ACCA Strategic Professional · Strategic Business Leader · Reporting to stakeholders
Brevik Shipping's board is debating how to determine what goes into its integrated report. One director proposes including every issue raised by any stakeholder. Another proposes including only items required by accounting standards. A third proposes including matters that substantively affect the organisation's ability to create value over the short, medium and long term. Which approach is consistent with the <IR> Framework's materiality principle?
The report should include matters that could substantively affect the organisation's ability to create value in the short, medium and long term, identified through a materiality determination process. Including everything harms conciseness, while limiting content to accounting rules or short-term profit ignores the wider capitals.
- AInclude every issue raised by any stakeholder to ensure inclusiveness
- BInclude only items required by accounting standards to ensure reliability
- CInclude matters that substantively affect value creation, determined through a materiality determination processCorrect
- DInclude only matters that affect short-term profit, as these are measurable
Explanation
The <IR> Framework defines a material matter as one that could substantively affect the organisation's ability to create value over time. It requires a process to identify, evaluate and prioritise such matters, considering the views of key stakeholders. Including everything undermines conciseness, and limiting to accounting requirements or short-term profit ignores wider capitals and time horizons.
Did you get it right without looking?
One question tells you little. A timed set on Reporting to stakeholders shows your real accuracy, how long you take and where you lose marks.
More Reporting to stakeholders questions
- Halden Telecom has invested heavily in staff training, a proprietary software platform and brand reputation. The finance director says that,…
- Marlow Retail's board report states that the audit committee 'reviewed the effectiveness of internal controls' but gives no information on h…
- Tamsin Retail's board argues that voluntary social and environmental disclosure is pointless because investors only care about profit. The c…
- Valtora plc, a listed manufacturer, publishes an annual report containing audited financial statements, and a separate sustainability report…
- Tamsin Retail's board wants its social and environmental audit to give the most useful insight into whether the company is meeting stakehold…
- Brightwell Energy wants its annual report to show investors how the business creates value over the short, medium and long term, linking str…