All eyes on the KPIs

Audit - generic image
By Anne Adrain, ICAS

18 June 2015

An ICAS working group publishes guidance on provision of greater assurance and transparency in KPI reporting.

A high level ICAS working group, chaired by ICAS President Jim Pettigrew CA, has published practical guidance on the provision of greater assurance and transparency in KPI reporting.  The paper 'Towards Transparency' represents the next stage in ICAS' contribution to the debate over the future of assurance in annual reports.

Aimed at audit committees and boards, the guidance paper includes a series of characteristics and criteria committees and boards can refer to during the KPI selection process. It also includes an Assurance Matrix, to enable them to evidence and communicate the extent of challenge and scrutiny over KPIs.

The paper's issue is set against the backdrop of enhanced non-financial reporting and increased audit committee and board responsibilities as specified in the UK Corporate Governance Code. Both of these have led to a greater emphasis on the predominantly narrative information contained in the front-half of the annual report, of which KPIs are one element.

The nine page guidance encourages audit committee and boards to:

  • Challenge the relevance of the KPI to the strategic objectives and user needs;
  • Compare the assurance obtained over each KPI against what users expect and desire;
  • Communicate the assurance obtained to users;
  • Facilitate increased dialogue between users and audit committees and boards.

The working group included representatives from each of the Big Four firms; investors; audit committee representatives; report authors and internal auditors. 

While the paper is primarily aimed at assisting audit committees and boards, it provides useful information for anyone involved in establishing or monitoring KPIs.

Jim Pettigrew said: "The increased reliance and emphasis placed on the non-financial information in the annual report highlights how important it is that users are presented with a robust set of KPIs.

"We believe that following this guidance will help audit committees and boards, and indeed anyone involved in measuring performance, to have greater confidence in their reported KPIs.

"ICAS is keen to receive feedback from anyone using the guidance - its relevance and practicality - as well as some of the challenges encountered."

Any comments or feedback on  'Towards Transparency' should be sent to Anne Adrain, (, ICAS Assistant Director, Sustainability and Assurance.

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