Essay on The Strengths And Weaknesses Of Ir
The world around us is changing at an exponential rate, with huge developments in technology but also huge developments in culture and society, shifting towards a more environmentally aware and long term focus on how business is conducted, and in this case how they report information about how they conduct business, both financial and non-financial factors. Integrated Reporting (IR) has been introduced in recent times as a more comprehensive and more useful method of reporting. This essay will discuss what IR is, the strengths and weaknesses of IR, whether IR is a revolutionary step in accounting and how we should research how beneficial IR is to end users of financial information such as investors and businesses.
What is Integrated Reporting (IR)?
The traditional, dated view of a business is the shareholder theory perspective. The perspective that businesses only exist to generate profits for the business and shareholders, with little regard for societies wellbeing. (Freeman, Wicks, & Parmar, 2004). However, over time it has become clear that this model of business cannot succeed with many examples of catastrophic failures by businesses that prioritise profits over sustainability, for example the global financial crisis and Enron. This created a demand for a new system that not only focused on profits, but also non-monetary factors such as sustainability and ethics.
The International Integrated Reporting Committee (IIRC) noticed this shift in expectations of…