Role of Integrated Reporting For Creating Values for Society

Question: Discuss about the Role of Integrated Reporting For Creating Values for Society. Answer: Introduction Demonstration of the Understanding of the Issue The role of integrated reporting for creation of the value for society elucidates in detail the development of the international integrated reporting structure. As per the Discussion paper issued by the International Integrated Reporting Committee on Towards Integrated Reporting- Communicating Value in the 21st century, the Australian Accounting Standards Board (AASB) considers that the international integrated framework as an important factor that can aid business entities in explaining the overall process of value creation (International Integrated Reporting Committee 2011). As rightly put forward by Eccles and Saltzman (2011), the integrated reporting framework also provides a holistic view of the entire business operations. The discussion paper explains as the process of accumulating different material information that essentially refers to the exercise of the collecting diverse kinds of the material information rather than integrating the information. The international integrated reporting conceptual structure as abridged in the discussion paper is essentially premised on reporting framework that provides the information needed to assess the organizational value in the 21st century and the way business represents the entire process of value-creation (Jensen and Berg 2012). In addition to this, the framework for integrated reporting have the need to provide definition as well as broad parameters or else diverse metrics for the measurement of the value of the organization across a broad range of industries as well as business entities. Furthermore, the framework also provides important principles in order to make it certain that the information that is reported is fundamentally comparable and attains the core intentions for improved communication to different stakeholders (Abeysekera 2013). Again, the development of assimilated integrated reporting is essentially premised based on the formulation of a conceptual framework that can provide the requisite building block to the entire integrated reporting framework. The current framework intends to establish link with the financial performance of the organization with the social, environmental as well as economic context that is critical for the purpose of the assimilation of the concept of the sustainable value creation with the integrated reporting (Eccles and Krzus 2010). The business organizations generate value not only for the targeted shareholders but also for the society as a whole by way of sustainable principles. The concept requires business entities to factor decisions; tradeoffs as well as sacrifices into the business model (Garca-Snchez et al. 2013). Comprehending this co-creation and shared value procedure is essential to integrated reporting. Therefore, the potential for value creation of the business entity fundamentally depends on the capacity to recognize all the available resources whether tangible or else intangible, possessed by the association. Therefore, value generated that essentially benefits the entire community as a whole, has the potential to affect the overall value as well as profitability of the corporation (Kernaghan 2013). Consequently, an organization that necessarily correspond the stratagem to the market and at the same time enumerates the contribution that in turn can stimulate the overall process of value creation in the organization. Integrated reporting is therefore a management as well as communication mechanism for comprehending and enumerating the way an organizations generate value in the current as well as in the upcoming period. For that reason, the objective is not to offer more information, but at the same time better information. In line with the framework, the overall integrated statement can help in accurate articulation of the broader range of enumeration that can contribute to different long-term value and the primary role that a particular organization plays in the community (Humphrey et al. 2014). Thus, it can be said that the value is shaped by diverse factors that is supplementary to financial performance that includes reliance on the business environment, social reputation and human capital competence among many others. Finally, this strategic advance goes well beyond the value replicated in the annual financial declarations and includes formation of intangible value along with the influence of the activity of the on the community altogether. This also takes into account a dimension and presents a description on the way it essentially influences long-term value of the shareholders (Adams 2015). Outline of the Various Arguments Related to the Issue As righty said by Eccles et al. (2012), AASB considers as the guiding principles as well as key content elements for rendering information from the reported frameworks. On the contrary, Australian Accounting Standards Board pleases in providing comments for the available Discussion Paper. As per the AASB guidelines, it needs to be considerate regarding development of international integrated reporting framework. It helps in assisting business entities for explaining the value creation process as well as providing holistic view for various operational aspects. On the other hand, AASB believes in rendering sufficient attention for paying for financial reporting for development of financial reporting as well as replacing financial statements of the business organization (Ey.com. 2016). According to Adams (2015), it has been argued that AASB recommends International Integrated Reporting Committee for developing constructed Conceptual Framework especially for integrated reporting. On the contrary, AASB mainly recommends significant proportion for gaining financial information as included in the integrated report relying upon Conceptual Framework for business organization. It involves concepts regarding reporting of potential financial information presented within the scope of Conceptual Framework. For instance, this includes information regarding human capital as well as equal opportunity for bringing compatibility of potential actions for fostering coherent reporting within an integrated report (Integratedreporting.org. 2016). Kernaghan (2013) argues that AASB follows comments with the ideas mentioned in the Discussion Paper as well as recommendations for addressing them for future analysis purpose. Discussion Paper does not necessarily define the integrated reporting but is the process for bringing material information in the integrated report. On the contrary, it explains regarding the exercising for collection of various types of material information in aligning with integration of financial reporting in the most appropriate way (Abeysekera 2013). Eccles and Krzus (2010) suggest that guiding principles starts with principles for pointing of integrated reporting framework. On the other hand, AASB considers guiding principles as well as key content elements for developing further clear guidance for integrated information. AASB considers some of the potential information regarding proposed guidelines and Management Structure. AASB recommends various developing of principles in aligning with Conceptual Framework for determination as included in the integrated reports. Guiding Principles are relevant but needs further development. Several key factors underpin integrated report elements as listed by the user of financial statements. As mentioned in the Discussion Paper, it needs to suggest regarding reporting types as well as information by the potential investors (Kernaghan 2013). It involves banks, analysts as well as potential investors. It is the financial reporting base for arranging as given in the organizational business mode l. Sustainability requires further consultation for coupling outcomes especially for pilot program for further refinement process as far as possible. According to Abeysekera (2013), there are some of the obstacles for achieving consensus as well as implementation of global approaches with financial reporting. IASB has been successfully achievable from the first ten years for building long history for supporting significant network of certain domestic setters as well as regulators at the same time. AASB recommends issues in aligning with IASB as prepares for ensuring the margins for complementary course of action. In the absence of developed conceptual framework, it posses difficulty to comment as per the Discussion Paper Justification of the Position As rightly pointed out by Jensen and Berg (2012), integrated reporting based upon the premise of organizational value. It is the value creation activities whereby definition lies within the Integrated Reporting Conceptual Framework. Development of International Integrated Conceptual Framework brings out integrated reporting serving as the first process. It defines the pilot program for enhancing strong foundation for base outcomes for assessing the effectiveness of potential course of action. It runs on parallel form in response with pilot program especially in the harmonization process (International Integrated Reporting Committee 2011). AASB enables in developing conceptual framework for focusing on the main outputs for process. Conceptual Framework brings clear understanding on the integration of financial reporting involving consideration of pilot program. As indicated in AASB Standards, it is for prospective investors for number of stakeholders as mentioned in the integrated rep orts. This involves banks, consumers as well as regulators and employees. Business entity should be considerate in using the financial information for gaining high level of comfort from other components. The main challenges raise issues in regard with harmonization of integrated reporting framework. It lacks enough existing global framework for various non-financial information reporting. Additional potential benefits involves in creating greater organizational clarity as well as streamlined reporting process in the near future. It should be suggested that initial cost as well as effort in alignment with internal reporting process (Kernaghan 2013). References Abeysekera, I., 2013. A template for integrated reporting.Journal of Intellectual Capital,14(2), pp.227-245. Adams, C., 2015.Understanding integrated reporting: The concise guide to integrated thinking and the future of corporate reporting. Do Sustainability. Eccles, R.G. and Krzus, M.P., 2010.One report: Integrated reporting for a sustainable strategy. John Wiley Sons. Eccles, R.G. and Saltzman, D., 2011. Achieving sustainability through integrated reporting.Stanf Soc Innov Rev Summer,59. 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Jensen, J.C. and Berg, N., 2012. Determinants of traditional sustainability reporting versus integrated reporting. An institutionalist approach.Business Strategy and the Environment,21(5), pp.299-316. Kernaghan, K., 2013. Integrating values into public service: The values statement as centerpiece.Public administration review,63(6), pp.711-719.