Evolution of Integrated Reporting

Contents
INTRODUCTION...................................................................................................... 2
Evolution Of Integrated Reporting................................................................................2
Integrated Reporting Overcome the Shortcomings of Traditional Financial
Reporting?............................................................................................................. 2
Current Problems and Challenges for Integrated Reporting?.................................3
Australian listed companies prepare integrated reporting?...................................4
Integrated Reporting should be mandatory throughout the world?.......................5
CONCLUSION......................................................................................................... 5
References............................................................................................................. 6

INTRODUCTION
Integrated reporting means drawing of all financial and non-financial performance of
the entity in a single report. Integrated reporting helps to highlight the non-financial
aspect such as the environmental, social and governance parameters. Many
investors and shareholders have felt the drawback in the current form of reporting.
Few entities like BASF, Phillips, United Technologies Corporation (UTC), American
Electric Power present their financial and non-financial data through integrated
reports. The purpose of integrated reporting is not only to present both financial and
non-financial data into one report. Its main motive is to link the sustainability and
business strategy and help the investors of the entity to identify the non-financial
areas of the entity. (Khandelwal, 2018)
Evolution Of Integrated Reporting
Integrated reporting is an evolution of corporate form of reporting. The main attention
is on how the firm creates values in the short, medium and long run. An integrated
report, a main outcome of Integrated Reporting, is a brief report primarily meant for
the stakeholders and investors, who have beneficial interest in the firm and can get
benefit from such integrated report. Generally, the intangible items which are not
shown in the financials of the company play a major role in the future aspects of the
firm. Integrated reporting is a best way or rather a best form of reporting purpose for
the 21-set century business. It not only shows the past and present performance of
the entity but also the future aspects of the firm, and through a brief way of
presenting such information to the investors and stakeholders. This modern
approach of reporting also focusses on how to better present the information by
breaking down the traditional approach. Integrated Reporting is gaining a lot of
importance in accounting profession as it is in the business sector. PA’s can play a
significant and major role in case of Integrated Reporting requirement to their
firm ,not only helping them to prepare the report according to integrated form to help
the investors,lenders,employee,customers,supplies to gain a clear understanding
about the business but also how to improve the company performance. (American
Institute of CPAs., 2018)
Integrated Reporting Overcome the Shortcomings of
Traditional Financial Reporting?
Integrated Reporting concept is first proposed by International Integrated Reporting
Council (IIRC).This reporting offers a major change in accountability for corporates’
definitely there is a question, will integrated Reporting change the way an

organizational risk is managed or it simply add the cost of the organization with few
benefits involved. (Nick A. Shepherd, 2016)
The idea of integrated Reporting is certainly appropriate, as compared to traditional
financial reporting as it does not provide any clear idea to the investors regarding
there value of the investment in an organization. Generally, the cash flow statement
and earnings of an organization provides some indications of the firm net worth. The
balance sheet of the organization often depicts less than 20% of the assets
employed. (Nick A. Shepherd, 2016)
Investors and other stakeholders of the company generally depend on other form of
reporting in order to understand the risk associated with the business and
sustainability. This report can range from triple bottom line report, corporate social
responsibility report, carbon disclosure reports and other reporting requirement. In
addition, all these reporting also add the extra effort of the accounting professionals
which lead to excessive comments on reporting part. These all load up the
administrative work and raise the question of integrity about the information
highlighted. (Nick A. Shepherd, 2016)
Current Problems and Challenges for Integrated
Reporting?
The Association of Chartered Certified Accountants (ACCA) has highlighted in his
published report all the advantages and challenges that early Integrated Reporting
adopters have faced and have provided solutions and recommendations to those
who are about to start.
The report published by ACCA identified few areas of weakness and challenges
where the financial reporting can be improved. These include:
Value Creation: In some point it was found that the firm have given better
explanation about how it created value for itself rather than how it created value for
others and some even found it very difficult to do distinguish between the two.
(Deloitte, 2017)The report generally identifies the following good points like:
 Identification of the organization stakeholders and ask them what the value
means for them.
 Consider the six capitals model tool.
 Understand clearly of what values means to major shareholders.
Connectivity: The organization identified this as one of the major challenges related
to integrated reporting. The report generally identifies the following good points like:
 Check about management discussions in board room, discussion in meeting,
information from management which are relevant to investors and
stakeholders of the organization.