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Corporate Sustainability: Integrating Performance and Reporting by Zabihollah Rezaee, Ann Brockett

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Chapter 5

Economic Vitality as a Component of Sustainability

ExecutiveSummary
The primary function of business entities is to create shareholder value through continuous sustainable economic performance. This chapter discusses the importance of economic performance, its key performance indicators (KPIs), measurement, recognition, and reporting in the form of financial statements. We will also examine the roles of assurance in the framework of audit reports on financial statements and internal control over financial reporting (ICFR). The reliability of financial statements, the effectiveness of ICFR, and the efficacy of audits are vital if public companies are to attract investors and build confidence in the capital markets. This applies to both financial statements and ICFR that are under integrated financial and internal control reporting (IFICR). This chapter also discusses the role of gatekeepers (e.g., board of directors, management, internal and external auditors) in preparing reliable, relevant, useful, and timely IFICR.

Introduction

Investor confidence in capital markets is the key driver of economic growth, prosperity, and financial stability. This confidence is earned over time and “the ability of the U.S capital markets to attract capital over time depends on investors having confidence in the integrity and transparency of the markets.”1 The global competitiveness of U.S. capital markets depends significantly on the reliability of information on KPIs, which assist ...

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