A comparative study of integrated reporting capitals and related financial reporting information

Abstract

M.Com. (International Accounting)

Abstract: The International Integrated Reporting Framework (<IR> Framework) was issued in December 2013 by the International Integrated Reporting Council (IIRC). The <IR> Framework lists six capitals that entities use. Entities often include those capitals that are more important or are used more frequently than others. Although the <IR> Framework was recently issued, the concept of integrated reporting is not a new concept in South Africa. The King Code of Governance (King III) was issued in 2009 and it has a requirement for entities to publish integrated reports. The purpose of this study is do a comparison between the information provided on the six capitals of integrated reporting and the related financial reporting information. A full list of International Financial Reporting Standards (IFRSs) that were used in this comparative study is listed under heading 4.2.3. The International Accounting Standard Board’s (IASB) IFRSs do not address all the capitals in detail. The accounting treatment of each capital is prescribed in relevant IFRS standards. A content analysis has been performed by comparing the information on the six capitals of integrated reporting and the relevant IFRSs identified. The results of the study indicate that the information that is presented and disclosed in the annual financial statements does not always give a true reflection of the results of the entity. This is mainly because of certain expenditures that do not meet the definition of an asset or liability, or that the recognition and measurement criteria of IFRSs will not lead to presentation on the statement of financial position. The study indicates additional information that should be disclosed in the notes to the financial statement or in the integrated report for each capital.