Corporate Integrated Reporting: Objectives and Benefits

MANAGEMENT ACCOUNTING

Corporate Integrated Reporting
Introduction
The process Corporate Integrated Reporting is a step that is taken into force by the companies
so that they can make their reporting formats more appropriate. There are many disclosures in
the companies like the environmental and social disclosures that are made mandatory for the
institutions just as the financial statements. These reports are needed to be prepared
individually which make it a time-consuming method. Hence, in order to decrease the time
utilized and making the process of data collection and recording much easier, the process of
corporate integrated reporting is taken into force. This type of reports also helps the
concerned public to understand the position of the firm in a much better and elaborated
manner thus keeping them informed about the company’s progress (Francis et. al, 2013).
Corporate Integrated Reporting is generally caller as CIR and has helped a lot of institutions
to carry out their work in a smooth manner.
The main objectives that are achieved by the use of CIR are as follow:
1. Providing the public with quality financial statements:
The main objective of the firm to shift the accounting system was to provide the users with
the most appropriate and quality information. The users of such documents are the
government, stakeholders, creditors, investors, financiers, etc. They are all in a sense a small
owner of the company as they have all invested in the shares and thus they also have the sole
right to verify and know the financial position of the company and also other information’s
which may affect the company’s reputation and name (Slaper & Hall, 2011). Briefly, it can
be explained as, the better the financial statements of the firm the better will be its power to
opt for a loan or seek for investors (Caradonna, 2014). The main function of the Integrated
Reporting includes the proper utilization of the sum of all the activities and information
related to the firm.
2. Betterment of Accountability and Answerability:
The system of CIR induces the management to provide the customers of the company with
reports that provide them with all the information. It is not possible for the firm to answer and
clear the doubt of each individual shareholder. Therefore, there should be made such a
financial statement that may clear the doubts of the stakeholders and thus clarifies any
misconceptions present in their minds (Freeman & Alexander, 2013). These types of purpose
shall be easily concurred using CIR. For example – if a company need a bank to provide a
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Corporate Integrated Reporting
loan, then it needs the s to show all the necessary documents to the bankers so that they and
look at the report and then ascertain that the company is worthy of a loan or not. Therefore,
the financial statements should be easy to understand and free of any misstatements because
if the financer will find any problem in the accounts, then he may deny providing the firm
with the loan (Glover & Lin, 2013). All these functions are made easy by the use of CIR, as
the data made using this function is clear and very accurate.
3. Consistency in the viewing and comparison of the financial statements:
The CIR system of accounting makes it easier for a user to compare the data of the firm with
the previous year’s data that helps them in making decisions. The comparison can be of the
same company in the different years or the comparison may be made between two companies
that pervade in the same field. Thus, it will not be good for a company if it will not provide
the users a proper financial statement, as they will not be able to understand the economy of
the business (Bonson & Bednarova, 2015).
4. Cooperation in decision-making:
If there is a situation arising for the firm to merge or collaborate with other firms, a proper set
of the financial data is needed. If the firm have maintained the financial data according to the
CIR then it will be easy for the stakeholders and the owners as all the required data will be
contained in a small account will the stakeholders can assess and then take any decisions
regarding to the merging or acquisition (Walker & Salt, 2012).
5. Non-financial reporting:
The normal account of the firm does not allow it to go through the non-financial aspects of
the firm that affects its business. In CIR system of accounting, it will become very helpful for
the firm as it also contains the data about firms non-financial like the human index and the
corporate social rankings that may change the financial value of the firm (Benabou & Tirole,
2010).
6. Assessment of the risks and the key indicators.
The use of CIR will also make it easy for the firm to find and loophole vulnerability present
in the system very easily. The main risks that should be identified are the IT risks, labor
turnover risks, etc which needs to be detected and rectified as soon as possible. These risks
can only be identified if they are clearly mentioned in the financial statements of the firm. In
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