Characteristics Of Integrated Reporting

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One of the main characteristics of integrated reporting is that it is mainly aimed at communicating with potential users of financial information. Furthermore as Paul Druckman (CEO of International integrated reporting council) stated, the main audience for integrated reports are investors. Consequently, integrated reporting focuses on delivering company’s message with regards to their company’s strategy of value creation and full commercial value to its potential investors.() Generally, integrated reporting changes the mindset of providing financial information, as it delivers more ‘personal’ view on the company. For example integrated report case studies for Impahla Clothing indicates all the internal policies such as employee motivation, …show more content…
Unlike traditional financial statements, integrated reporting also includes businesses’ intangible assets, like natural resources, intellectual property and employee motivation for example. For example, studies suggest that during the past few years the percentage of intangible financial resources managed by the businesses in S&P 500 has shifted from 17% in 1975 to 81% in 2009.() Hence this means that resources mentioned above are getting bigger and bigger part of business and should not be ignored. It is also worth mentioning that integrated reports are designed to be unique and customized for every business, so it could uncomplicatedly deliver its statement of purpose and strategy to user of financial information. Another distinctive attribute associated with integrated reports, is that they are designed to be easier to read concise and user friendly. For example, according to statistics provided by IIRC () the approximate number of ‘back end’ pages have grown from around 50 in 1990 to 400 in 2008. This demonstrates that complexity of financial statements has experienced an upturn, which can negatively impact potential investor’s …show more content…
On the contrary traditional financial reports tend to give more distant and free from bias view on businesses’ ventures and activities. As a result, it helps investors to create their own judgments and allows them to make ‘correct’ decisions on their own. Moreover, the fact that traditional financial statements are standardized, grants users of financial information prospect of freely comparing different financial statements. Furthermore, another distinctive feature of traditional reporting system is that it mostly focuses on past events, and can only provide proper short-term predictions. This happens due to unpredictable nature of modern markets, due to numerous external and internal factors that affects them. This gives potential users of financial information limited perspective on entities’ future prospects along with other vital information for long term investments. Ultimately it is only natural to assume that traditional system provides most faithful and trustworthy information on businesses’ financial capital through rule bound standardizes system with narrow

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