JRSSEM 2022, Vol. 2, No. 03, 230 – 247

E-ISSN: 2807 - 6311, P-ISSN: 2807 - 6494

DOI : 10.36418/jrssem.v2i03.260 https://jrssem.publikasiindonesia.id/index.php/jrssem/index

IMPLEMENTATION OF INTEGRATED REPORTING <IR>

FRAMEWORK IN NON-PROFIT ORGANIZATION

Nurhaliva

Lilik Handajani

Ayudia Sokarina

1,2,3

Master of Accounting Study Program, Faculty of Economics and Business, University of

Mataram, Indonesia

e-mail: nurhaliva100@gmail.com, lilikhandajan[email protected], ayudia.so[email protected]

*Correspondence: nurhaliva10[email protected]m

Submitted : September, 28

2022 Revised : October, 15

2022 Accepted : October, 19

2022

Abstract. This study aims to implement the 2021 revision of IIRF in X non-profit organization. This

research is qualitative research with an action research approach. The results of this study indicate

that X non-profit organization is able to present <IR> based on the eight content elements of IIRF,

although the information presented in <IR> is not fully presented in full because the adoption of

directed <IR> in IIRF is still at an early stage. However, if the organization is consistent with

presenting <IR>, there will be a gradual increase in the following years. This research is expected

to provide additional guidance on how to apply IIRF as a guide for presenting <IR> for organization

X and other non-profit organizations interested in implementing IIRF.

Keywords: Value Organization, Integrated Reporting, <IR>, The International Integrated Reporting

Framework, IIRF, Non-profit Organizations, Value creation.

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INTRODUCTION

Along with the times and the

increasing needs of

stakeholders

(stakeholders) resulting in an increasingly

diverse type of organizational reporting

(Roxana-Ioana & Petru, 2017) both for-

profit and non-profit organizations. There

are many problems related to

organizational reporting that traditionally

(focusing on quantitative aspects) are not

enough to meet the information needs of

various stakeholders (Adams et al., 2011;

FRC, 2009, 2011; Cohen et al., (2012) in

Cheng et al., (2014)). In addition to

quantitative reporting related to finance,

stakeholders

also now need non-financial

reports that are narrative in seeing how the

organization achieves its important goal of

creating value. The organization's ability to

create the best value can be reported

through a combination of quantitative and

qualitative (narrative) information (IIRC,

2021).

Narrative reporting is an umbrella

under which organizations can manage

their non-financial information

communications, which will set the context

for the organization's operations so that

stakeholders

can establish strategic fit and

a more holistic view of the future direction

of the organization (Conway & Byrne,

2018:107) . It is important for organizations

to pay attention no longer only to financial

information but non-financial information

that will be able to provide an overview of

the overall performance of the

organization. With this,

stakeholders

can

assess whether the organization is able to

create and maintain organizational value in

the long term.

Regarding how organizations present

information that is non-financial in nature,

it has been widely discussed by

practitioners, academics and

standard

setters

through several scientific studies

that have emerged

This non-financial

information is usually reported through

various mechanisms including such as

stand-alone

s ustainability reports

Corporate Social Responsibility

(CSR)

reports,

or contained in

annual reports

(Simnett et al., 2009; KPMG, 2011; Cohen et

al., 2012) in (Cheng et al., 2014). But on the

other hand, the variety of reporting

mechanisms of these organizations can

lead to silos because the reports are

presented separately. This causes

stakeholders

to be unable to use the

information disclosed relevantly due to the

separation of reports (Hoque, 2017). In

addition, the presentation of stand-alone

reports can lead to overlapping

information or a lack of coherence between

reports (Montecalvo et al., 2018). It is

necessary to have information connectivity

that can relate reports to one another so

that the overall performance of the

organization can be depicted which can

affect the company's value creation. It is on

this basis of this idea that the latest

reporting mechanism emerged, namely

the

Integrated Reporting

<IR> (Conway &

Byrne, 2018: 111).

While the organization's traditional

reporting contains many reports,

disconnected, and static, yet <IR> focuses

on the company's value creation process

232 | Implementation of Integrated Reporting <IR> Framework In Non-Profit Organization

over time by bringing together financial

and non-financial information (Tiron-Tudor

et al., 2020).

The International Integrated

Reporting Council

(IIRC) states that <IR>

will be of great benefit to

stakeholders

interested in the organization's ability to

create value over time. <IR> promotes a

more cohesive and efficient approach to

organizational reporting and aims to

improve the quality of information available

to capital providers to enable more efficient

and productive allocation of capital (IIRC,

2021). Organizations will no longer

generate voluminous, disconnected, and

static reporting. This will be conveyed

through an integrated thinking process and

the application of principles such as

information connectivity (IIRC, 2021). The

IIRC assures that communication about the

creation, preservation or eroding of

organizational values is the next step in the

evolution of organizational reporting (IIRC,

2021).

The discussion on

integrated reporting

was initially initiated with the publication of

Towards Integrated Reporting-

Communicating Value in the 21st Century

by IIRC at the end of 2011 as a framework

for introducing the concept and

implementing <IR>. Then furthermore,

academics and practitioners contribute

through research both theoretically and

empirically by referring to the basic

concepts, guiding principles and content

elements promoted by IIRC so that further

revisions to the framework <IR> in 2013.

Research conducted by Haller & van

Staden, (2014) which states that integrated

reporting capabilities can provide

information about the value created by

companies and their distribution among

various stakeholders.

Pricewaterhouse

Coopers

(PwC) conducted a Survey in 2015

which found that <IR> is the most effective

depiction of business models, strategies

and resource allocation (PwC, 2015) which

is an important principle in integrated

reporting. Lee & Yeo, (2016) conducted a

study of South African companies listed on

the

Johannesburg Stock Exchange

(JSE)

after the mandatory implementation of the

<IR> in 2010 and found that the disclosure

of <IR> positively affects the value of the

company. Roxana-Ioana & Petru, (2017)

conducted research on companies listed on

the Romanian

Bucharest Stock Exchange

(BVB), which states that <IR> can help

corporate governance through increased

accountability, clear performance

management, greater transparency,

effective leadership as well as more

effective risk management, and better

decision making that takes into account

long-term and long-term outcomes short.

Research conducted by Arora et al., (2021)

on several companies located in Australia,

Italy, New Zealand, South Africa and

Denmark in various sectors that have

implemented <IR> thus coming to the

conclusion that integrated reporting is a

flexible tool for communicating

organizational value creation, as it includes

financial and non-financial information,

and overall performance information.

Rachmawati et al., (2021) conducted a

study aimed at explaining the geographical

concept of <IR> based on IIRC

recommendations practiced by companies

in Indonesia with the conclusion that most

companies in Indonesia have implemented

elements and principles of <IR>, although

<IR> is reporting that is still voluntary. This

Nurhaliva

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research provides the view that the

importance of integrated reporting to

increase stakeholder trust (Rachmawati et

al., 2021). Confidence in the widespread use

of <IR> on an international scale can also

be seen from

The Value Reporting

Foundation's

statement that <IR> adopted

in more than 70 countries around the

world, by more than 2,500 organizations

and with the support of 40 stock exchanges

and will continue to grow, more and more

organizations are experiencing its benefits

for decision making and long-term value

creation (Value Reporting Foundation,

2021)

Seeing the positive response and

practical and theoretical contributions from

various circles in various countries to the

benefits of <IR>, so to improve company

reporting and to further integrate financial

and non-financial information, IIRC again

developed the <IR> framework by issuing

the

International Integrated Reporting

Framework

(IIRF) in 2021 as a revised

framework <IR>.

Of all the research that have developed

both theoretically and practically

contributed to the development of quality

<IR> as an evolution of organizational

reporting, most of them are analyzed and

reviewed from profit-oriented

organizations only, not non-profit

organizations. Whereas that requires a

good quality reporting mechanism is not

only profit organizations but non-profit as

well. This is something that not many

researchers look at. Although the IIRC

states that the IIRF is written primarily in the

context of private sector organizations or

profit sectors of various sizes, the IIRC

states that the IIRF can also be applied and

adjusted as necessary by the public sector

and non-bank organizations (IIRC, 2021).

Thus, it is possible for non-profit

organizations to use and feel the benefits

of <IR>.

Based on PSAK No. 45, a non-profit

organization is an organization that obtains

resources derived from donations. Non-

profit organizations do not play a role in

seeking personal benefits for each member,

but rather play a social role to meet social

needs and benefits with the resources

entrusted by donors. The characteristics of

non-profit-oriented entities are different

from those of profit-oriented business

entities. The fundamental main difference

lies in the way in which a non-profit-

oriented entity acquires the resources

needed to carry out its various operating

activities. According to ISAK 35, non-profit-

oriented entities obtain resources from

resource providers (donors) who do not

expect repayment or economic benefits

proportional to the amount of resources

provided (Indonesian Institute of

Accountants, 2018). Thus, non-profit

organizations have an ethical responsibility

to allocate and utilize the resources that

have been entrusted effectively and

efficiently.

Donor trust is the main key that non-

profit organizations must pay attention to if

they want to continue to operate

sustainably in meeting the social needs that

are their main goal. Donor trust arises from

the value created by the organization itself.

This is because non-profit organizations

contribute to society through their social

value creation (Weerawardena et al., 2010)

the value of non-profit organizations

actually already naturally exists in the body

234 | Implementation of Integrated Reporting <IR> Framework In Non-Profit Organization

of the organization because of its social

role. However, This social role requires more

accountability than donors expect due to

growing concerns regarding the ethical

attitudes of non-profit organizations in

managing their organizations (Moreno-

Albarracín et al., 2021). Such concerns are

heightened due to inappropriate behavior

of some non-profit organizations (Greenlee

et al., 2007 in Moreno-Albarracín et al.,

(2021)), damaging the image or traditional

value of the credibility of this sector (Rocha

Valencia et al., 2014). This shows that non-

profit organizations must maintain the

value that already exists naturally and strive

to continue to create value over time in

order to achieve the long-term

sustainability of the organization. The

organization's ability to create and maintain

organizational value can be created from

the accountability carried out by the

organization. Empirical evidence suggests

that high levels of transparency and

disclosure can increase the level of trust of

donors (Ramli et al., 2018)

In recent years, the issue of

accountability of non-profit organizations

has been highlighted by many parties in

relation to the mechanisms of

organizations in carrying out their

performance transparently (Prince, 2021).

They face great demands for accountability

and the results of the work they are able to

show to the funders (Gazzola et al., 2017;

Milde & Berlo, 2013). This guidance has

shown various efforts to promote

accountability in non-profit organizations.

The accountability of non-profit

organizations is generally reflected in the

availability of relevant and reliable

information about the performance,

financial situation and governance of the

organization (Gazzola et al., 2017) disclosed

in the form of organizational reporting.

Reporting of non-profit organizations

is a form of organizational accountability to

stakeholder groups such as donors,

volunteers, the government, and the

community in general.

Stakeholders

utilize

organizational reporting as material for

evaluating whether the organization is able

to fulfill its responsibilities in managing the

public resources provided and also how

non-profit organizations can create public

value for the sustainability of the

organization. As with profit organizations,

the accountability of non-profit

organizations also does not only assess

overall performance on the financial

aspects alone because such information

can be misleading; rather it must also

consider non-financial aspects. In the

context of non-financial organizations, the

disclosure of non-financial information

acquires important relevance because this

type of organization faces more

comprehensive stakeholders than profit

organizations (Nicolò et al., 2020).

Thus, non-profit organizations need to

take advantage of the momentum of <IR>

as the latest evolution of organizational

reporting that

pays attention to the needs

of stakeholders

. <IR> has been interpreted

as a further step in the evolution of

organizational reporting, suitable for

representing public value creation and

overcoming accountability pressures

(Mauro et al., 2020) . Although most

researchers focus on the study of for-profit

organizations, there are some researchers

who try to apply the concepts and

principles of <IR> to non-profit

Nurhaliva

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organizations. Such as research conducted

by Ramli et al., (2018) which aims to identify

the principles of

Integrated Reporting

(IR)

suitable for non-Islamic organizations in

Malaysia to realize their accountability to

stakeholders. Mauro et al., (2020)

conducted a study aimed at understanding

what if <IR> is a feasible next step to

improve the reporting practices of public

universities in Italy with the results of

studies showing that some of these

elements are already included, but often in

a fragmented (fragmented) and

inhomogeneous way. Furthermore,

research conducted by Dameri & Ferrando,

(2021) which aims to provide empirical and

theoretical solutions for some criticalities of

the IIRF. The researcher suggested that IIRF

adjustments are recommended for non-

profit organizations because <IR> is able to

foster awareness of the role of

Intelectual

Capital

(IC) in value creation in non-profit

organizations. Dameri & Ferrando, (2021)

conveys the limitations of his research that

none of the customized frameworks are

innovative by themselves, but together

contribute to providing innovative

solutions, which can address the disclosure

and managerial needs of the vetted or

researched organizations. With this, further

research is needed for development and

improvement solutions to IIRF.

Departing from the benefits of <IR>,

the guidance of accountability of non-profit

organizations is getting bigger (Nicolò et

al., 2020), and also the need for further

research related to IIRF, research will be

carried out related to how non-profit

organizations can take advantage of the

momentum of the presence of the latest

reporting mechanism, namely <IR> by

using the 2021 revised IIRF published by

the IIRC for guidance in the preparation of

<IR reporting> as a form of organizational

accountability for non-profit organizations

to gain public trust.

Organization X is one of the social

organizations in West Lombok Regency

that is active in helping abandoned street

children. This organization is one of the

most active organizations and has a

considerable asset value of IDR 29.15 billion

according to financial statements at the

end of 2020. This organization has a

main

office

in Lombok as an operational location

and

a representative office

in the

Netherlands as a fundraising office so that

it has comprehensive

stakeholders

. Their

stakeholders

are donors or general

sponsors in the form of corporations and

individuals in various countries, the Dutch

government, and the Indonesian

government, and the general public in

various countries, especially Indonesia. Due

to the guidance of accountability and

transparency from stakeholders,

Organization X began issuing annual

reports and audited financial statements

starting from the 2018 financial year and

stopped in the 2019 financial year. Initial

interview with the director of organization

X, the reason for not publishing the annual

report again in the 2020 financial year was

because

the annual report

published over

the past 2 years was less effective.

According to him,

stakeholders

are still

questioning the information that is not

stated in the

annual report

. In fact, there are

still

stakeholders

who still question the

information that should have been in the

annual report

or on the organization X's

website because there is no information

236 | Implementation of Integrated Reporting <IR> Framework In Non-Profit Organization

connectivity so that

stakeholders

do not

understand the information available

properly. So it needs a more comprehensive

reporting media that can present various

information desired by stakeholders in one

complete report. Therefore, they are trying

to think of a new concept as a reporting

medium that can meet the information

needs of their

stakeholders

MATERIALS AND METHODS

This research is a qualitative research

using an action research approach (Action

Research). The action research approach is

one of the scientific research approaches that

has two objectives, namely taking action (for

improvement) and building knowledge or

theory about action (Sugiono, 2015). Action

research is research in which the researcher

collaborates with the subject under study, the

subject actively participates in the research

cycle. This research will use a level 1 action

research approach. Action research at level 1

is action research in which the researcher

conducts research to find problems and

potential, and further finds actions for

improvement, only the researcher does not

test the action. This research approach is used

because researchers are also part of an

organization that can contribute information

and understand the flow of the organization's

operations. This makes it possible to carry out

an in-depth analysis focused on the context

and processes of the organization, taking

advantage of a series of concepts and models

based on the theory and suggesting a

customized version of the IIRF capable of

bridging the gap between empirical evidence

and theoretical frameworks.

This research will be conducted on one

of the non-profit organizations in west

Lombok district. The data collection

procedures used in this study are

participatory observation, documentation,

and unstructured interviews.

In organization X, the director is the

party responsible for all types of reporting

and as the decision-making party. So that the

director is the party who knows the most

financial and non-financial information. Then

the informant in the study is the director.

The data that has been obtained from

interviews, participatory observations, and

documentation is then collected and will be

analyzed using content analysis (Content

Analysis). In this study, we will use two types

of triangulation, namely source triangulation

and data collection triangulation to test the

validity of the data obtained.

RESULTS AND DISCUSSION

The IIRF introduced can be a guideline for

the preparation of integrated reports for both

for-profit and non-profit organizations. But it is

adjusted as necessary, based on the

characteristics and needs of each organization.

Based on the results of the study it can be

summarized that from the concepts offered in

the IIRF neither the guiding principles nor the

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elements of the content offered there are any

specific adjustments that change the non-profit

organization. Likewise in the framework

/pattern of value creation: from inputs,

processes (organizational activities) to outputs

have almost the same flow/process of value

creation as depicted in the IIRF.

Figure 1. X non-profit organization Value Creation Process

But there is little to distinguish the

definition because of the difference in the

goals of profit and non-profit

organizations. Such as the definition of the

outcome of capital (sources) financial. In

profit organizations, an increase in financial

capital (equity) can be considered as a

proxy for the fulfillment of the expectations

of stakeholders (especially shareholders).

Conversely, when the IIRF is implemented

in X non-profit organization, there is no

profit, and no stakeholders take advantage

of such increased financial capital. In X non-

profit organization, financial capital is no

longer an important thing, but must be

maintained to maintain the continuity of X

non-profit organization. Because the

process of value creation aims primarily at

achieving social performance that is in line

with the mission of the organization.

The existence of these differences in

definitions does not change in the slightest

the framework/pattern of creation offered

in the IIRF because in X non-profit

organization stakeholders still pay

attention to financial capital as a

benchmark to measure whether the

organization is still capable of carrying out

its social mission or not, and it can also

determine whether they will contribute

more than the previous one or not.

Based on the results and discussion of

the study, the process carried out to

identify the information outlined in the

draft <IR> of X non-profit organization

based on the content elements offered in

the IIRF can be seen in figure 2.

EX T ER N AL ENV I R ON M E N T

P U R P O S E, M I S S I O N , VI S I O N

FIN A N CI A L

M A N U F A C T U R E D

I N T E L L E C T U A L

H U M A N

I NP UT S

R I S K S A N D

O P P O R T U N I T I E S

B U SIN E S S M O D EL

B U S I N E S S

ACT IV I TI ES

OUTP UTS

ST R A T E GY A ND

R E S O U R C E A L L O C A T I O N

OUTC OM ES

(P O S I TI V E AN D

NE G A TI V E OV ER TH E

SH O RT, M ED IUM

A N D L O N G T E R M )

FIN A N CI A L

M A N U F A C T U R E D

I N T E L L E CT U A L

H U M A N

S O C I A L A N D

R E L A T I O N S H I P

N A T U R A L

PE R F O R M A N CE

O U T L O O K

S O C I A L A N D

R E L A T I O N S H I P

N A T U R A L

238 | Implementation of Integrated Reporting <IR> Framework In Non-Profit Organization

Figure 2. <IR> reporting roadmap

In implementing the IIRF in X non-profit

organization with the aim of presenting the

<IR> will meet the 8 elements of the

suggested content. Based on the results of

the review of information obtained from

documentation, observations and

interviews, a discussion of each of the eight

elements of content below was obtained:

The Organization overview and

External Environment. In the content

element of the organizational overview and

external environment, the description of

how the organization review appears clear

and unequivocal. The vision, mission,

programs, and strategic objectives that

they are the reasons why organization X

exists and can be different from other

organizations. Information regarding the

ownership and operating structure of the

organization can be presented. The main

activities of the organization and its

advantages with other organizations.

However, organization X is still unable to

identify how external environmental

influences such as the state of politics or

the state of the external environment that

can affect the existence of their

organization in a sustainable manner.

External factors can provide strategic focus

and future orientation including clearly

articulating how the availability, quality and

significant affordability of capital

contribute to the organization's ability to

achieve its future strategic goals and create

value. If the information can be well

identified in this content element, then it

will be very easy for organization X to

associate this content element with the risk

and opportunity content element, resource

allocation, foresight of the organization. In

the IIRF, it states that the elements of the

proposed content are not mutually

exclusive but support each other to jointly

provide information that will boil down to

the creation of organizational value.

Identifying the first element of content is

not difficult to do by organization X

because when data collection is carried out

either through documentation, namely

through annual reports, the organization's

website, and organization X's code of ethics

book, then validated through interviews

with informant. So as a non-profit

organization there is no need for any

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specific IIRF adjustments needed to be

made for this first content.

Governance. In the governance content

element, it can be concluded that,

organization X can only dig up information

related to the ownership structure of the

organization and the background of the

owners involved is presented completely in

the content element of the organizational

model in the input sub-element of the

organization. However, the organization

cannot dig deeper related to how the

organization's process of determining

strategic decisions, how the organization's

attitude in risk management and what

needs have been taken by the management

to influence and monitor the direction of

the organization's strategy and its approach

to risk management. This happens because,

organization X is not regularly or

structured/methodologically in managing

uncertainties related to threats, risk

assessment, developing strategies to

manage them and mitigating risks using

empowerment/management of owned

resources (risk management). This is

different from the application of integrated

reporting carried out by profit companies

because research conducted by Sari &

Kusuma, (2017) which examines the

disclosure of integrated reporting in

financial sector companies on the LQ-45

index, that governance is one of the highest

content elements disclosed by companies.

However, this is not for X non-profit

organization. Information about the

governance of organization X mentioned

above can be obtained from the annual

report, the website of organization X, legal

documents such as deeds of establishment,

and rich databases. So, for non-profit

organizations that want to make integrated

reporting, there needs to be better internal

governance.

Organizational Model. To answer the

content elements of the Organizational

Model, three important things will be

identified to determine the organizational

model, namely:

1.Organizational Input

2.Organizational Activities

3.Organizational Output

In fulfilling information related to

organizational inputs, organization X has

quite difficulty in fulfilling information

related to this element of content. This is

because it is still at an early stage in the

adoption of <IR>, the X organization does

not have a material cushion related to

which inputs can be the main support for

the organization's activities. The material

meaning here is if those inputs substantially

affect the ability of the X organization to

create value in the short, medium, and long

term. Although it is quite difficult to obtain

information related to organizational

inputs, organization X was able to identify

them. Information related to organizational

inputs is obtained from observations made

by researchers by digging up information in

the annual report and website of

organization X. Information related to the

activities of organization X above is

obtained in an easy way. The researcher

examines the Child Protection Policy (CPP)

owned by organization X, the website of

organization X and also supporting

information from the annual report of

organization X. Then the information is

compiled and adjusted based on the

indicators of business model elements

based on the IIRF. Information about the

240 | Implementation of Integrated Reporting <IR> Framework In Non-Profit Organization

output of the organization is also not

difficult to present if the creator of the

integrated report understands the IIRF well,

this information is obtained from the

general database of the child owned by

organization X. So as a non-profit

organization, the individual entrusted to

create the integrated report must really

understand the purpose and purpose of the

IIRF guide to be able to dig up information

that is in accordance with the suggested so

that it can conclude that there is no need

for special adjustments IIRF needs to be

done for non-profit organization for this

third content. Only, the organization needs

to understand what is in the IIRF.

Risks and Opportunities. To present

information related to the risk and

opportunity content elements, it cannot be

obtained from any documents such as the

previous three content elements. It seems

that organization X is struggling to identify

this element of content. This content

element information failed to be identified

at the gap analysis stage in the 2019 annual

report. The information of this element of

content is purely obtained from the views

of the informant herself. This is because

opportunities and risks are fickle, uncertain

in nature that organization X may or may

not face in the future in the year the

integrated report is to be presented. In

addition to profit organizations, it seems

that the same problem occurs, namely in

the research conducted by Becker et al.,

(2015) that of the four elements that are the

lowest to be presented by profit

companies, one of them is the content

element of risk and opportunity. As

mentioned in the first content element,

because organization X is still unable to

identify how the influence of the outside

environment such as the state of politics or

the state of the external environment that

can affect the existence of their

organization in a sustainable manner, it is

not easy for organization X to associate the

first element of content with elements of

risk and opportunity content, resource

allocation, foresight of the organization.

However, the risks that have been

successfully identified by organization X are

risks that are external in nature, namely

related to the impact of economic changes

nationally and internationally that can

affect the sustainable ability of organization

X to create value, and which have extreme

consequences if not a decision is made to

mitigate these risks. In addition to external

risks, it would be even better, if the

organization that wants to implement <IR>

is able to identify external risks as well as

internal risks. External risks are risks that

arise from outside the organizational

environment, while internal risks are risks

that arise from the environment in the

organization. Risks must be sought to be

identified, although even those risks may

be considered small enough that they

cannot affect the state of the organization.

This is so that preventive efforts are still

carried out so that in the future it will not

be a big risk for one organization. The ease

of obtaining information related to this

element of content depends on the breadth

of information that the informant has

regarding the organization he runs.

However, this information will be very easy

to dig out if it has already been well

identified indicators regarding the external

environment of the organization in which

they operate. Like the previous three

Nurhaliva

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content elements, as a non-profit

organization must fully understand the

purpose and objectives of the IIRF

guidelines to be able to unearth

information that is in accordance with what

is suggested.

Strategy and resource allocation. To

present information related to the content

elements of the strategy and the allocation

of resources, organization X can identify the

objectives of the strategy and the strategies

used to achieve those goals. organization X

is also able to identify the capital allocation

plan it has to implement the strategy. This

content element information is obtained

from the Child Protection Policy (CPP)

document, and then expanded and

validated with the information obtained

from the informant. In addition,

information regarding resource allocation

is obtained from the 2019 annual report

and the 2020 financial statements.

Performance. To meet the performance

content element, the information used

comes from the 2019 and 2020 financial

statements, in addition to the information

obtained from the 2019 annual report. It

can be seen how organization X measures

their financial and non-financial

performance as an effort to achieve the

organization's strategic goals. organization

X implies the outcome of the influence of

each capital (input) owned by organization

X to produce the desired output through

such financial and non-financial

performance. In addition, organization X

can relate between financial and non-

financial performance in 2020 and the

previous year. This sixth element of content

can be presented by organization X

according to the definitions understood in

the IIRF guidelines easily. Like research

conducted by Sari & Kusuma, (2017) that

performance is one of the highest content

elements expressed because things related

to performance have been in previous

reports even with guidelines other than

IIRF.

Outlook. In this element of outlook

content, the information obtained is from

previous annual reports and the results of

interviews from informant. The information

in this content element relates to the

information on the content element of the

external environment review and risks and

opportunities. Due to the review of the

external environment, as well as risks and

opportunities, with an analysis of how it can

affect the achievement of strategic goals.

Care is taken to obtain information

regarding this element of content to ensure

that the stated expectations, aspirations,

and intentions of organization X are based

on existing reality. The expectations of

organization X about the external

environment that the organization is likely

to face in the long run. What they expect is

commensurate with an organization's

ability to provide the opportunities

available to it (including the availability,

quality, and affordability of the

corresponding capital), and the risks they

face. The information of this content

element is narrated according to the

definitions understood in the IIRF, so it can

be applied even if it does not meet all the

indicators intended by the IIRF.

The basis of preparation and

presentation. In the basic content elements

of preparation and presentation,

information is obtained that organization X

in the process of determining materiality

242 | Implementation of Integrated Reporting <IR> Framework In Non-Profit Organization

considers matters of concern by their

stakeholders. Information on stakeholder

boundaries has also been. organization X

seeks to meet this information even if the

information presented is not as detailed as

a brief summary of the processes used to

identify relevant matters, evaluate their

importance, and narrow them down to

material issues. As with previous content

elements, these content elements can be

presented by organization X although they

cannot be fully presented to achieve

perfection based on those directed in the

IIRF guidelines because the adoption of

integrated reporting is only beginning and

requires familiarization with the terms and

intentions contained in the IIRF. Gustiarini,

(2017) and Sari & Kusuma, (2017) in

research also they show that the low

content elements for companies to present

are the basic content elements of

preparation and presentation.

From the description of the discussion

of each of the eight elements of <IR>

content above, it can be summarized the

obstacles or problems faced in the process

of preparing integrated reporting in X non-

profit organization along with solutions

that may be used by non-profit X

organization preparers in preparing IRs,

which can be seen in Table 1. below.

Table 1. Reporting constraints and solutions that can be offered

Element

Sources of

Information

Constraints

Possible solutions that could be

used

Overview of

the

Organization

and External

Environment

Annual report,

website of

organization X,

code book of

ethics of

organization X,

information

from the results

of interviews

with informants

(director of

organization X)

- Due to limited human

resources (HR), organization X

has not been able to identify

how the influence of the

external environment such as

the state of politics or the

state of the external

environment that can affect

the existence of their

organization in a sustainable

manner

- The human resources of

organization X can pay attention

to information related to macro-

and microeconomic conditions

(such as economic stability,

globalization, and industry

trends, and others related),

Social issues (population and

demographic changes, human

rights, health, poverty, and

others related)

- Environmental challenges, such

as climate change, loss of

ecosystems, and lack of

resources as planetary

boundaries approach

- Increased awareness for all

functional organizations at least

one year before the preparation

of <IR>, both from the board

level and the management level

to ensure commitment and

cooperate in supporting or

encouraging the

implementation of <IR>

- Human resources entrusted to

be involved in the preparation of

Nurhaliva

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integrated reports must fully

understand the purpose and

objectives of the IIRF guidelines

to be able to explore

information that is in accordance

with what is suggested from

various existing functional lines

Governance

Annual reports,

X organization

website, legal

documents such

as the

organization's

deed of

incorporation,

and employee

databases

- Due to the limitations of

human resources (HR)

Organization X has not been

able to dig deeper related to

how the organizational

process determines strategic

decisions, how the

organization's attitude in risk

management and what

decisions have been taken by

the management to influence

and monitor the direction of

the organization's strategy and

its approach to risk

management

- Organization X is not regularly

or structured/methodological

in managing uncertainties

related to threats, risk

assessment, developing

strategies to manage them

and mitigating risks using

empowerment/management

of owned resources (risk

management).

- Need for better internal

governance

- Mature risk management system

- Fulfill the information on the first

element of the content (review of

the organization and the external

environment) well

Organizational

Model

The Child

Protection Policy

(CPP) owned by

organization X,

the website of

organization X,

supporting

information

from the annual

report of

organization X,

and the general

database of

foster children

of organization

- Organization X does not have

a material bearing related to

which inputs can be the main

support for the organization's

activities

- Spend more time identifying or

discussing material inputs that

may affect an organization's

ability to create value

- Human resources entrusted to

be involved in the preparation of

integrated reports must fully

understand the purpose and

objectives of the IIRF guidelines

to be able to explore

information that is in accordance

with what is suggested from

various existing functional lines

244 | Implementation of Integrated Reporting <IR> Framework In Non-Profit Organization

Risks And

Opportunities

Information

from informants

(directors)

- Organization X is only able to

identify external risks

compared to internal risks

- Need for better internal

governance

- Mature risk management system

- Understand the elements of the

review of the organization and

the external environment well. If

the information on the first

element is well understood, in

particular on the external

environment that can affect the

organization's activities, then it

will be easy for the organization

to determine this element of

content

- Human resources entrusted to

be involved in the preparation of

integrated reports must fully

understand the purpose and

objectives of the IIRF guidelines

to be able to explore

information that is in accordance

with what is suggested from

various existing functional lines

Strategy and

resource

allocation

Child Protection

Policy (CPP),

information

from interviews

with informants

(directors),

Audited

financial

statements for

2020 and annual

reports of the

previous year

It is considered that there are

no significant obstacles

Performance

Audited

financial

statements for

2019 and 2020,

annual reports

for the previous

year

It is considered that there are no

significant obstacles

Forward view

Annual reports

of the previous

year and

information

from informants

- The information from this

content element is not based

on views taken from the risk

review process from both the

internal environment and the

external environment of the

- Fulfill the information on the first

element of the content (review of

the organization and the external

environment) well

Nurhaliva

*, Lilik Handajani

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| 245

(directors of the

organization)

organization so as to produce a

view such as expectations that

are not based on a systematic

process (built on a clear

analysis and based on the

availability, quality, and

affordability

of resources

)

- Fulfill the information on the

fourth element of content (risks

and opportunities) well

Basic

preparation

and

presentation

Information

obtained from

observations

- The information presented is

not as detailed as a brief

summary of the process used

to identify relevant matters,

evaluate their importance, and

narrow them down to material

issues.

- Increased awareness for all

functional organizations at least

one year before the preparation

of <IR>, both from the board

level and the management level

to ensure commitment and

cooperate in supporting or

encouraging the

implementation of <IR>

- Human resources entrusted to

be involved in the preparation of

integrated reports must fully

understand the purpose and

objectives of the IIRF guidelines

to be able to explore information

that is in accordance with what is

suggested from various existing

functional lines

CONCLUSIONS

This study aims to implement the 2021

revised IIRF in X non-profit organization.

Based on the results of the study, it can be

concluded that X non-profit organization is

able to present IIRF based on the IIRF

revision 2021 because the eight elements

of content suggested in the IIRF can be

presented by X non-profit organization

where the information is obtained from

pre-existing reports or documentation and

also information extracted from the results

of new thoughts (interviews informant and

research observations), although indeed

not fully presentable to achieve perfection

based on those directed in the IIRF

guidelines because the adoption of

integrated reporting is still in the early

stages, then organization X does not have

a material cushion regarding any

information that substantially affects the

organization's ability to create value.

However, if the organization is consistent

with continuing to present the <IR>, there

will be gradual refinement in the following

years. So as a non-profit organization,

individuals entrusted to create integrated

reports must fully understand the purpose

and objectives of the IIRF guidelines to be

able to explore information that is in

accordance with what is suggested. If the

information of each content element can

be identified properly, it will be very easy

for organization X to associate it with other

content elements. Because all elements of

the content are not exclusive but rather

support each other to jointly provide

information that will boil down to the

creation of organizational value.

246 | Implementation of Integrated Reporting <IR> Framework In Non-Profit Organization

The practical implications of this study

can specifically be taken into consideration

for organization X to present an integrated

report even though it does not fully meet

all the indicators of each of the 8 content

elements suggested in the IIRF. However, it

can be concluded that the 8 content and 7

guiding principles present in the IIRF can be

used by X non-profit organization with

flexible definitions and are understood

based on their own organizational models

because both for-profit organizations and

non-profit organizations have different

characteristics and goals. This research is

expected to contribute to the IIRC on the

<IR> implemented by non-profit

organizations, especially with factors that

hinder its implementation which are felt to

be correctable to carry out IIRF, along with

areas that have the potential to hinder

wider adoption and implementation.

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