Exploring Stakeholders' Information Needs And The Role Of Integrated Reporting Essay.

In December 2016, CPA Australia issued the following report, “An Exploration Of The Information Needs Of Selected Stakeholders Of Integrated Reporting” (CPA, 2016). This report provided a summary of research undertaken which explored the information needs of company stakeholders and their perspectives on integrated reporting (CPA, 2016). The objectives of the study were: 1. to explore what stakeholders claim they need and expect from an integrated report; 2. to assess the level of alignment between stakeholders’ expectations information needs; and 3. to understand the usefulness of integrated reporting to their decision-making (CPA, 2016).

As explained in the CPA Australia report, the integrated reporting framework was developed by the International Integrated Reporting Council (IIRC). 

Required

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:
   1. Providing information that is relevant to stakeholders;
   2. Stakeholder engagement;
   3. Comparability of reporting;
   4. Quality of reporting;
   5. Usefulness of reporting; and
   6. Users of reporting
3. Compare and contrast the findings of the CPA report with the following guiding principles that underpin integrated reporting:
   1. Stakeholder relationships;
   2. Materiality;
   3. Conciseness;
   4. Reliability and completeness; and
   5. Consistency and comparability
4. Identify and explain the similarities and differences between :
   1. The definition and objective of the International Framework with the definition and objective of general purpose financial reporting (GPFRs) as contained in the IASB / AASB conceptual framework (IASB CF);
   2. The identification of the users of an integrated report and the identification of the users of GPFRs;
   3. The integrated report concept of materiality and the IASB CF concept of materiality; and
   4. The integrated report concepts of reliability, completeness, consistency and comparability and the IASB CF concepts of reliability, completeness, consistency and comparability
5. Compare and contrast the integrated reports of four companies that appear in the examples database of the integrated reporting website (see below) with respect to  any four of the Guiding Principles as discussed in your answer to part 3

6. Discuss the factors that may explain the similarities of differences that you identified in your analysis in part 5.

Role of the International Integrated Reporting Committee

In this assignment, proper emphasis had been given on explaining the role of International Integrated Reporting Committee and this was done by referring to the International Integrated Reporting Committee website and use of applicable accounting literature. The current study explain about the possible roles of integrated reporting with respect to different attributes and these are stakeholder engagement, comparability of reporting, users of reporting, usefulness of reporting and quality of reporting. In the next segment, comparison had been conducted to understand findings of the CPA report in along with the guiding principles and some of these guiding principles are stakeholder relationships, reliability, materiality, conciseness, comparability and consistency. In addition to that, the study compares between the objective of International Framework and General Purpose Financial Reporting and this was clearly highlighted in the IASB or AASB conceptual framework. Furthermore, the study even compares between four companies where each of the company had been taken into consideration and explain in detail and these companies are HULAMIN LTD, DSM, MTN and CEMEX. These companies were compared as to whether the companies aligns or abides by the IR guiding principles and these are stakeholder relationships, completeness, reliability, comparability and consistency (Adams and Simnett 2011).

In this question, proper emphasis had been given to understand the role of the IIRC by gathering information from the IIRC website as well as relevant accounting literature. The International Integrated Reporting Committee can be termed as global coalition who act as a regulators and standard setters. In addition to that, the main role of this Committee is to propose a generally accepted framework in order to deal with a procedure that result in enhancing the level of communication within companies so that value creation can be done for given period of time (Brown and Dillard 2014). It was decided by the Committee to bring forward or identify the development areas that is possible by conducting internationally accepted integrated reporting framework. Proper concise communication can be enhanced within the companies if there is proper development of international accepted reporting framework as it will help the business to understand how they involve in value creation activities within specified time frame. Therefore, it is the responsibility of the International Integrated Reporting Committee to promote communication so that the companies can know how to create value in the next step and this can be done by development of commercial commentary.

Part A

Possible Roles of Integrated Reporting

Companies should always update about the information to the shareholders as they are always interested in getting access to these information about their work. Any of the environmental issues should be well communicated to the environmental stakeholders as they are interested in know the issues or significance at the same time. These environmental stakeholders have extensive but even gets access to varied informational needs and these needs cannot be well-addressed by any single or static or annual integrated reporting (Busco 2016). Therefore, most the stakeholders make use of reports and treat it as background information at the time of carrying out the research for a given company and the information was gathered by referring to the research findings of the CPA report as well as appropriate accounting literature.

Part B

It is the stakeholder who receives information through direct engagement with any of the Business Corporation or enterprises. The stakeholders should be well-informed about any changes planned by the companies as it is stakeholder engagement is necessary where the stakeholder after getting the information decides upon how to respond to the issues highlighted by the company (Cheng et al. 2014).

Part C

It can be seen that the integrated reports could not meet the informational needs for both the civic stakeholders as well as environmental stakeholders. It is the stakeholders who understand the issue or identified problems that results in comparability and quality of these reporting system.

Part D

As far as quality of integrated reporting is concerned, the financial stakeholders are of the opinion that this reporting reveals the variation through identified means. In addition to that, financial stakeholders reveals the fact that integrated reporting fails to reports most of case studies and even fails at the time of setting targets and even does not have narrations on how the given issues can be significant for any business. As far as environmental stakeholders are concerned, they engages in pointing out the issues where the reports fails to identify the right indicators such as amount of lending to fossil fuel projects and rendering headline information on  some of the smaller issues.

Part E

While engaging in decision-making activities, integrated reports plays major role here and useful at the same time. The stakeholders had mixed views upon the usefulness of integrated reporting. Furthermore, it can be seen that the prime motive or objective of integrated reporting is to understand the perspectives of the stakeholders on understanding the usefulness of integrated reporting and this will be used while engaging in decision-making activities.

Comparison Between CPA Report and Guiding Principles

Part F

Users of reporting

It is essential to understand the fact that the users of integrated reporting are the stakeholders. It help in representing the producers of the integrated reports and it is compared with the usefulness of integrated reporting as viewed by different users of the reports.

3.Part A

Information was gathered from the CPA report and found out that maintaining relationship with the stakeholders is important and this was under the performance content elements that reveals as one of the major components as it explain about the stakeholder relationships (Cpaaustralia.com.au. 2018). On understanding the integrated reporting, it takes into account improved corporate reputation and stakeholders relationships. One of the guiding principles is stakeholder relationships here and it is being evaluated in the question by comparing this guiding principles as mentioned in the findings of CPA report and integrated reporting. In CPA report, this report states about the stakeholder relationships whereas in the integrated reporting it states about the performance as well as business at the same time.

Part B

Information was gathered from the findings of the CPA report and found out that environmental stakeholders were of the opinion that business should engage in disclosing the information that had impact on environment and society as a whole. The issue mainly governs around issue such carbon gas emissions and climatic change. It is the stakeholders who desired to disclose the materiality concepts and its related impact at the same time. For example, most of the companies who have relevant information about their own operations and deal with the case as and when needed. It is not that much important unless the business has some actual power generator or big energy user (de Villiers, Rinaldi and Unerman 2014).

Information was gathered from the integrated reporting and found out that materiality presumes and applies from the perspectives of value creation activities (Integratedreporting.org. 2018). In addition to that, this particular integrated framework should aim at disclosing the information that shows the ability of the business in creating for short-term, medium-term and long-term creation of value

Part C

Information had been gathered from the CPA report and it can be seen that business largely thinks about the conciseness of presenting information to the stakeholders. It was added by one of the reporters that due to in-depth analysis, it becomes impossible to access potential information. On the contrary, other reporters thought that identifying the challenge of keeping the report in concise way can be treated as one of the interesting and challenging task that takes into account collection of right information at the time of conducting business activities.

Comparison of Companies

Information had been gathered from the integrated reporting and it can be seen that some of the reports finds it impossible to provide concise information as well as aim at presenting some context to the readers where the readers can understand the value creation process of business and level of performance in the most appropriate way (Dumay et al. 2016).

Part D

Information had been gathered from the CPA report and it can be seen that more than 10 stakeholders asked about the reliability of integrating reports. Some even argues that the integrated reporting is one of the reporting that renders assurance and verification of reports as it guides in boosting the level of confidence among the few stakeholders. In case of financial stakeholders, they believe that reliability can be found in varied form because it takes into account developing a reliability score during the assessment process. Some of the other financial stakeholders feels that the provided data should be reliable as far as possible. Companies should not involve in hiding any information from the stakeholders (Flower 2015).

Information had been gathered from the integrated reports and it can be seen that both reliability and completeness reveals about balancing between good and bad news. It was further noted that the reliability principles were good as more than 68% of the reports reveals used neutral factual language and properly manages to further avoid looking at certain elements such as materiality and promotional tools at the same time. It is important to involve in bringing improvement in the materiality determination process and this can be done by providing reliable and complete information to the stakeholders (García-Sánchez and Noguera-Gámez 2017)

Part E

Information was gathered from the CPA report and it can be seen that most of the arguments took place by the stakeholders and they were talking about the usefulness of integrated reports as it help at the time of making the comparison of the reports. Here, comparability is done between two or more companies within a given industry or sector as well as it plays major role for the environmental stakeholders.

Information was gathered from the integrated reports and it can be seen that both consistency and comparability involves allowing for making the comparisons for specified time frame. In addition to that, use of integrated reports will help in presenting the reports with internal consistency and measures taken for given period of time and this can be done by comparing with other companies.

Stakeholder Engagement

4.Part A

Part B

Part C

Part D

5.IR Guiding Principles

Stakeholder relationships

 Materiality

Consistency and comparability

Reliability and completeness

6.In this question, factors will be discussed that explain the similarities and differences as identified in the previous question. It can be seen from the above question on how far the IR guiding principles are essential in evaluating the undertaking as and when undertaken by any business enterprise. In the above question, four guiding principles were selected and explained for conducting analysis and these principles are stakeholder relationships, reliability and completeness, materiality and consistency and comparability. All of these four guiding principles were explained in details by referring to four companies and these companies are HULAMIN LTD, MTN Group, CEMEX and DSM. As far as integrated report are concerned for these four companies, it is needed to be related with the IR guiding principles.

After explaining about the similarities and differences, several factors had been identified and this is information gathering. This means getting access to accurate and complete information is essential and can be considered as one of the factors pertaining to integrated reporting framework. It becomes quite impossible for any companies to attract stakeholders and engage in maintaining relationships with them if there is incomplete or lack of information gathered or provided. Each of the stakeholders has the right to get informed on matters relating to any changes that had been developed within the business enterprise. Image of the company can be hampered if the company engages in hiding of any of the information or involve in material misstatement of figures because this activities distort the actual information. There are several other key factors and these are communication with the stakeholders and maintain positive relationships in the most appropriate way.

Conclusion

From the above analysis, it is found out that integrating reporting renders information to their users in an effective way. In addition to that, this integrated reporting help in carrying out the business by taking into account mainstream business practices as well as connecting it with the other industries and business companies at the same time. At the time of making the comparison, it becomes essential to understand the fact as each of the company have to provide complete information in their financial statement. By doing that, it will help the users while they involve in decision-making activities. Therefore, communication with the stakeholders and maintaining relationships with them becomes important in the long-term process.

References and Bibliography

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