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ACCA Applied Knowledge · Business and Technology · Sustainable business practices

Karta Co uses a social and environmental audit. It collects data on carbon emissions, supplier labour conditions and community donations, and compares them with targets the company set itself. Which statement about this audit is correct?

The audit is normally voluntary, with the organisation choosing its own scope and targets rather than following a prescribed legal format. It does not replace the statutory financial audit and it covers social as well as environmental performance, not just the cost of compliance.

  1. AIt is normally voluntary and not required by law in most jurisdictions to follow a prescribed formatCorrect
  2. BIt replaces the need for the statutory financial audit
  3. CIt measures only the costs of environmental compliance

Explanation

Social and environmental audits are generally voluntary and the organisation sets its own scope and targets, so there is no single mandatory format. They do not replace the statutory audit of the financial statements, which has a different purpose. They also cover social matters and performance against targets, not just compliance costs.

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