Академический Документы
Профессиональный Документы
Культура Документы
By:
AGRAWAL SANDEEP DILIP (PGDISEM 16)
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Executive Summary
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Table of Contents
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1. Introduction
1.1 Corporate Reporting and its evolution
Corporate Report is an official written communication released by a company
for a particular set of audience with the purpose of conveying both financial
and non- financial information related to the company. The contents of a
particular report is decided by the target audience set for the report.
Over the years the corporate reporting patterns have evolved due to various
regulatory compliances, changing business circumstances and the ever
increasing need for transparency and accountability. The companies were
historically reluctant to reveal any inside information in the form of reports
for the fear of overexposure, litigations, no standard framework, no visible
tangible benefits etc. Then due to statutory compliances and regulations the
companies started disclosing financial information annually with the core aim
of providing present and potential shareholders information about financial
performance. As the concept of triple bottom line became popular companies
started including the societal and environmental performance in their annual
reports. With growing clamour for corporate accountability for the impact of
their actions on environment and society and as the scope for environmental
reporting increased, companies started coming up with separate disclosures
for such issues. Some independent firms also released reporting frameworks
that were widely used for reporting purposes. The frameworks released by
GRI and AccountAbility became the most widely used ones. But as the
sustainability reports became more and more complex, it became increasingly
difficult to see the inter-related effects of policies, practices and impacts.
Several leading organisations like Novo Nordisk started researching on the
idea of integrated reporting. The first regulatory compliance came from South
Africa. Afterwards, the International Integrated Reporting Council (IIRC) was
formed which came up with a framework for integrated report. The main aim
of this framework is to provide a concise report that would indicate an
organisations most important social, environmental and economic and also
risks and opportunities in a manner that reflected the integrated nature of
these factors.
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1.2 Problem statement
With globalization and several other associated factors like growing expectations
of corporate transparency and accountability the current reporting frameworks
fall short in providing the critical interdependencies between various factors that
affect the ability of the organisation to create value for itself. Balance sheets and
financial statements no longer provide the requisite information that might help
shareholders and investors gauge the capability of the company to sustain growth
in the long term. They have to be supplemented by information that explains the
critical inter relation between strategy, governance, operations and financial and
non-financial performance. Integrated Reporting is a step in that direction. It
helps to bring together the diverse strands of reporting into a coherent,
integrated whole and demonstrate an organisations ability to create value now
and in future.
But since the integrated reporting framework is based on a relatively new
concept, there is a need to properly look into the requirements of this framework
both from the perspective of the company and the consultants and come out with
a broad strategy on how to go about it. The study done here would help KPMG
understand the process and requirements of the Integrated Reporting and also
help companies formulate processes that would ensure smooth making of the
report.
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analysing the integrated reporting framework and comprehending its
requirements. Based on the above studies, recommendations for changes in
annual reports so that an integrated report can be formed and a comprehensive
approach for integrated report was developed.
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2. Literature Review
2.1 Overview of annual report
The following material was thoroughly gone through to get proper
insights into annual reporting
www.google.com
Reliance annual report
HUL annual report
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3. Description of work
3.1 Annual Reports:
3.1.1 An overview of annual report
Annual reports are formal financial statements that are published
yearly that assess the companys yearly financial and operational
conditions and some specific accomplishments during a particular year.
Annual reports are intended to give shareholders and other interested
people information about the company's activities and financial
performance. A large part of the contents of the annual report is as per
the statutory compliances. In India, they are mainly determined by the
Income tax act and the Companies act.
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e. Information on companys shares: This section provides the
historical performance of companys shares, share holding
pattern, splitting of shares and other such share related
information
f. Auditors report: They are the comments of the auditors on the
financials of the company. Audits are conducted within the agreed
scope and boundary. They are included in the report so as to
instill confidence about the authenticity of the financial reports in
the minds of the readers
g. Financial Statements: This section contains balance sheets, profit
and loss statements, cash flow statements and schedules of the
financials for two years
h. Miscellaneous: Any special accomplishment or any other activity
taken up by the company during the course of the year that it
thinks fit to report upon may also be included in the report
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3.2.2 Principles of GRI Reporting
GRI subscribes some principles which form the basis of the
content and quality of the GRI report. These principles form
the basis of the report and are customary to ensure
transparency in sustainability reporting. They are divided into
two parts. They are as follows:
Principle for defining Report Content: There are four principles
in all which are used in combination to define the content of
the report
a) Stakeholder inclusiveness: The stakeholders should be
identified and the steps taken to address their reasonable
expectations and interests reported.
b) Sustainability Context: The report should present the
organizations performance in the wider context of
sustainability. The information in the report should reflect
the organizations past and future contributions to the
social, economic and environmental conditions at local,
regional or global level.
c) Materiality: Companies should identify and report on those
issues that substantially impact companys social,
environmental and economic performance.
d) Completeness: The report should include coverage of all the
relevant material aspects and their boundaries that would
enable stakeholders to assess the organisations
performance in the reporting period.
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b) Comparability: The reported information should be in a
manner that readers can compare changes across time
c) Accuracy: The information should be in considerable
detail so that stakeholders are able to analyse them.
d) Timeliness: Reports should be published at regular
intervals and at appropriate time so that information is
available to stakeholders for informed decisions at
appropriate time.
e) Clarity: Information should be in a manner that is easily
comprehensible to the readers.
f) Reliability: The data collection process should be in a
way that instills confidence in the stakeholders
regarding the veracity of the content.
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details of the organization, list of stakeholders to be engaged,
the scale of organization, information on employees etc.
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ranked by various stakeholders who themselves are ranked
based on their impact on the organisation. This is how
prioritisation is done. The required details are put in the
KPMG tool which gives us the materiality matrix and the
ranking of various relevant issues. Materiality matrix is a
graph against impact on stakeholders Vs importance for
managers. The issues on the top right corner which are
important for both are generally considered material.
d) Identify Indicators: After the identification of material
issues the material issues are mapped against the relevant
indicators. If the report is in accordance with
comprehensive then the organisation must report upon all
the indicators within a particular aspect.
e) Data Retrieval: After the indicators are identified, the
requirements of those indicators are identified. The
implementation manual helps us to identify these
requirements. Then the required data is retrieved from the
various sources.
f) Report Formation: The data retrieved is consolidated,
analysed and the specific position of data in the report is
decided.
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3.3 Integrated Reporting
3.3.1 Integrated Report: Overview and Relevance
Various researches have shown that the current reporting
practices, although extensive, fail to provide the critical inter-
dependencies between the various information that is available to
us. Hence, the effect of decision and events in one domain on
some other domain is unknown. Also, the reports have greater
emphasis on the financial aspects. The effect of intangibles on the
business is missing although they form a greater proportion of
companys market value. Hence, the overall value creation
potential of the company is unknown. Integrated reporting is a
step in that direction that could fill the required gap. It tries to
provide a holistic picture of the impact and risks businesses take
during their operations.
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3.3.2 Integrated Report Framework
The IIRC has developed a framework which provides the guiding
principles and the content elements. They assist companies in
deciding the content of the report.
2) Connectivity of information
An integrated report should show a holistic picture of
combination, interrelatedness and dependencies
between the factors that affect the organizations
ability to create value over time.
4) Materiality
An integrated report should disclose information about
matters that substantively affect the organizations
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ability to create value over the short, medium and long
term.
5) Conciseness
An integrated report should be concise to avoid
information over burden for the investors. This can be
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ensured by reporting only on the relevant issues and
avoiding the very generic ones.
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3.3.2.2 The Capitals
The capitals represent stores of value that an organisation
can use for the production of goods and services. The
capitals might increase or decrease or get transformed
into some other capital due to constant flow between
them. In the process of transformation value creation
process takes place. An important feature of the capitals
is that they are merely representative in nature and it is
not necessary to structure report around them. There are
six capitals in all which are represented as follows:
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can ask different departments to report the important issues
on a periodical basis.
c) Active involvement of the senior management: Surveys have
found that only those companies where senior management is
actively involved have shown credible improvements in
integrated approach
4. Limitations
Due to lack of practical experience in reporting, I might not had been able
to gauge the practical difficulties faced in implementing the
recommendations given by me. Also I might have missed looking into the
concept of Integrated reporting from various angles due to lack of practical
exposure in the reporting process.
6. Bibliography
www.google.com
KPMG research papers
EY research papers
www.integratedreporting.com
Wikipedia
Youtube
GRI website
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