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ACCA Strategic Professional · Strategic Business Leader · Reporting to stakeholders

Kestrel Logistics operates in a country where legislation requires listed companies to publish audited financial statements. Its directors also choose to publish a voluntary social and environmental report that is not audited. A local community group relies on that report. What is the most significant governance concern for the community group?

The main concern is credibility. Because the voluntary social and environmental report is unaudited, there is no independent assurance that it is accurate and balanced, so stakeholders such as the community group cannot rely on it fully and it may be selective or misleading.

  1. AThe voluntary report cannot be published because it is not required by law
  2. BThe absence of independent assurance reduces the credibility of the informationCorrect
  3. CThe audited statements will automatically be invalidated
  4. DVoluntary disclosures are always more reliable than statutory ones

Explanation

Voluntary reporting is permitted and can be valuable, but without independent assurance stakeholders cannot be confident it is complete and accurate, and the risk of greenwashing rises. The statutory statements are unaffected, and voluntary status does not make information more reliable.

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