Essay Example on What are the plausible reasons for such shift in the objectives of IIRC









In order to assure the capital investors that firm is achieving high profitability in not only short or medium term but also over the long run Firstly this answer will elaborate what are the plausible reasons for such shift in the objectives of IIRC in the light of evidence gathered from research Was this a smart step taken by IIRC or not followed by a reasoned conclusion The International Integrated Reporting Council formerly known as International Integrated Reporting Committee was established in August 2010 with the ambition of creating a globally accepted integrated system for accounting information reporting As the research paper by J Flower critically evaluates was formed with great missions and with hubris filled statements of accounting being the core component of the century Having the full support and existing members of IASB FASB IFAC and IOSCO Accounting experts from around the globe and brainstorming panel of the millennium The very first thing this body did was releasing a discussion paper which outlined the obvious integrated reporting is the future because it depicts how an organisation is being operated governed and its strategic approach compared with resulting performance Conventional form of reporting is flawed and needs a globally applicable framework which could overcome the barriers withstanding in the path of accounting sustainability 

This discussion paper also described how this hurdle would be dealt with a single integrated report which will replace all of the other reports this report would be primary report of a business Change of such magnitude would require total reform of accounting system meaning it would not only make a new reporting system but will also render all the current prevalent accounting and enterprise resource systems obsolete This will raise many red flags because all of the current laws code of conducts and legislative requirements are complicated how will it be integrated into a single report And if so how will that report not be complicated itself Moreover how will the barrier of non disclosure be fully tackled with just one report Many organisations are currently spending a lot both in terms of time and resources in order to comply with the specific reporting standards that are prevalent in their own country and in the countries that they want to operate or trade in This is a tiresome job and requires a lot of efforts as per initial claims by IIRC if this can be done by a single report which is equally understandable for every nation it would definitely result in saving time and resources As per the individual research conducted for this answer and the evidence which emerged from that research it appears that the transition of aim for IIRC was very carefully deviated from its original object and numerous valid analyses were conducted before this leap of faith Furthermore it took three years after the formation of IIRC to finally announce that what this institute will be truly be targeting in the light of accounting theory the Utilitarianism theory can best define this change in purpose 

This is a theory of simple view consisting of the common right and wrong judgement of the any economic decisions the value of which can be determined by conducting a cost vs benefit analysis of all the decisions taken As per this theory the good as well as the bad aspects of a decision should be measured in order to determine if it is viable or not and as long as an action or decision is proving to be more good than the bad it is deemed to be viable In case of IIRC the designing process of integrated reporting framework having global acceptability had more costs or per say negative aspects than benefits to the society as a whole firstly it was resulting in losses to many existing information system softwares already in market which many of the MNCs Multinational Companies were using to maintain their corporate and social activities stakeholders for the current accounting report framework was linked to multilateral levels Any change to this existing system will prove to be a domino effect collapsing thousands of businesses all over the planet in addition to that there was another cause there are always new discrepancies generated from multiple nations simultaneously IIRC spent a lot in terms of time and resources for the purpose of generating a global reporting system that could integrate all different standards from the countries in order to uniform it By the time the whole process of uniform guideline would amalgamate every necessary aspect of accounting systems there would be several new norms ending up distorting every information system algorithm which was included previously

This was a tedious and never ending job Metaphorically one cannot simply put everyone on same page Therefore the cost benefit analysis here shows the original objective is carrying more costs than the benefits However the governing management of IIRC derived a new objective of far greater benefits which was definitive and worth the cost incurring for it The usage of integrated reporting system in order to maximize the utility of the capital vested in the business and transferring of that information to the capital investors to increase their level of confidence in business The Theory of Utilitarianism decodes the decision making in a very efficient way simply put it is the average of negative and positive outcomes of a possible economic decision if the positive side of scale is far greater than the negative one the decision is worth the costs The IIRC s long term objective is to constitute a world in which integrated communication is in the core of all business practices occurring in both public and private sectors established via Integrated Reporting as the corporate reporting medium The circulation of integrated brainstorming and reporting gives rise to efficient and productive resource allocation which will in turn act as a foundation for financial stability and sustainability

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