Importance of Integrated Reporting Framework to Overcome Limitations of Traditional Financial Reporting

This report discusses the importance of integrated reporting framework in overcoming the limitations of traditional financial reporting. It focuses on how Berkshire Hathaway uses integrated reporting tools to provide comprehensive information to stakeholders. The report also explores various tools used in the integrated reporting framework, such as balance scorecard, corporate social responsibility report, intangible performance indicators, and behavioral anchored rating scale.

IMPORTANCE OF INTEGRATED REPORTING FRRAMWORK TO
OVERCOME LIMITATIONS OF TRADITIONAL FINACIAL REPORTING

Contents
Contents...........................................................................................................................................2
ABSTRACT....................................................................................................................................1
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Explanation of how integrated reporting tool uses to overcome the argued deteriorating
usefulness of traditional financial reporting such as that confronted by the stakeholders of
Berkshire Hathaway.....................................................................................................................1
CONCLUSION................................................................................................................................5
REFRENCES...................................................................................................................................6

ABSTRACT
This report is summarised all the factors of integrated financial report, it will help in
providing essential requirement of tools of integrated financial report towards overcome
problems of traditional financial report.
INTRODUCTION
Integrated report is a tool of strategic management process which is included all the
information related to each essential aspect of organization. It includes, present conditions of
shareholders, value net worth, position of company within market, performance evolution of
tangible as well as intangible asserts and behavioural factors of organization. This report is
prepared to provide better understanding to shareholders and build strong position of
enterprise among rival industries. In order to understand the usefulness of integrated
financial report Berkshire Hathaway has been taken, head quarter of this company is situated
in united stat it deals in conglomerate industry. In this report meaning of intergraded report
and importance of this report towards organization has been describe clearly. This report
also contains tools used by organization to prepare integrated report through which tey
overcome problems and issues of traditional financial report.
TASK 1
Explanation of how integrated reporting tool uses to overcome the argued deteriorating
usefulness of traditional financial reporting such as that confronted by the stakeholders of
Berkshire Hathaway
Integrated report: It is a new framework of accountancy which is used for enhancing the scope
of corporate financing and reporting. Integrated report is developed in order to overcome
limitations of traditional report (Mio, Marco and Pauluzzo, 2016). It is prepared for value
creation within the business enterprises, it consider financial as well as non financial items of
organization. This report contains all the fact as intangible and non intangible factor are
responsible for development of the business organization. Integrated reports are prepared on the
basis of financial, human, manufacturing, natural and social corporate capital. Main objective of
integrated report is to cover up performance of finance, structure of capital, sustainable reporting,
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management commentary and information related to corporate governance in an individual
report. It is focus on increasing the efficiency of corporate reporting by using information
collected from investors of organization’s capital.
Tools of integrated report framework:
 Balance scorecard: It is a integrated strategic tool of management system which act as a
linkage between organizational activites and performance management which help in
achieving objective of the organization. Balance scorecard is use to mark standard which
help in identifying performance of overall department of organization. .It will use in
comparison of customer perspective, financial perspective, learning growth and internal
organization perspective, fixed target standard are decided and manager analysis
performance by comparing with standard target to achieve target. Balance scorecard is
used to provides report related grow company provides, return, dividend, satisfaction to
their shareholders and customers,. It also focus on the capabilities of company to adopt
the changes, improve, growth, and innovate new technologies and features. Balance
scorecard is used for measure, job satisfaction, rate of innovation, employees’ turnover,
training and development measures of workforce of the organization (Lee and Yeo,
2016).
 Corporate social responsibility report: This report is prepared on the basis of
identifying the laws ethics, followed by company in order to fulfil their social
responsibly, it will help n measuring the level organization provides donation and work
for their society.
 Intangible performance indicator: This tool is used to measure the performance
standard of workforce of the organization it is used with balance scorecard. It is a method
of performance evolution technique. It will uses for identifying effectiveness, skills
mental stress level, perception of employees and this tool is used for providing incentive
on the basis of performance of the employees
 Behavioural Anchored rating Scale: It is most useful tool of integrating report which is
used for identifying behaviour of workforce of the organization towards the company and
behaviour of shareholders, external internal parties toward the company. Plosive
outcomes of customers and shareholders describe that company is in a strong position
and maintain goodwill within the market, negative outcomes of shareholders need
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company to change their policies regarding shareholder in order to maintain their position
and attain sustainability within the economy.
Importance of integrated report tools to overcome usefulness of traditional financial
reporting system for Berkshire Hathaway
Berkshire Hathaway is one of the famous corporations of United States which deals in
inv4stments, property, food, Aerospace tools, sporting consumer goods etc. It is conglomerate
industry, manager of this company y uses traditional financial report to provide information and
to communicate with their shareholders but traditional reports only provide limited information it
only deals with providing information related to the financial statement, position of the company
in the area of finance. Thus their manager decided to use prepared integrated report it will help in
providing all the essential information in one report through which shareholder can analysis
overall performance of all sector of the organization it will help shareholders to evaluate how
many portion company give for their cosily work, their policies, for corporate social
responsibility, financial governance as the main aim of integrated report is to consider and
involve their shareholders in decision making process it will help in building a build faith of
shareholder towards the company (Melloni, 2015). Integrated report focus on providing
information related to tools resource they use for their business activities it will useful to
understand the shareholders as well as their customer to know how their organization collect
formulated an distributes the goods ,the whole process of providing goods to each customers
useful for creating goodwill and positive perception towards the company to the all stockholders.
It will also gain the competitive advantage as organization with strong reputation in the market
economy has gain the sustainability to maintain their position for long time within the global
market are, Berkshire Hathaway is multination corporation and its target market are has wider it
provides as the company deals in many products, thus their market area include Asian countries,
Australia, European countries etc. It is essential for the management department to choose
effective stagy for their shareholders so that they can maintain in organization for long time
period and their issues related to traditional financial reporting has been reduces. Thus the
company use integrated reporting tools , for this purpose to collect information, measures
performance intangible assets, they use balance scorecard, 360 degree analysis technique,
financial governance, corporate responsibility report all these tools help in overcome all the issue
of shareholders arises due to this of traditional financing report. Traditional financing reporting
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focus only providing information related to return of assets, return of investment, dividend rate
company provides to their shareholders cash flow information related o assets and liability of the
company within a particular time period, but balance scorecard is used to consider all the
perspective of finance, customers, internal, shareholder through which report is mande on
considering each source of organization. Balance scorecard measure performance of
organization by difference between financial and non financial measure. Progress of the
company is based on the measuring traditional factors such as profit and loss statements,
financial statements, . Measurement of intangible assets are used as linking all the business
activites it will help in providing balance between all the activites of the organization. Tools of
integrated financial performance are uses for enhancing performance of workforce as these tool
are used for provide bonus it will motivate employees to work hard towards the organization in
order to gain the bonus it will also help in increasing efficiency and capabilities of the employees
as it is the tool of measuring performance of the employees it will use for growth and learning of
the business organization (Stacchezzini, Mellon and Lai, 2016). These tools are adopted by the
management department of the Berkshire Hathaway to overcome the limitations of the traditional
systems thus it play essential role in formulating strategies and implementing them within the
workplace of the organization. Integrated report is a deep summery which represent each aspect
of the organization as it will help in recognizing all the factors very effectively. Shareholder use
this report to identify and analysing performance of the company, they also consider how many
part company provide to their society it will positively impact of the company towards the
shareholder. This report also use for audit they use it as tool and document of proof for consider
all the calculation related to the company, as it will also use for providing tax exempt and
manager formulate future polices and procedure after analysing the customers’ expectations.
This also useful for identifying risk and help in making polices related to risk management.
Berkshire Hathaway is also deal in portfolio securities and provides good investing facilities to
their customers and shareholder for this corporation it is essential for the company to analysis
risk in external market, by formulating integrate financial report they can recognize easily the
risk factor for the organization. This report also help in forecasting future of the company it will
help in providing sustainability to the organization. In today’s compatible word where
technologies changes and rivalry industries launching new innovative product it is necessary for
organization to report though which they can analysis all the opportunity in future by identifying
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customers and stockholder expectations their manager of the company can innovate and
introduce new feature and producer within the market according to the demand of the customer.
Balance scorecard use to identify intangible performance factor of the company it will uses to
improve performance quality with use of this toll manger can identify their strategy , weakness
then they conduct running program to their employees who need to improve their skills.
Integrated reporting system is useful for recognize all the activites and performance tools within
the organization. Thus it is necessary for the manger to adopt this report for representing their
performance in front of the stockholders. Integrated financial report framework is build to fulfil
demand of their stockholder and to provide strong and help in build strong connection with
external parties and internal parties of the organization (Maroun, 2017). This report also consider
the how company can overcome from their problems it will use for engaging shareholder
towards the company and attract and gain focus of target market customers towards the
company. Berkshire Hathaway is biggest corporation and this it has more responsibly towards
their shareholder as well as they had liability to maintain their position and provides effective
serviced to their customers to fulfil all the objective in formulate the financial integrate report
which consider all the aspect and provides all the necessary information which help manager to
provides lead to the organization. It is beneficial and it will help improving an starting position
of the organization it will overcome all the limitation and companies of the shareholders have
related to the traditional financial report.
CONCLUSION
From the above analysis it has been concluded that in order to provides satisfaction to
shareholders and customers of the organization, manager needs to formulate integrated
report and use it as communication tool of the organization. Integrated report consider all the
factors which included performance analysis of workforce, corporate social responsibility,
perception, evolution of behaviour of external parties, this report is formulated on
considering all these factor. For this purpose balance scorecards, 360 degree analysis,
performance evolution technique has been used which cut throat all the limitations of the
traditional financial report.
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REFRENCES
From books and journals
Mio, C., Marco, F. and Pauluzzo, R., 2016. Internal application of IR principles: Generali's
internal integrated reporting. Journal of Cleaner Production, 139, pp.204-218.
Lee, K. W. and Yeo, G. H. H., 2016. The association between integrated reporting and firm
valuation. Review of Quantitative Finance and Accounting, 47(4), pp.1221-1250.
Melloni, G., 2015. Intellectual capital disclosure in integrated reporting: an impression
management analysis. Journal of Intellectual Capital, 16(3), pp.661-680.
Stacchezzini, R., Melloni, G. and Lai, A., 2016. Sustainability management and reporting: the
role of integrated reporting for communicating corporate sustainability
management. Journal of Cleaner Production, 136, pp.102-110.
Maroun, W., 2017. Assuring the integrated report: Insights and recommendations from auditors
and preparers. The British Accounting Review, 49(3), pp.329-346.
Morros, J., 2016. The integrated reporting: A presentation of the current state of art and aspects
of integrated reporting that need further development. Intangible Capital, 12(1), pp.336-
356.
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