BAO2203 - Integrated Reporting: Balancing Stakeholder Needs

This report provides an overview of Integrated Reporting (IR), a concept developed by the International Integrated Reporting Council (IIRC) to enhance value creation by presenting a company's performance in both financial and non-financial terms. It highlights the benefits of adopting IR, including improved decision-making, better risk management, enhanced stakeholder relations, and increased transparency. The report also addresses the increasing demand for businesses to report on their societal, economic, and environmental impact. Drawing on research from IIRC and other sources, the report concludes that integrated reporting is crucial for companies to communicate their strategic long-term objectives to potential investors, leading to better evaluations of company performance and overall organizational improvement. Desklib provides access to similar reports and solved assignments for students.

RUNNING HEAD: CORPORATE ACCOUNTING
Integrated reporting and its benefits

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Contents
Introduction.................................................................................................................................................3
Integrate Reporting – Concept.....................................................................................................................3
Benefits of IR..............................................................................................................................................4
Conclusion...................................................................................................................................................6
References...................................................................................................................................................7

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Introduction
Integrated Reporting is a concept developed by International Integrated Reporting Council
(IIRC) in order to create value over the time. It deals with the integrated presentation of
company’s performance in both financial and non-financial terms. This report contains detail
information about integrated reporting and its benefits to the companies. It explains the concept
of IR and the advantages a company can have by applying this in their business.
Integrate Reporting – Concept
<IR> is basically a process founded on integrated thinking which led to the creation of periodic
integrated reports by the organization about creating value over the time. The thinking includes
active considerations of the relationship between the organizations’s operational and functional
departments along with the capital invested or affected (Ey.com. 2018). An Integrated report is a
concise communication of an entity’s strategy, performance, governance and prospects that will
lead to the value creation over short, medium and long term period. It provides greater insights
about the performance data and clarifies that how relevant information fits into the operations of
the business. IR also helps the company to enhance their decision making process and keep the
same in the long term (Cimaglobal.com. 2018).
The concept of IR was introduced to reduce the gap between the information reported by the
companies and the data an investor require for evaluating and assessing the business value and
prospects. As per the report published by KPMG, the companies operating and listed in South
Africa are required to adopt the Integrated Reporting framework on an ‘apply or explain’ basis.
Value creation is the backbone of IR and also directs the future of corporate reporting. The main

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aim of integrated report is to provide relevant and value information to the potential or long term
investors (KPMG. 2012).
Benefits of IR
As the notion deals with the process of value creation, there are many benefits of IR which are
availed by the companies who apply Integrated Reporting framework into their business. There
is an increased demand for the business to not only report about their profits but also their impact
on the society, economy and environment of the country in which they operates. It is been
noticed by many organizations that the fundamental change in reporting not only requires the
focus on the end report but should lay more emphasis on the deeper understanding of the entire
process of business value creation (Ifac.org. 2016). However, IR can be considered as another
reporting convention, but it is much more than this. It helps the company in various ways, such
as:
 One of the benefits is that the companies will get to know about the new concept of
creating or destroying a value. It provides them greater insights about how to create or
destroy a business value.
 The revelation of key risk and responsibilities from management point of view, will help
the investors to accurately and easily measure the impact of the same for short, medium
and long term.
 It discloses the method of creating value both internally and externally. The value is
created in a more effective manner that it will result in winning the trust and securing
company’s goodwill by enhancing the relationships with the employees, investors and
stakeholders.

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According to the research done by IIRC, it was found that 79% reported improvement in the
decision making process and almost 97% agreed to the future benefits of Integrated Reporting.
Companies have started taking better decisions due to the changes in the management
information which ultimately resulted in better decision making. The report also stated that in
some organizations, an increase in the mutual understanding and respect is been noticed as a
benefit of IR. Mostly, the improved data quality is considered as a major benefit of this concept.
Also IR provides a new approach to the stakeholder relations. Companies who has applied to the
framework of integrated reporting has observed a positive impact on their relations with the
stakeholders and also the capital providers have a better understanding of the entity’s strategies
and long term goals (Integratedreporting.org. 2018).
From investors’ point of view, IR benefitted them in making decisions regarding their
investments. Having a full knowledge about company’s performance enables them to decide and
evaluate more accurately and precisely. In other researches, it is said that the primary benefit of
integrated reporting is the holistic view of information which is relevant to the company and the
value creation process. IR promotes the vital information related to a company’s long term
objectives, as a result of which the financial executives has an opportunity to modify the
corporate process and enhance its corporate value (Pwc.blogs.com. 2011). Other benefits
include:
 High level transparency in the data from both internal and external sources in order to
improve the analysis in both long and short term.
 The processes of assembling and review become more automated and streamlined which
eliminates the pervasive manual systems.

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 Makes the information more relevant for the management as well as for the shareholders
and helping them in making better decisions for future.
 Large collaboration on the reporting standards and the concept of disclosure provides a
broader insight on the standards suggested by IIRC and World Intellectual Capital
Initiative (WICI).
 It is also notable that integrated reporting helps the organizations to select right KPIs or
set the correct benchmarks with peer groups locally as well as internationally
(Deloitte.com. 2018).
However, despite of so many benefits there are also challenges and limitations to this approach.
But , at the end, the concept will end up providing many types of advantages to the financial
corporations.
Conclusion
The above report concludes that, it is very important for a company to adopt the integrated
reporting system as it will clearly communicate its strategic long term objectives to the potential
investors. This will result in better evaluation of company’s performance, value creation,
relationships enhancement and overall improvement of the organization.

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References
Cimaglobal.com. (2018). INTEGRATED REPORTING in the Public Sector. [Online] Available
at: https://www.cimaglobal.com/Documents/Thought_leadership_docs/reporting/IR-Public-
Sector.pdf [Accessed 21 April 2018].
Deloitte.com. (2018). A Director's guide to Integrated Reporting. [Online] Available at:
https://www2.deloitte.com/content/dam/Deloitte/na/Documents/audit/
na_za_Directors_Guide_on_Integrated_Reporting.pdf [Accessed 21 April 2018].
Ey.com. (2018). Integrated reporting Elevating value. [Online] Available at:
http://www.ey.com/Publication/vwLUAssets/EY-Integrated-reporting/$FILE/EY-Integrated-
reporting.pdf [Accessed 21 April 2018].
Ifac.org. (2016). The Use and Usefulness of Integrated Reporting. [Online] Available at:
https://www.ifac.org/global-knowledge-gateway/business-reporting/discussion/use-and-
usefulness-integrated-reporting [Accessed 21 April 2018].
Integratedreporting.org. (2018). Realizing the benefits: the impact of Integrated Reporting.
[Online] Available at:
http://integratedreporting.org/wp-content/uploads/2014/09/IIRC.Black_.Sun_.Research.IR_.Impa
ct.Single.pages.18.9.14.pdf [Accessed 21 April 2018].
Kpmg.de. (2012). Integrated Reporting. [Online] Available at: https://kpmg.de/docs/integrated-
reporting-issue-2.pdf [Accessed 21 April 2018].

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Pwc.blogs.com. (2011). Benefits of Comprehensive Integrated Reporting. [Online] Available at:
http://pwc.blogs.com/files/benefits-of-comprehensive-integrated-reporting.pdf [Accessed 21
April 2018].