Table of Contents
Introduction
Social responsibilities go a long way towards achieving acceptance in the community as an organization. Unfortunately, some organizations fail to recognize this aspect in the accounting reports. However, there is a recent progress in the Integrated Reporting that considers social investment as an international practice that needs to be evaluated in the accounting perspective. To get a clear perspective on this subject the paper seeks to analyze an article – Exploring the Implication of Integrated Reporting for Social Investment (Disclosures) – that evaluates IIRC piloting the program on four multinational organizations.
Article Description
The article focuses on four multinational organizations – National Australia Bank, Unilever, Heineken and Glaxo Smith Kline (GSK) – that applied Integrated Reporting Framework. In this article, the authors recap on what applied as pilot reporting formats which acted as the foundations to what they apply today in their corporations reporting. Through these four companies, authors ensure that there is a clear understanding of the global reporting procedures (Adams, Potter, Singh, & York 2016, 284). The article brings to attention the benefits the organizations that conducted IR pilot program experienced. The article has given an overview of the social investment implementation through the evolution of IR. It has concentrated on giving appropriate benefits that organizations receive after empowering the societies.
Personal Interest in the Article
The article is helpful to a student since it offers a different overview of Integrated Reporting (IR). Firstly, it can help in understanding the origin of IR and why organizations find it necessary to implement. It clearly defines the reporting formats that make implementation of IR possible. In addition, the article gives a proper flow of results realized over time after initiation. Finally, since the article emphasizes on social investment’s benefit in offering on what an organization gets in return.
Technical Issues Addressed
Organizations Do Not Consider Social Investment as Integral Part of Financial Reporting
The article has been prepared as an aftermath analysis of the corporation’s intention whenever preparing financial reports. Unfortunately, they fail to realize the overall need to go into details in the preparation. One of the aspects is the social investment part in financial reporting. The article considers bringing into attention that this is important reporting since it brings in differentiated benefits (Adams, Potter, Singh, & York 2016, 285). While some organizations give back to the community as part of the social investment, there are those who do it for financial return.
Qualitative Methodology Was More Sufficient In Preparation of the Article
In order to deliver on the article, the authors used qualitative methodology. For that reason, they gathered the content and analyzed them in thematic form. The researchers made sure that they focused on the social investment by the organizations and benefits each organization acquired from this type of investment (Adams, Potter, Singh, & York 2016, 287). Researchers found that isomorphism and isopraxism were useful in identifying changes applied in reporting so that to identify how similar and different integrated reporting can be comprehended by organizations.
The Findings indicated a lot of Similarities in Results on Social Investment but Some Differences in Industries the Organizations Operated
The researchers made sure that they focused on the four organizations. There are those findings that were common to all organizations while others were uniquely specific. The differences occurred because organizations were from different industry. Since the research focused on social investment, the piloting program on IIRC led to each of them changing their way of social investment and implemented a disclosure procedures (Adams, Potter, Singh, & York 2016, 291). The changes were observed after analyses were done between 2009 and 2013 for each organization. Some organization had to change the management while others changed the strategies on production. In addition, some set aside finances to support the social investment programs. Such programs were rapt towards community sustainability.
From the table above, there are some concepts that can be noted regarding the principles that were tested for all the companies. It is important to note that the companies did not demonstrate a 100 percent success on all principles. Nevertheless, there is a clear indication that the reports demonstrated poor accountability principle on almost all the organization. There were also some aspect in relation to ethics that never reflected well of the companies. However, the reports indicated that the organizations did well and were purposeful in fulfilling their mission and reason for existence.
A Major Limitation Was Noted Especially In Data Consolidation from Many Reports
The first limitation was that there was a wide gap in relation to social responsibilities as well as the environmental program (Adams, Potter, Singh, & York 2016, 293). This made it hard to consolidate the information. It was difficult to have quantified data until a lot of reports were put together. In addition, the data had to be collected from yearly reports that were at time hard to access (Adams, Potter, Singh, & York 2016, 294). Also, the selected social investment plans failed to meet the minimum requirements by IIRC. The period dedicated to the research was short which does not quantify to understanding the long term strengths and shortfalls. There is also lack of clear data that offer information on the important value that the organizations discovered after the social investment. Finally, the four companies may not have been sufficient to get the global companies’ perspective. The research saw these limitations and decided to keep the article open for futuristic analyses.
Personal Understanding and Assessment
The International Integrated Reporting Council (IIRC) had a pilot program that gave an opportunity for Australia through NAB to be part player (Bernardi & Stark 2015, 17). In addition to the stakeholders interested in the program attracted other external participants. The article focused on the social investment as an important aspect of IR. The first thing learnt is that many organizations participate in social impact but fail to account for social investment. It is important to integrate it since it may leave a gap that could hinder proper reporting (IIRC 2012, web). It is also clear that the social responsibility goes a long way both on the local market and internationally. Therefore, it had to be included as an international integrated reporting segment. Finally, it is clearer that each organization has a way of putting social responsibility as part of their integral operations (Adams, Potter, Singh, & York 2016, 123).
Conclusion of the Article
Therefore, the article is an appropriate introduction to the concept of social investment. It offers an opportunity for the learners to understand the global corporate reporting. The initiative was instigated to enhance integrated reports by including social investment. To demonstrate this IIRC initiated a pilot program on NAB and Unilever. Seeing the importance, there was additional companies (Heineken and GSK) initiating of the pilot program independently. All the four organizations studied demonstrated positive results after the implementation of social investment as part of integrated reporting as per IIRC recommendation. However, it is necessary to conduct further research in order to have a broader perspective on social investment on a global viewpoint.
- Adams, C. A., & Whelan, G. (2009). Conceptualising future change in corporate sustainability reporting. Accounting, Auditing & Accountability Journal, 22(1), 118-143.
- Adams, C. A., Potter, B., Singh, P. J., & York, J. (2016). Exploring the Implications of Integrated Reporting for Social Investment (Disclosures). The British Accounting Review, 13(4), pp. 283-296.
- Bernardi, C., & Stark, A. W. (2015). The Transparency of Environmental, Social and Governance Disclosures, Integrated Reporting, and the Accuracy of Analyst Forecasts. SSRN Electronic Journal, pp 1-53.
- IIRC. (2012). Understanding transformation: Building the business case for integrated reporting. Retrieved April 12, 2018, from International Integrated Reporting Council (IIRC): http://bestpractice.blacksunplc.com/corporate/iirc_understanding_transformation/projet/BUILDING-THE-BUSINESS-CASE-FOR-INTEGRATED-REPORTING.pdf