Definition
The International Integrated Reporting Council (IIRC) is a global coalition formed of regulators, investors, companies, standard setters, the accounting profession, academia, and NGOs. The aim of the IIRC is to establish integrated reporting and thinking within mainstream business practice in the public and private sectors. Integrated Reporting (IR) combines financial and sustainability information to provide a holistic picture of an organization’s value creation over time.
Key Objectives:
- Promote Integrated Reporting: Encouraging the use of IR by organizations worldwide.
- Enhance Decision-Making: Assisting company boards and executives in making better business decisions.
- Engage Stakeholders: Improving transparency and accountability to stakeholders, including investors, employees, and the public.
- Global Adoption: Facilitating the global adoption of IR standards and practices.
Examples
- Integrated Annual Reports: Many organizations now produce annual reports that combine traditional financial information with environmental, social, and governance (ESG) factors. For example, a company might detail its financial performance alongside its sustainability achievements, such as carbon footprint reduction.
- Sustainable Business Strategies: Companies adopt strategies that not only focus on financial profitability but also include their impact on the environment and society, aligning with the IR framework.
- Corporate Governance Enhancements: Improved corporate governance structures that ensure comprehensive risk management by including non-financial risk factors in their reporting and decision-making processes.
Frequently Asked Questions
What is the goal of the IIRC?
The main goal of the IIRC is to promote integrated reporting as a means of enhancing corporate reporting to reflect a more comprehensive, accurate picture of an organization’s ability to create value over time.
How does Integrated Reporting (IR) benefit organizations?
IR benefits organizations by providing more comprehensive insights into their financial performance, sustainability impacts, and overall value creation. This can improve decision-making, stakeholder trust, and potentially attract long-term investment.
Who can use Integrated Reporting?
Integrated Reporting can be used by a wide range of organizations, including public and private companies, not-for-profits, and governmental bodies, regardless of their size or sector.
How does IR relate to traditional financial reporting?
IR complements traditional financial reporting by providing additional context through non-financial information, resulting in a holistic overview of the organization’s performance and strategy.
What are the core principles of IR?
The core principles of IR include strategic focus, connectivity of information, stakeholder relationships, materiality, conciseness, reliability, and future orientation.
Related Terms
Financial Reporting
Definition: The disclosure of financial results and-related information to management and external stakeholders about how a company is performing over a specific period of time.
Sustainability Reporting
Definition: The practice of companies publicly disclosing information on their economic, environmental, and social impacts, and describing their sustainability initiatives and outcomes.
Corporate Governance
Definition: The system of rules, practices, and processes by which a company is directed and controlled, involving balancing the interests of its stakeholders.
Non-financial Reporting
Definition: Reporting that includes non-financial metrics like environmental, social, and governance (ESG) data to provide a comprehensive overview of an organization’s performance.
Online Resources
- IIRC Official Website
- Global Reporting Initiative (GRI)
- Sustainability Accounting Standards Board (SASB)
- International Financial Reporting Standards (IFRS)
Suggested Books for Further Studies
- “The Integrated Reporting Movement: Meaning, Momentum, Motives, and Materiality” by Robert G. Eccles and Michael P. Krzus
- “One Report: Integrated Reporting for a Sustainable Strategy” by Robert G. Eccles and Michael P. Krzus
- “The End of Accounting and the Path Forward for Investors and Managers” by Baruch Lev and Feng Gu
Accounting Basics: “International Integrated Reporting Council (IIRC)” Fundamentals Quiz
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