The purpose of this paper is to add to the limited body of interpretive research on integrated reporting by exploring challenges to preparing an integrated report. This is done using an integrated thinking framework which stresses the importance of an interconnection between sustainability performance, proactive sustainability management and integrated reporting.
Detailed interviews with 26 preparers at 9 South African-based organisations highlight practical issues encountered when producing an integrated report.
Integrated reporting is not consistently seen as a natural part of the business process, despite the relevance of multiple types of capital for organisations’ business models. The new report format is imposed on existing internal processes and reporting protocols which precludes a broad understanding of the purpose of integrated reporting and limits the development of management control systems and a supporting accounting infrastructure. In this constrained environment, reporting guidelines are used as disclosure checklists, stakeholder engagement is limited, systems are not always compatible and data analysis is difficult. Preparers are also unconvinced that integrated reports are taken seriously by investors, further limiting the interconnection between sustainability performance and integrated reporting.
Those charged with governance need to ensure that their organisations are identifying so-called non-financial issues as strategically relevant. Sustainability performance targets need to be clearly defined and linked to specific performance indicators. The management control systems and accounting infrastructure must be planned and developed to assist with the monitoring of sustainability performance and, in turn, to inform what information is included in integrated reports.
This study answers the calls for primary evidence on how integrated reports are prepared and the associated challenges. The findings add to the limited body of interpretive research on the functioning of corporate governance and accounting systems and offers practical insights for preparers and academics.
McNally, M.-A., Cerbone, D. and Maroun, W. (2017), "Exploring the challenges of preparing an integrated report", Meditari Accountancy Research, Vol. 25 No. 4, pp. 481-504. https://doi.org/10.1108/MEDAR-10-2016-0085Download as .RIS
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