Functions Of International Integrated Reporting Committee And Its Roles In Stakeholder Engagement, Financial Reporting Quality, And Comparability

International Integrated Reporting Committee: Functions and Objectives

In this particular study, the functions of International Integrated Reporting Committee are demonstrated by referring to the applicable accounting literature and IIRC websites. The next section illustrates the roles of integrated reporting in relation to the engagement of stakeholder, financial reporting quality, financing reporting comparability and by referring to the financial reporting users. Results of CPA report have been compared in the current segment in association with the guiding principles and such principles comprised of reliability and completeness, relationship, comparability, consistency and conciseness. Later on, the comparison between the objectives of general purpose financial reporting and international framework has been demonstrated as mentioned in the conceptual framework of AASB and IASB (Cascino et al. 2017). Furthermore, comparison has been done between the reporting framework of two companies that involves MTN Group, HULAMIN LTD, DSM and CEMEX. Such assessment helps in valuating whether their reporting framework complies with the guiding principles of IR.

 The International Integrated Reporting Council was previously known as The International Integrated Reporting Committee and was established in year 2010 with the objective of creating a framework that is accepted at global level that has the consequence of creating communication that is with creating value for organizations. A cross section of representatives from accounting, investment, corporate, civil society and standard setting sector are brought together using the platform of IIRC. Such representatives comprises of a working group, steering committee and a three task forces. IIRC is one of the coalition’s standard setters, regulators and professions from accounting. The committee has the intention of bringing together the development by way of conducting the internationally reported framework that is accepted internationally (Randolph 2015). Creation of such framework will assist business in creating concise communications of their information and thereby help in value creation and leading to the corporate reporting evolution.

The main interest of the stakeholders is having access of information that is relevant for their investment decision making. For example, investors now a day are interested in gaining the information relating to environmental issues and it is regarded significant in their investment decision depicting the particular organization is socially responsible or not. Such stakeholders have information requirement that are varied and extensive and it is not possible for a single annual or strategic report to address such requirements. It has been ascertained by making reference to CPA report and findings from literature review that for conducting research on any particular organization, stakeholders derives background information by making reference to such reports (Humphrey et al. 2017).

Roles of Integrated Reporting in Stakeholder Engagement, Financial Reporting Quality, and Comparability

Engaging directly with the companies or business is the primary source of stakeholders for seeking relevant information. Engagement of stakeholders is considered as quite interesting as they are able to gain information and are able to prioritize the information that they have derived.

The informational requirements of stakeholders such as environmental and civic references cannot be met by the integrating reporting framework. At the same time, most of the stakeholders have to face the issues relating to the matters such as timing issues, quality and comparability at the same time (Scott 2015).

Integrated reporting quality is used as a platform for identifying some of the significant variations as ascertained by the financial stakeholders. It is opined by some of these financial stakeholders that there are loopholes in the integrated reporting framework as it does not account for most of the case studies along with absence of narrations of the significance of issue and their inability to set the target. In addition to this, it is also pointed out by the environmental stakeholders that the integrated reporting also lacks on providing information on matters such as setting correct indicators in matters relating to environment such as providing headlines for some environmental issues and information about making lending to the projects such as fossil fuels.

The decision making activities are conducted by stakeholders using the framework of integrated reporting and in this regard, such report is considered as useful to investors. The usefulness of integrated reporting comes with mixed views on part of stakeholders. The main purpose of such integrated reporting framework is to highlight on the matters that are considered relevant for the decision making purse by the stakeholders (Mayo 2017). 

The main users of integrated reporting are stakeholders and investors as such report make a disclosure about the different views of the users and importance of the producers of report.

The information about the relationship of stakeholders with organization can be accessed from the findings generated from CPA report. Such information’s are disclosed under the content elements of performance that helps in explaining the relationship of stakeholders with that of stake. In addition to this, integrated report also incorporates the relationship of stakeholders and improved reputation of the corporate.

Guiding principles	Integrated reporting	Findings from CPA report
Relationships with the stakeholders	Performance Business	Stating stakeholder relationships

It has been ascertained from the findings generated from CPA report that the business is required to make disclosure of the information on matters relating to the environmental performance, information on the change in climatic conditions and disclosure about carbon emissions and the social impacts of their operations. Such information disclosure is regarded as relevant because of stakeholders found it important to get incorporated in their investment decision making. Moreover, it is also sought by the stakeholders to make disclosure of the information that have a material impact and disclosing the materiality concepts. There are many organizations who provide stakeholders with the information about the operations if their business activities (Iasplus.com 2018). Nevertheless, such information disclosure is not considered as relevant unless the organization is a big user of energy or they are a power generator.

Comparison between Objectives of General Purpose Financial Reporting and International Framework

The materiality concept is applicable and determined by organization from value creation perspectives as evaluated from integrated reporting. Therefore, it can be inferred from the analysis that the framework of integrated reporting should disclose the matters for which the ability of business is impacted pre dominantly and intends to create value for long and short term. 

 It has been evaluated from the findings of CPA report that the present information as well as conciseness facts is praised by organizations largely. It was opined by one of the reporters that potential information could not be accessed because of the level of detail presented in the report (Richardson 2017). Moreover, the challenging task for reporters is to keep the report in concise format that will help in treating complex business activities by gaining the access to right business information.

It has been found from the CPA report that the concise information’s could not be rendered by most of the reporters. However, stakeholders are able to have an understanding the process of value creation by providing sufficient context to readers along with the performance of organization at different times.

On finding the reports of CPA, we have noted that more than about 10 stakeholders have interrogated about the how much the reports are reliable, whereas we can see that the integrated reports also provides assurance and verification of the reports since it has been expected to provide a helping hand in assuring some confidence to a few stakeholders as well. In case we talk about the financial stakeholders, they are expected to find reliability in various forms as they deal in developing a reliability score for feeding as the assessment begins to process. At the same time we can note that other financial stakeholders expect the data which are provided should even more reliable in nature, the information about the data should be complete which consequently will result in distortion of the significant information.

In order to strike a balance in between the good and bad news together in case of integrated reporting, there must be reliability and completeness, the principles of reliability and completeness are found to be very motivating and encouraging as we can see that about 60 percent of the reports have used neutral factual language and also has managed to avoid depicted as the managing and marketing tools. So as to bring improvement in conscience as well as the reliability and completeness of the information it is significant to bring about the improved changes in the materiality determination processes, thereby enhancing the credibility of the reports in the most proper way possible.

Reporting Framework Comparison between Companies

Major arguments were raised by the stakeholders on issues related to the usefulness of the integrated reports from the findings of the CPA reports which is found to be very helpful in comparing the reports. On studying the integrated reports the consistency and comparability means letting the comparisons to be made for a specified period of time with other business enterprises.

International Framework objectives and framework.	Purpose financial reporting as depicted in AASB conceptual framework or IASB.
International framework is the integrate report that helps users by providing concise information about the governance, strategy, prospects and performance at internal and external level so that business are able to generate value over time for its stakeholders.	The concepts as well as objectives used for the purpose of general financial reporting are described in the conceptual framework of financial reporting. Moreover, the general purpose financial reporting also provides assistance to the International standard board for development of standards that are of consistent nature.
Assist in improving the content of governing process of organization by establishment of content elements and guiding principles. Explanation of the basic principles underpinning such guidelines so that organizations are able to make adequate utilization of such framework.	It assists preparers in consistent accounting policies development when there is no standard applicable to any specific or particular transactions. This particular objective is regarded as useful when no accounting policy exist in light of absence of standard.

Identification integrated reporting users	Identification of general purpose financial reporting users
An integrated reporting is of great importance to users such as investors and stakeholders who shows considerable interest in any organization for the purpose of decision making and analyzing their ability of creating value over time. Such users involve customers, suppliers, employees, local communities, business partners, regulators and legislators.	Long term investors or shareholders in any particular organization are the significant uses of the general purpose financing reporting. This is so because general purpose financial reporting entitles organization to make appropriate disclosure of their financial information by aligning with the relevant accounting policies. It assists them in making investment decisions.

Concept of materiality according to integrated reporting

Conceptual framework concept of materiality according to IASB

The information on matters concerning materiality is disclosed in the integrated reporting and such materiality concept would affect the ability of business to create the value for a given time period. At the time of presentation and presentation of integrated report, the process of determining materiality is considered of utmost importance. The relevant matters that helps in identifying the ability of creating value in terms of the potential impact on attributes of value creation (Libby 2017).

Information presented in the annual report is regarded as material if it influences the decision making process by misstating of omission the figures of any reporting entity. Moreover, materiality is considered as one of the aspect of relevance that is entity specific and such material factor is dependent upon the context and magnitude of financial reporting.

Integrated concepts	IASB conceptual framework concepts
Reliability- Freedom from nay material errors and balance impacts the reliability of information that is presented in the financial report. Some of the mechanism that helps in enhancing reliability is reporting system and robust internal control system along with stakeholder engagement (Macve 2015). Completeness- It is required by organization to make the identification of all the material information for deriving complete information.	Reliability- Information is considered as reliable in accordance with IASB conceptual framework if such information is represented faithfully and is free from any material errors. One of the qualitative characteristics of the financial reporting is reliability. Completeness- As per the framework of IASB, the information presented in the financial report of organization should be complete and there should not be absence of any information.
Comparability- The information presented in the annual report should be easily compared over time so that it assists users in comparing the information during the different financial reporting period. Consistency- The quality of financial information presented in the report is enhanced if there is consistency in the information’s so that it becomes useful for users to evaluate the performance of company.	Comparability-This particular qualitative characteristic enables users to evaluate the differences and similarities between the facts and financial information presented in the report.   Consistency-Consistency is about making use of same method accounting treatments of some of the financial elements presented in the report. Such characteristics would facilitate users to properly evaluate and analyze the information and making sound investment decision.

Integrated reports of four companies	Guiding Principles of IR
HULAMIN LTD The subscription of company is done on the principles of stakeholder engagement as depicted in the code of King III. Moreover, development of management is done for formulating the policies and highlighting the strategies for each group of stakeholders. Any disputes with the stakeholders are resolved by organization in a very effective manner. Rather than litigating, the company intends to settle any disputes using the mechanism of resolution (Haskin and Burke 2016). CEMEX The main principle of CEMEX is to build and maintain strong relationship with their stakeholders. Any alterations in their financial statements are adequately informed using a proper platform. MTN GROUP The operating activities of company are informed to the stakeholders along with the information about the amount of money being invested. DSM The main purpose of company is to keep their stakeholders well informed by building cordial relationship with them. Such information and cordial relationship further helps in enhancing the investing decision making of company.	Stakeholder relationships The relationship with stakeholders and reputation of organization has improved by incorporation of integrated reporting framework.
HULAMIN LTD The concepts of materiality have been applied at Hulamin limited for enabling qualitative as well as quantitative disclosures. Moreover, for enhancing the disclosure of information, various changes have been made and accordingly implemented. Such changes have facilitated the comparison of the financial information presented between different reporting period. CEMEX It is believed by company that there should be adequate presentation of information’s on all matters related to materiality. The group ensures that there is no materiality of the accounts and omitted figures in the financial statements. MTN GROUP All the material matters presented in the financial statements are adequately highly at MTN group. This provides assistance to investors in gaining all the relevant financial information so that the financial performance can be compared over time. DSM A great amount of emphasis is put by company on sufficient disclosure of material information’s in the financial statements.	Materiality The application of materiality concept is done by organization from the value creation perspectives.
HULAMIN LTD It is believed by the company that a consistent approach should be adopted that would help in balancing the accounting treatments under different categories. CEMEX Consistent information is rendered by organization at CEMEX to the financial statements users and used for facilitating comparison between the reporting periods. MTN GROUP Users should be capable of understanding the qualitative terms such as comparability and consistency. Sufficient emphasis is laid down by organization in disclosing the qualitative characteristics so that financial information can be compared. DSM The main priority of DSM is to provide users with the consistent information so that financial information can be compared.	Consistency and comparability These characteristics help in creating comparison and consistencies across the different reporting period.
HULAMIN LTD The main objective of company is to provide stakeholders with relevant financial information that is free from material misstatements. CEMEX Proving complete and reliable information to users is the main objective of the group. MTN GROUP Investors at MTN group are provided with adequate information about the financial performance of organization. DSM Investors at DSM group are provided with adequate information about the financial performance of organization.	Reliability and completeness Completeness and reliability qualitative characteristics help in creating balance between bad as well as good events together.

From the question given above, it is understandable that how the IR guiding principles are significant to understand the undertakings taken by the enterprise or the organization. The guiding principles which are selected above for the purpose of analysis were the stakeholder’s relationships, materiality, reliability and completeness, consistency and comparability (Loprevite et al. 2018). These above mentioned principles are explained in detail by referring to about four companies for example such as HULAMIN ltd., CEMEX, MTN Group and DSM. In order to relate with the IR guiding principles the integrated reports of these four companies are needed.

There are facts that have been noted by explaining the similarities and the differences are assembling of the information related to it. Obtaining the required information is essential and can be treated as one of the most significant factors pertaining to the framework of integrated reporting. It becomes very difficult for the companies to maintain healthy relationships with clients without having complete and appropriate information. Each and every shareholder need to be informed about any kind of changes or alterations made in organization (Martin and Roychowdhury 2015). Also hiding of the important information or not acquainting the clients about the newer implementation in the organization can have serious negative impact and image of the company on the clients and consequently it may affect their businesses in the long run. Others are the key factors that are playing a significant role in maintaining a good relation and communication of the stakeholders.

Conclusion

Lastly at the end of this study we conclude that the integrated reports provide useful and beneficial information to the users. Integrated reporting is also found to provide the thinking within the mainstream business practices and thereby providing connectivity in between the companies the clients. Comparisons are done or conducted so as to understand that it is significant to provide the complete information about the enterprise or a financial statement as it is found to help the users at the time of significant decision making .Communicating with the stakeholders as well as maintaining good relationship with the clients are found to be useful in the success of the process.

Materiality Concept according to Integrated Reporting and IASB

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