Society values are changing, as is the business environment. Many of the companies once focused solely on profit, are now also concerned about the development of the ecosystems in which they operate. Financial reporting is in line with this development. Once only the task of the financial experts within the financial department of the company, now financial reporting becomes an integrated approach bringing together specialists with various qualifications.

Revealing how value gets created in the company, the integrated financial reporting forces the organization to identify the interdependence of all elements - internal and external - that significantly affect its capacity to create value in a sustainable way. In order to establish these correlations, an integrated approach is needed across all of the company's functional units. This approach is beneficial for the decision-making process, because it will be done in an integrated way. Therefore, integrated reporting is the unitary process of the value-oriented organization.

The translation of integrated thinking into integrated reporting puts the company in a position to have a holistic approach to strategy, corporate governance, performance management and development plans. Therefore, integrated financial reporting can be used as a corporate governance tool for the company focused on sustainability and performance.

The advantages of integrated financial reporting
• A detailed analysis at the level of the management team, the company strategy and the factors that enable sustainable development
• Employee motivation, who will value engagement in a business with beneficial impact on the social context and the environment
• Improving brand perception and investor relations
• More relevant information provided to stakeholders about the company's development, who will make informed decisions about the development of the company
The challenges of integrated financial reporting
• Management can not specify the added value that the company brings to investors and other stakeholders and can not clearly define the business strategy, how to manage risks and performance assessment
• Information obtained by various business units of the company for the data collection, processing, review and reporting process takes some time to become effective
• Non-financial aspects - the impact of the company's operation on climate change, combating corruption and ensuring gender equality must be measured by new performance indicators (which can be audited to increase stakeholder confidence)
• Financial reports can become documents difficult to read and understand by investors, being necessary to consider the main purpose for which they are prepared – to provide a better understanding of the business to investors and other interested parties
Obstacles to be considered in the case of the integrated financial reporting
The high complexity of integrated financial reporting compared to classical annual financial reporting raises the question of how the financial auditor will issue the assurance opinion on a set of integrated financial statements.
Therefore identifying and adapting existing practices, developing new standards, rethinking auditors' liability in the context of subjective information for a reasonable assurance, identifying forms of insurance to obtain a reasonable cost/benefit rate are as many answers to the challenges that integrated reporting them brings to the financial audit process.
In order to keep up with the major changes that take place as a result of the impact of integrated reporting, the audit profession must adapt methodologies, as well as how to select and evaluate the audit evidences. Under these circumstances, control and transaction tests on non-financial indicators are also benchmarking of the profession within the reference framework described by integrated financial reporting.

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About us

For more than 23 years, PKF Finconta is one of the 10 leading professional services companies in Romania. Since 2006, we are a member of PKF International Limited. PKF International is a leading international business advisory organization. The company grew consistently over the years, forming a Group of four companies: PKF Finconta, PKF Finconta Consultanta, PKF Finconta HR and Finconta Consulting SPRL, members of national professional organizations CECCAR, CAFR, CCFR, and UNPIR.

We provide a wide range of business advisory and related specialist services. We have seven core areas of expertise and within these areas, we tailor our services to your business and your needs: audit, corporate finance, tax, bookkeeping and accounting advisory services, transfer pricing, payroll and personnel administration, and insolvency.

Web: www.pkffinconta.ro