Participation in Standard Setting

Running head: PARTICIPATION IN STANDARD SETTING
Participation in Standard Setting
Name of the Student
Name of the University
Author’s Note

1PARTICIPATION IN STANDARD SETTING
Introduction
In today’s business world all over the world, Integrated Reporting is considered as one of
the major aspect for the companies. Integrated Reporting refers to an effective communication
process of the organization’s strategy related to governance, performance and the process of
value creation (integratedreporting.org 2017). In the recent years, it has been seen that the
business and various investors have recognized a broader approach for organizational value
creation. For this reason, business organizations are being forced for the critical re-evaluation of
the communication strategies of financial information to the stakeholders. Due to this, Integrated
Reporting is considered as the combination of measurement of the company’s financial and non-
financial performance (Flower 2015). For this reason, most of the companies all over the world
are adopting integrated reporting for communicating financial and non-financial performance
related information (de Villiers, Rinaldi and Unerman 2014). While there has been an increased
demand in the communication of financial and non-financial information from the companies, it
is not clear for the stakeholders how they can add value by using this information. In the recent
years, it can be seen that incentives are provided to the short-term behavior of the business
organizations; and in this process, the capital market are becoming weaker. The people of society
are becoming poorer and the environment is suffering a lot from different business activities of
the companies. In this process, integrated reporting plays an integral part. The framework of
integrated reporting helps the companies in long-term value creation with various purposes. In
the current business world of various financial crises, it is required for the business organizations
to link financial stability and sustainable development with investment decisions, corporate
behavior and reporting. In other words, today’s businesses need a massive evolution in the
system of performance reporting, facilitating and organizational communication in order to
reduce the communication gap between the companies and their shareholders. In the process of
reducing this gap, various approaches of integrated reporting play a crucial part. Thus, the main
aim of this essay is to analyze and evaluate various aspect of integrated reporting so that they can
be beneficial for overall organizational development.
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2PARTICIPATION IN STANDARD SETTING
Benefits and Challenges of Integrated Reporting
Integrated Reporting and Financial Communication
In the recent years, it has been seen that the corporate reporting practice of the companies
are going through some of the major changes as the stakeholders of the companies are
considering that they are not getting enough information regarding the financial and non-
financial performance. For this reason, the companies are forced to re-evaluate their process of
the communication of financial and non-financial information in order to bring transparency.
Most of the analysts all over the world is considering that integrated reporting will have major
positive impact on the value creation of the organizations (repository.up.ac.za 2017). At the
initial stage of inception, the major aim of integrated reporting was to communicate the
company’s financial and non-financial performance information to various stakeholders of the
company. However, in the current years, another major objective of integrated reporting is
related with the investors of the businesses. For this reason, integrated reports of today’s world
are developed for a board range of stakeholders and investors of the companies. In the article
named “Is Integrated Reporting the silver bullet of financial communication? A stakeholder
perspective from South Africa”, it can be seen that in today’s business world, it is the duty of the
companies to release information related to financial and non-financial performance to the
stakeholders and investors (repository.up.ac.za 2017). According to the findings of this particular
article, it can be seen that the business organizations are facing major problems in the
communication of valuable non-financial and financial investment information to the
stakeholders and investors with incurring large amount of costs. The article states that it is the
responsibility of the financial officers of the companies to communicate performance related
information to the broad stakeholders in more effective manner (repository.up.ac.za 2017). For
this reason, integrated reporting is considered as one of the major tools for the communication of
financial and non-financial information to the stakeholders. Hence, integrated reporting can be
considered as the silver bullet of financial communication as it has become crucial for the
companies all over the globe.
Value of Integrated Reporting
In the recent years, it has been seen that most of the renowned corporations all over the
world have adopted integrated reporting as a part of their financial and non-financial reporting.
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3PARTICIPATION IN STANDARD SETTING
According to the article named “How valuable is Integrated Reporting?”, some specific factors
are required to be considered while implementing integrated reporting in the companies
(static1.squarespace.com 2017). As per this article, the primary executives of the companies like
CEO and others are the main initiator of the implementation of integrated reporting
(static1.squarespace.com 2017). In addition, the management of the companies is required to
have sufficient awareness for the use and implementation of integrated reporting. According to
this article, companies have to face some major pros and cons for the implementation of
integrated reporting. According to the pros, the implementation of integrated reporting provides
the organizations better understanding regarding creation of value and a more holistic view of the
whole organizations. Integrated reporting helps to improve organizational risk management
strategies and procedures. However, increased cost in the implementation of integrated reporting
is a major limitation as it helps in the occurrence of additional risk factor of businesses. As a
result of these challenges, the organizational managers are required to consider certain factors.
Before implementation of integrated reporting, it is required to secure the support of all related
parties. After that, the implementation process is required to be done by complying with all the
principles and regulations of the implementation framework (static1.squarespace.com 2017).
After that, it is required for the companies to arrange proper training and development
workshops so that all the organizational people can acquire the information related to Integrated
Reporting. Thus, the above discussion shows that integrated reporting helps the business
organizations in various ways for creating organizational values. However, the implementation
of integrated reporting needs to be done by considering the major challenges of it.
Overall Summary of Integrated Reporting
It is required to be mentioned that the main reason behind the implementation of
integrated reporting is to enhance and consolidate the existing reporting practices. There are
many reasons for which it is required for the companies to implement the strategies of integrated
reporting (integratedreporting.org 2017). Integrated reporting helps the business organizations in
bringing together the important material information regarding the company’s strategy,
governance, performance and processes. On an overall basis, it can be said that integrated
reporting assists the organizations in the demonstration of stewardship in organizational value
creation. In the development of integrated reporting, International Integrated Reporting Council
(IIRC) plays an integral part. IIRC refers to the global alliance of various regulators, investors,
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