Maintaining reports in business is not easy. If you do not have the proper guidelines during the procedure, you can suffer a significant loss on your company. There are various ways you can collaborate with shareholders and stakeholders. A lot of companies, however, prefer integrated reporting as well as traditional financial reporting.
These methods are pretty similar when it comes to getting the job done, but they are quite different. So, how different are these two reporting methods?
Integrated Reporting Vs. Traditional Financial Reporting
One major distinguishing factor between these two reporting methods is that integrated reporting aims to collaborate with stakeholders while traditional financial reporting aims to collaborate with the shareholders. They are methods that come under-reporting. You can go with whichever method depending on their task and their future needs.
Integrated reporting helps businesses in collaborating with lots of other firms. This ensures more stakeholders to the company. You will follow seven steps in this reporting. They include Strategic Focus and orientation of the future, Relationships with Stakeholders, Connecting Information, Materiality, Conciseness, Comparability, Reliability, Completeness, and Consistency.
On the other hand, traditional financial reporting is divided into two branches. They include external financial reporting and internal financial reporting. It aims at the shareholders of the company. It will prepare and publish all the financial statements of a company. This reporting is not suitable for shareholders and is only valuable for those that are interested.
What is an Integrated Reporting?
It’s more like communication that occurs in a corporate sector. The report will provide information regarding its strategy, lead generation, and performance. These factors can be either long or short term. While using this reporting method will explain all that is happening in the firm financially. It contains financial information and other factors of the business.
The report will disclose the financial information of a firm, thereby creating transparency. It gives a clear-cut picture of your company to society. Such reporting can help you improve your company’s level and help your company create social value. It is also referred to as an integrated reporting pilot program (IRRP).
It is suitable for multinational firms, and there are about 1600 firms that are incorporating this reporting. The reporting is used in 64 countries and is incorporated in the accounting sectors. If you want to learn such reporting in commerce class, you will study it in the 11th class. You will also learn it higher education. After learning, you will implement it in the workplace and depending on the nature of the area you are working with.
What is a Traditional Financial Reporting?
This reporting sheds light on the details of an organization concerning reports and other related financial services. It reports any happening in the financial sector and gives the date of the occurrence in terms of investment, changes, and performance in precise form. Its content includes but is not limited to liabilities, the company’s assets, profits, losses, and ownership structure and income statement.
You can also get information on the cash flows. The report can be created in a way that you can represent it as an excel sheet or PowerPoint presentation. However, the report has failed to answer some customer queries, which has made a massive impact on the reporting. As customers seek other methods to move, it is a powerhouse when it comes to financing.
It is able to give you exact values, and therefore you’re to go to when you wish to know exact table calculations. If you wish to answer any statistical data, then this method is for you. The method takes care of statistical data in the reporting section. However, the technique has failed to answer the direction of a company long term. But other than that, many businesses are satisfied with what the report can do and are leaning towards this report.
Difference between Integrated Reporting and Traditional Financial Reporting
- Integrated reporting is used by many companies and incorporated in all businesses, whereas traditional financial reporting is used in the industrial sector only.
- While using integrated reporting, it will help you connect with all stakeholders. On the other hand, using traditional financial reporting will be profitable for shareholders.
- Integrated reporting content will focus on two sectors, whereas in traditional financial reporting, the information only focuses on one sector.
- The main agenda for integrated reporting is to maintain various types of reports that sprout out in the financial sector. On the other hand, traditional financial reporting mainly focuses on shareholders.
- Integrated reporting will merge at most all business sectors, while traditional financial reporting will not engage all sectors. It will be associated with the stakeholders if only when they are vital for the business.
These two reports are vital today and are used in various sectors worldwide. Their major purpose is to report in an effective way. Many organizations incorporate traditional financial reporting because it uses modern approaches and the shareholders. Businesses are in completion today, and therefore they need to find an efficient way of reporting shares.
It will be wise to find an effective way of reporting to perform such a task for this to happen. If you wish to learn such aspects of reporting, learners will learn in commerce in the 11th class. You will be able to understand the reports in more detail in higher studies. These aspects you learn in commerce will only be implemented in the workplace.