Integrated Reporting Analysis
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Added on 2021-05-27
Integrated Reporting Analysis
Added on 2021-05-27
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Integrated Reporting 1INTEGRATED REPORTINGAuthorCourse TitleProfessorCity Date
Integrated Reporting 2Integrated ReportIntroductionThe report presents analysis of major benefits associated with preparation of the IR as well as its main limitations. The paper starts with a brief review of IR including its definition and what it is all about. This is followed by a detailed analysis of some of the key benefits related to preparation of the IR. Thereport later present some of the limitations associated with the IR. In essence, the paper would be conducted following this plan; first, it would present overview of IR, followed by benefits of IR, and later limitations. It would then be concluded with overall findings of the topic issue. To be more specific, the paper presents some of the benefits associated with preparation of integrated reporting as well as the limitations behind the same. Overview of the IRIntegrated reporting was mostly developed as a result of increasing concerns that prevailing reporting framework does not enhance creation of long-run value (Yates 2017). Integrated reporting is the procedure that is instituted on value creation. In other words, integrated reporting is considered as concise communication on how a given company’s governance, prospects, strategy and performance results in value creation. According to de Villiers, Rinaldi and Unerman, (2014), integrated reporting was adopted by different firms across the globe. Hence, it is significant to recognize how IR has evolved, obstacles hindering its widespread adoption as well as how they could be overwhelmed. Benefits of the Integrated ReportingThe IR is said to be a relatively beneficial since it is said to serve as the form of discipline for an organization. This assists in ensuring that the firm concisely reports material information indicating
Integrated Reporting 3how it is performing in the non-financial dimensions (King 2011). According to Brown and Dillard (2014), integrated reporting is beneficial since it enhances the manner in which companies plan, reportor think about their business operations. A good number of companies utilize integrated reporting as the opportunity to communicate concise, clear and integrated view explaining value creation within the firms (Yates 2017). Furthermore, integrated reporting is beneficial since it assist different companies think holistically on their plans and strategies, making informed decisions, managing chief risks and opportunities in order to build stakeholders and investors ‘confidence as well as help in managing entity’s performance (Dumitru, Glavan, Gorgan & Dumitru, 2013).Additionally, integrated reporting could be utilized in building trust and understanding within their firms (Yates 2017). Basically, as manager or business owner, securing clients’ finance providers’ and suppliers’ trust is vital. Application of integrated reporting helps in building trust amongst different stakeholders by highlighting some of the aspects creating value in the business (Flower 2015). To be more specific integrated reporting assist in comprehending value creation which is empowered by the integrated thinking, a key theme of the integrated reporting, which is mostly on the basis of breaking internal silos in between departments and people so as different firms could collectively better comprehend chief components of a business. Such comprises of strategy, risks and opportunities, governance and business model in context of issues and trends affecting an entity (Yates 2017). Besides, integrated thinking comprises of a firm considering numerous resources consumed and relationships it depends on, leaving the firm in better position in making decision which in turn assist in ensuring resilience and viability over time (Stubbs & Higgins 2014).Additional to improving the internal management practices, integrated reporting could result to other important benefits including maximizing probability of transferring, handing over or selling the business by giving better basis for the valuation (Adams 2015). It is also beneficial since it helps in
Integrated Reporting 4creation of greater credibility and trust with the clients, society, suppliers as well as other stakeholders.Such is significant in the light of the government agencies and for none profit making firms looking for the commercial or financial partners which could not only supply services and goods but also perform sustainably (Yates 2017). Furthermore, integrated reporting is beneficial since it assist firms in securing financial assistance at reasonable cost. The lenders would wish to understand how the finances have been used previously and future intentions through holistic tactics and well-rounded plan (Flower 2015). Integrated reporting assists the SME in building better and more concrete comprehension of some of the aspects which determine its capacity to create some value over long, short as well as medium term (Yates 2017). It usually enhances the SME’s business development and planning by taking fully connected as well as holistic view comprising of its effects on and use of all resources and capital which are significant to its future and business model (Higgins, Stubbs & Love 2014). Integrated reporting assists in breaking down inner silos and ensures that any relevant information flows freely and fully in between different sections of the firm in order to endorse more creative functional thinking (Jensen & Berg 2012). Silos could be developed inadvertently, if an only if individuals do nothave an opportunity to share information, think or stop in deliberative manner (Yates 2017). Hence, adoption of the integrated reporting could assists in creation opportunities aimed at improving information flow as well as shared understanding of the value creation in the SMEs businesses (Dumitru, Glavan, Gorgan & Dumitru, 2013). Besides, integrated reporting is said to assist different firms in creating value through deeper and widercomprehension of how numerous capitals are being created as well as preserved (King 2011). SMEs are usually judged based on their current financial position, which could be an impediment and limiting the long-run value creation. Contrary, having some access to the audited financial statements
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