The concept of Integrated Reporting, also known as ‘One Report’, promotes integrated thinking rather that ‘silo’ thinking. It builds on developments in financial, sustainability and other reporting, arguing the need to bring these separate reports together in a more cohesive, efficient approach (Adams et al. 2016). This in turn should promote communication of a fuller range of the factors and independencies that materially affect an entity’s ability to create value (IIRC,3013 a). According to Van Staden& Wild (2013), IR will be replacing the annual report.
Integrated Reporting is an attempt of firm’s financial and sustainability performance in company reports (Baboukardos and Gunnar Rimmel 2016). An Integrated Report should address abridge about how organisation’s performances, strategy, corporate responsibility considering the external environment of the business lead to the creation of sustainable amount of value. Most of the companies are of the opinion that by following integrated reporting framework they can achieve better transparency and a better reporting to stakeholders how a company achieves its goal and how value is created.
Figure1: Integrated Reporting Structure
Source: (Busco 2014)
Most of the companies nowadays are switching from traditional approach of reporting to integrated reporting system as it brings out better clarity and improves the company’s reputation. The basic problem which most of the company faces is implementing the new process of integrated reporting in place of traditional reporting. The change will be a time consuming process and there will be complexity in the implementation. Another problem which arises is the problem of recognition of what value is being created. The expectation of the people might be different as compared to the value created by the company. One of the weaknesses of the integrating reporting framework is that it has a wide coverage and both vital and non vital areas are included. This neglects the materiality coverage aspect which should be more focused.
There is a move towards integrated reporting whether explicitly stated or not. Companies create values about their social investment activities and connect them to strategy. It can be identified that the new framework of reporting has the potential to change how corporate reporting can help in focusing on social returns. In order to identify the external and internal forces that influences the decision making process of an organisations in adopting integrated framework of reporting, it is essential that integrated reporting is implemented in the organisations.
Research Aims and Objectives
In any research, research questions are very important as it directs the researcher what information he needs to collect and in overall data collection process. In most business, it became quite important for the management of different organization to pursue effective internal as well as external factors that are affecting the organisation’s decisions in effective manner. In this regard, it is essential to have proper understanding regarding the factors used for business’s decision to adopt integrated framework of reporting. The importance of integrated framework of reporting practices are given below:
- The public becomes more ethical and educated.
- The control over the reporting process is more extensive and strict.
- Management can improve their reporting process learning from past mistakes of traditional reporting system.
Rationale for the Research
The main reasons for implementing of integrated reporting is ensure clarity in the reporting process and contribute to the reputation of the company and also addresses the expectations of the stakeholders. The main purpose of this research is to identify the internal and external factors which affect the organisations decision making about implementation of integrated reporting. The report will also deal with the problems which the company faces while implementing and maintaining the integrated reporting process.
There are certain questions which arise while doing research on the internal and external factors which affect the firm’s decision making about adopting integrated framework practices. The questions which arise are:
- What are the most important factors that influence the organisation’s decision in adopting integrated reporting?
- How can integrated reporting help in improving management decisions and decision making process?
- How does internal and external factor of a business affect integrated reporting and whether such approach is beneficial for the business or not?
- How does the shareholder’s react to the new approach adopted by the organisations and how will this impact the overall stakeholders?
Integrated framework of Reporting has its roots in developments of corporate reporting, which has evolved over the years. The concepts which were introduced initially include triple bottom line (TBL), social and environmental accounting (SEA), Corporate social responsibility (CSR) and sustainability reports (Eccles and Krzus, 2011).
Eccles &Krzus, (2010b, pp 10-11) further develop this line of thinking with their concept of “one Report’, a concept which has become synonymous with IR, describing it as follows:
“Producing a single report contains both the financial and narrative information found in a company’s financial report with the non financial (such as social, environmental and issues of governance) and quality information found in a firm’s “corporate Social responsibility report” or “Sustainability“report. One report has two meanings. The first report has a narrow meaning and is provided digitally as a PDF. The second has broader meaning that is reporting financial and non financial information in a way that depicts their impact on each other”
Integrated Reporting is developing and becoming widely used in most of the business nowadays. A study shows the insights of accounting and auditing with respect to rapid development in integrated reporting. This approach will also affect the business in better future planning (De Villiers, Rinaldi and Unerman 2014). The responsibility of the company towards the society and general public has increased in recent years and former models which were followed by businesses earlier have also been review. A study shows the impact of one of the factors that is legal factors on the integrated reporting system. The analysis of a sample of 750 companies for the years 2008–2010, in which a correct methodology is applied to available data which reveals the impact of this institutional factor (Fr?as-Aceituno, Rodr?guez-Ariza and Garc?a-S?nchez 2013). The results show that companies located in countries following civil law in general, and where the standards of law and regulations are high, are more likely to produce and publish a variety of integrated reports, thus favouring decision taking ability of different stakeholders.
A study conducted by Jensen and Berg 2012, shows the determining factors of traditional reporting and integrated reporting based on business strategy and environment. The study aims to analyze the similarities and differences between companies which publish reports under traditional system and those which follow the integrated reporting approach. The results which were noticed were that companies following integrated reporting differs country wise (Jensen and Berg 2012)
This research will be requiring a detail analysis of various Companies reporting framework which are chosen in the sample. This research will be following descriptive style of conducting research. The researcher will be depending on various journals, works and articles of the different authors. The analysis of the journals of different author will serve as a guide to this research proposal.
Data collection can be done by primary and secondary methods. Primary methods are those where information is directly collected from the company whereas secondary data collection involves taking information from journals and newspapers. This research will be utilising both primary data as well as secondary data. Primary source of data collection will consist of direct information which is collected from the sample companies. The secondary sources will include journal and works of other authors. This research will also be depending on more qualitative data collection which includes facts and more descriptive data.
The research will be collecting information of qualitative nature from companies which are selected. For such selection sampling method will be undertaken and a sample of companies will be selected on the basis of which analysis of internal and external factors affecting company’s decision about adoption of integrated reporting framework.
The research limitations which will arise are shortage of funds, inappropriate amount of samples. Another problem which can arise is that the study is partly based on the research of the journals where some theories may not be correct and authentic. The sample chosen might show different results as compared to the entire population. This is limitation which will affect the findings and results of the research.
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