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Reporting Landscape Development
作者：WW Name ID Course Name
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Reporting Landscape Development
Due to globalization, there are many interconnections; there is a vast interconnection between finances, knowledge, and people. Therefore, there need for integrated reporting globally in the wake of the global financial crisis. Consequently, there is a need to develop suitable development and stability in the financial sector to enhance growth. Evolving the reporting system, facilitating and communicating mega trends without complexity and inadequacy of the current reporting requirements is essential. Techniques of linking decisions related to
investments, the behavior of cooperating, and reporting is now a necessity. There is some gap in the information system reports with various organizations seeking development in the reporting system in the world today. Therefore, integrated reporting is available to enable proper information flow and transparency in the business environment. This approach of providing information for appropriate decisions in capital allocation enables desirable returns in the long run. According to Gore and Blood (2010), transparency issues have led to some rigidity for management and stakeholders of many organizations. This has awakened the stakeholders to be very keen on how business is managed and the associated risks. For this reason, this paper discusses the evidence supporting the need for evolution in the system for reporting as proposed by the International Integrated Reporting Council in 2010 and evaluating the IIRC's integrated reporting development that attempts to transform the current landscape of reporting.
There is a need to adopt the current reporting system since the traditional reporting system has failed in transparency and communication. The traditional models involve several
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models available to the shareholders and fund providers with different purposes. Thus, due to these models, the traditional system for reporting has a weakness in providing very
comprehensive information on business activities (Weybrecht, 2010). Moreover, the traditional reporting involves short term performance with financial statement lacking enough information regarding the involved risks (Serafeim, 2015). Therefore, many companies using this kind of report system are not able to satisfy the need of stakeholders regarding the different techniques of information on the operation of the business (Hughen et al., 2014) despite the fact that many organizations tend to disclose information concerning the various aspects that include environmental reports and sustainability reports. However, uncovering the reports with the stakeholders' priority in mind is a problem for many organizations. Companies tend to confuse about who should have the priority regarding the stakeholders. This difficulty arises as a result of the amount of publications cost for the separate reports. Therefore, there is a need for the firms to adopt a new integrated reporting system with an appropriate framework that mitigates these difficulties associated with the traditional reporting system. With the new reporting system, firms will be able to provide all the required information to the stakeholders. The International reporting frameworks in 2010 proposed a new integrated reporting framework that encourages a single consolidated report that can enable any given organization to integrate all the reports to the stakeholders. It involves one single report that incorporates all the financial and other information, as indicated in the organization's yearly report (Eccles and Krzus, 2010). This reporting system, as compared to the traditional one, incorporated both the financial and the non-financial information.
There is a need to develop the system for reporting since the available sustainability reporting system cannot help decision-makers come up with suitable decisions. The
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sustainability reports are a subset of the integrated reports and only give information regarding the sustainability issues to do with the organization's environment, social and governance. However, the management of other information still needs to be undertaken. Moreover, there is no connection between the sustainability reports and the financial reports together with information to link the issues relating to sustainability and the core strategies in an organization (King, 2011). On the other hand, improving the reporting system is directed towards coming up with sustainability in society. Therefore, the reporting system's evolution will encourage organizations to consider risks and come up with appropriate practices, hence creating a more sustainable business environment (Armbester et al., 2011). Moreover, the evolution will help improve the kind of information available to stakeholders by bringing together the different reporting aspects that include financial management, governance, and sustainability. All these aspects are comprehensively combined; hence explanation about an organization's power to come up with and sustain values is possible. For this reason, the evolution in the reporting system will tend to give sustainability both in the financial and non-financial information that leads to clear understanding. There is availability of other information that can assist the stakeholders understand the values plus their creation.
There is a need for an evolution in the current reporting system because there is a need for new corporate governance mechanisms. Corporate governance does interact with potential stakeholders through an appropriate reporting system. Thus, the transparency concerning the board and associated activities is a significant concern to the stakeholders when a particular financial crisis arises. Therefore, accessibility to corporate governance information is vital to the stakeholders and fund providers. Through a higher level of disclosing the information based on the improved reporting system, there is a high level of transparency, enabling the organization to
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acquire investors (Simnett et al., 2009). Moreover, high transparency through an improved reporting system help organization to have a good reputation. This is what the integrated reporting system ensures an organization since governance is a crucial element in its framework. It tends to give information regarding the various actions undertaken related to governance in an organization (IIRC, 2013). This evolution will bring changes in the organization with regards to behavior and the decision-making process. Also, the reporting system's development will ensure that there is financial and non-financial information; hence, disclosure of all information is possible. The more transparent board of governance is, the more it will lead to appropriate corporate governance. The new framework's main aim in corporate governance is to ensure suitable stakeholder engagement, management of risks, and desirable transparency in an organizational governance system.
The evolution of the reporting system is necessary to enhance the stakeholder's
engagement in an organization. With the ever-increasing financial issues in various organizations, suitable reporting mechanisms that tend to disclose the required information to stakeholders remain paramount in engaging the stakeholders. Stakeholder prefers to have a report that clearly outlines both eh financial and non-financial information and, that exhibit the evidence regarding any financial scandals. Currently, companies are coming up with reports that involve different annual reports, which improves their reputation. A good reputation means an organization is in apposition to have the various advantages associated with the reputation, such as negotiation with the stakeholders (Simnett et al., 2009). Therefore, coming up with a better-integrated reporting system is the most suitable way for companies to fulfill the stakeholder's demands. However, there are still some organizations that are not in a position to meet the needs suitably. This is because there is still some confusion regarding prioritizing the stakeholders who seek the
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information and the costly publication of the individual reports. A good decision doesn't always exist with this kind of reporting system since there is no linkage between the financial and the non-financial information (Serafeim, 2015). For this reason, the International Integrated Reporting Council in 2010 proposed adopting an integrated reporting system that would help organizations mitigate this linkage problem. With the availability of the linkage, stakeholder engagement is done appropriately hence enhancing confidence. The reporting system's revolution will modify the stakeholders' thoughts about organizational activities, risk, goals, and strategies. The revolved reporting system will also tend to enhance the relationship between the stakeholders and an organization, bringing better understanding regarding their expectations. The International Integrated Reporting Council proposed that the reporting sector's improvement is the best approach to facilitate engagement and communication with stakeholders (IIRC, 2011). Adopting the improved reporting system is the best for communication and assisting various stakeholders to both the current and future performance.
The evolution of the system for reporting is vital since it can positively result incorporate behavioral change. The reporting system is the best strategy that an organization can
communicate its weaknesses to the key investors and external community in which it operates. Also, it is the best approach to take to cater for the shortcomings in the organization through communication. This suitable transparency is what can bring about positive change in the organization. However, the openness that can result in an appropriate change is not exhibited with the traditional reporting system. There is no interconnection between the information to bring about a clear understanding that results in the best decisions (King, 2011). From the integrated reporting perspective, there is an improvement in the organization's internal resources'
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alignment with the external resources. This alignment creates value since there is an interconnection between the organization and the external community of operation.
Adoption of the improved reporting system can enhance the performance and reputation of an organization. According to Bebbington et al. (2008), proper disclosure of corporate information to the key stakeholders and investors ensure transparency. The transparency is suitable to improve the reputation that, in turn, enhances performance. This enhancement is because a high reputation increases success during an organization's negotiation with various agencies such as the government. This higher possibility of success due to good reputation enables the organization to attract many contracts in the talks. Moreover, gaining very experienced employees in addition to making the prices to be a bit higher are as results of good reputation ant this improves performance. This transparency can be made possible through the improvement in the reporting system into an integrated one. The International Integrated Reporting Council pointed the need to adopt an improved version of the system for reporting by claiming that improvement in the performance is possible to organizations that provide transparency through integrated reports. The reports directed to the stakeholders illustrate that the organization's leadership can exhibit effectiveness when it comes to transparency. Moreover, combining the financial and non-financial information into an integrated report demonstrates a connection, providing multiple types of information regarding capital. According to Cheng et al. (2014), the reporting system's evolution is the best approach that can help an organization improve the information content that intern results in suitable organizational performance. In a nutshell, consistency in the disclosure of information improves investors' and stakeholders' trust, and this tend to improve reputation, which automatically enhances the performance of an organization. This desirable performance starts with a suitable reporting system as proposed by
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the International Integrated Reporting Council. Regarding the International Integrated Reporting Council framework, more transparent reports are directly proportional to how the reports are integrated, improving the quality of information, hence better understanding. Integrating information allows an organization management to develop suitable decisions regarding information consolidation, management of risks, and overall business development in terms of performance.
In summary, the reporting system's evolution can be of great importance to an organization. This paper has outlined some of the most relevant evidence that supports the fact that evolution in the system for reporting is indeed necessary for organizations. The associated advantages that come from adopting an appropriate reporting system in an organization are undeniable. Adopting and implementing improvement in reporting can seem complicated, but the related benefits are far more extensive. First, there is a need to embrace the current reporting system since the traditional reporting system has failed in transparency and communication. The conventional method involves several separate models that don't exhibit a suitable result for transparency. Second, considering evolution in the reporting system is necessary since the sustainability reporting system cannot help the decision-maker develop the right decisions. Third, improvement in the reporting system is vital since there is a need for new corporate governance mechanisms. The interaction between the corporate governess and various stakeholders depends on the system for reporting. Finally, evolution in the structure of reporting is vital for corporate performance and stakeholder engagement. The development will result in desirable stakeholder engagement. Consequently, the overall reputation is improved that in turn guarantees better performance.
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新时代企业报告制度的变革 - 图文
