Advanced Financial Accounting: Integrated Reporting Analysis

This report provides a comprehensive analysis of advanced financial accounting, focusing on the role of the International Integrated Reporting Committee (IIRC) and its impact on stakeholder engagement, comparability, and the usefulness of reporting. It examines the IIRC's framework, comparing it with the CPA report's findings and the objectives of International Framework and General Purpose Financial Reporting as outlined in the IASB/AASB conceptual framework. The report evaluates the roles of integrated reporting in relation to stakeholder engagement, comparability, usefulness, and quality. It then compares the IIRC guiding principles, such as stakeholder relationships, reliability, materiality, conciseness, and comparability, with the CPA report's findings. Furthermore, the report assesses four companies—HULAMIN LTD, DSM, MTN, and CEMEX—to determine their alignment with the IR guiding principles. The report also highlights the users of integrated reports and general-purpose financial reporting, emphasizing their respective objectives and relevance to various stakeholders, including investors, customers, employees, and regulators.

Running head: ADVANCED FINANCIAL ACCOUNTING
Advanced Financial Accounting
Name of the Student:
Name of the University:
Author’s Note:

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ADVANCED FINANCIAL ACCOUNTING
Introduction
In this assignment, proper emphasis had been given on explaining the role of
International Integrated Reporting Committee and this was done by referring to the
International Integrated Reporting Committee website and use of applicable accounting
literature. The current study explain about the possible roles of integrated reporting with
respect to different attributes and these are stakeholder engagement, comparability of
reporting, users of reporting, usefulness of reporting and quality of reporting. In the next
segment, comparison had been conducted to understand findings of the CPA report in along
with the guiding principles and some of these guiding principles are stakeholder
relationships, reliability, materiality, conciseness, comparability and consistency. In addition
to that, the study compares between the objective of International Framework and General
Purpose Financial Reporting and this was clearly highlighted in the IASB or AASB
conceptual framework. Furthermore, the study even compares between four companies where
each of the company had been taken into consideration and explain in detail and these
companies are HULAMIN LTD, DSM, MTN and CEMEX. These companies were compared
as to whether the companies aligns or abides by the IR guiding principles and these are
stakeholder relationships, completeness, reliability, comparability and consistency (Adams
and Simnett 2011).
Question 1
Evaluating the role of IIRC by gathering information from International Integrated
Reporting Committee website and applicable accounting literature
In this question, proper emphasis had been given to understand the role of the IIRC by
gathering information from the IIRC website as well as relevant accounting literature. The
International Integrated Reporting Committee can be termed as global coalition who act as a
regulators and standard setters. In addition to that, the main role of this Committee is to
propose a generally accepted framework in order to deal with a procedure that result in
enhancing the level of communication within companies so that value creation can be done
for given period of time (Brown and Dillard 2014). It was decided by the Committee to bring
forward or identify the development areas that is possible by conducting internationally
accepted integrated reporting framework. Proper concise communication can be enhanced
within the companies if there is proper development of international accepted reporting
framework as it will help the business to understand how they involve in value creation

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activities within specified time frame. Therefore, it is the responsibility of the International
Integrated Reporting Committee to promote communication so that the companies can know
how to create value in the next step and this can be done by development of commercial
commentary.
Question 2
Evaluating the existing as well as potential roles of integrated reporting that gets related
with following components as listed below: The information will be gathered by
referring to the research findings of CPA report and applicable accounting literature
Part A
Companies should always update about the information to the shareholders as they are
always interested in getting access to these information about their work. Any of the
environmental issues should be well communicated to the environmental stakeholders as they
are interested in know the issues or significance at the same time. These environmental
stakeholders have extensive but even gets access to varied informational needs and these
needs cannot be well-addressed by any single or static or annual integrated reporting (Busco
2016). Therefore, most the stakeholders make use of reports and treat it as background
information at the time of carrying out the research for a given company and the information
was gathered by referring to the research findings of the CPA report as well as appropriate
accounting literature.
Part B
It is the stakeholder who receives information through direct engagement with any of
the Business Corporation or enterprises. The stakeholders should be well-informed about any
changes planned by the companies as it is stakeholder engagement is necessary where the
stakeholder after getting the information decides upon how to respond to the issues
highlighted by the company (Cheng et al. 2014).
Part C
It can be seen that the integrated reports could not meet the informational needs for
both the civic stakeholders as well as environmental stakeholders. It is the stakeholders who
understand the issue or identified problems that results in comparability and quality of these
reporting system.

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Part D
As far as quality of integrated reporting is concerned, the financial stakeholders are of
the opinion that this reporting reveals the variation through identified means. In addition to
that, financial stakeholders reveals the fact that integrated reporting fails to reports most of
case studies and even fails at the time of setting targets and even does not have narrations on
how the given issues can be significant for any business. As far as environmental
stakeholders are concerned, they engages in pointing out the issues where the reports fails to
identify the right indicators such as amount of lending to fossil fuel projects and rendering
headline information on some of the smaller issues.
Part E
While engaging in decision-making activities, integrated reports plays major role here
and useful at the same time. The stakeholders had mixed views upon the usefulness of
integrated reporting. Furthermore, it can be seen that the prime motive or objective of
integrated reporting is to understand the perspectives of the stakeholders on understanding the
usefulness of integrated reporting and this will be used while engaging in decision-making
activities.
Part F
Users of reporting
It is essential to understand the fact that the users of integrated reporting are the
stakeholders. It help in representing the producers of the integrated reports and it is compared
with the usefulness of integrated reporting as viewed by different users of the reports.

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Question 3
Part A
Information was gathered from the CPA report and found out that maintaining
relationship with the stakeholders is important and this was under the performance content
elements that reveals as one of the major components as it explain about the stakeholder
relationships (Cpaaustralia.com.au. 2018). On understanding the integrated reporting, it takes
into account improved corporate reputation and stakeholders relationships. One of the
guiding principles is stakeholder relationships here and it is being evaluated in the question
by comparing this guiding principles as mentioned in the findings of CPA report and
integrated reporting. In CPA report, this report states about the stakeholder relationships
whereas in the integrated reporting it states about the performance as well as business at the
same time.
Part B
Information was gathered from the findings of the CPA report and found out that
environmental stakeholders were of the opinion that business should engage in disclosing the
information that had impact on environment and society as a whole. The issue mainly
governs around issue such carbon gas emissions and climatic change. It is the stakeholders
who desired to disclose the materiality concepts and its related impact at the same time. For
example, most of the companies who have relevant information about their own operations
and deal with the case as and when needed. It is not that much important unless the business
has some actual power generator or big energy user (de Villiers, Rinaldi and Unerman 2014).
Information was gathered from the integrated reporting and found out that materiality
presumes and applies from the perspectives of value creation activities
(Integratedreporting.org. 2018). In addition to that, this particular integrated framework
should aim at disclosing the information that shows the ability of the business in creating for
short-term, medium-term and long-term creation of value.

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Part C
Information had been gathered from the CPA report and it can be seen that business
largely thinks about the conciseness of presenting information to the stakeholders. It was
added by one of the reporters that due to in-depth analysis, it becomes impossible to access
potential information. On the contrary, other reporters thought that identifying the challenge
of keeping the report in concise way can be treated as one of the interesting and challenging
task that takes into account collection of right information at the time of conducting business
activities.
Information had been gathered from the integrated reporting and it can be seen that
some of the reports finds it impossible to provide concise information as well as aim at
presenting some context to the readers where the readers can understand the value creation
process of business and level of performance in the most appropriate way (Dumay et al.
2016).
Part D
Information had been gathered from the CPA report and it can be seen that more than
10 stakeholders asked about the reliability of integrating reports. Some even argues that the
integrated reporting is one of the reporting that renders assurance and verification of reports
as it guides in boosting the level of confidence among the few stakeholders. In case of
financial stakeholders, they believe that reliability can be found in varied form because it
takes into account developing a reliability score during the assessment process. Some of the
other financial stakeholders feels that the provided data should be reliable as far as possible.
Companies should not involve in hiding any information from the stakeholders (Flower
2015).
Information had been gathered from the integrated reports and it can be seen that both
reliability and completeness reveals about balancing between good and bad news. It was
further noted that the reliability principles were good as more than 68% of the reports reveals
used neutral factual language and properly manages to further avoid looking at certain
elements such as materiality and promotional tools at the same time. It is important to involve
in bringing improvement in the materiality determination process and this can be done by
providing reliable and complete information to the stakeholders (García-Sánchez and
Noguera-Gámez 2017).

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Part E
Information was gathered from the CPA report and it can be seen that most of the
arguments took place by the stakeholders and they were talking about the usefulness of
integrated reports as it help at the time of making the comparison of the reports. Here,
comparability is done between two or more companies within a given industry or sector as
well as it plays major role for the environmental stakeholders.
Information was gathered from the integrated reports and it can be seen that both
consistency and comparability involves allowing for making the comparisons for specified
time frame. In addition to that, use of integrated reports will help in presenting the reports
with internal consistency and measures taken for given period of time and this can be done by
comparing with other companies.
Question 4
Part A
Explaining the objectives of International
Framework
Explaining the objective of General
Purpose Financial Reporting as
mentioned in the Australian Accounting
Standard Board conceptual framework
Meaning
International Framework is one of the
integrated reports that guide in rendering
concise information on matters relating to
strategy, context prospects and governance
that leads to creation of values for specified
time frame (Tweedie, Nielsen and
Martinov-Bennie 2017)
Meaning
Help at the time of describing the objectives
and concepts as mentioned in the general
purpose financial reporting.
One of the practical tool that guides
International Accounting Standards Board
for developing the Standards that need to be
consistent by nature.
Objectives
To help in governing the general content of
the integrated reporting and enlighten the
underlying concepts (Lodhia and Stone
2017)
Objectives
To understand and interpret the standards
To develop consistent accounting policies
where no Standard is applicable to specific
transaction or events where no Standard
permits selection of the accounting policy.

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Part B
Highlighting the users of an integrated
report
Highlighting the users of general purpose
financial reporting
On using integrated report, it guides all
stakeholders who actually shows interest in
any business and involve in understanding
the ability for creation of value for give
period of time and the stakeholder for this
concern are customers, employees, business
partners, policy makers, legislators and
regulators (Thomson 2015)
Long-term investors are the users of general
purpose financial reporting
It can be seen that most of the investors do
not get access to information and this is the
reason why there is needed to get access to
financial information from general purpose
financial reports (Stubbs and Higgins 2014).
Part C
Materiality concept as mention in the
integrated reports
Materiality concept as mentioned in the
IASB conceptual framework
In case of integrated reports, the reports
properly discloses the information regarding
materiality concept as it greatly help in
value creation activities.
Materiality can be treated as entity specific
aspect of relevance as it is based upon
magnitude as well as links by understanding
the concept of financial reporting of
individual entity. In that case, IASB Board
fails to mention about uniform quantitative
threshold that explain about the materiality
concept.

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Part D
Explaining concept such as reliability,
completeness, consistency and
comparability as mentioned in the
integrated reports
Explaining concept such as reliability,
completeness, consistency and
comparability as mentioned in the IASB
conceptual framework
Reliability
It is essential to provide reliable information
that is free of any material misstated figures
or material error in that case. This can be
done by conducting robust internal control
and reporting system and engaging
stakeholders (Sierra‐García, Zorio‐Grima
and García‐Benau 2015
Completeness
All the informational needs should be
identified and links with the industry as it is
likely to be material that concerns all
business and industries at the same time
Consistency
It is essential to follow the reporting policies
reliably for given one period until there is
any change as it is required for bringing
enhancement in the quality of reported
information
Comparability
Information widely varied from one
business to other in integrated report
because each business unit desire to create
value in their own unique way.
Reliability
Information provided should be reliable as
mentioned in the IASB conceptual
framework. Reliability can be treated as
qualitative characteristics that help in
providing useful reliable information
Completeness
Completeness is one of the elements of
faithful representation. The information
provided to the users should be complete
and there should not be any missing
information
Consistency
With the reporting entity, making use of the
same methods by considering the same
items
Comparability
Comparability is a goal and treated as
qualitative characteristics as it guide users in
identifying and understanding the
similarities and differences among different
financial reports (Simnett and Huggins
2015).

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Question 5
IR Guiding Principles
Stakeholder relationships
Stakeholder relationships
In the integrated reporting, it is mentioned about stakeholder relationships and this takes
into account improved corporate reputation and stakeholder relationships.
HULAMIN LTD CEMEX MTN Group DSM
HULAMIN LTD
engages in
subscribing to the
principles on
stakeholder
management as
mentioned in the
King III Code. Here,
the management of
this company had
engaged in
highlighting the
strategy and
formulating the
policies for
maintaining
relationship with
each of the grouping
of stakeholders.
Furthermore, the
company engages in
solving any disputes
that takes place with
the stakeholders
(Hulamin Ltd 2018).
Therefore, the
company give first
preference to the
stakeholders and try
to resolve the
disputes rather than
litigating and
making use of
alternative disputes
resolution
mechanism as and
when required.
CEMEX believes in
maintaining positive
relationships with
the stakeholders and
they even inform all
the information to
them so that there is
miscommunication
that takes place
(Cemex. 2018).
MTN Group informs
their stakeholders on
matters relating to
any operations as the
money of the
stakeholders are
invested within the
business (MTN
Group 2018)
DSM believes in
informing their
stakeholders as it
help in maintaining
cordial relationships.
Strong relationships
should be
maintained by the
stakeholders as it
help while
undertaking
decision-making
activities (DSM
2018)

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Materiality
Materiality
In the integrated reports, it is properly mentioned about the materiality concept that help in
determining and applying from the perspectives of value creation activities
HULAMIN LTD CEMEX MTN Group DSM
The concept of
materiality as
understood by the
company had been
brought forward in
the disclosures both
in qualitative and
quantitative way.
Several changes can
be noted in the
content that brings
together
enhancement of
information and
involving in creation
of specific
comparative figures
as it result in
keeping a note of
information for
reference purpose
(Hulamin Ltd 2018).
The concept of
materiality as
understood by the
company had been
ton provide
information relating
to all material
matters where there
will be missing or in
that case misstated
figures shown in the
financial statement
of the company
(Cemex. 2018)
The concept of
materiality as
understood by the
company had been
highlighted in the
financial statement
where all the
material matters are
given (MTN Group
2018). All the
information
regarding the
material matters will
help the users of
financial reporting to
get access to overall
information on
understanding the
financial information
of the company for
specified time frame.
The concept of
materiality as
understood by the
company had been
to inform the users
about material
matters and clearly
mentioned in the
financial statement
(DSM 2018).
Consistency and comparability
Consistency and comparability
In the integrated reporting, comparability and comparability means allowing for
undertaking comparisons to be made for specified time with other business enterprises.
HULAMIN LTD CEMEX MTN Group DSM
The concept of
consistency and
comparability as
understood by the
company is to adopt
consistent approach
as it help in
balancing in
treatment in and
Providing consistent
information to the
users and the
information need to
be compared with
other business
entities (Cemex.
2018)
Focus upon
understanding the
two qualitative
characteristics
(consistency and
comparability) and
help their users in
rendering consistent
information and
Providing consistent
information to the
users as well as the
gathered information
need to be compared
with other business
entities (DSM 2018)