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ACCA Strategic Professional · Advanced Audit and Assurance (International) · The assurance of sustainability

Orchid Retail's integrated report applies the IIRC Framework. The assurance practitioner is evaluating whether the report meets the Framework's guiding principle of materiality. Which approach to determining content is consistent with the Framework?

Content should include matters that could substantively affect the organisation's ability to create value in the short, medium and long term. A fixed profit percentage is too narrow, including every stakeholder request defeats conciseness, and legal requirements alone do not define materiality in the Framework.

  1. AInclude matters that substantively affect the organisation's ability to create value over the short, medium and long termCorrect
  2. BInclude only matters exceeding a fixed percentage of profit before tax
  3. CInclude every matter raised by any stakeholder to ensure completeness
  4. DInclude only matters required by local company law

Explanation

Under the Framework, a matter is material if it could substantively affect the organisation's ability to create value over the short, medium and long term. A fixed financial threshold is a quantitative approach that ignores qualitative factors. Including everything undermines conciseness, and legal minimums are not the test.

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