Integrated Reporting - Woodside Petroleum Limited - Case Study Example

Integrated Reporting Name Institution Affiliation Integrated reporting Communicating the basic information to the various parties in an organisation is basic to ensure continued growth and operation. Organisations have been hereby adopting reporting strategies that will enhance effective communication of information to the targeted parties. Recent advancement in reporting has led to including both financial and non-financial information commonly referred to as integrated reporting. The need for regulation has however increased to ensure quality control of information included in the reports. The paper will discuss the main purpose of using integrated reporting and the benefits brought about by its use. It will also discuss the regulation and how it helps in achieving the goal of integrated reporting. Assessing the performance of a company relies on the quality of information availed. The information is not only financial in the form of a financial statement but also include other non-financial information such as new strategies to be adopted (Fried et al. 2014). The information is useful to the targeted groups in varying manner depending on their role in the organisation. Stakeholders use the information to assess their return on investment whereas the potential investors use it to make the decision on the investment to make. Public may use the information to determine the future of the company thus the availability of the products and services it offers. With the changing financial environment, it is paramount to ensure information communicated the various parties including stakeholders, potential investors and the public is of high quality reflecting the real position of the company regarding operation (Fried et al. 2014). Reporting has evolved in the modern environment as it aims towards building trust and raising capital. Integrated reporting aims at tackling the shift in preference by integrating both the financial and non-financial reporting. Its primary purpose is to address the various challenges that have been facing corporate reporting such as issues in value creation. It informs of the real nature of the company by using a holistic approach when reporting. Integrated information ensures accountability in the management of an organisation, a key strategy that aids in increasing the stock price over time whereas ensuring continued productivity (Fried et al. 2014). The rise in stock value provides financial benefits for the stakeholders. Integrated reporting provides benefits through value creation and capital accumulation. The system focuses on informing about the various strategies and policies adopted by an organization that may impact its performance in the short, medium and long term. Such strategies and policies affect the social and economic environment within which an organization carries out its operations. The results of the implementation of these policies and strategies may have varying impact in the long term as compared to the short term. Integrated reporting as a result focuses on educating the users of the information the type of impact such strategies and policies implemented by the company may have both in the long term and short term (In Songini & In Pistoni, 2015). The type of reporting system addresses the concerns that may arise when implementation of policies or strategies fails to bring the desired results at short term as it may be desired by the stakeholders and other parties to the operation of an organisation. It also helps in capital accumulation by giving insight into various resources being utilised by the company in its operations. Capital is utilized as the company engages in varying forms of production. It occurs in various forms including human capital, manufacture capital, natural, financial, social and even intellectual capital. Integrated accounting is based on these forms of capital enabling the organization to determine its reliance on external resources as they aim at value creation (In Akkucuk, 2015). Integrated accounting also helps in clearly understanding the opportunities and threats that the pattern may present that may impact the performance of the organization by determining the reliance on external resources for value creation (Fried et al. 2014). The system is also widely believed to help in management by enabling integrated thinking. Analysing the information presented in integrated reporting requires proper understanding of the factors that affect the organization’s operations and the nature of the relationship (Eccles & Krzus, 2015). The investors can also be involved in making the decisions that affect the organization in ensuring continued growth. There have been issues with the quality of information in reporting affecting its reliability thus increasing the need for regulation. The International Integrated Reporting Council (IIRC) has developed the International Integrated Reporting Framework that governs integrated reporting to ensure it meets the set standards (Fried et al. 2014). The framework lists the guiding principles to be used when preparing and presenting integrated reports. One of the guiding principles is the strategic focus and future orientation. The principle requires that an integrated report provides an accurate and deep understanding of the strategies adopted by the organisation. It also requires understanding how it contributes to value creation in the short, medium and long-term. An explanation of how it uses and affects capital is also required in the report. The guidelines also require an understanding of the risks and opportunities posed by the business model adopted by the organization and its position in the market. The principle helps achieve the main purpose of integrated accounting which is giving an explanation of value creation by the organisation to the investors who are the providers of financial capital (In Songini & In Pistoni, 2015). Another guiding principle is explaining the relationship with the stakeholders. The principle requires an integrated report to account for the relationship by explaining what actions and the extent the actions meet the needs and interests of the stakeholders (In Brusco, 2013). The principle enables the organisation to accomplish its purpose of value creation through enabling strong relationship with other parties. The contribution of stakeholders is also essential in assessing their view of the value, risks and opportunities that will help in developing and evaluating a strategy. Woodside Petroleum Limited has effectively used the guiding principle in the 2015 annual report. It has used strategic focus and future orientation by explaining how the strategy adopted by the company result in value creation. The company increases the shareholder value through global exploration and asset acquisition. It balances the short term and long term goal through taking into considering the health, safety, environmental, economic and social requirements. It has also set various policies that govern the personal and corporate behaviour. The board of the directors also has oversight over the company’s management to ensure accountability. The company has an audit board that is meant to manage risks thus protecting the shareholders and the consumers (Woodside Petroleum Limited, 2015). The supply chain of Woodside Petroleum Limited is also key in value creation. The company has also established the team to oversight the supply chain to ensure ethical conduct through dealing with bribery and corruption (Woodside Petroleum Limited, 2015). Woodside Petroleum Limited has also established a strong relationship with stakeholders and those affected by its activities by setting up the External Stakeholder Engagement Procedure that guides to set standards of dealing with the stakeholders such as customers, employees, investors, governments, suppliers and non-governmental organisations (Woodside Petroleum Limited, 2015). It ensures that they provide a safe and productive working environment for the employees whereas guaranteeing healthy and high-quality products for the customer. References Eccles, R. G., & Krzus, M. P. (2015). The integrated reporting movement: Meaning, momentum, motives, and materiality. Fried, A., Holtzman, M., & David, M. (2014). Integrated Reporting: The New Annual Report For The 21st Century?. Search.proquest.com.ezproxy.lib.uts.edu.au. Retrieved 4 August 2016, from http://search.proquest.com.ezproxy.lib.uts.edu.au/docview/1623093624?accountid=17 095 In Busco, C. (2013). Integrated reporting: Concepts and cases that redefine corporate accountability. In Akkucuk, U. (2015). Handbook of research on developing sustainable value in economics, finance, and marketing. In Songini, L., & In Pistoni, A. (2015). Sustainability disclosure: State of the art and new directions. Woodside Petroleum Limited,. (2015). Sustainable Development Report 2015. Read More