AUDIT OF THE INTEGRATED REPORTING

IJAEDU- International E-Journal of Advances in Education, Vol. IV, Issue 12, December, 2018 AUDIT OF THE INTEGRATED REPORTING Karagod V.S.1, Golubeva N.A.2, Erokhina E.I.3 1 Doctor of Economic Sciences, Professor, The National Research Nuclear University "MEPhI", Russia, 2 Candidate of Economic Sciences, Docent, Peoples' Friendship University of Russia, Russia, 3 Postgraduate, JSC Kommersant, Russia, Abstract The key subject of this publication is definition of the role of the audit in the preparation and verification integrated reporting. The functions of internal audit as an instrument of internal control of the processes of preparation integrated reporting are considered. The authors are disclosed the problems of external audit verification of integrated reporting. The purpose of this research is systematic approach to the issue of audit compliance assurance and reliability of integrated reporting. The results: the main functions of the implementation of the validation control of internal audit at the stages of preparation of integrated reporting. The positions of formation of methodical approaches to verification of integrated reporting by external auditors are considered. Keywords: external audit, internal audit, integrated reporting 1 INTRODUCTION The development of communications and influence of the ongoing global processes of integration and globalization on the activities of companies have contributed to a change in the stereotypes concerning the dominant of financial reporting. The existing gap between the content of financial statements and the list of information needed by investors and other interested parties (stakeholders) in the complex evaluation of the activities of a particular company doesn’t allow making operative decisions to achieve their goals. While remaining an indisputable authority in the economic life of the society, financial information, in the conciseness of its language requiring special and analytical skills, doesn’t allow a wide range of stakeholders to form a complete picture of the company's status due to the lack of data on its internal and external systemic relationships. The resolution of this lack of information was found in documents that, since the end of the last century, voluntarily compiled and publicly published the business that we are now familiar with as public non-financial reporting (hereinafter - PNR). Numerous evolutionary forms of the development of reporting messages consisting of only non-financial layers of information are combined under the name of PNR - social and environmental reporting; financial component is - the accountability of sustainable development. In the framework of this research, author’s attention will be paid to the most innovative form of the PNR - integrated reporting (hereinafter- <IR>) [9]. As a logical continuation of the evolutionary development of the PNR, the <IR>) is a variant of a successful partnership symbiosis of financial and nonfinancial information, which is guaranteed by the requirements of compliance with the International Integrated Reporting Standard (hereinafter - IIRC). The standard regulates seven leading principles, eight http://ijaedu.ocerintjournals.org 263 IJAEDU- International E-Journal of Advances in Education, Vol. IV, Issue 12, December, 2018 elements of content and defines fundamental concepts (See Figure1). Consideration of the basic framework of the IIRC, testifies to the continuity of the positions with known standards that lie in the reporting area of the corporate social responsibility in the context of sustainable development of business: a series of standards AA 1000, GRI, SASB. In all these standards there is a position of accounting for the opinions of stakeholders, a trend is being tracked in strategic disclosures in the context of reporting, and similar requirements are defined for the completeness, regularity of reporting and the quality of the positions (indicators) disclosed therein. Lying in their basis, the concept of sustainable development regulates the consideration of economic, environmental and social areas of disclosure. To varying degrees, there is a link to the disclosure of the company's management structure. The vector of the "business model" (GRI, SASB) is traced, the capitals are positioned (SASB - social and human). At the same time, this is by no means all the rudimentary signs of "predecessors" in the IIRC. Fig. 1. Basics <IR>: leading principles, content elements and fundamental concepts of integrated reporting Source: compiled authors based on [4] The chain of fundamental differences <IR> begins with the definition of the position of materiality of the disclosed information (See Table 1). Table 1. Comparison of the regulated approaches to the principle of materiality in AA 1000, GRI, SASB and IIRC Standard Explanation of the principle of materiality AA1000 Materiality is determining the relevance and significance of an issue to an organization and its stakeholders. A material issue is an issue that will influence the decisions, actions and performance of an organization or its stakeholders. GRI Consequences for the organization which are related to its impacts on the economy, the environment, and/or society (for example, risks to its business model or reputation); Material topics are appropriately prioritized in the report. SASB Information is essential if there is a considerable probability that the investor will consider that it makes essential changes to an overall picture of activity of the organization. IIRC The integrated report has to open information on the questions having significant effect on an ability assessment the organizations to create cost in short-term, medium-term and long-term period. Source: compiled by the authors based on [1], [2], [15], and [18] The conceptual consistency of the creation of value in <IR> is determined by the target assignments - for the company itself, for stakeholders and the society as a whole, and realizing the resource component (capitals) based on the business model. The existing contradictions in the theory of shareholder value and stakeholder theory, <IR> reconcile in itself the account of the influence of all stakeholders on the company's performance http://ijaedu.ocerintjournals.org 264 IJAEDU- International E-Journal of Advances in Education, Vol. IV, Issue 12, December, 2018 in achieving sustainable development [5]. Moving the provisions of the new institutional economy to the practical plane, the IIRC replaces the concept of an asset with the concept of capital and defines the latter as a reserve of value that changes in the process of the organization's activity [18]. At the same time, financial, production, intellectual, human, social-reputational and natural capital is identified as specific capital forms. The change in capital leads to a unidirectional change in the value created. Its growth is also a positive sign for the securities market. This p (...truncated)