Advanced Financial Accounting: Integrated Reporting Analysis of NAB

This report critically assesses the utilization of Integrated Reporting as a platform for corporate governance, specifically focusing on the financial statements of National Australia Bank (NAB). The report examines the information needs of shareholders and how NAB's 2018 integrated report addresses these needs by disclosing financial performance, financial position, and non-financial performance indicators, including dividend information and links to the annual report. Furthermore, the report applies institutional theory to justify NAB's adoption of integrated reporting, exploring the dimensions of isomorphism (coercive, mimetic, and normative) and decoupling. The analysis also delves into the concept of integrated thinking, outlining the five stages involved and how NAB has implemented these stages in its reporting. The report uses the management discussion and analysis section of NAB's 2018 integrated report to identify material issues and strategies, thereby demonstrating NAB's adherence to the principles of integrated thinking. The report concludes by emphasizing the comprehensive approach NAB takes in its integrated reporting to address the needs of its stakeholders.

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

1ADVANCED FINANCIAL ACCOUNTING
Question 1
The assessment of the utilization of Integrated Reporting as a better platform for
corporate governance for the financial statement users is a necessity. Shareholders are
selected as the user group of financial statements of National Australia Bank (NAB). There
are certain information needs of the shareholders since they are the partial owners of the
companies. For this reason, they need the financial information on the performance of NAB
in order to take decision on whether to retain or sale the bank’s shares (Martinet and Reynaud
2015). Therefore, they needs information on the financial performance and financial position
of the bank; they also require financial ratios of the bank. The 2018 integrated report of NAB
includes the disclosure of the financial performance of the bank based on the major financial
parameters such as net profit, net operating income and others. NAB has also included the
major financial ratios on its financial performance and position. This integrated report also
includes information on the non-financial performance of the bank. Information on the
payment of dividend has been disclosed by the bank in the same section. The link of annual
report is also provided for easy access to more detailed financial information (Nab.com.au
2019). All these aspects indicate towards the ability of the integrated report of NAB to
provide its shareholders with all required information on its performance and position. This
supports the notion that integrated reporting is a better platform for the shareholders for
corporate disclosure (Higgins, Stubbs and Love 2014).
Question 2
Wide use of institutional theory can be seen in order to justify integrated reporting
adoption by the corporations all over the world. As per institutional theory, companies all
over the world are hugely influenced by the institutions of culture, economic, education and
politics. This theory states that the policies of disclosure of a corporation have a tendency of

2ADVANCED FINANCIAL ACCOUNTING
becoming the same with the same of the other corporations (Peters 2019). Institutional theory
has two dimensions that are Isomorphism and Decoupling; and these dimensions can be
utilized in justifying the adoption of integrated reporting by NAB.
Isomorphism – There are three parts of isomorphism and they are discussed below.
Coercive
As per this concept, institutional practices of the business corporations change
because of the force from the stakeholders on which the corporations have huge reliance
(Keohane and Martin 2014). The integrated report of NAB demonstrates that four key
stakeholders of the bank are customers, shareholders, people and community because of the
heavy reliance of the bank on them. The diverse needs for information of these stakeholders
are not possible to accommodate only by the bank’s annual report which creates a force on
NAB to implement integrated reporting because it helps in satisfying the information needs
of the key stakeholders through the consideration of six capitals.
Mimetic
This concept indicates towards the propensity of the corporations to copy other
corporations’ practice for gaining the required competitive advantage so that uncertainty can
be eliminated (MacCormick and Weinberger 2013). This works as a major pressure for the
companies to adopt the practice of integrated reporting and the same is case of NAB. The
adoption of the practice of integrated reporting by the large banks worldwide creates pressure
on NAB for adopting integrated reporting practice to compete with the competitors. In
addition, this helps the bank in retaining its goodwill in the market.
Normative

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This concept states that it is needed for the corporations to adopt some practices
because of the pressure of group norms to adopt the same institutional practice. This is a
major force for NAB to adopt the practice of integrated reporting (Vayanos and Woolley
2013). Within the Australian banking sector, adoption of sustainability reporting has
converted into a best practice because most of the nationalized banks like NAB have already
adopted different sustainability reporting practices. This can be considered as a major
pressure on NAB for the adoption of the practice of integrated reporting because of its
operation in the banking sector of Australia.
Decoupling – This can be considered as another key force of adopting integrated reporting
practice by NAB. This concept states that maximization of profit through the adoption of
integrated reporting is the main goal of the bank (Peters 2019). On a more specific note, the
adoption of integrated reporting makes it possible for NAB to portray itself a socially and
environmentally responsible institution which attracts huge customers towards them; and this
boosts the revenue and profitability of the bank. It also maximizes the shareholders’ value
along with other key stakeholders.
Question 3
Integrated thinking refers to the vigorous concern of a company’s management
regarding the connection between the diverse functional and operational units as well as the
capitals used by the company. Integrated decisions can be made through integrated thinking;
and this also helps to short, medium and long-term value creation (Adams 2015).
Managements of the companies can achieve integrated thinking by analysing the internal
silos while ensuring increase in shared understanding on the processes to create value. There
are five stages that help in achieving integrated thinking; they are to understand extern
environment related sustainability development issues, to identify issue related to
sustainability development having influence on value creation processes, to develop

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governance along with connectivity and to prepare as well as present integrated report
(Adams 2015). As per the management discussion and analysis part of NAB’s 2018
integrated report, material issues related to external environment have been identified by the
management of NAB; some of these issues are digital disruption, economic condition and
others. According to the section of strategy in the integrated report, effective strategies have
been developed by NAB to counter these issues (Nab.com.au 2019). This section also
includes information on the governance aspect of the bank. Therefore, it can be seen from the
above analysis that all five stages required to employ integrated thinking have been followed
by NAB in its integrated report. This aspect indicates towards the crucial aspect that NAB has
used integrated thinking to full extent for the preparation of its integrated reporting.

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References
Adams, C.A., 2015. The international integrated reporting council: a call to action. Critical
Perspectives on Accounting, 27, pp.23-28.
Higgins, C., Stubbs, W. and Love, T., 2014. Walking the talk (s): Organisational narratives of
integrated reporting. Accounting, Auditing & Accountability Journal, 27(7), pp.1090-1119.
Keohane, R.O. and Martin, L.L., 2014. Institutional theory as a research program. The
Realism Reader, 320.
MacCormick, N. and Weinberger, O., 2013. An institutional theory of law: new approaches
to legal positivism (Vol. 3). Springer Science & Business Media.
Martinet, A.C. and Reynaud, E., 2015. Shareholders, stakeholders et stratégie. Revue
française de gestion, 41(253), pp.297-317.
Nab.com.au. 2019. ANNUAL REVIEW 2018. [online] Available at:
https://www.nab.com.au/content/dam/nabrwd/documents/reports/corporate/2018-annual-
review-interactive.pdf [Accessed 5 Sep. 2019].
Peters, B.G., 2019. Institutional theory in political science: The new institutionalism. Edward
Elgar Publishing.
Vayanos, D. and Woolley, P., 2013. An institutional theory of momentum and reversal. The
Review of Financial Studies, 26(5), pp.1087-1145.