Integrated Reporting

This article discusses the importance of Integrated Reporting (IR) in corporate reporting, its impact on strategy and control of organizations, and the influence of six capitals on strategic management accounting. It also highlights the adoption of IR framework by various types of private and public sector companies and the significance of IR framework in the contemporary corporate.

Running head: INTEGRATED REPORTING
Integrated Reporting
Name of the Student
Name of the University
Author’s Note

1INTEGRATED REPORTING
Introduction
Integrated reporting is referred as the presentation of information which are depicted with
identifying company’s performance on social, governance and environmental parameters. Most
of the organization are based on projecting both financial and non-financial information as per IR
framework. It is necessary for the corporates to publish such an information for ensuring
sustainability of business. Similar nature of improvement of IR is also incorporated into the
annual report for improving customer loyalty and brand value (Aytekin & Kurt, 2018).
Significance of IR framework in the contemporary corporate
The consideration of IR framework as per the contemporary corporate is evident among
investors and stakeholders. The limitation of such a framework is however seen with
stakeholders feeling such a report can be used only with short-term approach. The main motive
of IR can be however inferred with assessment analysis of presenting a sustainable value for
assisting the stakeholders in both medium term and short-term course of business. Additionally,
it is the responsibility of the corporate reporting to ensure that the developing economic reality is
able to identify the needs related to organisational thinking and planning. Most of the leading
entities have already incorporated IR to ensure concise and clear reporting standards. This type
of reporting is able to identify the ways in which resources will be able to create value for the
organisations. The relevant components of corporate reporting acts as the guiding principle for
multiple model of IR application. In these multiple models, the IR have focused on areas ranging
from wide applications in both financial and non-financial reporting. The relevance of such
models in the corporate reporting can be depicted with associating the reporting standard
followed by the organisation with global reporting (Rezaee, 2017).

2INTEGRATED REPORTING
Such a framework of reporting is also essential in providing a vivid comparison of global
reporting standards. The different elements of IR are considered with organisations contributing
in the external environment. Moreover, the governance factor is evident with additional value
creation for company. Based on the strategy and resource allocation, the organisations are able to
focus on both long-term and short-term goals. Additionally, UN puts forward the global
reporting among the companies by using sustainability in their financial reporting. This is often
identified by maintaining a “zero draft” policy adopted by the negotiators. This requires all the
private and publicly listed companies to ensure minimum or zero carbon footprint and
integrating this information in the sustainability report within a particular reporting cycle. The
overall use of such a policy is helpful to ensure that the companies are clear on their side for
including necessary information about sustainability in the financial reporting (Atkins &
Maroun, 2015).
Adoption of IR framework by various types of private and public sector
The consideration of IR framework by various types of private sector companies may be
evident among Philips, Novo Nordisk, BASF, American Electric Power (AEP) and United
Technologies Corporation (UTC). These entities looking forward to adopt such a reporting
standard has been not only able to master sustainability and financial reporting to a single report
but also associate the various types of sustainability strategy of the business to assist the
companies and stakeholders. This is conducive in recognising the various types of priority areas
by the companies which are of non-financial perspective. In the recent times, the publicly listed
companies have appointed dedicated IR officers (IROs), who monitors the private meetings with
investors, shareholders. These officers are also seen to be providing the necessary assistance for
holding conferences (Adhariani & de Villiers, 2018). At the time of IR framework adoption by
several types of private and public sector companies, it is important to understand the investor

3INTEGRATED REPORTING
relation function and also the upcoming issues which they might be facing. It is also the
responsibility of organisations to consider the opinion of investors on an event of preparation of
research model creation, Data analysis and Financial modelling (Naynar, Ram & Maroun, 2018).
In various types of other situations, the corporate reporting is conducive in disclosing
necessary information pertaining to risks of investors which are related to climate change. This is
particularly apparent among the several types of US entities which have taken measures for
disclosing such information in the financial report. It needs to be also noted that only a few
companies have considered the different factors which are relevant among both private and
public companies (Simnett & Huggins, 2015).
IR impact on strategy and control of the organizations in corporate reporting
The disclosure of strategy and business model may provide vital information to the
investors which can inculcate stronger control and strategy in a corporate entity. The different
types of previous findings of the studies have been able to disclose that several businesses adhere
to IR. This was mainly evident among the South African entities. Some of the other findings of
the research have further opined on the insights of improvement which is led by incorporation of
IR in a financial statement of an entity. The overall depictions pertaining to the study are
considered number of influences which were relevant to the requirement of IR.
The previous studies have also found that a vast number of corporate business model
have been conducive in facilitating important information related to decision-making on
investment. The various types of criteria’s taken from the framework of IR have further focused
on measuring the overall quality of disclosure which is implemented with relevant strategy. In
this context, the control factor has disclosed relevant information pertaining to risks and
opportunity. IR impact on strategy and control can be also discerned with making the overall

4INTEGRATED REPORTING
disclosure more efficient by mitigating the threats and addressing the business risks (Eccles &
Serafeim, 2015).
The overall depictions of the research on the subject of influence of IR on strategy and
control have shown that reporting risks are different from strategy to risks for any business. It is
important for the companies to identify such risk to ensure effective disclosure is made by the
company. The adoption of such risks and be noted among other companies which has been able
to discern the changes on private entities such as Philips, Novo Nordisk, BASF, American
Electric Power (AEP) and United Technologies Corporation (UTC) (Santis, Bianchi, Incollingo
& Bisogno, 2019).
The depiction of six capitals influencing the role of strategic management accounting
The influence of six capital on strategic management accounting can be discerned with
“relationship capital, financial capital, natural capital, human capital, social capital and
intellectual capital”. The natural capital is identified to provide an environment in which other
capitals can fit in. The natural capital is more related to the definitive changes which clearly
observes the requirements pertaining to disclosure of equity. The various concepts of the study
have stated about the changes in strategy based on explicitly acknowledging the subjects which
might be judged in a differentiated manner by the stakeholders (Dumay et al., 2019). Human
capital is identified to lead changes which are depicted in form of recognition, internal events,
external events and remuneration of the employees. It is understood that the financial capital is
able to derive the strategy changes which are associated with disclosing vital information about
financial aspects such as sales revenue, liability recognition and leasing techniques. (Atkins et
al., 2015).

5INTEGRATED REPORTING
The basic understanding of intellectual capital can be seen with the changes following the
intellectual property rights. The relationship capital is defined as the sum of organisations
connectivity in a marketplace both indirectly and directly. This process is able to evaluate and
identify the relationship capital requirement which is referred as RCM. The total relationship
capital of an entity is identified to be fluid in nature subject to any unprecedented changes
(BoardEx, 2019). Social capital is inferred as the factors which broadly encompasses the
effectiveness of how social groups function with interpersonal relationships, shared sense of
identity, shared norms, shared understanding, reciprocity, trust and cooperation. Several other
theorists believe that the contribution of such a concept in influencing the role of strategy
management accounting can be explained with improvement in performance of diverse group,
superior managerial performance, growth of entrepreneurial entities and improve supply chain
relations. Therefore, it can be identified that social capital enables overall functional
effectiveness among the business corporations (Rezaee et al., 2019).
Conclusion
The relevant features of the framework of IR is evident among investors and
stakeholders. The main motive of IR is considered with presenting a sustainable value for
assisting the stakeholders in both medium term and short-term course of business. Most of the
leading entities have already incorporated IR to ensure concise and clear reporting standards.
This type of reporting is able to identify the ways in which resources will be able to create value
for the organisations. In the recent times, the publicly listed companies have appointed dedicated
IR officers (IROs), who monitors the private meetings with investors, shareholders. The
incorporation of such an approach and private sector is also evident with companies such as
Philips, Novo Nordisk, BASF, AEP and UTC. The impact of certain information on strategy and
control is identified with significant improvements in the financial statement. On a conclusive

6INTEGRATED REPORTING
note it can be said that there has been significant role of six capitals in strategic management
accounting.

7INTEGRATED REPORTING
References
Adhariani, D., & de Villiers, C. (2018). Integrated reporting: perspectives of corporate report
preparers and other stakeholders. Sustainability Accounting, Management and Policy
Journal.
Atkins, J. F., Solomon, A., Norton, S., & Joseph, N. L. (2015). The emergence of integrated
private reporting. Meditari Accountancy Research, 23(1), 28-61.
Atkins, J., & Maroun, W. (2015). Integrated reporting in South Africa in 2012: Perspectives from
South African institutional investors. Meditari Accountancy Research, 23(2), 197-221.
Aytekin, S., & Kurt, E. S. (2018, October). THE IMPORTANCE OF INTEGRATED
REPORTING IN FUTURE PLANNING AND RISK MANAGEMENT. In 3rd
INTERNATIONAL TRAKYA ACCOUNTING FINANCE AND AUDITING
SYMPOSIUM (p. 71).
BoardEx. (2019). Relationship Capital - BoardEx. [online] Available at:
http://corp.boardex.com/relationship-capital/ [Accessed 2 Feb. 2019].
Dumay, J., La Torre, M., Bernardi, C., & Guthrie, J. (2019). Integrated reporting and integrated
thinking: Practical challenges.
Eccles, R. G., & Serafeim, G. (2015). Corporate and integrated reporting. Corporate
Stewardship: Achieving Sustainable Effectiveness, 156.
Naynar, N. R., Ram, A. J., & Maroun, W. (2018). Expectation gap between preparers and
stakeholders in integrated reporting. Meditari Accountancy Research.

8INTEGRATED REPORTING
Rezaee, Z. (2017). Business sustainability: Performance, compliance, accountability and
integrated reporting. Routledge.
Rezaee, Z., Tsui, J., Cheng, P., & Zhou, G. (2019). Business Sustainability in Asia: Compliance,
Performance and Integrated Reporting and Assurance. Wiley.
Santis, S., Bianchi, M., Incollingo, A., & Bisogno, M. (2019). Disclosure of Intellectual Capital
Components in Integrated Reporting: An Empirical Analysis. Sustainability, 11(1), 62.
Simnett, R., & Huggins, A. L. (2015). Integrated reporting and assurance: where can research
add value?. Sustainability Accounting, Management and Policy Journal, 6(1), 29-53.