SHEIKH MOHAMMAD RABBY

Lecturer, School of Business and Economics

(SBE)

INTEGRATED Course: ACT 330

Section: 07

REPORTING
Group members

Bushra Yeasmin 141 1637 030

Sanzid Rayan 1420349030
MD. Shihab khan 1410797030
Aniruddha Sen 1231174030
Sakib ahmed 1421482030
Ashiqur Rahman 1420486030
Sifat Afroze Tazry 1320683030

21st December 2017

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Sheikh Mohammad Rabby

Lecturer

School of Business and Economics (SBE)

North South University

Subject: Submission of the final group project.

Dear Sir,

We hope this report reaches you to the best of your health. We are grateful to inform you that we
have been able to complete our report on “Integrated Report”. We tried our level best to prepare
and complete this report with our best knowledge and of effort. This was a great opportunity to
increase our knowledge about integrated report.

We sincerely hope that we were able to fulfill the requirements. We will always be available and
eager to provide any further details or clarifications if needed. We are grateful for your
continuous guidance and support. Without your guidance, this report would simply not have
been possible.

We are looking forward to your kind appraisal of this report.

Sincerely yours,
Sanzid Rayan
MD. Shihab khan
Aniruddha Sen
Sakib ahmed
Ashiqur Rahman
Sifat Afroze Tazry
Bushra Yeasmin
Acknowledgement

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We would like to express my gratitude to all those who have helped us conduct and complete our
project. We would like to start by thanking almighty Allah for His guidance.

We would like to express our deepest gratitude to our course instructor Sheikh Mohammad
Rabby for his excellent guidance, direction, and unending support. We are grateful to him for
having faith in us and for his unbounded cooperation, patience and time. Without his
suggestions, advice, corrections, and encouragement, our report would have never been
complete.

We would also like to thank our parents; they have always supported, guided and encouraged us
with their best wishes. Also, we are very grateful to our fellow classmates and friends for their
advice on our project.

A lot of hard work has gone into making this project and it would never be successful without all
the help and encouragement.

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Executive summary:
Integrated reporting promotes a more cohesive and efficient approach to corporate reporting and
aims to improve the quality of information available to providers of financial capital to enable a
more efficient and productive allocation of capital.

The primary purpose of an integrated report is to explain to providers of financial capital how an
organization creates value over time.

The IIRC's Long term vision is a world in which integrated thinking is embedded within main
stream business practice in the public and private sectors, facilitated by IR as the corporate
reporting norm.

In this report we have tried to portray Integrated Report in the most simple and elaborated form
possible. Here we have also included Background, framework, Fundamental concepts of IR,
Value creation etc for better understanding. 

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Contents Page No.

Background…………………………………………………………………………… 6
Introduction………………………………………………………………………….... 7
Definition ……………………………………………………………………………..8-9

The framework……………………………………………………………………….. 10
Fundamental concepts ofIR……………………………………………………….. .. 11-12
Value creation ………………………………………………………………………13
Role of capitals (6 major capitals in IR)…………………………………………….14
Guiding principles ………………………………………………………………….15
Goals and objectives ………………………………………………………………..16
Applications…………………………………………………………………………17
Advantages and disadvantages………………………………………………..........18
Main aspects of the integrated report………………………………………………..19-20
Risk and opportunity…………………………………………………………………21-22
Conclusion……………………………………………………………………………22

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Background

The International Integrated Reporting council (IIRC) previously known as The International
Integrated Reporting Committee was formed in August 2010 and aims to create a globally
accepted framework for a process that results in communications by an organization about value
creation over time.

The IIRC brings together a cross section of representatives from corporate, investment,
accounting, securities, regulatory, academic and standard setting sectors as well as civil society.

It comprises a steering committee, a working group and a taskforces dealing with content
development, engagement and communications, and governance. And that’s why the
International Integrated Reporting Council (IIRC) is a global coalition of regulators, investors,
companies, standard setters, policy makers, the accounting profession and NGOs. The Coalition
is promoting communication about value creation as the next step in the evolution of corporate
reporting.

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Introduction

The International Integrated Reporting Council defines integrated reports as "a process based on
integrated thinking that results in a periodic integrated report of an organization on value creation
over time and communications related to aspects of value creation" .1 A report integrated is
"concise" communication about how the strategy, governance, performance and prospects of an
organization, in the context of its external environment, lead to the creation of value in the short,
medium and long term. "2 Companies around the world are adopting integrated reports, but it is
still considered a practice in its early stages, so it is important to recognize how it has evolved,
the costs and benefits, the obstacles that hinder widespread adoption and the how they can be
overcome, and ways in which this momentum can be built around the integrated implementation
of reports Because the generation of integrated reports is still a new management practice, this
Statement on Management Accounting describes both the guiding principles of integrated reports
as the content elements of an integrated report Specific examples are provided to illustrate how
leading companies are implementing the guiding principles and to provide information on the
various elements of content. Capitals and specific examples are provided to illustrate how the
metrics can be constructed for these different types of capital. The statement concludes with a
discussion on how integrated reports can be optimized through online technologies and
communication practices in teleconferences, as well as what the future holds. Insufficiencies of
corporate reports The purpose of corporate reports is to disclose information about the
corporation's financial affairs and, therefore, to provide greater responsibility and transparency
that, in turn, would facilitate future commercial ventures. Reliable and complete information
creates trust in investors and other interested parties and makes it more likely that they will
conduct transactions with a company repeatedly, reducing transaction costs for all parties.
Research has found that providing credible information is associated with better access to
finance, lower capital cost, better business relationships with customers and suppliers, and
greater employee confidence.3 Therefore, a primary function of corporate reporting is to provide
all interested parties with the information they require to carry out commercial transactions,
defined as the "information function" of the corporate reports. However, corporate reports have a
second function that goes a step further in the information disclosure process. While the
information function can be seen as a unidirectional way of.

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communication (in other words, corporations that inform interested parties), the transformation
function allows interested parties to use the information provided to establish an idiosyncratic
feedback mechanism.4 Through the transformation function, interested parties can receive and
evaluate the information to try to generate changes where they see opportunities to influence
corporate behavior potentially for the benefit of the corporation.5 The corporate reports have
undergone several transformations to adapt to a changing panorama of economic, technological,
social and political drivers and information needs of different stakeholders. Over time, drastic
changes in the corporate environment led to the need for additional information beyond the basic
financial statements, such as management comments, government disclosures and footnotes to
the financial statement, so that those interested may have A better understanding of the value
creation process. Independent verification was also added by external auditors to help build trust
among external stakeholders. Interest in governance disclosures came as a result of managerial
problems within companies and a growing number of scandals related to governance (options for
retroactivity, insider trading, and overpayment) .6 Although the financial statements were
accompanied by these Other types of information, corporate users Reports still find that the
information is incomplete and inadequate to explain the value creation process of an organization
and material non-financial risks. To better understand how we can build a more meaningful
reporting framework that addresses the shortcomings of the corporate reporting system, we must
understand the value creation process of 21st century companies. Companies use resources to
produce and provide their products and services. These resources can be classified as natural
capital, such as water, forests and minerals; human capital, as people's abilities, capacities and
experiences; and financial capital, such as funds obtained from investors or reinvestment of
funds obtained from operations. Companies use these resources to develop additional resources,
which can be classified as physical capital, such as factory equipment; intellectual capital, the
result of employee efforts that generate intangible assets; and social capital, which is derived
from the relationship between a company and the society from which it obtains its license to
operate. Taking advantage of these additional resources, companies can sell products and
services in exchange for financial compensation. The products and services are not the only
product generated by a company. Externalities are another result of the activities of a company.
Positive externalities arise when the actions of a company generate benefits for a third party. For

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example, employee training benefits the company, but it also creates benefits for other
companies that these employees could join in the future.

Definition:

Integrated reporting is an idea that has been made to have better extensive scope of measures that
add to long term esteem and the part association’s play in the public area. Integral to this is the
recommendation that value is progressively formed by factors extra to monetary execution, for
example, dependence on nature, social notoriety, human capital aptitudes and others. This value
creation idea is the foundation of Integrated reporting which causes the eventual fate of corporate
accounting. In option to financial capital, incorporated revealing analyzes extra capitals that
should direct an association's basic leadership and long term achievements.

The IIRC's vision is seeing the world itself in which coordinated believing is installed inside
standard business works in general society and private divisions, encouraged by Integrated
Reporting as the corporate detailing standard. The cycle of coordinated considering and
detailing, bringing about effective and beneficial capital distribution, will go about as a power for
budgetary steadiness and manageability.

Integrated reporting is predictable with various improvements in corporate revealing occurring

inside national wards over the world. It is proposed that the International System, which gives
standards based direction to organizations and different associations wishing to set up a
coordinated report, will quicken these individual activities and give stimulus to more
development in corporate revealing all-inclusive to open the advantages of IR including the
expanded effectiveness of the revealing procedure itself. Its main goals are to:

 Enhance the nature of data accessible to suppliers of money related funding to empower a
more effective and beneficial allotment of capital
 Promote a more durable and productive way to deal with corporate detailing that draws
on various announcing strands and imparts the full scope of variables that really influence
the capacity of an association to make an incentive after some time
 Upgrade responsibility for the wide base of capitals and advance comprehension of their
inter dependencies

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  Appreciate IR considering basic leadership and activities that emphasis on the production
of significant worth over the short, medium and long term.

The Framework:

The structure sets up standards and ideas that represent the general substance of a Integrated
report. A coordinated report sets out how the association's technique, administration, execution
and prospects, which prompt the production of value. There is no benchmark for the above issues
and the report is pointed fundamentally at the private segment. The thing is it could be adjusted
for open division and not-for-profit businesses.

The basic role of an integrated report is to disclose to suppliers of money related capital how an
association or company makes an incentive over time. An Integrated report benefits all partners
inspired by an organization's capacity to make esteem, including workers, clients, providers,
business accomplices, neighborhood groups, administrators, controllers and policymakers, in
spite of the fact that it isn't specifically gone for all partners. Shareholders can significantly affect
the capital allotment to point the report at all partners would be an unthinkable work and would
decrease the concentration and increment the length of the report. This would be in opposition to
the destinations of the report, which is value creation. Financial reports are fundamental in
corporate announcing, especially for consistence purposes, yet don't give important data
regarding business esteem. Clients require a more forward-looking concentration without the
need of organizations giving their own particular conjectures and projections. Organizations have
perceived the advantages of demonstrating a fuller picture of organization esteem.

Integrated reporting is now making coming age of the yearly report as it allows share or
stockholders to be more educated in terms of making decisions and its prospects. As this
framework is principle based, the IIRC has set out a rule based system as opposed to indicating a
detailed exposure and estimation standard. This report clarifies what makes the hidden an
incentive in the business and how administration secures this esteem. This gives the report more
business pertinence instead of the consistent approach as of now being utilized.

Integrated reporting will not supplant different types of other financial reports. However, the
main vision is that people who prepare these will pull together important data as of now created

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to clarify the key drivers of their business value. Data might be incorporated into the report
where it is material to the partner's evaluation of the business. This report also plans to give
knowledge into the organization's assets and connections that are known as the capitals and how
the organization collaborates with the outside condition and the capitals to make esteem.

Integrated reporting is worked around the accompanying key parts:

 Organizational outline and the outside condition under which it works

 Administration structure and how this backings its capacity to make esteem
 Plan of action
 Dangers and openings and how they are managing them and how they influence the
organization's capacity to make value
 Strategy and asset distribution
 Execution and accomplishment of vital targets for the period and results
 Outlook and difficulties company is facing and their suggestions
 Standpoint and difficulties confronting the organization and their suggestions
 The basis should be resolved, including what makes a difference are to be incorporated
into the coordinated report and how the components are measured or assessed.

Fundamental Concepts of Integrated Reporting

The IIRC is the global authority on IR. It strives to be market-led and evidence-based, acting as a
global Centre of excellence for corporate reporting reform. acts as an ‘umbrella’ for corporate
reporting, behavior and decision making, offering a basis for dialogue and alignment. The IIRC
has a clear vision to make a lasting contribution to financial stability and sustainable
development.

In 2013, the IIRC introduced the International Framework. The Framework provides the
conceptual underpinning to the IIRC’s work to help businesses produce an integrated report. It is
the result of consultation and testing by businesses and investors in all regions of the world.

The three fundamental concepts of IR

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1. Value creation for the organization and for others: An organization’s activities, its
interactions and relationships, its outputs and the outcomes for the various capitals it uses and
affects influence its ability to continue to draw on these capitals its continuous cycle.

2. The capitals: The capitals are the resources and the relationships used and affected by the
organization, which are identified in the IR framework as financial, manufactured, intellectual,
human, and social and relationship, and natural capital. However, these categories of capital are
not required to be adopted in preparing an entity’s integrated report, and an integrated report may
not cover all capitals- the focus is on the capital that are relevant to the entity.

3. The value creation process: at the core of the value creation process is an entity’s business
model, which draws on various capitals and inputs, and by using the entity’s business activities,
creates output (produce, service, by products, wastes), and outcomes (natural and external
consequences for the capitals).

Value creation

Value created by an organization over time manifests itself in increases, decreases or

transformations of the capitals caused by the organization’s business activities and outputs. That
value has two interrelated aspects – value created for:

• The organization itself, which enables financial returns to the providers of financial capital

• Others (i.e., stakeholders and society at large).

Providers of financial capital are interested in value an organization creates for itself. They are
also interested in the value an organization creates for others when it affects the ability of the
organization to create value for itself, or relates to a stated objective of the organization (e.g., an
explicit social purpose) that affects their assessments.

Integrated reporting helps to classifies the capitals used by an organization to create value in six
major types and provide information to its capital providers how the organization creates value
using these capitals in the short, medium and long term.

1. Intellectual capital – Organizational, knowledge-based intangibles, including:

 intellectual property, such as patents, copyrights, software, rights and licences

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  “organizational capital” such as tacit knowledge, systems, procedures and protocols

2. Human capital – People’s competencies, capabilities and experience, and their motivations to
innovate, including their: o alignment with and support for an organization’s governance
framework, risk management approach, and ethical values

 ability to understand, develop and implement an organization’s strategy

 loyalties and motivations for improving processes, goods and services, including their
ability to lead, manage and collaborate

3. Financial capital – The pool of funds that is:

 available to an organization for use in the production of goods or the provision of

services
 obtained through financing, such as debt, equity or grants, or generated through
operations or investments

4. Manufactured capital – Manufactured physical objects (as distinct from natural physical
objects) that are available to an organization for use in the production of goods or the provision
of services, including:

 buildings
 equipment

5. Natural capital – All renewable and nonrenewable environmental resources and processes
that provide goods or services that support the past, current or future prosperity of an
organization. It includes:

o air, water, land, minerals and forests

o biodiversity and eco-system health.

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6. Social and relationship capital – The institutions and the relationships within and between
communities, groups of stakeholders and other networks, and the ability to share information to
enhance individual and collective well-being. Social and relationship capital includes:

 shared norms, and common values and behaviors

 key stakeholder relationships, and the trust and willingness to engage that an organization
has developed and strives to build and protect with external stakeholders
 intangibles associated with the brand and reputation that an organization has developed

Capitals
The Stock and Flow of capitals

Organizations depend on various forms of capital to run their business. Here, the capital
comprises of financial, manufactured, intellectual, human, social and relationship, and natural,
although discussed in paragraphs, organizations who are preparing an integrated report are not
required to adopt this categorization.

The capitals are value stocks and that can be increased, decreased or transformed through the
activities and outputs of the organization. For example, financial capital of an organization is
increased when it makes a profit, and it’s human capital’s quality is improved when employees
get better training. So the overall capital stocks are not fixed over time.

There is a constant flow between and within the capitals as they are increased, decreased or
transformed. For example, when an organization improves its human capital through employee
training, the related training costs reduce its financial capital. The effect is that financial capital
has been transformed into human capital. Though organizations aim is to maximize value
overall, there can be a decrease in capital stocks.

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Disclosure about the capital:

• Determined by its effects on the ability of the organization to create value over
time.

• Shows the factors which effect on the availability, affordability and quality which
determine the organization’s expectation about its ability of producing and
surviving.

Role of the capitals in the Framework

The primary purposes of including the capitals in the integrated report are to serve:

 As a theoretical underpinning part with the concept of value creation

 As a guideline which ensures that organizations should consider all the forms of capital
which have effects on value creation.

Organizations may categorize the capitals in terms of the brand value, reputation, position etc.
there are some which might be considered in separate categories. Similarly, many organizations
comprise intellectual capital as human, “structural” and “relational” capitals.

Regardless of how an organization categorizes its capitals and for which purposes, the capitals
are always used as a guideline to the organization..

Guiding Principles of Integrated Reporting

1. Strategic focus and future orientation

It means an integrated report should provide the organizations strategy. It is also related to the
organizations ability to create value in the short, middle and long term.

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2. Connectivity of information

An integrated report should show the picture of combination and dependencies between the
factors that affect the organizations ability to create value over time.

3. Stakeholders Relationship

An integrated report should provide the nature and quality of organizations relationship with its
stakeholders.

4. Materiality

An integrated report should disclose information about matters that substantively affect the
organization's ability to create value over the short, medium and long term.

5. Conciseness

An integrated report should concise.

6. Reliability and Completeness

An integrated report must include all reliable matters both positive and negative in a balanced
and way and without material error.

7. Consistency and Comparability

The information presented on an integrated report should be consistent over time and the
information must enable comparison with other organizations to create value over time.

Goals and Objectives

The International Integrated Reporting Council (IIRC) is a global coalition of regulators,
investors, companies, standard setters, the accounting profession and NGOs. Together, this
coalition shares the view that communication about value creation should be the next step in the
evolution of corporate reporting. The International Integrated Reporting Framework has been
developed to meet this need and provide a foundation for the future and it is working with its
distinct mission, vision and objective.

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Mission

The IIRC’s mission is to establish integrated reporting and thinking within mainstream business
practice as the norm in the public and private sectors.

Vision

The IIRC’s vision is to align capital allocation and corporate behavior to wider goals of
financing stability and sustainable development through the cycle of integrated reporting and
thinking.

Objective

The IIRC’s objective for the Breakthrough Phase is to achieve a meaningful shift towards early
adoption of the International Framework.

Applications

Any communication claiming to be an integrated report and referencing the Framework should
apply all the requirements identified in bold italic type unless:

 The unavailability of reliable information or specific legal prohibitions results in an

inability to disclose material information.
 Disclosure of material information would cause significant harm.

In case of the unavailability of reliable information or specific legal prohibitions, an integrated

report should:

 Indicate the nature of the information that has been omitted

 Explain the reason why it has been omitted

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  In the case of the unavailability of data, identify the steps being taken to obtain the
information and the expected time frame for doing so.

Advantages and disadvantages of integrated reporting:

Advantages:

1. Integrated reporting helps understand value creation process. In this matter I want to
quote someone’s comment who are benefited from using integrated reporting: “Five
years ago, if we spoke about value, we would look at our value-added statement. We
would look at what is monetized .Now, we look at value added through non-monetized
capitals as well” (Suresh Gooneratne, DIMO, Asia pacific). So from his comment it is
totally understandable that how integrated reporting facilitates the value creation process.

2. Integrated reporting identify risks and opportunities which are specific to organization’s
strategic purposes and relevant in pursuing strategic goals.

3. Integrated reporting improves management information and decision making. As it

distribute strategies and resources of organization to the deserved authority, they make
precise decision for the betterment of organization strategic purposes.

4. Another important benefit because of integrated reporting is the change of conversation

between board and management. Board of directors are completely well-known about
how their organizations create value. As a consequence, between management and board
of directors, there have not been any distrust and obstacles coming from the broad of
directors. So then management can fulfill strategic purposes without any hindrance.

5. Integrated reporting connects departments and broadens perspective.

6. An Integrated Report displays an organization’s stewardship not only of financial capital,

but also of the other “capitals” (manufactured, human, intellectual, natural and social).

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Disadvantages:

1. Time consuming
2. Right now, the best hindrance as for nonfinancial data is from one perspective the
standard of materiality and then again being totally straightforward. These two issues are
opposing to each other. It is hard for the association to figure out which data ought to be
uncovered, since they need to report just the material viewpoints, yet they likewise need
to be completely straightforward and unveil as much as is required by the partners. This
issue can cause clashes inside the association
3. One of the impediments is that the bookkeeping included are created. The interviewees
demonstrated diverse perspectives when discussing burdens, they featured the colossal
exertion and time which are required in the entire procedure, and the issue of picking
emerge and finish straightforwardness
4. Acquiring the correct data isn't generally basic. The non-money related announcing
frameworks and procedures are less develop than monetary detailing forms, non-
budgetary is considerably more youthful. Gaining the data isn't generally simple. This is
because of the way that these information are not caught in a framework that is all right.

Main Aspects of Integrated Reporting:

Integrated reporting is a management and communication tool that helps understand and measure
how organization create values now and in the future. The goal of integrated reporting is to
provide the best information to financial investors, suppliers, stockholders and other parties
related with company’s objectives. If any company wants to acclimate with IIRC frame work,
they should conclude some questions described below in their integrated reporting:

• Organizational overview and operating context:

What does organization do and what are the circumstances under which it operates?

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• Governance:

The next part is we need to know the organization’s structure and how it supports company’s
ability to create value in the short and long term? Integrated reporting basically focus on the
company’s leadership structures such as skills, diversity, experience, and competencies of people
who monitors the regulatory activities of company. Also it works with how organization’s
culture, ethics, and values are reflected in its use of and effects on the capitals, including its
relationship with key stockholders.

• Business model:

A business model is a system that transforms input, through precise and systematic ways, into
output. This achieved output or outcomes work to fulfill company’s strategic purposes and create
value over the short, medium, and long term. Integrated reporting describes the business model
in details including inputs, outputs, outcomes, and business activities.

• Risks and opportunities:

Integrated reporting takes a bigger approach to risk and opportunity management than traditional
framework. An integrated report identifies the key risks and opportunities that are specific to the
organization including those that relate to the organization’s effect on relevant capital in short,
medium , and long term. Integrated reporting works to identify organization’s specific risk and
opportunities which can be external and internal or a mix of the two. External sources include
stemming from external environment such as legal, commercial, social and political context. On
the other hand external sources include those stemming from the organization’s business
activities for example how the organization differentiates itself in the market place, to create
value what are its strategic planning and so on .

Strategy and resource allocation:

After identifying risk and opportunities integrated reporting help allocate resources and strategies
to the deserved departments of the organization to fulfill organization’s strategic purposes.

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Performances:

An integrated report should answer the question: To what extent has the organization achieved
its strategic objectives for the period and what its outcomes are in terms of effects on the
capitals?

Outlook:

An integrated reporting should find out the answers of these questions: What challenges and
difficulties an organization may encounter while pursuing their strategic goals? And what are the
potential implications for its business model and future performance?

Risks and opportunities:

What are the specific risks and opportunities that affect the ability of the organization to create
value in the short, medium and long term and how does the organization face them? The
identification of risks and opportunities is not limited to recognizing them when they occur, but
also to evaluating the probability of their occurrence and the impact of such an event. Actions
that aim to mitigate or manage these risks and take advantage of opportunities, respectively, must
also be present in an integrated report.

Conclusion

Integrated reporting is a new reporting framework that extends beyond traditional corporate
reporting by focusing long-term value creation in terms of financial, manufacturing, human,
intellectual, social and relationship, and natural capitals. It has its own supporting body, the IIRC
has designated as the “breakthrough phase” because the IIRC aims to achieve wider acceptance
for integrated reporting. However, despite anecdotal support integrated reporting receives at the
firm, national, and international levels, empirical evidence on the economic consequences of
integrated reporting is scarce.

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