Total Value Creation (TVC) Method

Developed by the Canadian Institute of Chartered Accountants, TVC is a method to calculate the present value of future value streams using discounted cash flow techniques. Though the method is not new its application is, since TVC is applied to events and not transactions as the norm is for financial reports (see also about Asset Management Account). TVC includes four parts to report on an organization's value cre­ation potential:

1.       An organization's strategy for creating and realizing value

2.       An event-driven discounted cash flow of expected future value streams

3.       A report on the organization's capacity to generate the expected value
           streams (capacity consists of capabilities, infrastructure and networks)

4.       A report to shareholders on the financial and nonfinancial value streams

It is not clear what the definition of event is and, like other models discussed, the TVC is still experimental.

GLOBAL INITIATIVES

The Global Reporting Initiative (GRI)

The GRI is an initiative of the Coalition for Environmentally Responsible Economies in partner­ship with the United Nations Environment Program to develop guidelines for reporting on the economic, environmental, and social performance of companies. Though focused on environ­mental and social issues, many of the indicators developed report on various aspects of IC (e.g., those relating to employee productivity and turnover).

If successful, the GRI's initiative may provide a model for global IC reporting.

Organization for Economic Cooperation and Development (OECD)

TheOECD organized a symposium on Intellectual Capital Reporting in June 1999, where a num­ber of countries and organizations presented models for reporting on IC.10 For the most part, these presentations are based on performance measures, where indicators to measure the various forms of IC were developed. Among the presenters was KPMG of the Netherlands, basing its measur­ing model on Andreissen's model of IC, outlined in Chapter 2. There was no follow up to the Symposium, and it is still to be seen if the OECD will take a more active role in IC reporting.