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1.With reference to the IIRC website and the relevant accounting literature, explain the role of the the International Integrated Reporting Committee (IIRC)

2.With reference to the research findings of the CPA report and the relevant accounting literature, explain the existing and potential roles of integrated reporting with regards to:

a.Providing information that is relevant to stakeholders;

b.Stakeholder engagement;

c.Comparability of reporting;

d.Quality of reporting;

e.Usefulness of reporting; and

f.Users of reporting

3.Compare and contrast the findings of the CPA report with the following guiding principles that underpin integrated reporting:

a.Stakeholder relationships;

b.Materiality;

c.Conciseness;

d.Reliability and completeness; and

e.Consistency and comparability

4.Identify and explain the similarities and differences between :

a.The definition and objective of the International <IR> Framework with the definition and objective of general purpose financial reporting (GPFRs) as contained in the IASB / AASB conceptual framework (IASB CF);

The Role of IIRC in Integrated Reporting

In today’s business world, Integrated Reporting is considered as a crucial factor. An integrated report can be regarded as a concise communication report that provides overview about the strategy, governance, performance and prospects of the business organization for the purpose of value creation (de Villiers, Rinaldi and Unerman 2014). In this context, it needs to be mentioned that the main aim behind the development of integrated reporting is the enhancement of accountability, stewardship and trust along with bringing transparency in the flow of information for the creation of value. The adoption of the framework of integrated reporting provides the business organizations with the opportunity to provide the investors with the information they need for making more effective capital allocation decision that leads to effective long-term investment returns (Adams 2015). Apart from this, there are many other advantages of the adoption of integrated reporting for the business entities. In the discussion of integrated reporting, it is required to mention about the IIRC (The International Integrated Reporting Council) that helps the business organizations for the correct implementation of integrated reporting. In Australia, there are many business organizations that have either adopted the integrated reporting or adopting it. The main aim of this report is to analyze and evaluate the different dimensions of integrated reporting along with the role of IIRC in the correct adoption and evaluation of integrated reporting.         

From the above discussion, it can be observed that IIRC plays an integral part in the development of integrated reporting in the business organizations. For this reason, there are certain role of IIRC can be observed. They are discussed below:

IIRC is considered as a powerful international committee of leaders from different backgrounds like accounting, corporate, investment, regularly bodies, standard setters and many others. The IIRC was established in the year of 2010 for the purpose of sustainability reporting and global reporting initiatives (Abeysekera 2013). The main role of the IIRC involves in enhancing and consolidating the existing practices for corporate reporting for the development of one single reporting framework that will help in the process of value creation by providing the investors with all the required financial as well as non-financial information of the business organizations. Another major role of IIRC can be seen in the demonstration of the connection between the strategy, governance, financial performance with the non-financial performance that is social and environmental performance.  By reinforcing this connection, integrated reporting assists the business organizations in taking more sustainable business decisions so that the investors and stakeholders become able in understanding the financial as well as non-financial performance of the entities (Stubbs and Higgins 2014).

Importance of Integrated Reporting in Business Organizations

In this context, it needs to be mentioned that the IIRC has received the full support of the American Institute of Certified Public Accountants for the development of a globally-accepted reporting framework so that the business entities can get the opportunity of presenting more complete and transparent picture of financial and non-financial performance, optimal resource utilization and their ability to create value over the long-run (Cheng et al. 2014). For this reason, it can be said that IIRC plays a significant role in restoring the public trust in the business so that the confidence of the investors can be enhanced along with other stakeholders and to ensure the effective allocation of the capita of the firms. One of the major contribution of the IIRC towards the development of one single reporting framework is the introduction of International Integrated Reporting Framework on 9 December 2013 and the introduction of this framework have developed an important millstone in the massive evolution of corporate reporting. For this, IIRC organizes a three-month global consultation that is based on 350 responses from every region from the world in order to gain the support (Frías-Aceituno, Rodríguez-Ariza and García-Sánchez 2013). Thus, from the above discussion, it can be seen that the IIRC has some of the major roles to play in the development of one single reporting framework for the business entities.         

Providing information that is relevant to stakeholders: In today’s business world, more and more stakeholders like investors are demanding the information related to non-financial performance of the organizations along with the data for financial performance. In this process, integrated reporting plays a crucial role as it helps the companies in disclosing both the financial and non-financial information in one single corporate report where the stakeholders can get all the information they need (forbes.com 2018).

Stakeholder engagement: One of the major ways for fostering the stakeholder engagement is to provide them with all the required information they want. In this context, it needs to be mentioned that integrated repots are considered as a major tool for providing the stakeholders with all the information they want as it becomes easy for them to navigate the these reports for gaining information and it leads to better stakeholders engagement (Brown and Dillard 2014).

Comparability of reporting: It is only possible to realize the full value of the integrated reports when they can be compared as the financial reports. There is a necessity of an assurance in order to consider the information of the integrated reports comparable. In this context, it needs to be mentioned that the auditors of the companies can audit all the components of the integrated reports that provides the necessary assurance to have comparability in the integrated reports (Churet and Eccles 2014).  

Existing and Potential Roles of Integrated Reporting

Quality of reporting: The introduction of integrated reporting is considered as a major evolution in the process of corporate reporting. The implementation of integrated reporting majorly helps in enhancing the quality of the information in the reports and makes the process of corporate reporting more productive that leads to tangible benefits. Integrated Reporting helps in enhancing the quality of reporting by inducting more integrated thinking so that better understanding can be enabled (Eccles and Krzus 2014).  

Usefulness of reporting: It can be seen that an integrated report helps the business entities in disclosing all the necessary information about the financial as well as non-financial information of them. This particular aspect increases the usefulness of these integrated reports as the users can get information about the financial as well as social and environmental performance of the organizations.  

Users of reporting: All the users of the financial reporting can use the integrated reporting for gaining their required information related to the financial and non-financial information of the entities. The major users of integrated reports in the business organizations are investors, creditors, employees, customers, lenders, government, regulatory bodies and others (Busco 2016).  

Stakeholder relationships: As per the IR framework, it is required for an integrated report to provide insight about nature and quality of the relationship of the companies with their key stakeholders (integratedreporting.org 2018). However, as per the CPA report, the civic and environmental stakeholders feel that they are not the targeted audience of the integrated reports as they main target stakeholder is the investors or shareholders. Thus, difference in the viewpoint can be seen in this context (cpaaustralia.com.au 2018).

Materiality: According to the IR framework, it is the requirement of the integrated reports to disclose important information about the issues substantially affective the ability of the business entities to create value on short, medium and long-term (integratedreporting.org 2018). However, the report of CPA shows a different view. As per the report of CPA, more than half of the stakeholders of the business entities feel that the integrated reports does not sufficiently discusses the material issue such as climate change and many others (cpaaustralia.com.au 2018).  

Conciseness: As per the IR framework, an integrated report needs to be concise. It implies that the integrated report needs to include the required context to understand the strategy, governance, performance and prospects of the companies without the burden of less information (integratedreporting.org 2018). However, the reports of CPA states that the stakeholders do not use the integrated reports as the primary source of information as the stakeholders consider the integrated reports as one information source among a large range of other sources (cpaaustralia.com.au 2018).  

Comparison of Guiding Principles and CPA report Findings

Reliability and completeness: As per the IR framework, an integrated report is required to include all the material issues that can be both positive and negative in a balanced manner in the absence of any material errors (integratedreporting.org 2018). This view is different from the report of CPA as the CPA report has mentioned that integrated reports inadequately addresses the material issue related to environmental as well as social responsibilities. Moreover, most of the business entities use the integrated reporting to report about their positive material issue to enhance the goodwill of the company instead of both the positives and negative issues (cpaaustralia.com.au 2018).

Consistency and comparability: As per the IR framework, companies are required to present the information on a consistent basis over the time so that they can be compared with the information of other organizations (integratedreporting.org 2018). However, it can be found from the report of CPA that the environmental stakeholders of the companies feel frustrated as different data points and report formats make it worse in comparing the information in the integrated reports with the integrated reports of other companies (cpaaustralia.com.au 2018).  

International <IR> Framework: As per the definition, an integrated report can be regarded as a concise communication report that provides overview about the strategy, governance, performance and prospects of the business organization for the purpose of value creation (integratedreporting.org 2018).

The main objective of this framework is the establishment of guiding principles and content elements for governing the whole content of the integrated reports and to provide the explanation of the fundamental concepts of integrated reporting (integratedreporting.org 2018).  

AASB Conceptual Framework: AASB has defined the general purpose financial reporting as the statements being issued throughout the year to help the investors are creditors in the process of decision-making (aasb.gov.au 2018).

The main objective of general purpose financial reporting is to provide the existing and potential investors with the financial information about the business enteritis so that they can make correct and effective investment and other financial decisions (aasb.gov.au 2018).  

International <IR> Framework: There are different users of this framework as it is beneficial for all the stakeholders of the companies for the purpose of value creation. The main users of this framework are customers, employees, suppliers, business partners, government, legislators, local communities, regulation makers, policy makers, environmental groups and others (integratedreporting.org 2018).

AASB Conceptual Framework: The same aspect can be seen in the case of general purpose financial reporting as there are also many users of these statements. The existing and potential investors, creditors, lenders and suppliers are the main users of the general purpose financial reporting. However, some other users can also be seen like policy makers, regulatory bodies, government and others (aasb.gov.au 2018).  

Comparison of International and General-purpose Reporting Frameworks

International <IR> Framework: The concept of materiality states that the integrated reports are required to disclose all the required information about the matters having significant effects on the value creation process of the companies. Thus, the entities are required to indentify these material matters or issues based on their ability of affective the process of value creation. After that, the companies are required to involve in the process of evaluating them for prioritize them (integratedreporting.org 2018).    

AASB Conceptual Framework: As per AASB, financial information is considered as material in case its omission or missstements can influence the decisions of the primary users of the general purpose financial reporting. More specifically, materiality is regarded as an entry-specific aspect of relevance that depends on the nature or magnitude of the financial information of the business entities. For this reason, it is not possible for AASB to specify any uniform quantitative threshold for the determination of materiality (aasb.gov.au 2018).  

International <IR> Framework: As per this framework, reliability of the information can be enhanced with the assistance of robust internal control, reporting system, engagement with the stakeholders and others. An integrated report is considered as complete when it includes all the material information irrespective of negative and positive. It is required for the business organizations to present the information in the integrated reports in the most consistent manner over time. Comparability can be seen when the users can compare the information in the integrated reports to other companies’ information (integratedreporting.org 2018).  

AASB Conceptual Framework: In case of AASB conceptual framework, comparability is considered as a qualitative characteristic of financial reporting that enables the users in understanding the similarities and differences in the financial reporting. On the other hand, the presence of reliable financial information can make positive difference in the decision making process of the companies (aasb.gov.au 2018).

It can be observed that many companies all over the world have adopted the IR framework for the preparation and presentation of the integrated reports. Four of these companies are Hulamin Ltd, Eurazeo, Cbus and Cemex. The following discussion involves in comparing and contrasting the integrated reports of these four companies based on the ‘Materiality’ guiding principles. In this context, it needs to be mentioned that the integrated report should report about both the positive and negative materiality issues.

Hulamin Ltd: From the 2016 Integrated Report of Hulamin Ltd, it can be observed that the company has reported both the positive and negative material issues in the forms of opportunities and threats from the external environment. As per this integrated report, the major opportunities and threats of the company is availability of the required capital and incentives, metal price conversion margin, price and availability of aluminum and others (examples.integratedreporting.org 2018).

Eurazeo: The same aspect can be seen in the case of Eurazo as the company has also reported about their material issues. Some of the major reported material issues of Eurazo in the integrated report of 2016 are transparency in the financial reporting, management of the business as well as environmental risk, transparency in the non-financial reporting, governance and others (examples.integratedreporting.org 2018).

Cbus: Superiority can be seen in the 2017 integrated report of Cbus as the company has reported more material issue in the integrated report as compared to Hulamin Ltd and Eurazo. The major material issues reported by the company in the integrated report are the new introduced approaches to the financial advice, process of better engaging with the stakeholders of the companies, positives and negatives about the distribution model of the company and others (examples.integratedreporting.org 2018).

Cemex: The same aspect can be seen in the case of Cemex as the company has included various issues in their integrated report. The major issues reported by the company in the integrated report are compliance of the organization with all the required laws and regulations, the value creation process of the company by positively connected with the stakeholders, effectively addressing the environmental issues and others (examples.integratedreporting.org 2018).  

From the above discussion, it can be observed that there are differences among the integrated reports of the above-mentioned companies and there are some factors that contribute towards these differences among the integrated reporting of these companies. All these aspects can be connected with the materiality issues of the companies. Opportunities and threats from the external business environment can be considered as one factor as Hulamin Ltd has considered this as a material issue in the integrated reporting. After that, transparency in the financial reporting can be considered as another major factor due to the fact that Eurazeo has reported about this factor in the integrated report as the material issues. Thus, difference can be seen in these two factors. After that, the next factor is the factors that lead to the better engagement with the stakeholders of the company. It needs to be mentioned that the integrated reports of the companies are required to take into consideration the material issues that help the company in developing a cordial relation with the stakeholders of the companies. Another major aspect is the compliance issue as the company has considered this aspect as a major material issue. In this context, it needs to be mentioned that it is the prime responsibility of the business entities to comply with all the required standards and regulations with conducting the business operations. Most importantly, the companies have the responsibility to consider the compliance with the environmental rules and regulations. These are the major factors that contribute to the similarities of differences in the integrated report of the companies.     

Conclusion

The above discussion indicates towards the fact that integrated reporting is one of the major tools for the corporate reporting of the business enteritis. The above discussion indicates towards the fact that the IIRC has a vital role to play in the preparation and presentation of the integrated repots of the business entities as the IIRC helps the companies in enhancing the disclosure process of both the financial and non-financial information of the business entities so that the stakeholders can get them at the time of their requirements. Apart from this, it can also be observed that integrated reporting also has some major roles to play in different aspects of the company like to provide the useful information to the stakeholders, effective stakeholder engagement, to maintain the quality of reporting, to enhance the quality of information and others. Most importantly, the report indicates towards the fact that the report of CPA has shown some different results that vary from the guiding principles of IIRC; some of them are stakeholders’ relationship, materiality, reliability, competence and many others. From the above discussion, it can be observed that there are some major differences in the definition, objectives, users and various concepts between the IR framework and the conceptual framework of AASB. The main aim of AASB conceptual framework involves with the repotting of financial reporting while IR framework covers both the financial and non-financial information of the companies. It can also be observed that there are some major differences among the interred reports of the companies named Hulamin Ltd, Eurazeo, Cbus and Cemex as some major aspects contributes to these differences.

References

Aasb.gov.au. (2018). Conceptual Framework for Financial Reporting. [online] Available at: https://www.aasb.gov.au/admin/file/content105/c9/ACCED264_06-15.pdf [Accessed 10 Jun. 2018].

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.

AICPA. (2018). International Integrated Reporting Council (IIRC). [online] Available at: https://www.aicpa.org/interestareas/businessindustryandgovernment/resources/sustainability/integratedreporting.html [Accessed 10 Jun. 2018].

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.

Cpaaustralia.com.au. (2018). AN EXPLORATION OF THE INFORMATION NEEDS OF SELECTED STAKEHOLDERS OF INTEGRATED REPORTING. [online] Available at: https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/professional-resources/sustainability/report-exploration-stakeholder-needs-integrated-reporting.pdf?la=en [Accessed 10 Jun. 2018].

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.

Examples.integratedreporting.org. (2018). Cbus - Integrated Report - Strategy and resource allocation. [online] Available at: https://examples.integratedreporting.org/fragment/865 [Accessed 11 Jun. 2018].

Examples.integratedreporting.org. (2018). Cemex - Integrated Report - Governance. [online] Available at: https://examples.integratedreporting.org/fragment/871 [Accessed 11 Jun. 2018].

Examples.integratedreporting.org. (2018). Eurazeo - Integrated Report - Business model. [online] Available at: https://examples.integratedreporting.org/fragment/868 [Accessed 11 Jun. 2018].

Examples.integratedreporting.org. (2018). Hulamin Ltd - Integrated Report - Risks and opportunities. [online] Available at: https://examples.integratedreporting.org/fragment/820 [Accessed 11 Jun. 2018].

Forbes.com. (2018). [online] Available at: https://www.forbes.com/sites/jnylander/2015/11/11/why-integrated-reporting-attracts-investors/#785ebf7d57e7 [Accessed 10 Jun. 2018].

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.

Integratedreporting.org. (2018). THE INTERNATIONAL <IR> FRAMEWORK. [online] Available at: https://integratedreporting.org/wp-content/uploads/2015/03/13-12-08-THE-INTERNATIONAL-IR-FRAMEWORK-2-1.pdf [Accessed 10 Jun. 2018].

Stubbs, W. and Higgins, C., 2014. Integrated reporting and internal mechanisms of change. Accounting, Auditing & Accountability Journal, 27(7), pp.1068-1089.

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