Integrated reporting is a process in which a company’s results are evaluated in relation to the creation of value of a specific duration. This is in relation to how a company conducts itself in efforts to attain the strategies it aims at and how the organization is manage and the performance rate (Pretorius, 2014). These are the factor considered in integrated reporting where those factors are used in the creation of value of a short duration of time. Therefore, integrated reporting refers to a company’s evaluation in relation to performance and from a financial aspect. This paper will examine the impact that integrated reporting has made in Malaysian companies.
It is through integrated reporting that business worth was able to shift from just tangible assets to other factors. These factors consist of people, intellectual property, brand and reputation. For example, if a company seeks to record an increase its number of sales or produce a new product in the industry, the company reputation will influence the number of sales and success of the product (Jones, 2012). A company with a good reputation is, therefore, more likely to be of greater value. These are some of the external factors that do affect integrated reporting in business operations. Companies are expected to acknowledge the concept behind integrated reporting in order to secure their future in the business world. This is because investors have gained more interest in integrated reporting. This is because integrated reporting plays a significant role in guaranteeing an organization’s success.
Integrated reporting shapes a company’s future through providing the relevant information which helps provide a mutual understanding on strategies meant for implementation. Companies are expected to incorporate integrated thinking into developments structures and governance in order to improve on its performance. This is because it is clear that investors are in search of companies that have the potential to maintain success and a good reputation over a long period. The evaluations established through integrated reporting influences the way investors view a particular organization (Lannoo, 2008). It is, therefore, evident that a good integrated report is required. It is through the integrated reporting concept that companies can manage their creation capacity, performance and their presentation of their value. This is because such information is required by investors in evaluating companies that they would like to partner with. It is through integrated reporting that the Malaysian economy has been able to witness growth in its industrial sector (Eccles, & Krzus 2010, p. 36). This is due to the strategies implemented by companies to ensure there is corporate growth in the country.
Integrated reporting not only entails of evaluating a company’s true value through total evaluation of financial and non-financial aspects. The disclosing of integrated information brings more merits and demerits to an organizational. Through this there are a lot of possibilities of growth to the company (Paul, & Nieland, 2013). Through good integration, a company is likely to acquire more investors who will facilitate the growth of the company. Therefore, a good report is required in to help improve on performance through providing an opportunity to the creation intangible value. This will help in securing a good future for the success of an organization. It is evident that stakeholders are now requiring a good reporting on internal and external factors in order to know the potential a company has in maintaining its business practices (Ramin, & Reiman 2013, p. 153). The Malaysian companies have been able to acknowledge and integrate the required details into their business practices to achieve their goals. This has led to the increase in investors in the country. This is because investors put their resources in companies that present potential of growing in the future.
How Integrated Reporting Will Increase Complexity, and Improve Reliability and Transparency in Practice
It is clear that integrated reporting is a concept that aims at attaining enhancement of existing practices through proper evaluation and experimentation. Malaysian companies are currently being faced with a challenge since they are required to provide accurate and reliable information over a short period. Company stakeholders and regulators are more likely to demand reliable information over a short period. Such information is also required by business leaders in a particular company in making decisions that are best for all the relevant parties in the company (Kass, 2012). With the pressure on accurate reporting, companies are challenged to provide accurate information over a short period. Companies are pressured to provide analysis and deliver on accurate results. This results to difficulties to organizations that may be finding it hard to provide the required information. External business factors require a company to provide more accurate information regarding business undertaking and strategies over a short duration of time (Lannoo, 2008). Despite the speed in which the information is expected to be provided. There is also need for accuracy in reporting. This is because accurate results are required in ensuring there is transparency in the business practices. It has been witnessed that investors and the public are interested in companies that can provide accurate and transparent reports.
Integrated reporting will also improve on internal aspects of a business through ensuring the required information is provided to facilitate good financial results. The company is expected to ensure that its finances are well accounted for in relation to the amount of resources used in achieving certain objectives that were meant to improve on the company’s performance. Therefore, financial aspects are also affected since they are relevant in evaluating performance and laying down strategies for implementation. Inaccurate reporting in an organization hinders progress since it ties down valuable time and resources. Accurate results are, therefore, required to ensure that there is good use of time and resources (Soyka, 2012). Transparency plays a significant role in managing business practices and ensures the success of an organization. This is through attracting more investors to a particular organization that has demonstrated transparency and accurate in integrated reporting. Companies seeking to acquire more value have been required to cut down on the interest rate in order to maintain good profit margins. This is attributed to the current economic conditions. Integrated reporting helps companies to lay down strategies that are in their best interest. In this instance, in order to maintain good profit margins and improve on practices. This is because there is the need of doing more with fewer resources. Therefore, there is improvement on reliability since the consumers are provided with products at a reasonable price. Through cutting down on cost, there will be a rise in the recorded number of sales which will lead to a reasonable profit rate. These strategies are acquired after integrated reporting where it is established that there is increased competition and economic inflation (Desjardins, & Willis, 2011).
Environmental and social factors are continuously being of great implications to business practices. This is because they affect the success a company may have in its business operations. This is through proper evaluation of its strategies in order to improve on an operation through effective integration reporting. As stated in the paper, integrated reporting offers a chance to secure a good future to a company through providing a review of all the a company’s available resources and laying down strategies aimed at increasing the given resources (Global Reporting Initiative, 2014). This helps in establishing the value of tangible and non-tangible resources that are required for development purposes. In consideration to the underlined factors, there should be keen analysis on the way social issues are addressed in attaining business objectives through integrated reporting.
Differences in the Company that Implement Integrated Reporting from the Current CSR and Sustainability Reporting
The social environment issues that need to be evaluated include ethics and human rights. With the increase in constant evaluation of the need to maintain success in the corporate world, businesses are faced with the challenge to maintain a good social responsibility factor in order to maintain a good reputation. The society is also a stakeholder any company whose needs need to put to consideration since they are the consumers of the products or services being provided by the organization (Busco, Frigo, Riccaboni, & Quattrone 2013, p. 38). Through integrated reporting, a company should be in a position to understand the society’s needs in order to maintain good relations in the future. The corporate social responsibility is an internal organizations regulation program that is integrated into a company’s business practices. The function of the corporate social responsibility is to ensure that business practices are in compliance with the set regulation that is in relation to maintaining good social ethics. There is the need for the compliance of integrated since it helps in shaping a company’s corporate social responsibility practices (Loska, 2013).
It is required by the Malaysian government that all organizations regardless of their area of specialization take a positive aspect of the corporate social responsibility. This is because this factor is significant in ensuring the success of a particular organizations business practices. The Malaysian government has made this possible through laying down strategies that aim at achieving proper corporate social responsibilities in business practices (Bishop, Strey, & Rupprecht, 2010). This can only be made possible through proper analysis and implementation of integrated of reporting. It is, therefore, required that all organization conducts proper evaluation in relation to integrated reporting since it is key in maintaining the required conduct in corporate social responsibility practices (Zoltners, Sinha, & Lorimer, 2004).
Sustainability is maintained through improving on corporate social responsibility factors. This leads to an increase in the rescored number of profit. This makes it evident that the society influences a great deal of the success to be witnessed in the company. Research has proved that organization that have integrated good corporate social responsibilities have had more success compared to organizations that have not integrated this aspect in their business strategies (Schaltegger, Bennett, & Burritt, 2006). It is, therefore, evident that maintaining corporate social responsibilities guarantee the success of a business venture. Corporate social responsibilities are expected to be a guide to organizations on how they should maintain good relations with the public. Malaysian leaders are putting more emphasis on the need for intergraded reporting to ensure there is success in their industrial sector.
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