Which of the following statements is TRUE about integrated reporting?

Integrated reporting is designed to provide a holistic view of an organization's performance, incorporating both financial and non-financial information. The correct statement asserts that integrated reporting helps stakeholders manage risks. This is because integrated reports provide a comprehensive overview of how various factors—financial, social, environmental, and governance—impact an organization's ability to create value over time. By understanding these interconnections, stakeholders can gain insights into potential risks that may arise from non-financial aspects, such as environmental liabilities or social responsibilities. This ability to assess risks enhances decision-making and helps stakeholders gauge the long-term sustainability of the entity.

In contrast, the other choices do not accurately represent the nature of integrated reporting. For instance, stating that it only reports financial performance overlooks the fundamental aspect of integrated reporting, which combines both financial metrics and non-financial impacts. Claims of mandatory applicability for all entities are incorrect, as integrated reporting frameworks are generally voluntary and vary based on different jurisdictions and organizational requirements. Lastly, the assertion that it ignores non-financial factors is fundamentally misaligned with the principles of integrated reporting, which explicitly includes non-financial performance as critical components of overall value creation.