BAO2203 - Integrated Reporting: A Stakeholder Needs Analysis

This report analyzes integrated reporting (IR) and its role in balancing the needs of different stakeholders within business entities. It explores the benefits of IR, such as improved understanding of value creation, enhanced communication with stakeholders, and better risk management. The report also addresses the limitations of IR, including difficulties in identifying stakeholder values, challenges in data connectivity, reconciliation of conflicting stakeholder needs, and potential resistance to change. It highlights the importance of securing departmental support and managing costs effectively during IR implementation. The report concludes that while IR offers significant advantages in enhancing organizational efficiency and stakeholder communication, companies must address its limitations to maximize its effectiveness. Desklib offers additional resources and solved assignments for students studying integrated reporting.

Running head: INTEGRATED REPORTING
Integrated Reporting: A Question of Balancing the Needs of Different Stakeholders
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Introduction......................................................................................................................................2
Benefits of Integrated Reporting.....................................................................................................2
Limitations of Integrated Reporting................................................................................................5
Conclusion.......................................................................................................................................7
References........................................................................................................................................9

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Introduction
The main aim of this report is to analyze and evaluate different aspects of integrated
reporting in order to discuss the major benefits and limitations of integrated reporting in the
business entities (de Villiers, Rinaldi and Unerman 2014). Integrated Reports can be considered
as a concise communication that shows how the business organization’s strategy, governance,
performance and prospect cane contribute towards the creation of value over the long, medium
and short term. Thus, it can be said that integrated reporting (IR) assists the business
organizations in enhancing the organizations’ way to think, plan and report the story of their
business. Most importantly, the implementation of IR helps the business organizations in the
communication of the needs of different stakeholders so that their needs can be fulfilled in an
effective manner (Adams 2015). Business entities of all size can use IR in order to build trust and
understanding within the business. The importance of trust is paramount among the managers,
customers, suppliers, shareholders and others; and the implementation of IR helps in building
trust by highlighting what drives values.
Benefits of Integrated Reporting
From the above discussion, it can be seen that IR has become an important aspect for the
business organizations as it helps the business entities in value creation. In this context, it needs
to be mentioned that an integrated report needs to be concise and should be able to highlight the
process of value creation in the organizations (Flower 2015). Business entities can become
majorly beneficial from the implementation of IR. The following discussion outlines the major
benefits of IR in the business organizations.

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With the implementation of IR, business organizations become able to develop a better
and more concrete understanding about the elements that determines their ability for the creation
of value for long, medium and short term. For this reason, IR helps in the planning process of the
companies and helps them to develop a holistic view on the capital and resources important for
the business model (Abeysekera 2013). The implementation of IR helps the business entities in
understanding not only the financial capital of the companies, but it helps in gaining
understanding about the other capitals for their better management. As per IR, there are six types
of capitals in the companies; they are financial capital, manufactured capital, intellectual capital,
human capital, natural capital and social and relationship capital. The involvement of IR can be
seen in the consideration of different implications for the conception between these capitals,
internal factors and external environment with the help of business model (Cheng et al. 2014).
The integrated reporting process plays an integral part in the development of a new a
communication tool for addressing the issues and demands of the stakeholders of the companies.
IR helps in the optimization of organizational reporting; for example, it can enable the
collaboration of multiple departments on an interdisciplinary level for the sharing of information
and creation of synergies (Cheng et al. 2014). This aspect helps in broadening the knowledge
and understanding of the organizational people about the organization. Thus, one aim of IR is to
strengthen the internal dialogue beyond the borders of individual departments that leads to the
increase in the efficiency of the resources (García-Sánchez, Rodríguez-Ariza and Frías-Aceituno
2013). For example, the integration between a sustainability report with the annual report helps
in saving both time and money of the companies as it is needed to design, print and distribute
only one report. Moreover, IR makes the decision-making process of the organizations faster in
the operational level due to the improvement in consistency in the value chain (Stubbs and

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Higgins 2014). Apart from this, IR brings simplification in the process of assessing opportunities
and risks. The implementation of IR helps in the effective disclosure of relevant financial
information and IR, as an external communication tool, helps in the enhancement of the
company’s image to the people of financial community. More specifically, IR helps in the
satisfaction of the needs of the investors to get a holistic picture of the company’s financial
situation. The investors become able to get all the required financial information in order to
determine the financial position and financial performance of the business entities (Cheng et al.
2014).
Business entities are judged by their recent financial performance that can be a limiting
factor for the way of value creation. In addition, the stakeholders should have the access to the
audited financial statements of the organizations for decisions making (Frías-Aceituno,
Rodríguez-Ariza and García-Sánchez 2013). In addition, these users also have interest in other
aspects like business model, business strategy and others that assist the organizations in
achieving the organizational objectives. All these above-mentioned information can be found in
the integrated reports for underatsding the outlook of the business. The inclusion of key financial
information can be seen in the integrated reports. Apart from these financial aspects, IR puts
focus on the significant non-financial measures and narrative information (Frías-Aceituno,
Rodríguez-Ariza and García-Sánchez 2014). By accessing all the financial and non-financial
information, the investors, lenders, creditors, customers, banks and others can gain the full
picture of the business entities’ process of value creation. IR is not about the reporting of endless
details. While it is important for the integrated reports to contain sufficient information so that
the readers can understand the strategy, governance, performance and prospects of the
organizations, there should not be burden of irrelevant and unnecessary information in these

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integrated reports. In this context, it needs to be mentioned that IR helps in the linking of
information for providing the readers with more specific results.
From the perspective of the management, business organizations become largely
benefitted from the implementation of IR due to the access in better data and information, easier
decision-making and the creation of more efficient workflow. IR helps in bringing improvement
in the risk management process with the help of transparent connection in the value creation
process (García-Sánchez, Rodríguez-Ariza and Frías-Aceituno 2013). The implementation of IR
helps in the increasing transparency that leads to the effective assessment of risk and
opportunities and due to this, it becomes possible for the management of the entities to align
strategic objectives with the business prospects and risks. Apart from this, IR helps in enhancing
the internal understanding about the value processes and the identification of the employees in
the companies. IR helps in the disclosure of value drivers and value chain. Another major benefit
of IR is that it helps in the linkage between financial and non-financial capitals and it leads to the
holistic presentation of the business organizations that includes the value drivers for the
stakeholders (Cheng et al. 2014). Thus, based on the above discussion, it can be seen that the
implementation of IR has major benefits including the creation of value.
Limitations of Integrated Reporting
The above discussion states about the major benefits that the business organizations enjoy
due to the implementation of IR. In spite of these major benefits, business entities also have to
face some major challenges while implementing IR that cannot be ignored. The following
discussion discusses about the major challenges of the implementation of IR:

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Creation of value is considered as the major objective of IR. However, value creation is
also regarded as one of the major limitations of IR as many business organizations fails to
identify and understand what is considered as value for the major stakeholders for the
organizations (Brown and Dillard 2014). Connectivity is considered as one of the major
limitations in the way of the implementation of IR as the requirement is the breaking down of the
silos within the organization and to change the existing process of collecting data. In most of the
cases of integrated reports, it can be seen that there was scope for the improvement in showing
connectivity of information s that a better holistic picture of interrelatedness, combination and
dependencies for the creation of value for the stakeholders (Crowther 2016).
At the time of the implementation of IR, another major imitation faced by the business
entities while reconciling the needs of different stakeholders. It has been seen that only 46% of
the integrated reports become able to explain the materiality determination process and this
particular limitation affects the overall efficiency of IR (Churet and Eccles 2014). Maintaining
conciseness is considered as another major limitation of IR as most of the integrated reports have
the lengths of more than 150 pages. For this reason, business entities find it very difficult in
reconciling conciseness and effective communication with the key stakeholders. The lack of
balance between the bad news and good news is considered as another major limitation of as
more than 51% of integrated reports lack reliability as well as completeness. Business entities are
required to know what good news looks like before the implementation of IR (Eccles and Krzus
2014).
Resistance to change is regarded as one of the major limitations in the implementation of
IR. The managements of the business entities face resistance from the individual departments
along with the individual employees due to the changes in financial reporting caused by the

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implementation of IR (Busco 2016). In this context, it needs to be mentioned that the business
entities have to incur higher amount of costs or the implementation of IR. At the same time, there
is an involvement of greeter degree of work for the implementation of IR. For this reason, both
the high cost and increased work is considered as the major limitations of the implementation of
IR. The implementation of IR provides the business entities with greater degree of transparency
that makes the business entities expose to potential risks as the company has to disclose about the
organizational negatives for the purpose of reporting (Stent and Dowler 2015).
It needs to be mentioned that the implementation of IR causes major changes in the
business organizations and it taken lengthy time in order to be implemented. Several years are
required from the initial decision to the publication of the final reports and it demands greatest
coordination (Wild and van Staden 2013). In the presence of lack of experience, the whole
implementation process can go in vein along with the wastage of time and effort. In the process
of the implementation of IR, insufficient deliver of required data and information between the
departments can make the whole process difficult as well as ineffective. It can lead to the failure
of the implementation of IR. Apart from these, limited staff, time constraints, lack of financial
resources and lack of work assignment and clear role are the regular limitations in the
implementation of IR (Abeysekera 2013).
Conclusion
From the above discussion, it can be seen that the implantation of IR helps in increasing
the overall efficiency of the business organizations and the companies become majorly beneficial
from the implementation of IR. With the implementation of IR, the managements of the
companies become bale to make an effective communication with the key stakeholders and

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become able to create value by satisfying their needs. In addition, the implementation of IR helps
in providing a holistic picture of the organizations and makes the employees aware of different
parts of the companies. At the same time, the business entities face limitations in the
implementation of IR. High cost and higher amount of work can be considered as major
limitations of IR implementation along with inexperienced workforce and lack of coordination
along the departments. Moreover, lack of conciseness is also considered as the limitation in IR
implementation. Thus, in order to avoid the limitations of IR, the companies are recommended to
secure the support of all the departments before the implementation of IR. Apart from this, in
order to make the implementation process smooth, it is recommended to the business entities to
acquire external expertise. Moreover, the introduction of training programs and communication
events like workshops ensure the effective implementation of IR. Most important, the full
support from the executive management needs to be there in order to ensure the correct and
effective implementation of IR.

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References
Abeysekera, I., 2013. A template for integrated reporting. Journal of Intellectual Capital, 14(2),
pp.227-245.
Adams, C.A., 2015. The international integrated reporting council: a call to action. Critical
Perspectives on Accounting, 27, pp.23-28.
Brown, J. and Dillard, J., 2014. Integrated reporting: On the need for broadening out and opening
up. Accounting, Auditing & Accountability Journal, 27(7), pp.1120-1156.
Busco, C.A., 2016. Integrated Reporting. Springer,.
Cheng, M., Green, W., Conradie, P., Konishi, N. and Romi, A., 2014. The international
integrated reporting framework: key issues and future research opportunities. Journal of
International Financial Management & Accounting, 25(1), pp.90-119.
Churet, C. and Eccles, R.G., 2014. Integrated reporting, quality of management, and financial
performance. Journal of Applied Corporate Finance, 26(1), pp.56-64.
Crowther, D., 2016. A social critique of corporate reporting: Semiotics and web-based
integrated reporting. Routledge.
de Villiers, C., Rinaldi, L. and Unerman, J., 2014. Integrated Reporting: Insights, gaps and an
agenda for future research. Accounting, Auditing & Accountability Journal, 27(7), pp.1042-1067.
Eccles, R.G. and Krzus, M.P., 2014. The integrated reporting movement: Meaning, momentum,
motives, and materiality. John Wiley & Sons.

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Flower, J., 2015. The international integrated reporting council: a story of failure. Critical
Perspectives on Accounting, 27, pp.1-17.
Frias‐Aceituno, J.V., Rodríguez‐Ariza, L. and Garcia‐Sánchez, I.M., 2014. Explanatory factors
of integrated sustainability and financial reporting. Business strategy and the environment, 23(1),
pp.56-72.
Frías-Aceituno, J.V., Rodríguez-Ariza, L. and García-Sánchez, I.M., 2013. Is integrated
reporting determined by a country's legal system? An exploratory study. Journal of cleaner
production, 44, pp.45-55.
García-Sánchez, I.M., Rodríguez-Ariza, L. and Frías-Aceituno, J.V., 2013. The cultural system
and integrated reporting. International Business Review, 22(5), pp.828-838.
Stent, W. and Dowler, T., 2015. Early assessments of the gap between integrated reporting and
current corporate reporting. Meditari Accountancy Research, 23(1), pp.92-117.
Stubbs, W. and Higgins, C., 2014. Integrated reporting and internal mechanisms of
change. Accounting, Auditing & Accountability Journal, 27(7), pp.1068-1089.
Wild, S. and van Staden, C., 2013, July. Integrated reporting: initial analysis of early reporters–
an institutional theory approach. In 7th Asia Pacific Interdisciplinary Accounting Research
Conference (pp. 26-28).