• March 26th, 2016

Financial Accounting Theory (integrated reporting)

Paper, Order, or Assignment Requirements

Integrated reporting (<IR>) is an innovative approach to corporate reporting which is gradually gaining international recognition. The International Integrated Reporting Committee (IIRC), which is the peak body driving the integrated reporting agenda internationally, explains that integrated reporting is about “communicating the full range of factors that materially affect the ability of an organization to create value over time” (IIRC, 2013a, p.8). According to the IIRC “an integrated report is a concise communication about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value in the short, medium and long term.” (IIRC, 2013b, p.1)
1) Flower (2015) explains that the IIRC was initiated with the purpose of creating a globally accepted framework for accounting for sustainability (The Prince’s Accounting for Sustainability Project and Global Reporting Initiative, 2010) but what ultimately eventuated is a framework for communicating to providers of financial capital the “ability of an organization to create value over time” (IIRC, 2013a, p.8). It seems that IIRC abandoned the sustainability agenda along the way. How would you explain the IIRC’s change of focus in relation to integrated reporting? When constructing your answer use one or more theories to explain the reason(s) for IIRC’s change of focus. You should conduct your own desk research to obtain supporting evidence and facts to strengthen your arguments and justify the appropriateness of the selected theory/theories. (approx. 1250 words) (15 marks)

2) Tweedie and Martinov-Bennie (2015) argue that integrated reporting as conceptualised by the IIRC upholds the entitlements of providers of financial capital over other stakeholders and organisational sustainability over social sustainability.

a) Using an appropriate theory support the view that listed companies should focus on the information needs of financial capital providers over other stakeholders. You are required to draw on empirical research evidence to support your arguments. (approx. 500 words) (5 marks)

b) Assuming the focus of listed companies is financial capital providers, critically examine the extent to which sustainability considerations are important or not important for them. When constructing your answer distinguish between the concepts of organisational sustainability and social sustainability (also refer to Flower (2015) who uses a similar dichotomy labelled “value for society” versus “value for investors”). Your discussion should draw upon the research on information needs of providers of financial capital. (approx. 750 words) (10 marks)
This is a research assignment and as such your assignment should provide your personal view based on research evidence, theory and original thought.
In your assignment, you are expected to draw on:
¥ relevant accounting theories

¥ the International Integrated Reporting Framework issued by the IIRC (available at:

¥ scholarly articles from academic journals

¥ reports issued by professional accounting bodies, accounting firms (particularly, the Big
4), regulatory bodies, the IIRC and other organisations

¥ official websites of professional accounting bodies, accounting firms (particularly the Big
4), regulatory bodies, the IIRC and other organisation

¥ media reports on integrated reporting

Integrated reporting is covered in Chapter 9 (pp. 458-462) of your textbook. The theoretical knowledge necessary to successfully complete this research assignment is not confined to one or few topics but spread across many topics in this unit. Therefore, you may want to read ahead.
Some guidance on reading scholarly journal articles is provided on the Blackboard site of this unit. As a starting point, some key references are provided at the end of this document under “Other key references”.

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