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The accounting environment

Framework for Integrated Reporting

12.1 Overview

One of the weaknesses of historical cost reporting is that it reports transactions and
events that have already occurred. Whilst this information is useful, users of financial
statements are often more interested in what may happen in the future.
Consequently, an integrated report which includes elements of historical cost
reporting along with some prospective or forward-looking information to meet the
needs of users was developed.

12.2 Principles of the Integrated Reporting Framework

The IR Framework requires reporting in relation to a range of 'capitals'. The capitals
are stocks of value, not just financial, that are inputs to an entity's business model.
The capitals identified by the IR are:

 financial – the financial resources available within an organisation or available
from external sources

 manufactured – including assets manufactured for sale or retained for own use
by an organisation

 intellectual – organisational, knowledge-based intangibles such as patents,
copyrights and other legally enforceable rights

 human – employees of an organisation

 social and relationship – including key stakeholder relationships and the
development of shared norms and values, and

 natural – natural resources available to an organisation.

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