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ACCA Strategic Professional · Strategic Business Leader · Reporting to stakeholders

Zentara Foods, a listed manufacturer, publishes an annual report containing only financial statements. An investor group complains that it cannot judge the company's effect on water resources, workers and local communities. Which reporting approach would most directly address this concern by extending accountability beyond shareholders?

Adopting social and environmental accounting is the best response. It reports non-financial social and environmental impacts to a wider group of stakeholders, extending accountability beyond shareholders, whereas more frequent financial reporting, remuneration disclosures or conservative inventory valuation do not address water, workforce or community effects.

  1. AAdopting a social and environmental accounting approach that reports non-financial impacts to a wider group of stakeholdersCorrect
  2. BIncreasing the frequency of interim financial reports to shareholders
  3. CExpanding the directors' remuneration report
  4. DSwitching to a more conservative inventory valuation policy

Explanation

Social and environmental accounting extends the accountability of an organisation to wider stakeholders by reporting on its social and environmental impacts. The other options relate only to financial information or shareholders and do not address the impact on water, workers and communities.

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