XBRL AND INTERGRATED

REPORTING
Learning Objective:
• Discussing current issues of accounting and auditing
a) XBRL
b) Integrated Reporting.

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XBRL
• XBRL = Extensible business reporting language
• Allows financial information to be presented in an
interactive way that in turn allows individual items of data
to be extracted by software to produce reports custom
designed by individual users
• SEC (2008)
• 500 of largest US companies
• 2009 financial reports

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XBRL
• The Sec hopes that XBRL will allow much faster analysis of
company financial data by a wider group of users with less
error.
• This reason is the current technique used to extract details
from financial statements contain errors because their either
are manually performed or use a software program that
produces output that only approximates the underlying data.

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XBRL
• XBRL will loosen the control managers currently have on
data aggregation decisions and place their performance
under greater scrutiny
• Currently, financial analysts tend to focus on large
companies because of the greater availability of their data
and the wider interest in these companies from investors.
Follow by the small companies.

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XBRL
• Increasing the availability of financial data for small
companies could make them more attractive to analysts.
• In turn, greater analysts following is likely to increase the
liquidity of small companies stock.
• In addition amateur investors may develop more confidence
from the greater level detail and comparability of data
between companies.

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XBRL
• However, CFO seem to be about to lose their ability to choose
the level of disaggregation of data in financial statements.
• Additionally, if provide the investor with complete access to
transaction level data, this would not be useful because the
data would have little meaning. As example, calculation of
ratio for certain types of expenses to sales

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 The effects of corporate collapses and
Sarbanes-Oxley Act (2002)
• High profile collapses in early 2000s changed the image of
accounting and auditing and its regulatory environment
• Criticism of auditor independence and corporate governance
• SOX
• peer reviews replaced by PCAOB inspections
• restrictions on provision of non-audit services by audit firms to their
audit clients

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8
 Issues surrounding the application of fair value
accounting during the global financial crisis
• Some believe the practice of fair valuing assets was
contributing factor
• it requires the write-down in the value of some assets when markets
are turbulent
• marking financial assets to market

• Considerable dispute about this

• SEC investigation (2008)
• recommendations offered for improving fair value accounting

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9
 Reactions by standard setters
• IASB (October, 2008) changed rules so that losses from
changes in market values of financial assets could be
reclassified under certain circumstances avoiding charging
mark-to-market losses to the income statement
• FASB (2009) introduced a ruling to allow banks to use their
own judgement in determining the fair value of assets,
rather than using markets

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10
INTEGRATED REPORTING

http://integratedreporting.org/
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© 2016, Lili Susanti Samsurijal, All Rights Reserved
INTEGRATED REPORTING
• The International Integrated Reporting Council (IIRC)
long term vision is a world in which integrated thinking
is embedded within mainstream business practice in the
public and private sectors, facilitated by Integrated
Reporting (<IR>) as the corporate reporting norm.
• The cycle of integrated thinking and reporting,
resulting in efficient and productive capital allocation,
will act as a force for financial stability and
sustainability.

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Integrated Reporting aims to:
1.Improve the quality of information available to providers of
financial capital to enable a more efficient and productive
allocation of capital;
2.Promote a more cohesive and efficient approach to
corporate reporting that draws on different reporting strands
and communicates the full range of factors that materially
affect the ability of an organization to create value over time;

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Integrated Reporting aims to: - continue
3. Enhance accountability and stewardship for the broad
base of capitals (financial, manufactured, intellectual,
human, social and relationship, and natural) and promote
understanding of their interdependencies;
4. Support integrated thinking, decision-making and
actions that focus on the creation of value over the short,
medium and long term.

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INTEGRATED REPORTING
• Integrated Reporting <IR> is consistent with numerous
developments in corporate reporting taking place
within national jurisdictions across the world.
• It is intended that the International <IR> Framework,
which provides principles-based guidance for companies
and other organizations wishing to prepare an
integrated report, will accelerate these individual
initiatives and provide impetus to greater innovation in
corporate reporting globally to unlock the benefits of
<IR>, including the increased efficiency of the reporting
process itself.
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INTEGRATED REPORTING
• It is anticipated that, over time, <IR> will become the
corporate reporting norm.
• No longer will an organization produce numerous,
disconnected and static communications.
• This will be delivered by the process of integrated
thinking, and the application of principles such as
connectivity of information.

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INTEGRATED REPORTING
• <IR> is consistent with developments in financial and other
reporting, but an integrated report also differs from other
reports and communications in a number of ways.
• In particular, it focuses on the ability of an organization to
create value in the short, medium and long term, and in so
doing it:
a) Has a combined emphasis on conciseness, strategic focus and
future orientation, the connectivity of information and the
capitals and their interdependencies;
b) Emphasizes the importance of integrated thinking within the
organization.

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INTEGRATED REPORTING
• Integrated thinking is the active consideration by an
organization of the relationships between its various
operating and functional units and the capitals that the
organization uses or affects.
• Integrated thinking leads to integrated decision-making
and actions that consider the creation of value over the
short, medium and long term.
• Integrated thinking takes into account the connectivity
and interdependencies between the range of factors
that affect an organization’s ability to create value over
time, including:
© 2017, Dayang Maziela binti Zulkipli, All Rights Reserved
Organization’s ability to create value over time, including:
1. The capitals that the organization uses or affects,
and the critical interdependencies, including
tradeoffs, between them;
2. The capacity of the organization to respond to key
stakeholders’ legitimate needs and interests;
3. How the organization tailors its business model and
strategy to respond to its external environment
and the risks and opportunities it faces;
4. The organization’s activities, performance (financial
and other) and outcomes in terms of the capitals –
past, present and future.
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INTEGRATED REPORTING
• The more that integrated thinking is embedded into
an organization’s activities, the more naturally will
the connectivity of information flow into
management reporting, analysis and decision-
making.

• It also leads to better integration of the information

systems that support internal and external reporting
and communication, including preparation of the
integrated report.

© 2016, Lili Susanti Samsurijal, All Rights Reserved

Thank you