Accounting Standards - Assignment Example

UNTING STАNDАRDS Name: Course: Tutor: University: City and State: Date: Accounting Standards Question 1 The integrated report has incorporated new features in the way corporations prepare a report of its status to its shareholders and other stakeholders in comparison to the current framework of the reporting. The integrated report intends to enhance communication between the capital markets and companies compared to the traditional. There are areas in which the integrated reporting adds value to the old reporting ways while in other areas we find completely new additions. The integrated report will concentrate on connectivity of information, strategic focus, the future orientation of the past information and check on the Conciseness, reliability and materiality of the information reported (International Integrated Reporting Committee, 2013). Additionally, the information should attract response from stakeholders and include a sustainability report. On one hand, Integrated reports promote integrated reasoning because conventional reporting is done in compartments; it motivates reasoning in a compartmentalized manner. However, on the other hand Integrated Reporting shows and facilitates integrated considerations – tracking, handling, and communicating the complete complexness of the value development procedure (Eccles and Saltzman, 2011). We find that integrated Reporting shows the level to which integrated reasoning is occurring within the company. Additionally, an integrated report seeks to show a company's stewardship with considerations of financial capital as included in the traditional reporting while also including the other “capitals” (manufactured, human resource, social, natural and intellectual), as well as their inter-reliance and how they promote achievements. This wider viewpoint needs a consideration on risk and resource management. Concerning that financial reporting, the traditional reporting has mostly considered the past financials while the integrated reporting targets to focus on the past and future financial performance of the company while integrating the company strategies. Currently, yearly reports mostly concentrate on past economic performance and economic risks. Other reports, as well as communication, may cover other resources and company financial relationships, but they are scarcely provided them in a linked way, or attributed to the organization’s ideal goals and its capability to create and maintain value in the future. Concerning the period being reported, media attention as well as regulatory focus has been concentrated on the short-term financial outcomes especially after the global financial crisis (Eccles et al., 2010). Despite the fact that the short-term financial analysis is crucial, it is equally important to analyze the short-term financial in a long-term perspective. To this end integrated reporting factors in the short terms medium and long-term financial outcomes. Financial reporting concentrates on a shallow series of required financial disclosure. Despite the fact that growing variety of companies are increasingly working on transparency reporting evident through the preparation of sustainability reports voluntarily, the number of companies implementing this is not high. By emphasizing on transparency, in ways such as covering a broader variety of problems and exposing the pros and cons of the company performance, the integrated report allows the development of trust. Reporting in the current times is evaluated to be too conformity-focused, lowering the opportunity for organizations to exercise reasoning appropriately. Although a particular level of compliance alignment is essential to make sure reliability and allow evaluation, Integrated Reporting considers a principles-based strategy that inspires higher concentration on aspects that are relevant to particular areas and companies. It allows a company to reveal its situation in obvious and easy to understand language. Lengthy and complicated reports are often impassable for many audiences. A key purpose for Integrated Reporting is to laminate the clustering in the main report so that it includes, brief and the most vital information (Eccles et al., 2010). While the internet is presenting aspects of technology advancement, many business reports are still provided as if they were completely document based. However integrated reporting uses new and growing technological innovations to link the information found in the main report and to enable access to further details online, which is evaluated to be appropriate. Question 2 Integrated reporting will be a changing and interesting process that is eventually motivated by business reporters through interaction with their main stakeholders. These contrasts with the controlled compliance-based reporting norm that corporate have become acquainted with over the decades. One can be certain that the beneficial begin of integrated reporting will provide about the continued development of the concept as well as best practices and advantages for corporate reporters and their stakeholders. At the center of integrated reporting is the organization’s business model. There is nonspecifically approved meaning of the term “business model” (Eccles et al., 2010). However, it is often seen as the process by which a company goes about to develop and maintain value creation. A company decides its structure through choices that usually identify that value is not brought about by or within the company alone. Instead, it recognizes that other factor affects the value creation. The first factor that affects value creation is the external aspects (including economic conditions, public problems, and technical change) that present threats and possibilities, which make the context within which the company functions. The second factors is the inter-connectedness with others (including employees, associates, systems, providers, and customers) while the third factor is the accessibility, affordability, high quality and management of various sources of funds” (financial, manufactured, intellectual, human resources and social) (International Integrated Reporting Committee, 2013). Therefore, when an integrated report provides an interactive report that includes external factors and relationships and resources that help generate and sustain value with time, an Integrated Report provides a broader description of company performance than conventional reporting. In particular, it can make all the appropriate capital visible in which performance (the past, existing and future) relies upon, how the organization utilizes these capitals and its effect on them. These details are critical to the efficient utilization of scarce resources. It will provide a significant demonstration of the businesses opportunities for long-term strength and achievements, and accomplish the informational needs of investors and other stakeholders. Question 3 Capital framework in integrated reporting is the consideration of human resources, intellectual, financial, manufacturing, social, and natural capital. These six types of capitals are crucial in an organization during the preparation of an integrated report. All companies rely on a wide range of resources and connections for their achievements. The level to which organizations are operating them down or developing them up has a significant effect on the provision of the resources and the effectiveness of the connections that include the long-term viability of those companies. Integrated Reporting shows what can be known as “integrated thinking” and motivate the ability of the managers, to keep track of, handle and communicate the full complex nature of the value-creation procedure. Additionally, it also shows how the key factor of corporate reporting bring together the different lengths of reporting (financial, control comments, governance and compensation, and reporting sustainable development) into a consistent whole that describes an organization’s capability to develop and maintain value (International Integrated Reporting Committee, 2013). Additionally, the main reason for the production of integrated systems that it helps anticipates the need for a cohesive reporting that will also decrease the bulkiness of reports on companies while enhancing investors’, and other stakeholders,' ability to comprehend the information provided. Furthermore, the integrated reports show the use of as well as the impact of relationships and resource s (human resources, natural and societal as well as economical, manufacturing and intellectual resources) on which the company and community rely on prosperity (International Integrated Reporting Committee, 2013). Additionally, it shows and conveys the interdependencies between the achievements of the company and the value it makes for its investors, workers, clients and, more generally the society. Question 4 In terms of promotions of integrated reporting concept, the IIRC (International Integrated Reporting Council) has been in the frontline working to gather a consensus on application of integrated reporting among business communities and corporation. Besides, the Prince of Wales through Accounting initiated the development of sustainability reporting framework for the sustainability project that hopes to include environmental indicators management. The efforts of the Carbon Disclosure Project, the Environment Disclosure Requirements Panel, the United Nations (UN) Meeting regarding Company and Growth, and the UN Worldwide Lightweights as well as the Worldwide Corporate are also garnered towards the development of best practices that could be used in the integrated reporting (Jensen and Berg, 2012). The Collaborative Project on Valuing Non-Financial Efficiency and others are also working to develop principles, recommendations, and standards that can be used for accounting and reporting of non-financial details. Furthermore, some companies have started implementing the integrated reporting that includes some South Africa. Although the integrated reporting is not recognized as the standard requirement in the accounting practices, the effort is focused towards international consensus f its implementation. Question 5 Some components of the present strategy approach towards integrated reporting are in a state of wonder. For example, the professional growth is mainly motivated by the community of auditors’, biasing the growth of exterior reporting designs for audit standards. While this may appear sensible from the outlook of an auditor‘s business designs, the danger of not extensively involving the organization cannot be emphasized further (White, 2010). Secondly, the current concentration concerning the recommended sustainability reporting by bodies such as Accounting for Sustainability, UN International Compact/FI/PRI/PRE, GRI, Account-Ability, ISO, and OECD among others seems to be aligned with expanding the scope and content-matter of their prescribed specifications and frameworks. This integration process is a pattern that has prospective advantages for organizations and the world at large. However, we may see the range in the reportable becoming more and more complicated as alignment at the general principles level that does not have defined units of accountancy. Although the ‘what’ is added is outlined, failing to determine the “how” results in organizations working without specific solutions that would be consistent with the current transparency needs. Therefore, conventional setters should debate extensively in offering functional explanations of a wider range of concepts about sustainability reporting (White, 2010). This move may accomplish fast adopting of new confirming specifications. The integrated reporting activity needs to be cautious when dealing with the problems and alternatives from a broader perspective to accomplish changes and to improve on stakeholders’ benefits. Additionally Incorporated Confirming needs commitment from the executive management, which can only be obtained through the clear communication of a powerful company situation for its adopting. Some teams are not particular pleased with the ideas of disclosing certain techniques and strategies, efficiency actions and objectives that they use. Such teams are uncertain about divulging such details to opponents companies thereby losing their competitive edge. Forecasting their prospect to the public may give the competitors an advantage of anticipating their strategies. References Eccles, R.G., Cheng, B. and Saltzman, D., 2010. The landscape of integrated reporting. Reflections and next steps, Cambridge (Mass.), Harvard Business School. Eccles, R.G. and Saltzman, D., 2011. Achieving sustainability through integrated reporting. Stanf Soc Innov Rev Summer, pp.56-61. Jensen, J.C. and Berg, N., 2012. Determinants of traditional sustainability reporting versus integrated reporting. An institutionalist approach. Business Strategy and the Environment, 21(5), pp.299-316. White, A., 2010. The five capitals of integrated reporting: Toward a holistic architecture for corporate disclosure. The Landscape of Integrated Reporting, Cambridge: Harvard Business School. International Integrated Reporting Committee, 2013. Consultation draft of the International< IR> framework. Author, London. Read More