Question

Question 4.
Discuss intergration reporting in detail and highlight key issues that are of audit importance.

Answer 1

An integrated report is a concise communication about how an organization's strategy, governance, performance and prospects lead to the creation of value over the short, medium and long term.

It means the integrated representation of a company’s performance in terms of both financial and other value relevant information. Integrated Reporting provides greater context for performance data, clarifies how value relevant information fits into operations or a business, and may help make company decision making more long-term. While the communications that result from IR will be of benefit to a range of stakeholders, they are principally aimed at providers of financial capital allocation decisions.

IR is focused on showing the connectivity of strategic objectives, risk and performance to demonstrate how organisations create value. This means that organisations need to understand and report on all areas of performance and not just focus on short-term financial results.

You will see that IR has many elements which easily relate to P5. The definitions of IR are:

• A concise communication of an organisation’s strategy, governance and performance.
• Demonstrates the links between its financial performance and its wider social, environmental and economic context.
• Show how organisations create value over the short, medium and long term.

The following IR Content Elements are particularly relevant

• Organisational overview and the external environment
• Opportunities and risks
• Strategy and resource allocation
• Business model
• Performance
• Future outlook

IR helps to complete financial and sustainability reports. A framework has been published, but some questions remain in order to know how to apply it. Do we need a new report ? Do we need one report ? Will this report be useful for investors, and for other stakeholders? Other questions could have been raised, such as who is really working for an integrated reporting, and who has interests in it.