Integrated Corporate Reporting
Introduction
Integrated Corporate Reporting (ICR) can definitively be termed as a contemporary approach to communication by businesses with the intent of providing a holistic report on the organization’s strategy. Hence, ICR is a concise communication approach to bring together all mannerism of reporting on the state of the business enterprise. Such include concerns regarding strategy, risk, performance and sustainability etcetera. Therefore, ICR is particularly concerned with provision of succinct information that captures the key challenges and opportunities that a business is faced with in its sustainability. This paper evaluates the concept of Integrated Corporate Reporting in the context of Malaysian companies drawing positives and negatives of the same. Subsequently, the paper presents an overview evaluation ICR in enhancing transparency, reliability and increased complexity in business reporting. Finally, the paper presents implications of adopting an ICR approach on conventional Corporate Social Responsibility (CSR) practices by the organization.
ICR Merits and Demerits for Firms in Malaysia
Malaysian companies are regarded as companies in the developing world since Malaysia is a developing country. The general attitude among companies in the developing world is that multinationals from the developed world have taken advantage of the global markets to stifle their growth. The said notion is evident among companies in Malaysia; however, the companies are as optimistic about ICR as their multinational counterparts are. To this end, companies in Malaysia have continuously focused on production of reports that integrate social, financial, governance and environmental information all at once. Resultantly, provision of such information gives the organization a succinct but comprehensive overview of its prospects in the near future. The primary objective or the master plan among Malaysian companies in adopting ICR is for two main purposes. First, it will ensure that investors are protected and secondly, to ensure that the businesses have a sound governance system in place.
Similar sentiments are shared by Norwani et al. (2111, p. 206) who note that Malaysia faces a great problem in the management of its companies when it comes to corporate governance issues. Hence, the main problem in many Malaysian based companies is related to the poor management of companies by managers. Moreover, the emphasis for ICR is provided as a guard against incompetence on the part of the management of a corporation or company by mismanaging company resources. Therefore, issues concerning financial reporting are a concern of the management in ensuring that the company’s finances are not poorly managed. Governance is mandated with the provision of direction and control of the company. For this reason, ICR in Malaysia is concerned with how the managers of the firm are accountable for the decisions they have made in offering direction and control of companies resources at their disposal.
Primarily, the influence that ICR has had on Malaysian companies has been that the requirement of ICR on companies is to ensure that reporting on corporate governance is primarily of interest. Secondly, the requirement that stakeholders majorly shareholders’ interests are catered for is the other important consideration for Malaysian firms. Evidently, companies observe that an understanding of corporate governance would serve as appropriate in the interpretation of the outcomes in line with all other operations of the company. In this regard, companies in Malaysia are, therefore, expected to develop sound leadership in the management boards of firms. This is because it is a prerequisite for ensuring that the businesses are appropriately managed. Moreover, the managers of the business can be held accountable for the decisions they have made in regards to the outcomes of their control and direction of company resources. Essentially, the companies in Malaysia are focused in a holistic approach to ICR that predominantlyfocuses on the management of the organization.
The mandate of ICR as earlier mentioned in the introduction section is so as to provide a succinct and adequate analysis of the prospects of the organization as a projection of realizations in the near future. Hence, the role of ICR is intertwined with its objectives which are mainly to enhance transparency, reliability and complexity. Tijani et al. (2013, p. 493) observe that ICR is central in the creation of trust, confidence and the general boost of reputation of the organization. The sentiments resound in the intentions of ICR for the creation of transparency and accountability. Therefore, the first role or obligation of ICR is to assure that public faith in the business serves to mitigate any doubts or suspicions that may lurk among skeptics. Consequently, ICR ensures transparency of the company which wins people’s confidence on the sound operation of the company in the immediate and near future.
Secondly, the role of ICR in reliability stems from its capacity to traverse difficulties that may be as a result of variables in various segments or departments in the organization. As a result, the company is capable of providing an overview summary of the strengths and weaknesses of its departments through the ICR report. For instance, sustainability reporting can develop pointers for the need for control in various operations of the organization. Similarly, the company will be in a position to appreciate the efforts made by various parties or departments to the success of the organization. Resultantly, the ICR report proves efficient in providing an accurate analysis of the reliability of different entities, factions and departments etc. in regards to performance indicators.
Thirdly, the role of the ICR reporting in enhancing complexity lies in its capacity to bring together various aspect of unrelated business functions, pool them together and be able to develop an evaluation of the status of the business. As such ICR has a definitive approach to developing analysis from aspects such as corporate social responsibility, financial, capital, investment and market research reporting etc. which all serve to secure the a clear and holistic preview of the company’s expected future performance.Centrally, the complexity brought about lies in the manner in which the company’s operations are analyzed to present a holistic look into the future prospects of the business despite the fact that each of the diverse issues analyzed may not necessarily have a correlation.
Implications of adopting an ICR strategy on CSR
The development of an ICR strategy in place of a CSR strategy presents various differences. Fundamentally, CSR is concerned with issues regarding reporting to the community on aspects of the company’s involvement in activities that serve to better the community. In contrast, ICR is basically concerned with ensuring that reporting on the company’s operations is provided by giving a holistic look into its prospects. Therefore, it can be arguable that CSR is a segment of ICR while the inverse is not applicable. Evidently, the CSR approach is challenged in its effectiveness to communicate information about the future of the company with regard to its prospects. On the other hand, ICR is apt in defining the contributions of various segments including CSR in enhancing the potential for the future prospects of the business. Moreover, the difference between ICR and CSR is such that the former places various aspects of the operations of the company into perspective while the latter is mainly based on evaluating the contribution of the firm to improving the lives of the community.
Consequently, the difference between ICR and CSR is such that the former will result in the development of accountability of the organization which translates into confidence of investors in the operations of the business. On the other hand, a business CSR strategy is founded on the development of good will between the business and community members. Further, the ICR approaches are meant to minimize risks while at the same time ensuring that appropriate measures are taken to enhance better performance of the business in the immediate and near future. On the contrary, the CSR strategy is meant to provide the business with a competitive edge in regards to maintaining good relationships with members of the community.
Conclusion
ICR ad described is concerned with the development of communication that provides a succinct description of the company’s prospects as a projection of the near future performance averages. Moreover, ICR practices are increasingly on the rise since they are deemed to provide a holistic analysis on contributions of various unrelated segments of the business. In this regard, the ICR strategies discussed herein have been used to combine information from financial reporting, corporate governance reporting and marketing reporting among others. Such are crucial in the interpretation of the strengths and weaknesses of the organization, hence, providing an apt prediction of the firms’ performance in the near future. This paper has discussed the state of ICR in Malaysian based companies, to this end, the review finds that companies in Malaysia are predominantly hinged on ICR that focuses on corporate governance concerns. In addition, the review finds that Malaysian firms welcome ICR approaches as they enhance accountability of the management of company resources which basically defines the soundness of the business. Furthermore, the preoccupation with scrutiny of the controlling and directing functions of the management is informed by the capacity of the ICR approaches to hold leaders accountable, thus, safeguarding stakeholder’s interests in the business.
Secondly, the paper has also discussed pertinent issues in regards to ICR’s role in the development of increased complexities, improvement of reliability and the enhancement of transparency in the organization. In essence, the evaluation provides various attributes of benefit that ICR present for reliability, complicity and transparency. Moreover, there are befits discussed in the context of improving business performance while making it accountable and appealing in the eyes of the public. The final section of the paper draws a line between the differences that abound between CSR and ICR. The evaluation finds that the differences are such that CSR is a community based aspect that aims at good will of the community while ICR is a holistic approach that comprises of CSR initiatives. ICR unlike CSR is focused on providing confidence building avenues for clientele and stakeholders on the company’s prospective future. Ultimately, the paper is a comprehensive analysis of the concept of Integrated Corporate reporting.
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