Unit Code

Integrated Reporting

Unit Code

Charl de Villiers Leonardo Rinaldi Jeffrey Unerman, (2014),»Integrated Reporting: Insights, gaps and an agenda for future research», Accounting, Auditing & Accountability Journal, Vol. 27 Iss 7 pp. 1042 – 1067.

Brief description of the articles contents and how it relates to Integrated Reporting, Basically why is the article of interest to you as a student in Contemporary Financial and Integrated Reporting?

The paper presents an evaluation of the developments in voluntary disclosures with a focus on the developments in social and environmental reporting. The social and environmental reporting has evolved from disclosures within the company annual statements to the present day reporting on standalone reports (sustainability reports). However, the reports have come to be so intricate given the multiplicity of matters that need to be disclosed so as to meet the stakeholder expectations. Some organisations have also branched out to use the media and sustainability web sites to report the information. Bodies such as the Global Reporting Initiative and the Institute of Social and Ethical Accountability have also been formed to develop voluntary reporting standards to lead organisations in instigating and applying these the developed reporting standards. The standards were developed in a bid to boost the reliability and comparability of the reports. In the same vein, the GRI practices also have come to be more intricate as they cover lots of social, environmental and governance topics. Linking the information also became a challenge.

This has led to a recent advocacy for the recombination of sustainability reporting with financial reporting such that one report is generated. The report would contain integrated “social, environmental, financial and governance information” and is what is touted to be integrated reporting. In the main, integrated reporting seems to lean on and is mainly based on the considerations that relate to social and environmental reporting. This new concept has largely been propagated by the International Integrated Reporting Council (IIRC). The IIRC indicates that the report would concisely cover key organizational social, environmental and economic actions, risks, outcomes and opportunities in an integrated manner. But this also has become a challenge.

Integrated reporting has and continues to be embraces in all corners of the globe. It also continues to receive support from various market intermediaries, international and national professional organisations as well as the leading international accounting firms including Earnest & Young, KPMG, Deloitte and Touche, and PricewaterhouseCoopers. Integrated reporting encourages use of technology to boost connectivity of information.

Technical issues such as problem statement, methodology used and major findings of the study.

Despite being a new area, integrated reporting has developed at a very fast pace and has engrossed a lot of academic attention, that has developed a body of literature. However, there is need for the individual studies on integrated reporting to be broader and provide a well-rounded depiction of the development of reporting guidelines. Up till now integrated reporting does not have a universally accepted definition as each author or party come up with their particular definition.

The research in conducted on a synthesised academic analysis and the views presented in the emergent integrated reporting academic literature together with policy pronouncements.

There is clear depiction on the hasty development of integrated reporting guidelines, and initial developments of practice, current academic and pragmatic encounters because of the different ways in which institutions understand and enact integrated reporting. The paper points out numerous areas that require further vigorous academic research so as to guide developments in policy and practice.

Impact of the article such in terms of improved reporting or your understanding of the area or impact on business decision making with implications for the IIRC and other relevant stakeholders.

Through innovation integrated reporting can be enhance. Stubbs and Higgins (2014) indicates that integrated reporting is crucial in enhancing sustainability reporting and does not seek to revolutionalise the current financial and sustainability reporting framework. Further evidence indicates that implementing integrated reporting in a negotiated and integrated manner pushes organisaions to change their operations and approaches to reporting. Integrated reporting is still in its early stages of adoption. Therefore, more time will be needed before innovative disclosure mechanisms are formed. Integrated reporting is in a point where it seeks to transform sustainability reporting but it does not embody a sweeping innovation driving transformation or a lack of comprehensive standards that may well inhibit more extensive adoption.

Integrated reporting advocates for greater transparency. This will be enabled through the disclosure of the nature along with the quality of an organization’s association with stakeholders. Integrated reporting will also require disclosure of how main stakeholder’s legitimate desires, interests and prospect will be understood, considered and addressed. Integrated reporting speaks to a larger group of stakeholders. It brings into play extra integrated thinking as it ensures the likelihood for a fuller regular inclusion of stakeholder’s legitimate desires, interests and prospect.

As it stands, integrated reporting pursues to offer info that cover a wider risk assessment and probable future value growth. It therefore pulls the interest of thus capital providers and probable investors. As such, the IIRC places emphasis on the creation of shareholder value. However this is what raises key concerns, such as;

  • How organisations will choose the social and environmental capitals (GRI) and human, social and relationship, and natural capitals (IIRC), if not the stakeholders who embody these capitals?

  • Given the difference in the method of choosing the capitals, it will be hard to determine the disclosures among the different types of capitals under GRI-sustainability reports and IIRC-integrated reports.

  • The direct or indirect effect the top management should take into the account for the different types of capitals.