An intangible asset (IA) is one of the key resources of a business in the knowledge-based economy. However, information on intangible assets (IAs), which includes intellectual capital (IC), human capital (HC), and structural and relationship capital (SRC) which are internally generated, is lacking in the financial statement of a company. Alternatively, a company can use the Integrated Reporting (IR) approach to explain how it creates value from its IAs over time in the Integrated Annual Report. This study examines the current reporting practices of IAs using , and identifies any improvement that may be required by Malaysian public listed companies (PLCs).

The study is conducted on the top 50 PLCs on Bursa Malaysia in year 2018. Data from the Integrated Annual Reports are collected and analyzed using content analysis by applying the weighted scoring of the integrated IAs disclosure index to determine the IAs reporting level. Additionally, several interview sessions are conducted with three PLCs and three experts on IAs and . Data from the interview are analyzed qualitatively to determine the IAs reporting practices. Then, a comparison is made to the International Integrated Reporting Framework published by the International Integrated Reporting Council (IIRC) (2013; 2021) and the best practices to identify any necessary improvements.

The findings show that IAs information is highly reported in the Integrated Annual Report. The results show that IC has the highest score, indicating a higher importance and integration of IC information over HC and SRC. IAs information are mostly found in the Overview, Strategic, Business Model, Governance, Performance and Risk and Opportunities segments in the Integrated Annual Report. However, the level of integration is moderately low since the IAs information are disclosed in two or three segments only. Additionally, evidence suggests that companies in Malaysia have undertaken the process by having integrated thinking and frequent stakeholder engagement in preparing the Integrated Annual Report, which is in line with the Guiding Principles of the International Integrated Reporting Framework (IIRC, 2013; 2021). It is recommended that the companies should continuously improve, revise and amend their strategy, governance, performance and risk assessment related to IAs, so that it reflects the value creation ability of IAs over the short, medium and long terms. This study provides new insights into the IAs practices that are disclosed in Integrated Annual Report by some Malaysian PLCs.

Keywords: Intangible Assets, Integrated Reporting, Integrated Thinking, Malaysia.

Research Team:
Assoc. Prof. Dr. Arifatul Husna Mohd Arif
Assoc. Prof. Dr. Norfaiezah Sawandi
Dr. Fathiyyah Abu Bakar

Institute:
Universiti Utara Malaysia

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