Integrated Report - AI Generated Flashcards
what is the IIRC framework? What does it encourage
The framework sets out principles and concepts on what should be included in the integrated report
It encourages to show performance against strategy
explaining the various capitals used and impact,
give a long term view of the organization
Who benefits from an integrated report?
Investors
employees
customers
suppliers
local communities
legislators
regulators
policymakers
Why is it not possible to aim the report at all stakeholders?
Aiming the report at all stakeholders would be an impossible task and would reduce the focus and increase the length of the report, contrary to the objective of report which is value creation.
What approach did the IIRC take in developing their framework?
Principle-based framework
What is the purpose of integrated reporting? will IR replace other forms of reporting?
-To explain how an organisations strategy, governance, performance and future prospects create value over time
It enables stakeholders to make more informed decisions
-no it wont replace it
-IR preparer will take info already produced and explain the value, to aid assessment of SH
What are the key components of integrated reporting?
▪ Organization’s overview
▪ External environment (PESTEL / P5F)
▪ internal environment (SWOT analysis )
▪ How organization creates value
▪ Future plans and strategies
▪ Key risks
▪ 6 capitals
▪ Social and Environmental Initiatives
It should include all material methods both positive and negative in a balanced way
Before submission - A high level review should be done to ensure all relevant aspects are included
What are the different types of capitals that companies can focus on?
▪ Financial Capital
o Overall financial performance and position of the company
o Sources of funds for future strategies
▪ Manufactured Capital
Tangible assets
o Non-current assets such as plant and machinery
o Current assets such as inventories
▪ Intellectual Capital
o R&D and innovation
o Brand
o Patents
o Technical / R&D staff
Human Capital
Employee matters
o Knowledge, skills and experience of employees
o Productivity and efficiency
o Staff turnover
o Staff satisfaction surveys
▪ Social Capital
Relationship and trust built with key stakeholders i.e.
o Customers
o Suppliers
o Societies / Communities
o Government
▪ Natural Capital
Environmental matters
o CO2 Emissions / Carbon footprint
o Recycling / Disposal of waste products
o Pollution / Spillage
o Use of scarce resources (e.g. oil, trees, etc.)
Companies are not required to adopt these classifications.
What are some examples of terms that can be included in the concept of value?
- The total of all the capitals
- The benefit captured by the company
- The market value or cash flows of the organisation
- The successful achievement of the company’s objectives
value depends upon the individual company’s own perspective
Should an integrated report attempt to quantify value?
No as users of the report can assess value on their own
What should an integrated report disclose regarding its basis of preparation and presentation?
frameworks used
Methods used to quantify or evaluate material matters
-also include a summary on how materiality was set, and describe reporting boundaries.
What should a company consider when describing the disclosures in an integrated report?
Balancing the need for disclosure with the potential loss of competitive advantage
what are the problems with traditional reporting?
Companies struggle to communicate value through traditional reporting.
framework is an effective tool for Shifting reporting focus from annual financial performance to long-term shareholder value creation
good for businesses who want to develop their narrative and explain how their business has grown
what should an IR include relating to stakeholders?
-nature and quality of the organisation’s relationships with its key stakeholders
-how and to what extent the organisation understands, takes into account, and responds to their needs and interests.
-the report should be consistent over time to enable comparison with other entities
FS vs. IR Difference
-Focus on purely financial information vs overall business performance
-historic performance vs future strategies
-short term vs long term value creation
-share capital vs. 6 capitals
-no environmental strategies in FS
Disadvantages of IR
▪ Too much commercial information / strategy is disclosed
▪ Valuation of 6 capitals is subjective in nature
