2015 Cambridge Business & Economics Conference
ISBN : 9780974211428
Impact of Integrated Reporting (IR) on accounting and finance
By
Kamala Raghavan, DBA, CPA, CFF, CGMA, CFP
Associate Professor
JHJ School of Business, Texas Southern University
Houston, Texas 77004
raghavank@tsu.edu
(713) 313-4202
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Impact of Integrated Reporting (IR) on accounting and finance
Abstract
The International Integrated Reporting Council (IIRC), a global coalition of accounting professionals,
regulators, investors, organizations, standard setters, and non-governmental organizations, defines
Integrated Reporting (IR) as “a process that results in communication by an organization about how its
strategy, governance, performance, and prospects lead to the creation of value over the short, medium,
and long term”. IR combines the organization’s business model, strategy, governance, performance, and
prospects to expand the information content to stakeholders and to encourage long term strategic thinking.
It is based on the concept of "integrated thinking," defined as "the active consideration by an organization
of the relationships between its various operating and functional units and the capitals that the
organization uses or affects. Integrated thinking leads to integrated decision making and actions that
consider the creation of value over the short, medium and long term." IR helps managers to understand
the dependencies and interconnectivity of organizational factors that can impact short, medium, and long
term value creation. Investors and regulators demand integrated reporting on all financial and nonfinancial assets used to create value. Integrated thinking and IR enhance corporate reporting and
transparency of all types of "capitals". IIRC released the IR framework to guide organizations on their
reporting on December 8, 2013. It is a key step in the development of IR to enhance the relevance and
usefulness of information to capital markets. The framework is a principles-based approach to defining
the overall content and elements of the new integrated report. Since the framework is tested and driven by
market forces, the probability of its acceptance by the users is almost certain. It is essential for accounting
and finance professionals to understand the framework and ensure the usefulness of the reports, and
educators to prepare the students for success in the global marketplace. This paper looks at the potential
future impact of IR on the accounting and finance professionals, and current reporting technologies.
Introduction
The International Integrated Reporting Council (IIRC), a global coalition of accounting professionals,
regulators, investors, organizations, standard setters, and non-governmental organizations, defines
Integrated Reporting (IR) as “a process that results in communication by an organization about how its
strategy, governance, performance, and prospects lead to the creation of value over the short, medium,
and long term”. IR combines the organization’s business model, strategy, governance, performance, and
prospects to expand the information content to stakeholders and to encourage long term strategic thinking.
It is based on the concept of "integrated thinking," defined as "the active consideration by an organization
of the relationships between its various operating and functional units and the capitals that the
organization uses or affects. Integrated thinking leads to integrated decision making and actions that
consider the creation of value over the short, medium and long term." It helps managers to understand the
dependencies and interconnectivity of organizational factors that can impact short, medium, and long
term value creation. Investors and regulators demand integrated reporting on all financial and nonfinancial assets used to create value. IIRC released the IR framework to guide organizations on their
reporting on December 8, 2013. It is a key step in the development of IR to enhance the relevance and
usefulness of information to capital markets. The framework is a principles-based approach to defining
the overall content and elements of the new integrated report. Since the framework is tested and driven by
market forces, the probability of its acceptance by the users is almost certain. It is essential for accounting
and finance professionals to understand the framework and ensure the usefulness of the reports, and
educators to prepare the students for success in the global marketplace. This paper looks at the potential
future impact of IR on the accounting and finance professionals, and current reporting technologies.
Recognizing the need for IR, a global coalition of accounting professionals, regulators, investors,
organizations, standard setters, and non-governmental organizations formed the International IR Council
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(IIRC). The IIRC was established in 2009 to oversee the creation and implementation of an IR
"framework within which more long-term decisions can be made, unlocking financial capital for
investments as well as providing a more holistic picture of how value is created over time." The AICPA
and the Chartered Institute of Management Accountants (CIMA) are members of the IIRC Council. The
mission of IIRC was to enable IR to be embedded into mainstream business practice in the public and
private sectors (www.THEIIRC.Org). The organizational structure of the IIRC consists of a Board that
has overall responsibility for the IR framework, a Council to provide guidance and strategic insights, a
Working Group to develop the IR framework, and support staff. The IIRC Pilot program participants
included over 100 organizations from various sectors from 23 countries, and over 35 global institutional
investors. It was designed to enable organizations and investors to share experiences and create a
framework of concepts and principles to be used for preparation of future integrated reports. Starting in
October 2011 the business participants applied the concepts and principles underlying IR into practice to
help develop the framework, and the institutional investors tested the draft framework to ensure that IR
added value by supporting decision making processes. Based on 350 responses from the participants, the
framework to guide organizations on their reporting was released on December 8, 2013. The release of an
approved framework was a key step in the development of IR to enhance the relevance and usefulness of
information to capital markets. The Framework is currently being used and tested by a large number of
global organizations in various industries (Microsoft, PepsiCo, Southwest Airlines, Unilever, Danone,
Eni, Coca-Cola, Volvo, BASF, HSBC, Natura, SAP, and Repsol, to name a few).
Organizations in IIRC pilot program found that effective IR promotes integrated thinking and decision
making, and helps to strengthen communication between business units responsible for strategy, internal
control, systems, investor relations, finance, sustainability, communications, human resources and many
others. They found that IR will prompt them to think differently about reporting frameworks and
standards that are not rule-based, but using it will provide them with better financial reporting across
business activities, and helps management to make strategic decisions based on consistent, reliable, and
complete data and create synergies.
Integrated thinking and IR enhance corporate reporting and transparency of all types of "capitals"
including financial, intellectual, human, manufacturing, natural resources, and social responsibility.
Integrated thinking concentrates on short, medium and long-term performance as opposed to current
financial reporting that concentrates on historic, short term performance. The recent financial crisis and
the growing income disparities across societies have caused many observers to blame the short term focus
of organizations for the social, environmental, and economic problems. If organizations want to achieve
the goal of a sustainable society, a changed paradigm requiring management to integrate innovation,
competitiveness and sustainability by using integrated thinking and IR will be needed. IR provides a
holistic view of the business by looking at the financials, strategies, operations, risks and opportunities,
future outlook, and governance
The IIRC believes that IR will allow investors to better assess the impact of the "organization's strategy,
governance, performance and prospects" more effectively, as well as to benefit the reporting
organizations by improving their communications with stakeholders and enhancing their internal
processes. By enhancing the information relevance to financial capital providers, IR will enable better
allocation of capital and create concise communication about the impact of the organization’s strategy,
governance, performance, and prospects in the context of its external environment on its value creation.
A fundamental concept of IR is the consideration of six types of capital: financial, manufactured,
intellectual, human, social and relationship, and natural.
The IR Framework
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The IR framework is a principles-based approach that defines the overall content and elements of the new
integrated report, and treats internally created and externally purchased capital in the same manner. It
strives for a balance between flexibility and prescription and provides the fundamental concepts, guiding
principles, and content elements that should be featured in an integrated report. It represents a meaningful
and reliable way to communicate the business’ value-creation over the short, medium and long term
which is a vast improvement over the current financial statements prescribed by the FASB or IASB. The
new IR framework does not mandate specific content, but encourages organizations to design reports
which outline an organization's strategy, governance, performance and prospects within the context of its
external environment. The framework’s principles would apply to corporate, not-for-profit, and
governmental entities alike.
To be considered to be an integrated report according to the framework, it must satisfy certain minimum
requirements. It must be a "designated, identifiable communication" focusing on the connectivity and
interdependencies among internal and external factors in the business model that have a material effect on
their value creation over time. IR results in a periodic, concise integrated report about how an
organization's strategy, governance, performance, and prospects-in the context of its external
environment-lead to the creation of value in the short, medium, and long term. Although providers of
financial capital are the primary intended users, an integrated report should be designed to benefit all
stakeholders- including employees, customers, suppliers, business partners, local communities, regulators,
and policy makers- interested in an organization's ability to create value over time. The key objective of
IR is to enhance accountability and stewardship with respect to the broad base of tangible and intangible
capitals and promote understanding of their interdependencies. This innovative and integrated approach to
reporting offers interesting opportunities to management accountants and finance professionals who will
be called upon to leverage their existing skills and acquire new ones as the adoption of Integrated
Thinking and IR continues over time. Accounting researchers have long argued that increased
transparency in financial reporting should increase share prices while making it easier for organizations to
raise capital. . Figure 1 shows IIRC’s guiding principles and content elements for integrated reporting
framework.
The fundamental concepts of IR are represented by the capitals that an organization uses and affects, as
well as the process of creating value over time. At the heart of IR are 6 tenets of better reporting:
1. Communication about value creation: understanding and articulating the resources (capitals) used by
organizations that are critical to long term value creation of value. Research shows that traditional
financial statements account for only 20% of the value of a business and intangible factors such as
intellectual and human capital make up a greater proportion of its value proposition.
2. Concise and clear communication to enhance clarity and readability.
3. Articulation of strategy: A clear articulation of the business strategy and the risk management and
performance indicators will help providers of financial capital understand more about the business and
give long term commitment, while helping the business increase its performance.
4. Connectivity of information: the recognition of the inter-connectivity and dependency of different parts
of the business, and breaking down the traditional silos will lead to less duplication in the reporting
process and greater efficiency.
5. Future orientation: Most of today's corporate reporting is based on historic data, while investors are
looking for the business’ future plans to enhance value in a sustainable way. IR encourages an increased
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mix of historical and future-oriented information which provides a qualitative assessment of the risks and
opportunities.
6. Understanding the external environment: Many corporations have surpasses countries in their size, and
have increased their power, economic, social and environmental impact in the last few decades. IR
requires that the impact of external environment on a business' ability to create value be reflected in the
reports.
FIGURE 1
IR GUIDING PRINCIPLES AND CONTENT ELEMENTS (SOURCE: IIRC)
The framework defines 6 guiding principles of IR:
1.
2.
3.
4.
5.
6.
Strategic focus and future orientation: Reports should provide insight into the organization’s
strategy and the effect on its short, medium and long term value creation.
Connectivity of information: Reports should take a holistic view of the business and show the
inter-relatedness and dependencies between the organization’s value-creating factors.
Stakeholder relationships: Reports should offer insight into the organization’s relationships with
stakeholders and its responsiveness to stakeholders’ needs and interests.
Materiality and conciseness: Reports should be concise and eliminate duplication. They should
disclose information that materially affects the organization’s value creation over short, medium
and long term horizons.
Reliability and completeness: Reports should include “all material matters, both positive and
negative, in a balanced way and without material error.”
Consistency and comparability: Reports should be consistent over time and be comparable to
industry. Figure 1 shows the guiding principles and content elements of the framework.
According to the framework, the integrated report should address 7 key content elements which are linked
together to present a concise and holistic picture of value creation. The report includes a description of the
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business model, the external factors affecting the business, management's strategy for developing the
business, and discussion on the performance, prospects, and governance of the business. Based on capital
changes and value creation, the report content elaborates the organization's mission, strategy, governance,
business model and financial accounting data. Accountants can use the flexibility of IR to prepare reports
that are transparent and informative to the user. The content elements are:
1.
2.
3.
4.
5.
6.
7.
Organizational overview and external environment reports should address the organization’s
mission and vision, culture and values, ownership and operating structure, main activities and
markets, competitive landscape, revenue and staffing numbers, and external factors such as legal,
political, and environmental aspects.
Governance reports should detail the organization’s governance structure including leadership,
strategic direction, risk appetite, and the impact of compensation structure of key personnel on
value creation, and the change in capitals over the short, medium, and long term. The report
should describe strategic decision making process and the impact of the organization's culture,
ethics and values on that process. Where relevant, the existence and impact of regulations on
corporate governance should be discussed.
Business model reports should identify the organization’s key inputs, business activities, and
outputs, and how they relate to the capitals. For example, the intellectual and human capitals are
critical to the success of a service business while manufactured, financial, and natural capitals are
critical to a manufacturing organization. The report should describe activities needed to create the
key products and services, non-financial capitals such as intellectual property, human capital and
relationship capital, as well as activities that protect the organization from negative impact on
capitals, such as pollution controls and equipment maintenance. Outcomes would describe
positive (creating value) and negative (decreasing value) changes in the capitals.
Strategy and resource allocation reports should identify the organization's short, medium, and
long-term strategies, and their impact on the organization’s value creation.
Future outlook reports should describe the organization’s forward-looking information about the
expected impact of current strategic objectives on future changes in capitals and thus, on long
term value. The future outlook should be based on reasonable assumptions and disclose long-term
risk factors that may affect these projections. The reports should summarize the organization’s
method for determination of materiality, and significant frameworks and methods used to
determine material events. General reporting guidance reports should include disclosures about
material matters, capitals, and policies for aggregation and disaggregation.
Performance reports should outline the qualitative and quantitative overview of an organization’s
ability to achieve its strategic objectives. The reports should assess the organization’s key
performance indicators tied to the key outputs identified in the business model section, and
presented on a consistent basis to allow users to compare past and current performance.
Opportunities and risks reports should describe specific risks and opportunities from external
sources and internal business activities which could affect the organization's value creation, and
the organization’s risk responses. Disclosures should include an assessment of the likelihood and
potential magnitude of each item, and impact of business activities that might help manage/
deflect key risks.
The IR framework proposes that an organization creates value by using its business model to process
inputs to create outputs and outcomes. The capitals that an organization uses and affects are embodied in
the value that it creates through its business model. The business model represents the fundamentals of an
organization’s activities and structure interacting with the external environment and capitals to create
value over time. The business model draws on various capitals as inputs and, through its business
activities, converts them to outputs (products, services, by-products and waste). These outputs lead to
outcomes that affect the capitals. The organization and society share both the cost of the capitals used as
inputs and the value created by business activities. An integrated report should reveal the challenges and
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uncertainties that an organization is likely to encounter in pursuing its strategy, and the potential
implications for its business model and future performance.
Figure 2 provides an overview of the value creation process as described by the IR framework to
recognize that organizations use 6 different types of input capitals (financial, manufactured, intellectual,
human, social and relationship, and natural) to create output capitals. An organization's business model
represents the chosen system of inputs, business activities, outputs, and outcomes that aims to create
value over the short, medium, and long term according to its own mission and vision, business model, and
capitals.
Figure 2: Value Creation
The IR framework focuses on an expanded list of resources by including resources that the organization
does not actually own or control. The framework identifies the following categories of capitals: financial,
manufactured, intellectual, human, social and relationship, and natural. While the first 3 capitals are
similar to those traditionally recorded as assets, the latter 3 are typically not shown on the balance sheet.
Organizations are urged to use the capitals model as a benchmark for ensuring they consider all forms of
capital they use or affect, and as part of the theoretical underpinning for the concept of value.
The 6 forms of capital are:
Financial capital including funds generated by financial or internal operations available to the
organization as it carries out its business activities. Cash flow from operations, cash flow from financing
activities, and net income are performance measures that partially capture the change in this capital over
time.
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Manufactured capital including inventory, property, plant and equipment owned by the organization as
well as infrastructure (roads, bridges, etc.) that the organization has access to and uses in its business
activities.
Intellectual capital includes traditional intellectual property and the organization's knowledge, systems,
and procedures that contribute to value. Contrary to tradition accounting, the framework treats internally
created intellectual capital and externally purchased capital the same, allowing a research oriented
organization to report increases in intellectual capital as medium and long term value increases.
Human capital includes employees’ competencies, capabilities, and experiences as well as the skills of
contractors and suppliers.
Social and relationship capital includes brand reputation developed by the organization, and stakeholder
relationships such as banking, investor, suppliers, and customer relationships.
Natural capital includes renewable and non-renewable environmental resources. The Global Reporting
Initiative has developed reporting guidelines and measures about the organizational impact on the natural
resources and sustainability and the IR framework integrates the measures.
The business participants in the Pilot Program found that considering the capitals concept led them to
change the inter-departmental communications, to use technology to integrate information, and to change
reporting formats to reflect the information connectivity. They found that the primary benefit of the
capitals concept is to establish the causal relationship between their business model, strategy and
performance. Many of the participants are increasing their non-financial communications to provide
investors with potential leading indicators of financial performance. Many knowledge based organizations
such as financial services and technology are changing the way they communicate their strategy for value
creation, and are focusing on accounting for social and relationship capital by showing improved
customer experiences, or on human capital by showing the attraction and retention of talent.
The participants found that explaining their business models to investors provides clarity and new insight
for investors. It helps the participants understand how different activities interact has helped them to
analyze the model’s strengths, weaknesses, opportunities and threats, and many of them have changed
their approaches to work across departments to pull information together for a more cohesive and
coherent picture. Connecting information through IR sparks integrated thinking and provides concise
information showing the inter-relationships and dependencies between components that affect a
business’s ability to create value over time. The sentiments of the participant organizations are
represented by the following representative comment by Colin Melvin, CEO of investment organization
Hermes EOS: IR supports stewardship and ownership activities along with better investment decisionmaking and analysis. IR business model is a description of the organization, and how longer-term factors
fit into that description is the key to understanding the organization and its sustainability.
The global software provider, SAP is a typical example of global organizations’ adoption of IR. SAP’s 4
key performance indicators (KPIs) reflect its dependence on three capitals: financial, intellectual, and
human capitals. The 2 financial performance indicators (revenue and margin) measure the historic
performance, and the 2 non-financial indicators (customer loyalty and employee engagement) look to
SAP’s future success and value creation. Sonja Simon, Head of Group Accounting and Reporting, says,
“Our report makes it clear that our business success relies on the power of human thinking, inspiration
and creativity. We worked together with colleagues in sustainability to actively drive the project and
make sure we have support from our board for the idea. To comply with financial reporting rules and
accounting standards, information does not always present an accurate picture. For instance, the value of
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software rights developed over the past 40 years is not currently reflected on SAP’s balance sheet due to
the restrictions of International Financial Reporting Standards. We need to be cautious in order to avoid
creating a legal risk in forward-looking statements, and to work within regulatory frameworks while at the
same time providing a more comprehensive and holistic picture to our stakeholders.” Producing an
integrated report brought sustainability, investor relations, financial and communications department
employees together. SAP created a graphic to show the relationships between the financial and nonfinancial indicators and supported findings with external research. It reported that cost savings from
reducing its carbon footprint by €220 million and 1% change in employee retention saved €62 million in
costs.
Global organizations including PepsiCo, Hyundai, SAP, Tata Steel, Unilever, Deutsche Bank and HSBC
are voluntarily adopting IR, and realizing the benefits of a cohesive and efficient reporting process. IR
provides a new direction in corporate reporting by enhancing the financial reporting framework and
allows organizations the freedom to present the integrated report based on own unique business model,
and develop techniques for reporting expanded information content. The expanded disclosures about
organizations' strategies and value creation processes for medium and long-term growth would appeal to
many stakeholders. Cost benefit analyses on developing the IR model would determine its adoption rate.
However the favorable comments from global accounting firms, and regulators and enthusiasm of early
adopter organizations seem to indicate that the IR framework will evolve into a set of standards for
preparing annual reports soon.
Implications for accounting and finance professionals and educators
Accounting professionals need to be proactive and not dismiss the IR initiative as a costly and
burdensome process and acknowledge the global consensus that current reporting is broken. As IIRC
CEO Paul Druckman explained, “The challenge we have faced is to create a durable model that reflects
the revolutionary developments in business, markets and society that have taken place over the past 40
years. Our aim is to encourage behavioral change – what we call "integrated thinking" – which unlocks
the real transformation in the way different parts of a business interact with each other to breakdown silos,
create efficiencies and articulate in a cohesive way how its strategy and business model create value over
time”. Regulators like UK's Financial Reporting Council and professional organizations such as AICPA,
ACCA, and CAA are encouraging organizations to adopt IR and benefit from reporting innovations. The
participants in the IIRC Pilot Program are acting as catalysts for IR by forming regional networks across
the globe and refining IR by sharing their experiences. Each regional network addresses local challenges,
builds capacity and engages with policymakers, peers, standard setters and others in own geographical
domain to drive the adoption of IR. Many of the professional organizations in accounting and regulatory
bodies are endorsing IR framework. The Association of Chartered Certified Accountants (ACCA) is
planning to introduce IR within its qualification and is enhancing its syllabus in order to “ensure that
ACCA members are complete finance professionals with the skills necessary to work in all sectors”.
Similar thoughts about integrated financial reporting are expressed in the document titled “Framework for
audit quality” released by the International Auditing and Assurance Standards Board (IAASB) in
February 2014 on the key interactions within the financial reporting supply chain as reflected in Figure 3,
and shows the concept of integrated reporting as it relates to auditing. Some of the key interactions and
contextual factors within the financial reporting supply chain are reflected in Figures 3 and 4 below:
Figure 3: Key interactions (Source: IAASB Framework for audit quality)
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Figure 4: Contextual factors (Source: IAASB framework for audit quality)
Technology: The IIRC views technology as an enabler of the preparation of an integrated report and
anticipates that as reporting technologies will continue to evolve and report preparers will become more
adept in their application. Technology is mission critical to business and will continue to have a central
role in the finance profession. Understanding the capital flows and changes due to the organization's
business model can be accomplished by a technology like XBRL that digitally links accounting
information with authoritative literature for accounting standards and other reporting guidelines.
Organizations can use interactive structured data standards like XBRL to maintain accessible and reliable
data. Software using the XBRL tags can analyze data for investors, analysts, nongovernment
organizations, media, and regulators to better understand the capital flows and changes, and maintain
comparability of information across reports. Integrated reports can use XBRL platform and enhance the
current benefits of XBRL. The IIRC’s IR Technology initiative launched in November 2014 aims to build
an understanding of application of technology to help adopters of IR. The accounting firms of Price
Waterhouse Coopers and Deloitte have signed up along with some technology firms including SAP. IIRC
CEO Druckman commented that through this initiative the global technology organizations like SAP can
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learn the challenges and problems faced by users of IR and develop the tools to make the process faster,
more efficient and better integrated into business processes.
Accounting and finance professionals: The business model of any organization forms the core of the
process of value creation using strategy formulation, action planning, governance, and risk management.
The need to understand the connectivity across multiple drivers of the value chain, knowledge about the
business model, and a holistic perspective of the organization’s strengths and weaknesses makes
management accountants the ideal candidates to drive the effort to adopt IR by leveraging their integrated
thinking. Accountants and controllers need to be ready and equipped to take advantage of the
opportunities to lead that will definitely flourish in this space. IR has moved on from being a promising
concept to an adopted global practice. The professionals can lead the design by using IR and integrated
thinking as an open platform to understand the business model, and not be constrained by rigid standards.
They can lead the process by mediating the connections and trade-offs between the drivers of value
creation. Having accounting professionals involved in IR will help ensure that the environmental, social,
and governance data are consistent with the financial data. However accounting professionals will need to
learn new skills and work with experts in other fields. They will need to decide if a single set of principles
and format of report will work for all organizations, or if they should be tailored to different.
Benefits: IR can provide benefits in the areas of communication, risk management, and cost. The
communication benefits can be achieved because data integrated into a report with audited financial data
is perceived to be more reliable than data presented in separate reports by consumers and investors. The
integrated report can provide a signal to managers and employees that environmental, social, human
resource, and governance issues are as important as financial considerations in decision making. Risk
management benefits are obtained from improved communications across units and increased
understanding about managing risks. Managing and lowering the identified risks would help reduce the
company's cost of capital by lowering the risk premium and reputational risk. Lowering risk will help
organizations lower operating costs.
Costs. The implementation of integrated reporting can be difficult and costly in the initial stages due to
data collection from multiple sources, and employee training. Organizations will need to identify
information that is relevant and significant for strategic objectives. Employees will need education and
training about integrated reporting. The data for integrated reporting can come from many new areas,
including human resources, operations, risk management, and accounting. Organizations that are not
preparing current reports on sustainability will need to install new systems, and provide training for staff.
However costs in later years will be lower, and the benefits of IR will start to accrue.
Education and training: Accounting educators must look at the available resources by regrouping and
rethinking educational curricula. As expressed by the Pathways Commission report, a vibrant and strong
accounting “profession” operates with a social contract encompassing a set of promises and commitments
centering on the preparation of reliable accounting information. The accounting educators have to act as
trustees or guardians for the future of the profession and develop the students’ cognitive and technical
skills on new developments like IR along with a deep understanding of accounting profession’s societal
purpose.
Conclusion
IR combined with integrated thinking is making the leap from promising concept to powerful practice
around the world. Value creation for the organization will require accounting and finance professionals in
all areas of strategy, planning and implementation including information systems, governance, reporting,
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and risk management to be at the forefront of the process because of their holistic view of the entity’s
strengths and weaknesses. These professionals will need to be ready and equipped to master the concepts
and processes in the implementation of IR and integrated thinking, and play a critical role in the
development and issuance of integrated reports. They can help in planning for the required disclosures
about strategies and corporate social responsibility in the integrated reports. Organizations of all sizes will
benefit from integrated thinking because managers will need to consider the whole range of risks and
opportunities when evaluating alternatives, and understanding the interaction of the risks with the
capitals. Accountants will need to monitor the materiality of risks and opportunities and the probabilities,
and assess the potential values for the capitals. For an integrated report to be successful, reporting
principles will need to be established in order to determine what should be reported.
IR and integrated thinking are market led and endorsed by organizations and investors, so the probability
of their acceptance by the users quite high, making it essential for accounting and finance educators to
step up efforts to understand the framework and incorporate it into the curricula to prepare the students to
adapt and succeed in the global marketplace. Evaluation of inter-relationships between accounting
education and all stakeholders is critical to enable business schools to address any weaknesses in their
curricula, and maintain strong relationships. The framework is the first step of a major change in the
reporting process in the future. The changes in current reporting model will affect all areas of an
organization and will require future managers to re-calibrate their thinking of the inter-relationships of
financial and managerial reports, strategy, and management information systems. It is essential for all
financial professionals in the organizations and educators to be engaged now to prepare for the change,
and shape the evolving reporting for an increasingly complex global marketplace. Roles and opportunities
will exist for future accounting and finance professionals within IR using integrated thinking. These
professionals can be the designers and leaders of IR implementation because of their holistic
understanding of the business model, and the connectivity between the various units, while preserving a
balance between competitiveness and sustainable growth.
References
ACCA. 2014. ACCA introduces IR into qualification, Accountancy News , January 10.
Amato, Neil and S. White. 2013. IIRC releases International IR Framework Journal of Accountancy,
December: 8.
Busco, Cristiano et al. 2014. Leading practices in IR, Strategic Finance, 96(3), September: 23-32.
CGMA. 2014. Integrated thinking: the next step in IR. New York, AICPA.
Cheney, Glenn Alan. 2013. Is IR worth the extra work? Financial Executive, 29 (4) May: 83-85.
Deloitte Review. 2012. IR: the new big picture.
Druckman, Paul. 2013. IR Framework aims to promote lasting sustainable change, Guardian
Professional, 8 December.
Fried, Abraham, Mark P. Holtzman, and David Mest. 2014 IR: The new annual report for the 21st
century? , Financial Executive 30 (4), Fall: 24-31.
Hagel, Jack. 2014. 6 tips for integrated thinking. Journal of Accountancy, 218 (6): 20-21.
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2015 Cambridge Business & Economics Conference
ISBN : 9780974211428
International IR Council. 2013. International IR Framework. December.
International Federation of Accountants. 2014. A framework for audit quality: key elements that create
an environment for audit quality, International Auditing and Assurance Standards Board (IAASB),
February.
Monterio, Brad J. 2014. IR and corporate disclosure. Strategic Finance 95(9) March: 54-57.
PwC. 2014. 17th Annual Global CEO Survey.
PwC. 2014. Build trust and create long-term value: 10 minutes on IR, April.
United Nations. 2012. Resilient people, resilient planet: a future worth choosing- A report of the UN
Secretary General’s High-level panel on global sustainability. New York, United Nations, January.
Roth, Harold P. 2014. Is IR in the future? The CPA Journal, 84 (3), March: 62-67.
Sharman, Paul. 2012. Towards IR- communicating value the 21st century. Cost Management, 26(2),
Mar/Apr: 36-40.
Smith, Sean Stein. 2014. IR, corporate governance, and the future of the accounting function,
International Journal of Business and Social Science, 5(10): 58-63.
July 1-2, 2015
Cambridge, UK
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