmental performance of an SME.

Coordinator:

Dr. Péter Soltész and László Varga
BBS - Budapest Business School
29-31 Markó Street,
H-1055 Budapest, Hungary
INTEREST project
EU flag Erasmus+
This project has been funded with support from the European Commission under the ERASMUS + European programme.
This publication reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.