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ACCA Strategic Professional · Advanced Performance Management · Sustainability

Brightwell Ltd's board is deciding what to include in its integrated report. A proposed disclosure concerns a supplier dispute that could, over the next five years, materially affect the company's ability to create value. Directors disagree on whether to include it. Under the Integrated Reporting Framework's materiality principle, which approach is correct?

The report should include matters that could substantively affect the organisation's ability to create value in the short, medium or long term. The supplier dispute qualifies, so it should be disclosed, whether or not it is recognised in the financial statements or raised by a stakeholder.

  1. AInclude matters that substantively affect the organisation's ability to create value over the short, medium and long termCorrect
  2. BInclude only matters already recognised in the financial statements
  3. CInclude all matters raised by any stakeholder, regardless of their effect on value creation
  4. DInclude only matters that affect value creation within the next twelve months

Explanation

The framework defines a material matter as one that could substantively affect the organisation's ability to create value in the short, medium or long term. It is therefore not limited to items in the financial statements, to the next twelve months, or to every stakeholder concern.

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