1.0 income statement indicating earnings and net

1.0 IntroductionIntegrated reporting in business modelderives the attention towards inclusion of different components in organizationsuch as organizational strategies, future performance and governance. Thisintegrated business model includes inputs such as varied types of capitals,namely, natural, financial, human, etc., and outputs such as services orproducts (EY, 2013). Traditional financial business model tends to focus on thespendable financial components and resources, near-term cash flows and inflows(McKinney, 2015).2.0 Differenceand Criteria of Replacement between Traditional Financial Reporting Model andIntegrated Reporting Business ModelIntegrated Reporting Model Concept, whichis proposed by the InternationalIntegrated Reporting Council (IIRC), provides a change in corporate accountability.

This concept is timely in nature and thus dependence on traditional financial reportingissues a clear representation of an investment’s value (IFAC, 2016). Stakeholdersand investors had previously got dependent on the traditional patchwork of additionalreporting in order gain a deeper understanding on different areas of managementsuch as sustainability and risk (IFAC, 2016). However, traditional reportingstandard is not able to cover various aspects of management and no longeroffers any direct and clear demonstration of the investments’ value (IFAC,2016).

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Traditional form of financial reporting inthe form of cash flow, balance sheet and income statement indicating earningsand net worth of the business fails to create any substantial value for theorganization, and hence, integrated form of financial reporting comes in thepicture in this case (ACCA, 2015). Inherent limitations in traditional methodof financial reporting make it difficult for the companies to appropriatelycommunicate value. Thus, to cover the limitations of the same, integratedfinancial business model has been able to change the focus from yearlyfinancial performance to creation of long-term shareholder value (ACCA, 2015).IIRC has established principle-basedstructure instead of specification of a detailed measurement and thus disclosureof standard enables various companies to establish their own report rather thanadoption of a standard checklist (ACCA, 2015). Thus, this form of integratedfinancial reporting provides a platform to explain the underlying value of thebusiness and the procedure of management to protect its value.

However,integrated form of financial reporting would not be able to replace other standardof reporting, but the vision will be capable of substituting the fundamentaldrivers of a business’ value (ACCA, 2015).3.0 ConclusionIt can be concluded that integrated form offinancial reporting, covering various aspects of corporate management, which arenot covered by the traditional form, will be able to create a platform tounderstand and determine the value of business by offering due importance oflong-term value of shareholders and not just focusing on annual financialperformance. Thus, this framework will be able to attract the attention of thecompanies and replace the traditional form of financial reporting.

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