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ACCA Strategic Professional · Strategic Business Leader · Reporting to stakeholders

Calder Foods invests heavily in staff training and in supplier partnerships that improve product quality. Its finance director wants the integrated report to show how these investments affect the organisation's value. Under the <IR> Framework, how should these be classified?

Staff training builds human capital, and supplier partnerships build social and relationship capital. The <IR> Framework classifies capitals by their nature, not by how they were paid for, so classing them as financial capital because cash was spent would be wrong.

  1. AHuman capital from training and social and relationship capital from supplier partnershipsCorrect
  2. BFinancial capital from both, because they are paid for in cash
  3. CIntellectual capital from both, because they improve know-how
  4. DNatural capital from supplier partnerships and manufactured capital from training

Explanation

The six capitals are financial, manufactured, intellectual, human, social and relationship, and natural. Staff skills and competencies are human capital, while relationships with suppliers and other stakeholders are social and relationship capital. Treating both as financial capital confuses how they are funded with what they are.

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