ACC303 - Integrated Reporting Framework: Relevance & Application

This essay examines the relevance of the Integrated Reporting Framework in the contemporary corporate world, focusing on its potential to enhance corporate reporting norms. It discusses the six-capital approach (financial, manufactured, intellectual, human, social and relationship, and natural capital) and analyzes BHP Billiton Ltd as a case study, highlighting the company's sustainability practices and integrated reporting. The essay emphasizes the importance of integrated reporting for long-term value creation, stakeholder engagement, and improved internal decision-making, concluding that effective risk management policies and strategies are crucial for guiding a company's business and financial operations.

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Advanced Management Accounting
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Integrated Reporting Framework
A concise way of communicating various factors about the company in the context of
organisation’s strategies, governance, performance and other future prospects of the company
that can be directly attributable and linked to the company. Integrated report of the company
is a detailed report explaining about the various activities of the company which can help the
company in the long-term creation of value by taking various factors and points into
considerations (Brown & Dillard, 2014). Integrated reporting did not focuses on a particular
concern or area where the activities of the company is focused on instead it focuses on how
the company integrates he approach and application of the various social and economic
activities with the business operations of the company (Cheng et al. 2014).
Financial activity, employees, environmental and social factors are some of the
common factors in the operations of the business. Alignment of these key factors with the
operations and the policies of the company are also some of the key factors that should be
considered for the sustainability of the business (De Villiers, Rinaldi & Unerman, 2014).
Application of various factors and points into consideration will help the company identify
various areas and factors which are important for the operations of the business and the role
they play. Use of integrated reporting is done commonly in the corporate world by many
corporate companies and institutions so that they can create better value for the stakeholders
of the company.
The assessment considers a business which follows integrated reporting practices for
the purpose of effective reporting of the information of the business. The business which is
considered for this assessment is BHP Billiton ltd which is engaged in mining sector and the
same analyses the reporting framework which is applied by the business (De Villiers, Rinaldi,

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& Unerman, 2014). The reporting framework helps businesses to appropriate report about
values which are created by the organization.
In today’s world most of the businesses are adopting integrated reporting framework
for the purpose of ensuring that the needs of the stakeholders are considered with priority. In
addition to this, integrated reporting also facilitates better internal decision making.
Integrated reporting practices are being widely accepted by different businesses due to the
focus its provides on long term sustainability of the business. The integrated reporting
process has further improved following the six-capital approach. The six-capital approach is a
useful process in strategic planning process of the business and ensure that the overall level
of sustainability is maintained in the organization. The integrated reporting framework allows
the management of a company to appropriately show the activities which are carried out by
the business and
In order to analyse the integrated reporting framework, the reporting framework of
BHP Billiton ltd is considered. The sustainability report for the year 2018 shows that the
management of the company has put emphasis on the sustainability practices of the business.
The management of the company recognises the fact that in order to create long term value
for the business, special emphasis needs to be provided on sustainability of the business
(Sustainability Report 2018., 2019). The three major area where the management of the
company focuses as specified in the sustainability report are safety of the employees,
environment protection and supporting the entire community.

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Figure 1: (Activities undertaken by BHP Billiton ltd)
Source: (Sustainability Report 2018., 2019)
The above chart shows the different activities which are undertaken by BHP Billiton
ltd for the year 2018 and the same is covered in sustainability report which is prepared by the
management of the company. The main purpose of the business is to create long term values
for the stakeholders by discovery, acquisition, development and marketing of natural
resources (Churet & Eccles, 2014). The management of the company effectively follows
policies which requires them to invest 1% of the pre-tax profits to programs which can help
in developing the community at large and ensure that the funds are also used for the purpose
of protecting the environment.
The integrated reporting follows the six-capital approach which allows the
organization to create value over time. The six-capital approach is the best way to create

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value and measure the same on the basis of qualitative and quantitative standard. The
different types of capitals are discussed below in details:
 Financial Capital: The financial capital refers to the pool of funds which is used by
businesses for the purpose of financing different activities of the business. The
financial capital is invested in the business so that operations can be conducted and
revenue can be generated from the same (Baboukardos & Rimmel, 2016). In the case
of BHP Billiton ltd, the equity share capital and the long-term borrowings which is
used by businesses form part of the financial capital of the business and the same is
shown in the annual reports of the company. Manufactured Capital: The manufactured capital is either purchased or developed by
the business. The manufactured capital comprises of products which are produced by
the business by using the assets. In the case of BHP Billiton ltd, the natural resources
form part of the manufactured capital which is used by the business for creating long-
term value for a business. Intellectual Capital: Such type of capital forms a key part of the business and
includes all the investments which is undertaken by the management of the company
in research and development and innovations (Flower, 2015). These types of capital
are responsible for generating competitive advantage for a business. In the case of
BHP Billiton ltd, the sustainability report for 2018 shows that the business has
significantly undertaken innovative approach with a view to support the biodiversity
of the business.
 Human Capital: The human capital refers to the employees which are employed in
the business for carrying out the operations of the business. This type of capital
analyses the relationship between the firm and the employees who are working the
firm. In addition to this, it also states the relationship between the stakeholders of the

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business and the firm (Dumay et al., 2016). The sustainability reports which is
prepared by the management of BHP Billiton ltd shows that the business considers the
employees of the business as an asset of the company and therefore takes all the
necessary steps to ensure the safety of the employees. The culture of care and trustful
relationships is a fundamental principle of the employee relations strategy at BHP.
 Social and Relationship Capital: Social and relationship capital deals with the social
relations which is established within the organization and also the relations which the
business shares with the external stakeholders. Social and Relationship capital
includes effectiveness of supply chain management, community acceptance,
government relations and relationship with competitors. The sustainability report
formulated by the business shows the role which is played by the management
(Reuter & Messner, 2015).
 Nature Capital: The nature capital comprises of the natural resources which is
available from nature. In respect to the core activities of BHP Billiton ltd the major
resources and operations of the business is done related to the nature capital. The
management of the company also engages in restoration of the area where mining is
carried out. The main activities of BHP is mainly associated with resources which is
generated from mining activities.
On the basis of the six types of capital which is included in integrated reporting
framework, the management of the company can take major decisions relating to major
activities of the business. All major decisions relating to activities and operations can be
taken effectively following integrated reporting framework. The application of the integrated
reporting in the operations and daily working of the business can help the company in
achieving the better management of the resources of the company. BHP Billiton can achieve
and explore the various opportunities in contrast to the same where the company can see and

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evaluate the risk management policies of the company. The management of BHP Billiton
recognises the fact that in order to create long term value for the business, special emphasis
needs to be provided on sustainability of the business. There were several areas and factors
analysed for the company that will help the company in the identification of the creation of
the values for the stakeholders of the company (Flower, 2015). The sustainability report
presented by the company shows that the various application of the factors for the company
helps them in identifying crucial factors and the influence of the same in the operations of the
BHP Billiton Company. Risk Management Policies and strategies used by the company
should be such that it guides that company in the overall business and financial operations of
the company.

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Reference
Baboukardos, D., & Rimmel, G. (2016). Value relevance of accounting information under an
integrated reporting approach: A research note. Journal of Accounting and Public
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Cheng, M., Green, W., Conradie, P., Konishi, N., & Romi, A. (2014). The international
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Churet, C., & Eccles, R. G. (2014). Integrated reporting, quality of management, and
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De Villiers, C., Rinaldi, L., & Unerman, J. (2014). Integrated Reporting: Insights, gaps and
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De Villiers, C., Rinaldi, L., & Unerman, J. (2014). Integrated Reporting: Insights, gaps and
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Flower, J. (2015). The international integrated reporting council: a story of failure. Critical
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Sustainability Report 2018. (2019). BHP. Retrieved 2 February 2019, from
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