Utilization of Integrated Reporting for Corporate Governance

Running head: ADVANCED FINANCIAL ACCOUNTING
Advanced Financial Accounting
Name of the Student
Name of the University
Author’s Note

ADVANCED FINANCIAL ACCOUNTING1
Question 1
The assessment of the utilization of Integrated Reporting as a better platform for
corporate governance for the financial statement users is a necessity. Shareholders are
selected as the user group of financial statements of National Australia Bank (NAB). There
are certain information needs of the shareholders since they are the partial owners of the
companies. For this reason, they need the financial information on the performance of NAB
in order to take decision on whether to retain or sale the bank’s shares (Martinet and Reynaud
2015). Therefore, they needs information on the financial performance and financial position
of the bank; they also require financial ratios of the bank. The 2018 integrated report of NAB
includes the disclosure of the financial performance of the bank based on the major financial
parameters such as net profit, net operating income and others. NAB has also included the
major financial ratios on its financial performance and position. This integrated report also
includes information on the non-financial performance of the bank. Information on the
payment of dividend has been disclosed by the bank in the same section. The link of annual
report is also provided for easy access to more detailed financial information (Nab.com.au
2019). All these aspects indicate towards the ability of the integrated report of NAB to
provide its shareholders with all required information on its performance and position. This
supports the notion that integrated reporting is a better platform for the shareholders for
corporate disclosure (Higgins, Stubbs and Love 2014).
Question 2
Wide use of institutional theory can be seen in order to justify integrated reporting
adoption by the corporations all over the world. As per institutional theory, companies all
over the world are hugely influenced by the institutions of culture, economic, education and
politics. This theory states that the policies of disclosure of a corporation have a tendency of

ADVANCED FINANCIAL ACCOUNTING2
becoming the same with the same of the other corporations (Peters 2019). Institutional theory
has two dimensions that are Isomorphism and Decoupling; and these dimensions can be
utilized in justifying the adoption of integrated reporting by NAB.
Isomorphism – There are three parts of isomorphism and they are discussed below.
Coercive
As per this concept, institutional practices of the business corporations change
because of the force from the stakeholders on which the corporations have huge reliance
(Keohane and Martin 2014). The integrated report of NAB demonstrates that four key
stakeholders of the bank are customers, shareholders, people and community because of the
heavy reliance of the bank on them. The diverse needs for information of these stakeholders
are not possible to accommodate only by the bank’s annual report which creates a force on
NAB to implement integrated reporting because it helps in satisfying the information needs
of the key stakeholders through the consideration of six capitals.
Mimetic
This concept indicates towards the propensity of the corporations to copy other
corporations’ practice for gaining the required competitive advantage so that uncertainty can
be eliminated (MacCormick and Weinberger 2013). This works as a major pressure for the
companies to adopt the practice of integrated reporting and the same is case of NAB. The
adoption of the practice of integrated reporting by the large banks worldwide creates pressure
on NAB for adopting integrated reporting practice to compete with the competitors. In
addition, this helps the bank in retaining its goodwill in the market.
Normative