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ACCA Strategic Professional · Strategic Business Leader · Stakeholder analysis and organisational social responsibility

Pellam Energy's board is deciding whether to have its sustainability report externally assured. Which of the following is the strongest reason in favour of assurance?

The strongest reason is that external assurance raises stakeholders' confidence in the reliability of the reported non-financial information. It does not remove directors' responsibility, replace internal data systems, or by itself improve environmental performance.

  1. AIt increases stakeholders' confidence in the reliability of reported non-financial informationCorrect
  2. BIt removes the need for the company to collect internal data
  3. CIt transfers legal responsibility for the report from directors to the assurer
  4. DIt guarantees an improvement in environmental performance

Explanation

External assurance adds credibility to non-financial disclosures. It does not replace internal data collection, directors remain responsible for the report, and assurance reports on information rather than causing performance to improve.

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