Disclaimer: This is an example of a student written assignment.
Click here for sample essays written by our professional writers.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com.

Importance of the International Integrated Reporting Council

Paper Type: Free Assignment Study Level: University / Undergraduate
Wordcount: 3946 words Published: 6th Nov 2020

Reference this

The International Integrated Reporting Council (IIRC) is an international association of the integrated reporting stakeholders such as regulators, investors, companies, standard setters, the accounting profession and NGOs. Its mission is to establish integrated reporting as standard practice in the government and non-government entity, for profit and not-for-profit organization and private and public sectors.

Integrated Reporting brings together relevant information pertaining to an organization’s strategy, governance and its performance on which it reflects the commercial, social and environmental context.

This provides a transparent and elliptical illustration of how the company displays stewardship and how it creates value, both now and in the future.

But integrated reporting is not just a process of reporting. It is focused on unified learning, or thinking about processes. Integrated thinking provides a better understanding of how value is generated and improves board and management decision-making. The more holistic thought is incorporated in day-to-day activities, the more likely it will be reflected in internal and external interaction. Integrated thinking and integrated reporting are reinforcing each other on this basis.

Improve the quality of information available to financial capital suppliers to promote the efficient and productive allocation of capital. Promote a more coherent and transparent approach to corporate accounting, building on various reporting lines and sharing the full range of factors that have a significant impact on the capacity of an entity to produce value over time.

The informative study helps those involved in the potential of a company to create value. It requires, but not restricted to, financial capital suppliers. Employees, clients, vendors, business partners, local communities, policymakers, regulators and policy makers may also be included in the structured study of a company.

The integrated reporting process, which is centered on integrated thinking, also benefits the management and governing bodies of the organization. Integrated thought spans organizational divisions and roles, time horizons, and internal and external viewpoints to change the business model and approach. Organizations benefit from decreased internal silos, a greater view of cause and effect, and better decision-making through this bridging phase.

The unified document is the most recognizable and measurable consolidated reporting tool. It is a concise communication on how the strategy, governance, performance and prospects of an organization lead over time to value creation in the context of its external environment. A comprehensive document in compliance with the International < IR > Framework should be compiled.

The International < IR > Framework describes integrated thought as' the effective consideration by an organization of the partnerships between its different organizational and operational entities and the capitals used or influenced by the entity.' Integrated thinking leads to unified decision-making and decisions that recognize value creation in the short, medium and long term. Simply stated, it means thinking holistically about the tools and interactions that the company requires or influences, and as meaning is generated the connections and trade-offs between them. The institution perceives itself as part of a larger system in applying this mindset, one shaped by the quality, availability, and cost of resources, as well as evolving regulations, standards, and expectations of stakeholders. Integrated thought is a type of process analysis owing to its holistic approach; in this scenario, the emphasis is on the relationship between the business model of the enterprise and various forms of resources.

Get Help With Your Assignment

If you need assistance with writing your assignment, our professional assignment writing service is here to help!

Assignment Writing Service

They prohibit the use of the' integrated document ' tag on documents that were not produced in compliance with the International < IR > Framework, as such reports would give the consumer a confusing and misleading message about what integrated reporting really is. Paragraph 1.17 of the < IR > Framework provides the requirements for any document that appears to be an interactive statement and the < IR> Framework guide. Basically, these documents will implement all bold italic-type criteria (summarized on pages 34–35 of the < IR> Framework) unless specific conditions prohibit their implementation.

That said, most organizations are genuinely on the road to standardized coverage and have published reports that generally conform to the < IR > Standard, acknowledging areas for improvement may occur (e.g., the document may not be as succinct as intended). In such reports we see no harm being labelled' integrated reports,' as long as the reports communicate an inclination to constantly evolve future reports to achieve full adherence to the < IR > Framework.

In response to the International < IR > Framework, significant progress is being made in corporate reporting. The < IR > Examples Database presents innovative and inspiring examples in practice of integrated reporting.

The International < IR > Framework, published in December 2013, outlines the principles of structured media and promotes the function of the IIRC. Document preparers and clients in all regions of the world, including the 140 company and shareholder members in the IIRC's Pilot Program, accompanied thorough training and screening. More than 359 entries from Africa, the Americas, Asia, Europe, the Middle East and Oceania, as well as many global entities, benefited from the < IR > Framework

The < IR > Framework lays out basic concepts, guiding principles and material components for writing and delivering a structured document. It is written primarily in the private sector, for-profit enterprises of any size, but is also applied by public sector and non-profit organizations.

The < IR > Framework recognizes individual entities ' uniqueness and thus strikes an important balance between flexibility and prescription. The principles-based approach allows companies to tell a unique story of value creation while providing for a sufficient degree of corporate comparability. The < IR > Framework encourages a consistency of methodology in the sense that, as formalized in the relevant material elements, all document preparers should provide core business data. Core disclosures include business model, strategy, and allocation of resources, performance, and governance information. The < IR > Framework supports both qualitative and quantitative transparency when presenting these data, as each gives meaning for the other. Where calculation is necessary, the IIRC endorses the use of generally accepted measures of measuring to the degree that they are relevant to the conditions of the organization and are compatible with the existing metrics used by those tasked with governance.

The' quality' definition is arbitrary. Therefore, in the International < IR > System, there is no one-size-fits-all concept of' value creation.' And that's why the IIRC allows organizations to create so communicate their own quality understanding–public or private, large or small, for-profit or non-profit. It involves taking into account core investors ' needs and interests, understanding that the benefit generated for the company is usually based on the value produced for others. This also involves understanding how value is created and, in addition, how the business model turns wealth and partnerships (or capital) into goods, facilities, by-products and waste.

The Framework does not explicitly call for an entity-specific quality concept to be reported in the unified report; furthermore, the internal process of identifying and communicating the value proposition of the company creates a collective understanding between management and those accountable for leadership, setting the stage for the preparing of documents.

To assess how successfully the organization delivers value, the effects of its outputs and activities on each capital class should be considered. We call these effects ' business model results' and they point to a net positive (value is created), net negative (value is eroded) or neutral (value is preserved) position when taken in aggregate.

This research, of course, is not an exact science. Many tests are unmeasurable, and subjectivity and ambiguity are inherently concerned. Organizations may also have an imperfect understanding of the interdependencies and trade-offs between capitals, or an incomplete understanding of external parties ' perspectives. Finally, organizations necessarily apply judgement to priorities one set of interests over another set of interests. Notwithstanding these shortcomings, the < IR > Framework offers a rigorous framework to beyond the financial bottom line to define and convey how value is created.

No. The < IR > Framework does not require a calculation of the net value created or destroyed during the reporting period. Furthermore, the integrated report should not attempt to value the organization itself. Value assessments are the role of others using the information presented in the report.

Materiality is seen through a prism of value creation in structured coverage. Financial reporting, on the other hand, approaches the term in regards to financial position and performance; sustainability reporting does so through ecological, social and economic effect prism. With this in mind, the Statement of Common Principles of Materiality of the Corporate Reporting Dialog notes the challenge of establishing a quantified definition of materiality ' one size fits all.' The Statement states that materiality must be measured and implemented in scope; in another sense, what is material may be immaterial.

Material information is any information capable of making a difference in the assessment and analysis at hand Reporting focuses on the information needs of the primary stakeholders for whom the report is issued Judgment is necessary in order to determine the appropriate level of aggregation or disaggregation of detailed information.

For the consolidated document, some, but definitely not all, data classified as content for other types of study will also be relevant. Therefore, as stated on page 10 of the Unified Reporting Materiality provided jointly by the IIRC and the International Accountants Association, organizations will improve the effectiveness of their reporting process by recognizing where current reporting branches are mutually supportive. When illustrated in the financial report, for instance, structured statements usually include a description of financial performance. They also include any "sustainability" issues that have a significant impact on the organ.

The process of determining the quality of the structured document should be aligned with existing processes for value creation (e.g. strategy growth, business planning, risk management, governance, stakeholder engagement, business model refinement) and preferably incorporated in them. The reasoning is simple: an integrated document describes how the company creates value; thus, if the unified report represents what the entity does–and what it does to create value–then there should be no distinction between, on the one hand,' how to decide what needs to report' and, on the other,' how to create value.

Materiality in Integrated Reporting, provided jointly by the International Unified Reporting Council and the International Federation of Accountants, states that topics relating to value creation are usually addressed at board meetings. These problems are often dealt with in relation to aspects of the value creation phase of the enterprise and are likely to be related to organizational objectives, performance goals and risk management. The paper notes that the method of addressing relevant issues is complex, so that the current agenda of the board cannot provide a complete picture of all relevant issues.

The short reply is' no.' The longer approach contains a subtle but important distinction: The object of the Stakeholder Relationship Guiding Principle is not to address the content of the document to all stakeholders ' information needs. Rather, it is to understand and communicate this understanding of the needs and interests of key stakeholders–as critical drivers of value.

Others may choose to undertake a specialized workshop to educate this element of the process of determining materiality; furthermore, this strategy is redundant for those who are still engaging in the normal course of business with shareholders. Others, for example, engage as part of quality control programs with consumers and vendors on a regular basis or notify stakeholder rating ratings. Many collaborate with a broad base of investors to perform risk assessments or establish strategic plans.

Public research could also be carried out for a specific purpose, such as community involvement in educating proposals for an expansion of the facility. The more the company embeds holistic planning, the more often the genuine desires and expectations of key stakeholders are expressed in normal business practices.

Where a stand-alone stakeholder consultation exercise takes place as part of the process of determining materiality, its findings should be considered by other engagement mechanisms with those surfaced. The stand-alone activity should not impact the quality of the combined study in a disproportionate way.

A structured report provides visibility into the tools and partnerships the company utilizes or impacts–the Global < IR > System applies to these' capitals' together. Capitals are assets of inventory on which the business model of an entity relies as inputs and which, through its business activities and outputs, are expanded, diminished or converted. In the < IR > System, the capitals are classified as economic, industrialized, mental, physical, cultural, and environmental.

Find Out How UKEssays.com Can Help You!

Our academic experts are ready and waiting to assist with any writing project you may have. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs.

View our services

The Oxford English Dictionary describes capital as' wealth in the form of cash or other assets owned or accessible for purposes such as beginning or investing in a business.' It refers to' a valuable resource of a particular kind' when used with a modifier (e.g., financial capital or human capital). In the language of business and growth, the word financial capital is already very much rooted. The < IR > Framework applies the same convention to the full range of resources and relationships that organizations rely on or have an impact on.

Yes. Paragraphs 2.17–2.18 of the < IR> Framework accept that all organizations may not match the definitions of assets. Instead, they should be used as a detailed checklist when writing a structured document to insure that an asset that is directly used or impacted is not neglected. An explanation can help in comparability where different categories are used.

The word ' capitals' should not be used in unified studies. Organizations can use language compatible with other current interactions and more comprehensible to internal and external participants or database clients. For example, if an organization uses the term ' people' in other communications, it may make sense to use this rather than' human capital' in the integrated report. It may be more fitting to use the term ' partnerships' than' social capital and friendship capital.'

Yes, the consolidated document does not need to be organized along the capitals rows. As noted in the International < IR > Framework, paragraph 2.17, an organization is free, however it chooses, to structure its integrated report. Of course, if an organization thinks this is the best way to explain its story of value creation, it can choose to structure its integrated report around the capitals.

Yes. While most organizations communicate to some degree with all capitals, such connections may be relatively minor or indirect to the point that they are not significant enough to be included in the unified study.

The simplest way of distinguishing between these three capitals is to call each one's ' carrier ': for intellectual capital, the carrier is the company itself For human capital, the carrier is the entity (usually staff or employees) For social and partnership assets, the organization and its internal / external networks and associates are joint carriers.

Yes. Throughout environmental and corporate social responsibility (CSR) studies, economic or societal-based documents generally focus on institutional effects on investors or community as a whole. Such disclosure often describes the investment of the organization in social and community programmes, financially or otherwise.

On the other side, social and relationship assets declarations in an interconnected document address the essential networks, alliances and connections of the company and describe how these specific relationships affect the capacity of the entity to create value. For example, these reports may explain the impact of the actions and results of the organization on customer satisfaction or the ability of suppliers to deal with the organization and the terms and conditions on which they do so. These relationships are generally based on the principles of mutual benefit, confidence and shared values, recognizing that the value created for the organization is inextricably linked with the value created.

Not every asset used or influenced by an entity is owned or controlled by it. Some may be the estate of others. Of instance, a logistics company can depend on a government-owned transport infrastructure's accessibility, reliability, and affordability. In a legal sense, certain capitals may not be owned at all. Social and relationship assets, for instance, is not' held' in a traditional sense by its nature; nevertheless, the networks, relationships, and connections of a company may be central to its value-creating potential.

With these factors in mind, a holistic plan should include all resources that is essential to the capacity of the company to create value, whether or not it is held by the entity.

No. Although numerical data such as performance indicators or monetized statistics can help explain the use and impact of an enterprise on resources, the aim of a structured document is not to measure or monetize: (1) the organization's importance at a moment, (2) the value it produces over a period of time, or (3) the uses or effects on all assets. It is the organization's responsibility to determine which mix of quantitative and qualitative data best explains the tale of value creation over time.

Opportunity-based reports give transparency into the awareness and planning of a company for new developments. Such forward-looking information helps financial capital providers and others to assess how the organization will be positioned for the future. It also influences the confidence of readers in the adaptability of the strategy of the organization and the business model of the longer term.

Strong companies are constantly tracking threats and opportunities in the operating environment. It is crucial that the balanced report shows all sides of the coin; after all, failure to seize opportunities can be as harmful to a business model as mismanagement of threats, especially in an environment of uncertainty or competition.

The comprehensive study will answer the question: what are the particular challenges and opportunities that affect the ability of the company to create value over the short, medium and long term, and how are they handled by the enterprise?

Many studies present threats more comprehensively than opportunities; nevertheless, hazards over opportunities are not stressed by the International < IR > Framework. Throughout the < IR > Framework, challenges and opportunities are actually referenced together–including in a single, dedicated product component–because they are often related. For example, an organization could aggressively exploit new opportunities in pursuing its strategic goals, a move that could carry inherent risks. On the flip side, new risks that have the potential to disrupt business models can also present new innovation and growth opportunities.

The degree to which they affect value creation depends on the level of reporting of incentives (and risks). Report preparers should realistically assess the likelihood of materializing the opportunity (or risk) as well as the magnitude of the effect if it does. Organizations should also recognize their ability to deliver, as they occur, on crucial opportunities.

In fear of exposing too much to rivals, some are hesitant to disclose information regarding openings. Where this is of genuine concern, it is important instead to make information of a general nature on the topic rather than specific details.

Organizations need to establish and maintain superiority over their rivals in order to create profitability over the short, medium and long term. The risk of new competition and alternative products or services, the negotiation strength of consumers and distributors, and the frequency of market competitiveness threaten this benefit. In a rapidly changing and competitive environment, if not managed effectively, any of these factors, or a combination, has the potential to very quickly put an organisation out of business. Therefore, evaluating and reacting to an organization's competitive landscape and market place is important for financial capital suppliers and others involved in how it generates value over time.

A company can show its awareness of the external environment and its effect on its policy and business model through its consolidated study. As far as competitive landscape and market positioning are concerned, it involves (but not restricted to) its knowledge of:

Others on the business, current and potential market trends such as evolving consumer demands and expectations, supply chain problems or recent or increasing legislative and regulatory conditions Future disruptors such as new technologies or competing products and services. The market position and how it differentiates itself in the category

Where competitive landscape and market positioning reports may dramatically affect competitive advantage, addressing these issues more broadly may be necessary. The aim is not to reveal confidential information, but to provide knowledge of other market players and possible disruptors and to display constructive understanding and control of their related impacts. However, to avoid disclosure, the commercial sensitivity banner should not be used inappropriately. If there is no release of material information due to competitive risk, the consolidated document will notice this aspect and the explanations for it.

It is necessary to find an appropriate balance between achieving the primary purpose of the comprehensive document by full disclosure and disclosure of sensitive information to competitors. There may be situations where omitting data may be more detrimental to the company than including it, especially in terms of trust of shareholders and stakeholders.


Cite This Work

To export a reference to this article please select a referencing stye below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Related Services

View all

DMCA / Removal Request

If you are the original writer of this assignment and no longer wish to have your work published on UKEssays.com then please: