Integrated reporting development for Corporate Reporting Practice

An integrated reporting system is generally a holistic kind of reporting whose focus is tackling the existing challenges in reporting and further provide for an effective way of coming up with a long term strategy. The integrated report thus contains the sphere in which the corporate entity operates the business model and organizations strategy. The Integrated Financial Reporting provides the users with the required metrics to measure the performance of their organizations manage risks and foster sustainability. The paper analyses the reasons for and against the adoption of the integrated reporting as a tool of corporate Reporting Practice. Reasons for the Integrated Reporting Through the implementation of the Integrated Reporting, an organization will not only be exposed to the most efficient financial reporting but also assist the organization cope up with the environmental and social requirements demanded by the stakeholders, suppliers , customers and Non- Governmental organizations (Cheng et al.

Further, owing to the transparency in the information, integrated reporting assists companies to belter access partners and get more capital (Neilsen & Roslender 268). In short the companies build on their competitive advantage over other organizations that are yet to adapt to the integrated system of reporting, by enabling operational efficiencies, cost saving and differentiation. In a nutshell, it gives organizations a broader view of the market environment, the industry, business models and ensuring a sustainable business environment for the companies. Fourth, the Integrated Reporting system seeks to introduce metrics upon which the sustainability of the organization could be measured, something that is lacking with the current reporting systems used by most organizations. The absence of clear metrics has been a very big problem for concern and more so converting the environmental and social issues into business language.

Further, in order to boost the quality of the reports prepared, the Integrated System proponents advocate for a compulsory third- Party Audit, a requirement that is currently not being implemented. Indeed the introduction of the above measure will make the reports more reliable, accurate and of an acceptable quality and thus making the ESG data more trustworthy. Arguments Against the adoption of the Integrated Reporting System An Integrated Reporting system being a new concept, despite having benefits will definitely face the resistance of employees who do not want change. Change comes with a lot of responsibilities which end up affecting the job description of an employee. The Integrated Reporting system is thus not an exception. For example, they argue that it may take several years to have the integrated system fully functional and thus leading to the production of the first report.

Further owing to the departmental corporation required by the implementation of the IR system, it calls that employees with experience in interdepartmental coordination lead the process. However, most companies are short of these experienced staff as the IR system is a new one and most employees have never interacted with it. The cost implications are also high despite the fact that the IR system implementation allows for companies to implement the same taking into consideration the needs and the peculiar circumstances of each company. Third, taking into consideration that the Integrated Reporting system is a value based system, most organizations feel that value metrics proposed are too wide and that there is need for the simplification of the same. Fourth, the Integrated Reporting system is meant to be implemented globally by having a uniform sustainability reporting system across the world.

Such kind of an approach or arrangement however, creates a lot of challenges. One of the major problems is as to who will be the policing officer of the system. In short, the question of who the regulating officer for the entire world will be is quite problematic (Flower 6). Companies are left to guess whether such reporting rules will be enforced through the stock exchange authorities by making it a listing requirement and the viability of such an option. More over the system acts as an eye opener to the organizations that initially did not have a strategy think of having one and stating clearly the manner in which the company aims at creating value (Tweedie, Nielsen & Martinov-Bennie 419). Further, the Integrated Reporting system opens up the space for internal dialogue.

The boundaries that initially blocked departments from talking and consulting each other are now removed by the IR standards and thus creating room for departments to create ideas, form opinions and give feedback for the better of the organization as a whole. Also, the IR system enhances efficiency, and this has been reported by companies which are already implementing the system such as PUMA (Tweedie, Nielsen & Martinov-Bennie 408). Integrating both the financial and non-financial information provides a very detailed report on the position of the company and the sustainability of the same in future. For example, they raise questions as to the global uniform implementation of the standards, the global regulator of the system, the practicability of the uniform metrics or standards across all organizations, the cost implication owing to the experience required and the resistance to change by employees.