Abstract
Transparency is pivotal for good governance and to enhance accountability for the way public funds are spent in State-Owned Entities (SOEs). This study aimed to evaluate whether integrated reports enhance transparency in the major entities listed in Schedule 2 of the Public Financial Management Act No 1 of 1999 (PFMA). This evaluation was conducted according to the disclosure requirements stipulated in the Integrated Reporting Framework (IRF).
A thematic qualitative content analysis methodology was developed, using a disclosure index that is based on the mandatory disclosures as per the IRF. A ranking system was used to determine the level of disclosure made on the 2023 and 2024 integrated reports of the eight selected public entities, relating to the risk and opportunities, strategy and resource allocation, performance, and outlook content elements. The disclosures were graded inadequate, standard, or exemplary. Inadequate is the grading given when the required information was not disclosed, and exemplary is those disclosures that had sufficient detail. The study further established a trend based on the results of the assessment performed to evaluate whether an improvement is identifiable.
The findings showed a moderate disclosure level of content elements, with risks and opportunities obtaining the lowest level of exemplary disclosures. The findings identified common themes on the non-disclosure of opportunities on the risk and opportunities content element, the non-disclosure of forward-looking assessments relating to the medium- and long-term risks and opportunities, their impact, the external environment, and the strategic objective over different time horizons. The overall findings also reveal that there has been an improvement of the level of disclosure from the 2023 financial year to the 2024, thus translating to the improved transparency achieved by the public entities. Furthermore, the results show that the preparers of integrated reports have room for improvement in providing the required detail of information. This study contributes to the accounting disclosure literature as it explores the current state of integrated reporting for SOEs in South Africa, a developing country. This study also highlights disclosure elements that need the attention of preparers of the IR, while also emphasising the shareholders' expectations of the public entities.