The real meaning of Integrated reporting

The real meaning of integrated reporting

Integrated reporting is more than only aimed at informing interested stakeholders about performance achieved against targets, the vision and strategy adopted to serve the stakeholders’ interests, and other factors that can influence business performance in future.

Clearly regulations require companies to exercise transparency. However, a more fundamental reason for reporting lies in accountability: a company needs to account for the impact it has on the stakeholders it relates to. Not exercising such transparency would impose serious risks, including high financing costs to compensate for a lack of transparency or governance or, ultimately, losing the license to operate. By contrast, a transparent approach would not only improve reputation, but also would bind stakeholders such as employees to the company’s objectives.

The reason for including environmental and social factors in reporting

In today’s world companies play a significant role in shaping the future of society. Awareness of this has risen significantly over the last decades, resulting in changed attitudes towards the role business is expected to play.

It also resulted in changes in the views of business leaders about the role they want to play.

Business these days is seen more than ever as the agent of a wide group of stakeholders. Unlike the old paradigm that ‘the business of business is business’, companies accept wider accountability in current times towards the stakeholders whose interests they impact – no longer can companies focus only on the interests of those with a financial interest.

This wider accountability implies that companies have to fulfil the (information) needs of those who provide them with integrated reportingother economic resources such as labour, space, air or natural resources and those who enter into transactions with the organization such as customers. Therefore a company’s current performance and future ability to continue operations and achieve business growth needs to be evaluated on the basis of a comprehensive set of factors that influence these.

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Qualitative characteristic

Qualitative characteristic is a characteristic that makes financial information more useful to the primary users of general purpose financial reports.

Liabilities and assets for current tax

Liabilities and assets for current tax - Current tax for the current and prior periods should be recognised as a liability to the extent that it is not paid

Examples of adjustments of errors

Examples of adjustments of errors – When errors affecting income are discovered, careful analysis is necessary to determine the required action to correct the account balances. As indicated, most errors will be caught and adjusted prior to closing the books. The few material errors not detected until subsequent periods and those that have not already been counterbalanced must be treated as prior-period adjustments. See also ‘Types of errors‘.

The following sections describe and illustrate the procedures to be applied when error adjustments require prior-period adjustments. It is assumed that each of the errors is material. Errors that are discovered usually affect the income tax liability for a prior period. Amended tax returns are usually prepared either to claim Read more

Types of accounting errors

Types of accounting errors come in the form of different kinds of errors. Some errors are discovered in the period in which they are made and are easily adjusted. Others may not be discovered currently and are incorrectly reflected in the financial statements until discovered. Some errors are never discovered; however, the effects of these errors may be counterbalanced in subsequent periods, and after this takes place, account balances are again accurately stated. Errors may be classified as follows:

  1. Errors discovered currently in the course of normal accounting procedures. Examples of this type of error are clerical errors, such as an addition error, posting to the wrong account) misstating an account, or omitting an account from
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1 Best Read – An error in issued financial statements

An error in issued financial statements

Adjustment of an error in issued financial statements (i.e. financial statements approved by Board of Directors and by the Shareholders (in general meeting), and filed at a a Chamber of Commerce / Companies House) is fundamentally different from a chance in accounting policies or a change in estimates. See the following definitions from IAS 8:

Error Accounting policies Change in accounting estimate

Prior period errors are omissions from, and misstatements in, the entity’s financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that:

  • was available when financial statements for those periods were authorised for issue; and
  • could reasonably be expected to have been obtained
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