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2022 - BAG > 4) Integrated Reporting & Key Principles > Flashcards

4) Integrated Reporting & Key Principles Flashcards

1
Q

asset efficiency ratios?

A
  • inventory turnover
  • average collection period
  • settlement period
  • operating cycle
  • asset turnover
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2
Q

cash ratios?

A
  • cash conversion
  • free cash flow
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3
Q

market perception ratios?

A
  • price earnings
  • earnings yield
  • dividend yield
  • dividend cover
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4
Q

which requirements must an integrated report meet?

A
  • fundamental concepts
    (value creation and capitals)
  • guiding principles
  • content requirements
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5
Q

what factors should an IR look at?

A
  • strategy
  • governance
  • risk mgmt
  • financial performance
  • future prospects
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6
Q

long term vision of the IIRC?

A

embedding integrated thinking in mainstream business practices facilitated by IR

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7
Q

what is the primary purpose of an IR?

A

to explain to providers of fin capital how an org creates, preserves, erodes value over time

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8
Q

role of six capitals in value creation?

A

all six need to play a role otherwise no value can be created

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9
Q

what does integrated thinking help with?

A

integrated decision making

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10
Q

what is integrated thinking?

A

when the org considers relationship between its operating and functional units, and the capitals it uses

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11
Q

what does integrated thinking incorporate into decision making?

A
  • governance and remuneration
  • financial statements
  • mgmt commentary on these elements
  • sustainability reporting
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12
Q

what are the fundamental concepts of the IR?

A
  • value creation
  • six capitals
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13
Q

what is value creation?

A

the processes that result in inc/dec or transformations of capitals caused by the org’s business activites and outputs

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14
Q

what are capitals?

A

stocks of value on which orgs use as inputs and outputs to their business model and which are used in org activities

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15
Q

what are the six capitals?

A

financial
manufactured
natural
social and relationships
intellectual
human

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16
Q

why is the governance function necessary?

A

needed for the company to function properly and deliver value; ensure risks are identified and managed

17
Q

what do guiding principles show us?

A
  • how to implement IR
  • what to focus on
  • how it should look
18
Q

what are the 7 guiding principles?

A

1) strategic focus and future orientation
2) connectivity of info
3) stakeholder relationships
4) materiality
5) conciseness
6) reliability & completeness
7) consistency and comparability

19
Q

what is connectivity of info?

A

show holistic picture of interrelatedness between factors that impact value creationn

20
Q

what is stakeholders relationships?

A

provide insight into nature/quality of org relationships; how org responds to their needs/interests

21
Q

what is materiality?

A

provide insight on matters which substantively impact ability to create value

22
Q

what is reliability and completeness?

A

includes all material matters, both + - in a balanced way, no errors

23
Q

what is consistency and comparability?

A

present info on a consistent basis and in a way that allows for comparison with other orgs to the extent that it is material

24
Q

content elements uses?

A

must be included and should be related back to the org’s ability to create value. helps see us how value is created using capitals.

25
Q

what are the content elements?

A
  • organizational overview + ext environment
  • governance
  • business model
  • risk and opportunities
  • strategy and resource allocation
  • performance
  • outlook
26
Q

what does performance indicate?

A

to what extent the org has achieved its objectives for the period and what effect this had on capitals

27
Q

what does outlook speak about?

A

challenges/uncertanties the org is likely to face when pursuing strategy and potential implications for business model and future performance)

28
Q

what is basis of presentation?

A

how org determines which matters to include in IR and how such matters are quantified/evaluated

29
Q

how is performance measured?

A

not prescribed by framework; company will set its own performance indicators and using judement given the specific circumstances

30
Q

disadvantages of IR?

A

subjectivity and if they focus on wrong stuff, value will decline

31
Q

concerns with IR?

A
  • not assured – not signed off on
  • diverts focus away from sus reporting as IR is required by King/JSE
  • may not actually result in integrated thinking and may not be useful for non-corps

2022 - BAG (9 decks)

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