The Purpose and Benefits of Integrated Reporting - Essay Example

Integrated Report Name: Institution: Date: Integrated Report Introduction The main objective of integrated report is to ensure the promotion of a more efficient and cohesive approach to corporate reporting. This is often aimed at improving the quality of information that is made available to the financiers of organizations. This enables the provision of a more productive and efficient technique in the allocation of capital (IIRC 2013, p.4). The main objective of this report is to describe the purpose of integrated reporting, benefits and guiding principles and evaluate for AGL The purpose and benefits of integrated reporting The purpose of integrated reporting The main purpose of integrated reporting is to provide an explanation to the providers of financial capital on the value creating techniques of an organization. Through this approach to reporting, an integrated report is of benefits to t stakeholders who have some interest in how an organization ensures value creation overtime (IIRC 2013, p.4). Through the principle-based approach, interfered report ensures the existence of an appropriate balance between prescription and flexibility, which is essential in recognizing a wide variation in the varied circumstances that affect individual organizations while at the same time enabling an appropriate level of comparability across companies with the objective of meeting relevant information needs (IIRC 2013, p.5). Inasmuch as integrated reports do not describe the main performance indicators, methods of measurement or engaging in the disclosure of individual matters, it is inclusive of a small number of requirements that are applicable before an integrated report can be said to be operating in accordance with the integrated framework (IIRC 2013, p.4). Integrated reporting things An integrated report provides an explanation on how an organization is involved in the creation of value over time. The realization that value is not only created within an organization but also influenced by an external environment. This is created through stakeholder relationships and dependent on varieties of resources (IIRC 2013, p.7). Through integrated reporting an insight about the external environment that affects an organization. Furthermore, integrated reporting also provides an insight on the relationship and the resources affected and used by a company these are capitals, which are categorized as manufactured, natural, financial, human, and intellectual (IIRC 2013, p.7). Through these relationships and resources, integrated reports explain how organizations interact with capitals and the external environment in the creation of value overtime. Benefits of integrated report The value creation process of an organization overtime is manifest in the increases, decreases and the transformation of capitals resulting from the business activities and outputs of an organization. Integrated reporting explains how value created has two interrelated aspects. For instance, an organization can create value for itself and this enables financial returns to capital providers (IIRC 2013, p.7). Organizations can also create value for other stakeholders and the surrounding community. Capital and financial providers are increasingly interested in the value an organization creates for itself. An additional interest for the financiers is the value that organizations create for stakeholders and society especially when it interferes with the ability of the organization to create value for itself. Integrated reporting while providing an insight on value creation it also enlightens financiers on the area of focus of an organization with regard to value creation (Roth 2014, p. 64). An additional benefit of integrated reporting is that it enables an organization to develop an integrated thinking, which is essential in the evaluation of an organization’s long-term sustainability. This occurs through the integration of the social, environmental and governance data with the financial records (Roth 2014, p. 64). Guiding principles of IR The useful integrated reporting should own guiding principles to support an organization’s purpose and strategy. The process of preparing and presenting an integrated report must be informed by the following guiding principles: strategic focus and future orientation, connectivity for information, stakeholder relationships, materiality, conciseness, reliability and completeness, comparability and consistency (IIRC 2013, p.16). Stakeholder relationships Stakeholder relationships is a guiding principle for the integrated reporting to provide nature and quality of the relationships between company and major stakeholders. Stakeholders provide useful insights about matters that are important to them, including economic, environmental and social issues that also lead to the ability of the organization to create value (IIRC 2013, p. 17). Stakeholder relationship can help the company to: Develop and evaluate strategy and purpose. Know how stakeholders perceive value. Identify major trends. Identify material matters, including risks and opportunities. Manage and decrease risks. Strategic Focus and Future Orientation This principle’s purpose is help provider to insight into the company’s strategy, and also in order to help company to understand how it relates to the organization’s ability to create value in the short, medium and long term. Moreover, it has effects on the capitals. An application of this guiding principle provides an organization with techniques of highlighting significant risk opportunities in relation to its market position and business model (IIRC 2013, p.16). Evaluation of AGL energy Stakeholder relationships of AGL In the process of developing public policy targeting the use of environmentally friendly energy to reduce the effect of climate change, AGL has been involved in transparent operations with governments to ensure the facilitation of sensible public policy. This has been realized by maintaining proactive consultations ad dialogues with industries, governments and other stakeholder groups with the aim of influencing sensible public policy outcomes. Through such an approach, AGL has been able to work in collaboration with different stakeholders to ensure the development of mutually beneficial energy projects (AGL 2015, p. 18). Strategic focus of AGL The strategic focus of AGL is to ensure the delivery of improved shareholder returns. This focus is founded on the strengths of AGL with regard to the development of the energy industry. Through this strategy, AGL will improve in terms of business productivity, which will be essential in driving retail growth while at the same time improving on the position of the company in the transforming energy sector. The strategic roadmap unveiled by AGL is a revelation that it will be necessary to embrace organizational transformation, which will include creating an anticipatory culture characterized by commitment to an orderly transition (AGL 2015, p, 10). References AGL 2015, AGL Annual Report 2015 Roth. H, P 2014, Is Integrated Reporting in the Future? Considering the Costs, Benefits, and Role of CPAs. The CPA Journal The International IR Framework (IIRC) 2013, Integrated Reporting. International Integrated Reporting Council ` Read More