ACCA Strategic Professional · Strategic Business Leader · Reporting to stakeholders
Halvorsen Marine plc, a listed shipping group, publishes an annual report with a long financial section but only a brief, generic paragraph on how the board oversees principal risks. Investors say they cannot judge whether the board understands the risks facing the business. Which governance disclosure weakness does this best illustrate?
The weakness is insufficient narrative reporting on risk oversight. Stakeholders need meaningful explanation of how the board identifies, monitors and manages principal risks to assess stewardship. A generic paragraph provides no such insight, so investors cannot judge the board's understanding, regardless of how detailed the financial section is.
- AExcessive compliance with a rules-based code, producing boilerplate disclosure
- BInsufficient narrative reporting that explains risk oversight, limiting stakeholders' ability to assess stewardshipCorrect
- COver-reliance on integrated reporting capitals, which hides financial results
- DA breach of the going concern assumption in the financial statements
Explanation
Narrative reporting exists to give stakeholders context on strategy, risk and governance beyond the numbers. A brief generic paragraph on risk oversight fails to show how the board discharges its stewardship duty. Boilerplate may come from any approach, but the core weakness here is lack of informative disclosure, not rules-based compliance or going concern.
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
- Marlow Retail's board report states that the audit committee 'reviewed the effectiveness of internal controls' but gives no information on h…
- Brelmont Ltd operates in several jurisdictions. Its board is preparing a sustainability report and wants to disclose how governance bodies o…
- 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…
- Brightwell Energy wants its annual report to show investors how the business creates value over the short, medium and long term, linking str…
- Calder Foods invests heavily in staff training and in supplier partnerships that improve product quality. Its finance director wants the int…