Assessment of Integrated Reporting for adoption by Alumina Limited

Document Type:Research Paper

Subject Area:Accounting

Document 1

As such, the paper aims to distinguish IR as a timely policy objective for Alumina Limited (AWC) to implement owing to the positive milestones it could accrue the company. Notable benefits of making integrated reports include enhanced reliability and comparability which are building blocks of effective reporting. Usually, by adopting the practice, relationship with the stakeholder increases due to the concise and holistic nature of the information. As a policy recommendation, despite IR being a work in progress, it is timely to implement it by establishing all the necessary framework in the organization including inclusiveness of senior management, communicating and adopting set policy standards as contemplated by FASB, WFE, and the IFRS. Introduction The intrinsic interconnections and increased globalization of finance, people and knowledge have created a crisis in the recent past.

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Also, over time, the stakeholders are switching their interests to include the nonfinancial information about the company which traditional reporting standards does not inform. Over the years, value for intangible assets has increased which according to S&P 500 market capitalization is seriously changing. Appendix i shows the changing market value of intangible assets. Moreover, investors view the financial statements and sustainability reports as missing links between corporate reporting, business strategy, and risk which obliterated assessment of the financial health of the organization; the nonfinancial reporting should be integrated with financial reports. Also, the sustainability reports lack accountability mechanisms for nonfinancial reporting besides failing to determine oversight framework or even third-party assurers, as well as the reports lacking crucial qualitative performance indicators to help assess financial materiality.

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IR is to “communicate the full range of factors that materially affect the ability of an organization to create value over time. ” 7 These are not limited to communicating the existing skills of human capital, social reputation, and environmental reports. Indeed, IR aims to connect business strategy, risks and the critical performance indicators and financial performance. It is a holistic, multidimensional and clear representation of the organization from where stakeholders make decisions. 8 However, to effectively create the desired value that meets objectives, the company should brace all its resources and align them to the business strategy, outline benefits attributable to the society and relate them to profitability and value-creation to enhance shareholder confidence. 12 The materiality principle surrounds the two forms of reporting where IR decipher it as an effort at appealing to the investors and other stakeholders in the short, medium and long-term.

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On the contrary, SR merely relies on whether sufficient interests are promoting the report. Adopting IR means that the company is in a position of winning the stakeholders more intensively since they access all the significant information about the organization. 13 Benefits and costs of IR Integrated corporate reporting aims to shape the value of information that institutional stakeholder will derive from the financial statements. The essential components of IR include financial statements which apprise about the financial information, governance and remuneration based on the human capital base, sustainability information and management commentary. 17 Also, costs of acquiring new information system that meet the objectives of IR is very high because it requires additional investment developing new information systems that assure data sustainability, besides the inevitable financial capital to meet the cost of skilled personnel with an ability to cultivate data into the integrated reports.

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18 It is also likely that adopting an IR system will agitate property disclosure costs which arise from sharing competitive information with the institutional stakeholders. The IR and the Institutional stakeholders Integrate reporting informs environmental stakeholders about performance, responses to environmental issues such as climate change policies as well as opens discussions with the company. The environmental partners easily access information contained in the reports to help in informing decisions about the influence of the company’s operations. 19 Moreover, these stakeholders determine the vital issues like culture, labor, and even human rights concerns; environmental impacts and how they inspire operations. Besides, the system should promote reliability and comparability of reports through compliance with the International Financial Reporting Standards (IFRS) or the Generally Acceptable Accounting Policies (GAAP) such as adopting such clauses as “the necessary information presents a true and fair view”; guarantee quality of data through the integrated auditing assurance that meets the principle of materiality.

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In conclusion, as pressure about information access to institutional stakeholders rises, so are better frameworks contemplated to meet the needs. It is crucial, for the company to improve its systems to ensure they inspire and create value in the organization which is the focus of modern investors. Environmental lobbyists, investors, lenders, and employees need information to make informed decisions about the company as well as foster growth in the organization. Such objectives are only assured through integrated communication of corporate information. bar. <https://drcaroladams. net/exploring-the-implications-of-integrated-reporting-for-social-investment-disclosures/>. Accessed Sept 19th 2018. Clayton, A. net/publication/282562074_Integrated_reporting_vs_sustainability_reporting_for_corporate_responsibility_in_South_Africa> Accessed Sept 19th 2018. Eccles, R. G. and Krzus, M. P.  Accounting, Auditing & Accountability Journal, 27(7), pp. <https://www.

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