The integrated reporting system: a new accountability enhancement tool for public sector entities

Abstract

In the recent years, integrated reporting has made progress towards becoming an efficient communication instrument that would bring an active contribution to the financial stability and sustainability of the economic environment. This paper employs mainly a documentary research approach and aims to track one of the main prerequisites leading towards new trends in public sector reporting-the concept of "public accountability", and pinpoint the existing evidence which supports the perspective of adopting an integrated reporting system for public entities. Also, the authors emphasize the reaction from practitioners to the idea of "integrated reporting for the public sector" and analyse the frontrunning application of hybrid forms of reporting (e.g. City of Warsaw Integrated Sustainability Report), as well as the profile of the "Integrated Reporting-Public Sector Pioneer Network.". Findings show that integrated reporting is gaining momentum towards application in the case of public sector entities, but advancements are rather slow. Due to the scarcity of data from reporting practice regarding integrated reports in the public sector (as the Pioneer Network is currently under development), which makes it difficult to construct an empirical study with actual evidence, the authors use extrapolation and knowledge transference from existing proof of hybrid forms of reporting.

Integrated thinking in the reporting of public sector enterprises: a proposal of contents

“…These papers have analysed the particularities of public organization reporting, for example, in terms of the nature of a public organization's stakeholders and the plurality of their interests (Navarro-Galera et al, 2014;CIPFA, 2016;Guthrie et al, 2017). Thus, governments, policymakers and citizens are considered priority stakeholders in their dual role as taxpayers and voters (Cohen and Karatzimas, 2015;Opris or et al, 2016). In addition, the nonexistence of contributed capital investors (Manes-Rossi, 2018) and, therefore, the search for well-being over other benefits by citizens (CIPFA, 2016) affects the nature of disclosed information.…”

“…In addition, the nonexistence of contributed capital investors (Manes-Rossi, 2018) and, therefore, the search for well-being over other benefits by citizens (CIPFA, 2016) affects the nature of disclosed information. The general interest in knowledge regarding resource use, activities and impacts should be emphasized (Cohen and Karatzimas, 2015;CIMA, 2016), because public entities are required to exhibit higher transparency than private companies (Opris or et al, 2016). Regardless of the legitimacy theory, there is a need to implement management systems that ensure that the scarce resources available to public organizations are being allocated effectively, efficiently and sustainably (CIPFA, 2016) and to stress that reporting can contribute to improving performance and trust in public sector entities.…”

“…A number of authors have highlighted IR contribution to improving understanding of the creation of public value and the use of available resources (Opris or et al, 2016;CIPFA, 2016). Thus, IR is considered as a mechanism to promote internal changes in public organizations (CIPFA, 2016;Guthrie et al, 2017) or as a source of information on relational capital (Cohen and Karatzimas, 2015;Melloni, 2015), a key aspect in the management of public sector activities (Dumay et al, 2015).…”

“…Governments must justify the use of funds raised through taxes, ensure continuity in the provision of services and demonstrate the ability to fulfil future commitments (OECD, 2015;IPSASB, 2017). However, it is uncertain whether citizens are able to interpret the information presented in the financial statements of such entities (Eccles and Saltzman, 2011;Cohen and Karatzimas, 2015;Opris or et al, 2016). Hence, narrative reporting has gained more prominence (Lai et al, 2018).…”

“…In addition, the elements required to put IT into practice have not been empirically investigated (Oliver et al, 2016). Particularly, this paper focusses on the IT concept because of its relevance to the creation of public value, IT in the areas of public sector organizations (Opris or et al, 2016) and government sustainability (CIMA, 2016;CIPFA, 2016).…”