Analysis of Integrated Reporting and Traditional Corporate Reporting

This report, focusing on CC30008 Accounting Theory, examines the advantages of integrated reporting (IR) over traditional corporate reporting. It explains how IR can benefit organizations and key stakeholders by addressing the limitations of traditional methods, such as improving transparency and accountability, and providing a more comprehensive view of a company's performance and value creation. The report explores the differences between IR and other non-financial reporting techniques, highlighting the inclusion of various capitals and a focus on both short-term and long-term objectives. Furthermore, it discusses the advantages of IR, including greater clarity, better decision-making, and streamlined reporting, while acknowledging potential disadvantages. The report concludes by emphasizing the relevance of IR to stakeholders of listed companies by providing insights into strategy, business models, and value creation over time, thus supporting investment decisions.

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CC30008: ACCOUNTING THEORY
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Executive Summary
The report is about explanation as to how a move from the traditional corporate reporting to
an integrated reporting could benefit an organization and its key stakeholders. Traditional
corporate reporting is usually a signal of superior and competitiveness corporate governance.
This kind of reporting always assists in addressing all relevant information concisely and also
discloses thoroughly measures undertaken including on corporate policy, activities,
company’s prospects, strategic plans as well as current initiatives in protecting the
environment. Therefore, a stronger traditional corporate reporting could assist in attracting
capital and maintaining confidence in capital markets; hence, assisting organizations meet
their environmental and social challenges. Integrated reporting is relevant to numerous
stakeholders of listed companies in that it informs them about sustainability performance
accomplished against the targets, strategy and vision adopted in serving their interest as well
as other aspects that could influence the company performance in future. Furthermore, it is
relevant since it provides some insights into organizations’ resources and relationships and
how different organizations interrelate with exterior atmosphere and capital in creating value.
In essence, this framework is relevant to investors in that it helps them to gain greater insights
into listed organizations’ strategies, their business models as well as how they create values
over time; hence, supporting their investment decisions and improving their returns.

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Introduction
This report presents detailed explanation as to how a move from the traditional corporate
reporting to an integrated reporting could benefit an organization and its key stakeholders.
This starts by a discussion on the capacity of a traditional corporate reporting to different
corporates, followed by the meaning of integrated reporting and how it could assist in
addressing limitations of the traditional reporting. Further, the report presents a discussion as
to how integrated reporting differs from the other non-financial reporting techniques, then a
review of the advantages and disadvantages of integrated reporting. The report is then lapped
up by an explanation as to how relevant integrated reporting could be to stakeholders of
various listed companies.
1. Capacity of Traditional Corporate Reporting to Assist Corporations Meet
Their Current Environmental and Social Challenges
Revelation of the corporate, social, environmental as well as governance aspects has turned to
be the topic of greater attention. Traditional corporate reporting is usually a signal of superior
and competitiveness corporate governance. This kind of reporting always assists in
addressing all relevant information concisely and also discloses thoroughly measures
undertaken including on corporate policy, activities, company’s prospects, strategic plans as
well as current initiatives in protecting the environment (Guthrie & Abeysekera 2006).
Therefore, a stronger traditional corporate reporting could assist in attracting capital and
maintaining confidence in capital markets; hence, assisting organizations meet their
environmental and social challenges. In addition, traditional corporate reporting has the
capacity to assist organizations meet their environmental and social challenges since it assists
capital providers and potential investors to understand financial performance of a given

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organization. This makes it easier for the corporations to get financial assistance from capital
providers to carter for their environmental and social needs.
In essence, the information and gauge that traditional corporate reporting need are tool that an
organization’s management could utilize as the key input to their strategic planning. In
addition, traditional corporate report is regarded as the communication instrument in
providing reassurance to the shareholders about an organization’s behaviour beyond its
financial status. Therefore, the exercise of the traditional corporate reporting could be viewed
as an instrument in an organization’s business strategy, not only the public relations
application (Stubbs & Higgins 2014). Further, traditional corporate reporting has the capacity
of delivering information which would assist in improving decision-making value to
customers, employees and investors which is in return essential for corporations as it could
assist them meet their environmental and social challenges. It also has the capacity to
increase accountability and transparency of different organizations since it was considered as
a significant means for organizations to show their long-term economic value and
performance, while assuming corporate responsibility and donating to a sustainable
development.
Further, traditional corporate reporting has the capacity to assist organizations meet their
current environmental and social challenges in that it provide management’s take on an
organization’s external market. Even though no one has the capacity to predict the future,
potential investors wish to understand what an organization’s leadership thins the future
would hold (IIRC 2013). This is basically, provided under traditional corporate reporting
where competitive environment, macroeconomic environment as well as regulatory
environment in which an entity operates in is reported. In addition, traditional corporate

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reporting has the capacity to assist organizations deal with environmental and social
challenges in that they provide details on how well these organizations manage their
intangible and tangible assets, including customers, innovation, brands, social and
environmental reputation aimed at creating value.
2. Meaning of Integrated Reporting and How It Can Address Limitations of the
Traditional Reporting
IR is a precise communication process on how a given company’s strategy, presentation,
prospects and governance bring about formation of value over time (De Villiers et al. 2014).
In essence, it is usually the global alliance of organization, investors, regulators, accounting
experts and standard setters. It is one of the recent reporting developments in line of the
anticipated reporting inventions which are said to help improve significance of the corporate
reporting. This helps in establishment of guiding principles as well as content elements which
is said to govern full content of IR and in explaining vital ideas which support them (Stubbs
& Higgins 2014). It enhances accountability and transparency which is crucial in building
resilience and trust, by revealing how chief shareholders’ genuine interests and requirements
are understood, considered and replied to via actions, continuing statement and decisions. In
essence, IR is the procedure initiated on an integrated thinking which is said to results in
intermittent integrated reports by a given company about value creation within a specified
period and related communications about aspects of value creations (IIRC 2013). Therefore,
given the above definitions of IR, it is evident that IR can help in addressing limitations of the
traditional corporate reporting in that it would help in improving superiority of the evidence
presented to suppliers of the financial capital in enabling a more effective as well as a more
productive allocation of the capital. In addition, IR addresses limitations of the traditional
corporate reporting since it endorse a more efficient and cohesive tactic to the corporate

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reporting that attracts numerous reporting elements and communicate complete aspects that
are said to materially upset volume of a given company to creating value. It also enhances
stewardship and accountability for a broader base of the capital and promotes understanding
for interdependencies (Owen 2013).
Further, integrated reporting could address limitations from traditional reporting technique in
that it bring about better risk identification as well as mitigation procedures which is a win for
an organization, its directors and shareholders it affects. It also assists in addressing
traditional reporting limitations in that it alter decision-making procedures in a manner that
bring into line benefits to the society and general business (Stubbs & Higgins 2014).
Furthermore, integrated reporting can assist in addressing limitations of traditional corporate
reporting in that it does not only shows the connection in between an entity’s governance,
financial presentation, strategy and social economic and environmental context within which
an organization operates, but it also integrate sustainability into an organization’s core
business (IIRC 2013). Further, it helps in addressing limitations of traditional corporate
reporting in that it gives clear metrics, translating both the environmental and social issues
into the business language; that is, figures. This is achieved by including the ESG metrics
such as the ones different companies are experimenting currently which is important for
investors as well as other stakeholders.
3. How Integrated Reporting Differ from the Other Nonfinancial Reporting Techniques
Integrated reporting differs from other forms of reporting in that it moves past the silo
method of reporting and gathering a more inclusive evaluation and exhibition of an entity’s
performance as well as worth. This gives numerous benefits like giving an entity an all-
inclusive outlook of evidence pertinent to its key strategy, capacity to create and sustain value

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as well as business model. Therefore, unlike the other reporting approaches, integrated
reporting provides all the relevant information for the internal and external purposes while at
the same time providing appropriate information to the shareholders (Frías-Aceituno,
Rodríguez-Ariza & García-Sánchez 2013). Further, it differs from the other nonfinancial
reporting techniques in that it entails a holistic discipline that is mostly based upon an
interlinking process of all data sets; meaning that in integrated reporting all the relevant
information including the non-financial information are to be made available on timely,
reliable and regular basis.
Furthermore, integrated reporting differs from other nonfinancial reporting in that it entails
consequences of the integrated thinking unlike other nonfinancial reporting which are silo
based promoting thinking in silos. In essence, integrated support or reflects integrated
thinking and therefore is it both a consequence of the integrated thinking and stimulating it.
Also, integrated reporting differs from other nonfinancial reporting in that under integrated
reporting, other methods of capitals like natural, human and social intellectual and the
manufactured capital are included unlike other nonfinancial reporting which are
predominantly based on presenting an organization’s stewardship on the financial capital
(Abeysekera 2013). Further, integrated reporting aims at connecting the future and past of all
the strategic relationships and resources unlink the traditional reporting which does not
connect all the information to one another and to an organization’s sustainable value creation
and objectives.
Additionally, although short-term data is significant in analysing a given organization, other
nonfinancial reporting focus solely on short-term objectives unlike the integrated reporting
that focus on turning around this myopic fact and report both short and long-term

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information. It also differs from other nonfinancial reporting in that it is principle based
enabling focus on aspects which are material to specific organizations and enabling
disclosure of particular status in a clear language (Stubbs & Higgins 2014). This is contrary
to other nonfinancial reporting which are often claimed to be a bit compliance oriented;
hence, hindering an entity’s capacity to exercise suitable judgement. Further, complexity and
length in the financial reports is said to hinder different readers in collecting information
(Dumay, Bernardi, Guthrie & Demartini 2016). Nonetheless, with integrated reporting, it is
easier for the readers to collect information since the reports under integrated reporting are in
a focused and concise manner unlike the other nonfinancial reporting where reports are
lengthy and imprecise manner.
4. Advantages and of Integrated Reporting
Integrated reporting is said to bring about some societal and investors’ advantages like
transparency as well as some disadvantages. Therefore, this section would analyse business
advantages and disadvantages of the integrated reporting as compared to other reporting
practices. To start with, the first advantage of the integrated reporting is greater clarity. This
is based on the fact that integrated reporting provides adequate linkage of non-financial and
financial relationship (Stubbs & Higgins 2014). Further, integrated reporting is advantageous
since it enhances better decision making amongst investors and other stakeholders. In
essence, it enhances increased effectiveness in the decision making via improved analysis of
relationship that exists between non-financial and financial information. In addition,
integrated reporting enhances deeper engagement such as increased communication
effectiveness and efficiency through improved utilization of technological possibilities.

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It also lowers reputation risks through increased understanding of the probable risks via
improved analysis of the tactical and strategic choices which could affect externals. In
essence, integrated reporting provides essential opportunities in increasing understanding of
an organization. This enhances increased knowledge of the risks and opportunities associated
with a given organization in addition to an improved strategic communication which are
important outcomes of the increased business understanding emerging from integrated
reporting (Abeysekera 2013). Integrated reporting gives a greater access to wide range of
external and internal information sources via integrated processes and standardization of the
information. In addition, it provides streamlined reporting via more reuse of the reporting
elements, collaboration and transparency of reporting and an analytical concept utilized by
both external and internal analysts. It also give better allocation of the capital as well as other
resources and better access to the business partner and capital markets (De Villiers, Rinaldi
& Unerman 2014). Further, integrated reporting assist in breaking down the silos and
increasing the cross-functional communication amongst different departments by improving
information flows; hence, improved connection across different departments. In essence,
integrated reporting assists in increasing proficiency between different departments and also
improves information usage.
In spite of the numerous benefits associated with integrated reporting, there are also some
challenges that come with this form of reporting. For instance, lack of clarity and complexity
are seen as some of the probable disadvantages linked with integrated reporting (Rensburg &
Botha 2014). Although integrated reporting focuses on reduction of complexity and
increasing clarity, the whole range of the non-financial data additionally to the financial
information could prove to just increase complexity and to reduce clarity. In addition, under
integrated reporting, there is lack of a tested set of the standard. Though the IR presently

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launched a framework, the framework has not yet been tested in the field; which could give
the report preparers with best practice and case-studies that would in turn stimulates the
awareness which is presently absent. Furthermore, integrated reporting is said to lack
adequate guidance in establishing a balance in between commercial sensitivity and
transparency as well as exposure of the risks (Frías-Aceituno et al. 2013). In addition, IR has
a disadvantage in that under this framework, auditors would request for other reporting
mechanisms, liability considerations and new standards. Basically, while dealing with the
future-oriented data using integrated reporting it could prove a bit hectic to adapt to this
framework. This is based on the fact that this reporting technique could prove impossible to
assure which could in turn damage reliability of the information processed through integrated
reporting.
5. How Integrated Reporting is Relevant to Stakeholder of Various Listed Companies
Integrated reporting is relevant to numerous stakeholders of listed companies in that it
informs them about sustainability performance accomplished against the targets, strategy and
vision adopted in serving their interest as well as other aspects that could influence the
company performance in future. Further, integrated reporting is more relevant to shareholders
of different listed companies since it gives them more relevant understandable information in
enabling better decision-making (Kooiker, 2014). Further, integrated reporting is relevant to
different stakeholders in that it improves corporate communication through both the
stakeholders’ engagement for selection of important information and transparency on value
creation.
Furthermore, it is relevant since it provides some insights into organizations’ resources and
relationships and how different organizations interrelate with exterior atmosphere and capital

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in creating value. To be more specific, integrated reporting include total of all capitals,
benefits garnered by an organization, market value and cash flows as well as successful
accomplishment of an organization’s objectives. Studies shows that integrated reporting is
relevant to investors in that is helped them management their investment risks, assess
organization dynamics and regulatory environment, and be able to assess the organization’s
forward looking information. In essence, this framework is relevant to investors in that it
helps them to gain greater insights into listed organizations’ strategies, their business models
as well as how they create values over time; hence, supporting their investment decisions and
improving their returns (Adams 2015).
Further, integrated reporting is relevant to shareholders in that it assists in shifting the extent
to which a listed company co-exist in mutually beneficial manner (Stubbs & Higgins 2014).
It recognizes both the value-created for shareholders and that one for an entity. This could
have some impacts on the long-term value production of listed organizations and provides of
their capital. In addition, integrated reporting is relevant to shareholders since it enhances
business-society relation that is characterized by mutual advantage and trust, which is crucial
to long-term success of these companies. Integrated reporting is also relevant in that is a
means to encourage competition between different listed companies over which firm is more
sustainable for the stakeholders. Further, integrated reporting is relevant to the stakeholders
since it allows them to make more informed evaluation of the future of different
organizations. It is also relevant to stakeholders since it help them easily understand reports
of various organizations since integrated reports shows interdependency of both financial
performance and the non-financial issues of the companies; hence, changing stakeholders’
perception.

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REFERENCES
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De Villiers, C, Rinaldi, L & Unerman, J 2014, ‘Integrated reporting: Insights, gaps and an
agenda for future research,’ Accounting, Auditing and Accountability Journal, 27(7), 1042–
1067.
Dumay, J, Bernardi, C, Guthrie, J & Demartini, P 2016, ‘Integrated reporting: A structured
literature review,’ Accounting Forum. doi:10.1016/j.accfor.2016.06.001.
Frías-Aceituno, JV, Rodríguez-Ariza, L & García-Sánchez, IM 2013, ‘Is integrated reporting
determined by a country's legal system? An exploratory study,’ Journal of cleaner
production, 44, 45-55.
Guthrie, J & Abeysekera, I 2006, ‘Content analysis of social, environmental reporting:
What is new?,’ Journal of Human Resource Costing and Accounting, 10(2), 114–126.
IIRC 2013, The International Integrated Reporting Framework: Accessed 3rd October, 2017
from; http://integratedreporting.org/wp-content/uploads/2013/12/13-12-08-
THEINTERNATIONAL-IR-FRAMEWORK-2-1.pdf