Comprehensive Analysis of Integrated Reporting: Benefits & Limitations

This report provides a detailed analysis of integrated reporting (IR), exploring its definition, benefits, and limitations. It begins with an overview of IR, emphasizing its role in value creation and its evolution. The report then delves into the advantages of IR, such as improved planning, stakeholder trust, holistic thinking, better decision-making, and enhanced internal management practices. Furthermore, it highlights how IR can facilitate securing financial assistance and improving business development. The report also acknowledges the limitations of IR, including clarity issues, lack of standardized frameworks, implementation challenges, and time consumption. In conclusion, the report emphasizes the importance of IR as an efficient communication tool with stakeholders, highlighting the interconnectedness of financial and non-financial aspects within an organization, ultimately leading to a shared business language and a comprehensive understanding of the organization's performance and future prospects.

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INTEGRATED REPORTING
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Integrated Report
Introduction
The report presents analysis of major benefits associated with preparation of the IR as well as its main
limitations. The paper starts with a brief review of IR including its definition and what it is all about.
This is followed by a detailed analysis of some of the key benefits related to preparation of the IR. The
report later present some of the limitations associated with the IR. In essence, the paper would be
conducted following this plan; first, it would present overview of IR, followed by benefits of IR, and
later limitations. It would then be concluded with overall findings of the topic issue. To be more
specific, the paper presents some of the benefits associated with preparation of integrated reporting as
well as the limitations behind the same.
Overview of the IR
Integrated reporting was mostly developed as a result of increasing concerns that prevailing reporting
framework does not enhance creation of long-run value (Yates 2017). Integrated reporting is the
procedure that is instituted on value creation. In other words, integrated reporting is considered as
concise communication on how a given company’s governance, prospects, strategy and performance
results in value creation. According to de Villiers, Rinaldi and Unerman, (2014), integrated reporting
was adopted by different firms across the globe. Hence, it is significant to recognize how IR has
evolved, obstacles hindering its widespread adoption as well as how they could be overwhelmed.
Benefits of the Integrated Reporting
The IR is said to be a relatively beneficial since it is said to serve as the form of discipline for an
organization. This assists in ensuring that the firm concisely reports material information indicating

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how it is performing in the non-financial dimensions (King 2011). According to Brown and Dillard
(2014), integrated reporting is beneficial since it enhances the manner in which companies plan, report
or think about their business operations. A good number of companies utilize integrated reporting as
the opportunity to communicate concise, clear and integrated view explaining value creation within
the firms (Yates 2017). Furthermore, integrated reporting is beneficial since it assist different
companies think holistically on their plans and strategies, making informed decisions, managing chief
risks and opportunities in order to build stakeholders and investors ‘confidence as well as help in
managing entity’s performance (Dumitru, Glavan, Gorgan & Dumitru, 2013).
Additionally, integrated reporting could be utilized in building trust and understanding within their
firms (Yates 2017). Basically, as manager or business owner, securing clients’ finance providers’ and
suppliers’ trust is vital. Application of integrated reporting helps in building trust amongst different
stakeholders by highlighting some of the aspects creating value in the business (Flower 2015). To be
more specific integrated reporting assist in comprehending value creation which is empowered by the
integrated thinking, a key theme of the integrated reporting, which is mostly on the basis of breaking
internal silos in between departments and people so as different firms could collectively better
comprehend chief components of a business. Such comprises of strategy, risks and opportunities,
governance and business model in context of issues and trends affecting an entity (Yates 2017).
Besides, integrated thinking comprises of a firm considering numerous resources consumed and
relationships it depends on, leaving the firm in better position in making decision which in turn assist
in ensuring resilience and viability over time (Stubbs & Higgins 2014).
Additional to improving the internal management practices, integrated reporting could result to other
important benefits including maximizing probability of transferring, handing over or selling the
business by giving better basis for the valuation (Adams 2015). It is also beneficial since it helps in

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creation of greater credibility and trust with the clients, society, suppliers as well as other stakeholders.
Such is significant in the light of the government agencies and for none profit making firms looking
for the commercial or financial partners which could not only supply services and goods but also
perform sustainably (Yates 2017). Furthermore, integrated reporting is beneficial since it assist firms
in securing financial assistance at reasonable cost. The lenders would wish to understand how the
finances have been used previously and future intentions through holistic tactics and well-rounded
plan (Flower 2015).
Integrated reporting assists the SME in building better and more concrete comprehension of some of
the aspects which determine its capacity to create some value over long, short as well as medium term
(Yates 2017). It usually enhances the SME’s business development and planning by taking fully
connected as well as holistic view comprising of its effects on and use of all resources and capital
which are significant to its future and business model (Higgins, Stubbs & Love 2014). Integrated
reporting assists in breaking down inner silos and ensures that any relevant information flows freely
and fully in between different sections of the firm in order to endorse more creative functional
thinking (Jensen & Berg 2012). Silos could be developed inadvertently, if an only if individuals do not
have an opportunity to share information, think or stop in deliberative manner (Yates 2017). Hence,
adoption of the integrated reporting could assists in creation opportunities aimed at improving
information flow as well as shared understanding of the value creation in the SMEs businesses
(Dumitru, Glavan, Gorgan & Dumitru, 2013).
Besides, integrated reporting is said to assist different firms in creating value through deeper and wider
comprehension of how numerous capitals are being created as well as preserved (King 2011). SMEs
are usually judged based on their current financial position, which could be an impediment and
limiting the long-run value creation. Contrary, having some access to the audited financial statements

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is considered significant to the financial providers (Frías-Aceituno, Rodríguez-Ariza & García-
Sánchez 2013). Nonetheless, financiers and other stockholders are much interested in the other
sections such as business model and strategy, which would drive entities forward in meeting their
chief goals. In order to meet these needs, concise integrated reporting offer relevant information
needed in comprehending the firm and their future outlook (Flower 2015).
Integrated reporting is not all about endless detail or reporting but it include adequate context for the
reader to comprehend the SME’s strategies, performance, prospects and governance. Additionally,
integrated reporting helps businesses in linking financial information such as detailed information on
environmental, social and financial performance elsewhere (Dumitru, Glavan, Gorgan & Dumitru,
2013). Therefore, by taking the holistic approach, integrated reporting is said to be relatively beneficial
in providing pathway for different firms to suitably consider full range of the aspects like multiple
capital which is said to make up SMEs’ value creation. Moreover, integrated reporting is beneficial
since it offers significant opportunity in establishing or enhancing systems and processes for
measuring, analysing and identifying crucial information in numerous capitals (Flower 2015). This in
turn assist in building a significant levels that is said to drive value creation which is built into setting
up targets and objectives, managing risks and opportunities, aligning performance to chief objectives
as well as undertaking investment and project appraisals (Higgins, Stubbs & Love 2014).
Besides, integrated reporting is considered as single reporting process which combines non-financial
and financial information all together (Raisiene 2011). Hence, by issuing integrated report,
organization benefits from better or suitable engagement with the shareholders, better risk
management as well as better resource allocation. It assists regional utility in driving performance in
an entity and improves the relationship with the shareholders (King 2011). Integrated reporting brings
about more transparency on the corporate commitments towards sustainability by indicating the link in

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between sustainable and financial performance within a single report. In addition, integrated reporting
conveys financial capital, social capital, governance, environmental capital and intellectual capital
onto a shared stand (Adams 2015). Hence, integrated reporting is not all about reporting, but is a
component of better organization reporting with relatively or significantly better benefits.
On overall, integrated reporting is beneficial since it improves quality of information offered to the
financial providers in ensuring that capital is mostly allocated more productively and efficiently (King
2011). It also helps in promoting more efficient and cohesive technique to organization reporting,
ensuring that it draws on numerous reporting components and transmitting a wider range of the aspects
which affect significantly on entity’s capacity to create value. Similarly, integrated reporting increases
responsibility and accountability in regard to management of different organizations (Higgins, Stubbs
& Love 2014).
Limitations of Integrated Reporting
Some of the major limitations of integrated reporting include lack of clarity and complexity. Although
integrated reporting is said to aims at increasing clarity and decreasing complexity, the new range of
non-financial information additional to financial info could demonstrate increased length and
complexity as well as decrease clarity (Flower 2015). Furthermore, integrated reporting lacks
satisfactory direction in creating balance in between profitable understanding and transparency and
exposure to the risks. Integrated reporting also lack tested sets of the standards. There is also a
limitation of probable duplication of the information as well as inadequate guidance in balancing in
between commercial and transparency sensitivity. Additionally, integrated reporting has a limitation of
implementation barrier (Higgins, Stubbs & Love 2014). This means that obtaining relevant
information in the integrated report become a bit hectic. This is based on the fact that non-financial

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reporting are less mature in comparison to the financial reporting; hence, acquiring information in the
integrated report is not that easy since the information is not captured in the system which is all correct
(King 2011). Another important limitation of integrated report is possible difficulties in assurance on
some data which could in turn leads to damaged reliability. Integrated reporting takes a lot of time
since it require a lot of workings; hence, the process is time-consuming. Another limitation of the
integrated report is the principle of the materiality and being totally apparent (Haller & van Staden
2014). Such issues are inconsistent with one another; hence, it is a bit hectic for a business to
determine the type of information to be unveiled as they wish to expose only the material aspect and
also wish to be apparent.
Conclusion
In conclusion, integrated reporting is considered as a prominent approach for businesses. This is based
on the fact that benefits outweigh its limitations. In addition, integrated reporting not only comprises
of reporting but goes beyond reporting. From practical view, execution of the integrated reporting
could be at times complex. Besides, from the above discussion, it is evident that integrated reporting is
one of the most efficient means to communicate with the stakeholders that would in turn indicate
holistic view of the firms’ future targets and the links in between the financial performance as well as
reporting on environmental and corporate social responsibilities. Integrated reporting is also beneficial
to stakeholders since it signals to them how non-financial and financial are closely linked within an
organization. Use of integrated reporting makes it better to place information in a proper perspective,
hence, enabling users of such information to view bigger picture regarding organization’s
performance. In essence, integrated reporting results in clear and strong message to different
stakeholders and also provides holistic view, by combining both non-financial and financial
information. This enables creation of shared business language. It can also be indicated that integrated

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reporting enhances the manner in which companies plan, report or think about their business
operations. It assists different companies think holistically on their plans and strategies, making
informed decisions, managing chief risks and opportunities in order to build stakeholders and investors
‘confidence as well as help in managing entity’s performance. Additionally, it can also be stated that
integrated reporting is beneficial since it could be utilized in building trust and understanding within
their firms. To be more specific, it assists in comprehending value creation which is empowered by
integrated thinking, a key theme of the integrated reporting, which is mostly based on flouting the
internal silos in between departments and people so as different firms could collectively better
comprehend chief components of a business. It improves quality of information offered to the financial
providers in ensuring that capital is mostly allocated more productively and efficiently as well as helps
in promoting more efficient and cohesive technique to organization reporting, ensuring that it draws on
numerous reporting components and transmitting a wider range of the aspects which affect
significantly on entity’s capacity to create value.

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REFERENCES
Adams, CA 2015, ‘The International Integrated Reporting Council: A call to action,’ Critical
Perspectives on Accounting, Vol. 27 No. 1, pp. 23-28.
Brown, J & Dillard, J 2014, ‘Integrated reporting: On the need for broadening out and opening up,’
Accounting, Auditing & Accountability Journal, 27(7), 1120-1156.
de Villiers, C, Rinaldi, L & Unerman, J 2014, ‘Integrated Reporting: Insights, gaps and an agenda for
future research,’ Accounting, Auditing & Accountability Journal, 27(7), 1042-1067.
Dumitru, M, Glavan, ME, Gorgan, C & Dumitru, VF 2013, ‘International integrated reporting
framework: a case study in the software industry,’ Annales Universitatis Apulensis: Series
Oeconomica, 15(1), 24.
Flower, J 2015, ‘The International Integrated Reporting Council: A story of Failure,’ Critical
Perspectives on Accounting, Vol. 27 No. 1, pp. 1-17
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.
Haller, A & van Staden, C 2014, ‘The value added statement–an appropriate instrument for Integrated
Reporting,’ Accounting, Auditing & Accountability Journal, 27(7), 1190-1216.

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Higgins, C, Stubbs, W & Love, T 2014, ‘Walking the talk (s): Organisational narratives of integrated
reporting,’ Accounting, Auditing & Accountability Journal, 27(7), 1090-1119.
Jensen, JC & Berg, N 2012, ‘Determinants of traditional sustainability reporting versus integrated
reporting. An institutionalist approach,’ Business Strategy and the Environment, 21(5), 299-316.
King, M 2011, Foreword to: IRCSA integrated reporting and the integrated report. Discussion paper,
www. sustainabilitysa. org.
Raisiene, AG 2011, ‘Advantages and limitations of integrated management system: the theoretical
viewpoint,’ Socialines Technologijos, 1(1).
Stubbs, W & Higgins, C 2014, ‘Integrated reporting and internal mechanisms of change,’ Accounting,
Auditing & Accountability Journal, 27(7), 1068-1089.
Yates, A. 2017, Corporate Reporting. A significant shift towards adoption of the principles of
integrated reporting. KPMG.

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__________________________________________________________________________________
MINUTES LOG
__________________________________________________________________________________
Date of Meeting: ______________________________
Time Meeting began: _________________________
Time Meeting ended: _________________________
Location of meeting: online / VU campus other: _____________________________________
Attendees: ___________________________________________________________________
Apologies from any absent members: ______________________________________________
Agenda of Meeting:
Discussion of the probable benefits of preparing integrated report and its limitations
Minutes of Meeting:
Agreed Actions:
Integrated reporting is considered as a prominent approach for businesses. This is based on the fact
that benefits outweigh its limitations. It is one of the most efficient means to communicate with the
stakeholders that would in turn indicate holistic view of the firms’ future targets. Use of integrated
reporting makes it better to place information in a proper perspective, hence, enabling users of such
information to view bigger picture regarding organization’s performance.

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Time Date and location of next meeting: _______________________________________________
Signatures of all attendance: