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ACCA Strategic Professional · Strategic Business Leader · Reporting to stakeholders

Halden Telecom has invested heavily in staff training, a proprietary software platform and brand reputation. The finance director says that, as these do not appear as assets in the statement of financial position, the integrated report need not discuss them. Which response is most consistent with the <IR> Framework?

They should be discussed where material. The <IR> Framework uses six capitals, including human, intellectual, and social and relationship capital, and these are covered whether or not they are recognised as accounting assets. Excluding them because of financial statement recognition rules would misapply the Framework.

  1. AThey should be discussed where material, because the capitals include intellectual, human and social and relationship capital, whether or not recognised as assetsCorrect
  2. BThey can be omitted because the capitals are limited to financial and manufactured capital
  3. CThey should be included only if their fair value can be reliably measured and recognised
  4. DThey should be reported only in the financial statements notes

Explanation

The <IR> Framework identifies six capitals: financial, manufactured, intellectual, human, social and relationship, and natural. They are not restricted to items recognised under accounting standards, so material effects must be discussed. The measurement-based option reflects financial reporting recognition rules, not <IR>.

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