Exploring Integrated Reporting: Strategy, Control, and Six Capitals

This essay provides an overview of integrated reporting (IR), highlighting its significance in presenting both financial and non-financial data of an organization. It emphasizes how IR contributes to sustainability by incorporating environmental, governance, and social parameters, ultimately enhancing brand value and customer loyalty. The essay discusses the relevance of the IR framework in creating sustainable value for stakeholders, noting its adoption by leading organizations to clearly communicate resource utilization and value creation. Furthermore, it examines the influence of IR on organizational strategy and control in corporate reporting, particularly in South African companies, and demonstrates how the six capitals (financial, manufactured, intellectual, human, social & relationship, and natural) impact strategic management accounting. The discussion includes specific examples of how changes in these capitals, such as human capital and financial capital, can drive strategic shifts and disclosures related to employee remuneration, sales revenue, and equity.

Integrated
Reporting

Integrated Reporting
– Project the financial and non-financial data of an organization
– Depict how a company performs on the environmental, governance and social parameters
– Contributes to sustainability in various areas of the organization
– Improve the brand value and customer loyalty

Relevance of IR framework in
the contemporary corporate
– Creating a sustainable value for helping the stakeholders in both medium terms
and short term
– The leading organizations are already depicted to apply the IR for a clear and
concise IR which will explain the way resource will be able to create value for
the organizations
– IR included by the organizations may be depicted in terms of providing external
environment
– The relevance of IR in the corporate report can be discerned with organizations
being able to relate the financial standards with the global reporting standards

Use of IR framework by wide
range of private and public sector
– Adoption of IR framework by a wide range of the private sector companies may
be clearly discerned in form of entities such as American Electric Power (AEP),
Novo Nordisk, BASF, United Technologies Corporation (UTC) and Philips
– Merging the financial and sustainability report into a single report and link the
sustainability strategy with the business strategy
– Investor relation function must be aware of the upcoming problems which the
issuer may be facing
– Disclosing investor related risk associated with the climate change

Influence of IR on the strategy and
control on the organizations in corporate
reporting
– Several business strategies were possible to be disclosed only after the adherence to
IR among the South African companies
– The overall insights into the disclosure have improved since the time IR was
incorporated in the financial statement of the company
– The previous findings have revealed that corporate business model have provided
necessary information pertaining to the information associated to investment
decision making
– The control factor can be clearly seen to be disclosed by the organisation as per the
making efficient disclosure of risks and opportunities relating to mitigate the threats
and address the risks

Demonstration of six capitals impacting
on the role of strategic management
accounting
– The change in the human capital can lead to several changes in the strategy which
may be discerned in terms of recognition and declaring the external and internal
changes pertaining to disclosing of the remuneration of the employees
– The financial capital will be able to depict the strategic changes relevant with the
disclosure of crucial financial information such as sales revenue, liability recognition
and leasing techniques followed by the company
– The natural capital may be further seen with the definitive changes which may be
clearly identified as per the disclosure of the equity
– The demonstration of the intellectual capital can be further discerned as per the
changes pertaining to the intellectual property rights

Thank You