6.1 Integrated Reporting, Integrated Thinking, and the Integrated Report Flashcards
Through integrated reporting, a company
A. Combines the sustainability report with the corporate social responsibility report.
B. Is limited to including only material value created for itself.
C. May disclose the effects of externalities on capitals owned by the company.
D. Communicates implementation of strategies, corporate governance, performance, and prospects leading to value creation.
D. Communicates implementation of strategies, corporate governance, performance, and prospects leading to value creation.
Through IR, a company communicates implementation of strategies, corporate governance, employee and management performance, and prospects that lead to value creation over time. In the context of the entity’s external environment, IR communicates how value is created by providing a combination of financial and nonfinancial information. Thus, IR enables a company to tell its own unique story of value creation.
The primary purpose of integrated reporting (IR) is to
A. Explain to providers of financial capital how value is created by the company over time.
B. Give customers holistic information about the company and its values.
C. Report about nonfinancial aspects of the company.
D. Meet the requirements of regulators.
A. Explain to providers of financial capital how value is created by the company over time.
IR is defined as “a process founded on integrated thinking, which results in a periodic integrated report by an organization about value creation and preservation in the short, medium, and long term.” It is primarily focused on giving holistic information to the providers of financial capital about how the entity creates value over time.
Integrated reports
A. Must be prepared in conformity with accounting principles that are generally accepted in the United States (U.S. GAAP).
B. Are the foundation for integrated thinking.
C. Depict how costs and customer value accumulate along a chain of activities that lead to a product or service.
D. Include financial and nonfinancial information.
D. Include financial and nonfinancial information.
An integrated report is designed to provide a holistic view of a company by connecting financial and nonfinancial information with the long-term value-creation possibilities of the organization.
Integrated thinking is
A. The final step in the integrated reporting process.
B. The basis for integrated reporting and the integrated report.
C. Most often undertaken by a specialized department.
D. Primarily a management and governance process.
B. The basis for integrated reporting and the integrated report.
Integrated thinking is a prerequisite to integrated reporting. Understanding the mutual influences of financial and nonfinancial factors is necessary for integrated reporting about the performance of a company and for making well-informed decisions to create value in the long term. Through integrated thinking, a company gains insight into how interdependencies between financial and nonfinancial factors interact and affect value creation. Thus, integrated thinking is the basis for the externally communicated integrated report.
Which statement about integrated reporting is true?
A. Integrated reporting communicates a company’s strategy throughout the organization and connects critical success factors with performance measures.
B. A principles-based framework for integrated reporting has been issued by a major standard setter.
C. The ultimate goal of the proponents of integrated reporting is for it to become the reporting standard for public companies in the U.S.
D. Integrated reporting is the basis for the externally communicated integrated report.
B. A principles-based framework for integrated reporting has been issued by a major standard setter.
Integrated reporting is a relatively new concept. The IIRC, which was established in 2010, issued a principles-based framework for integrated reporting in 2013. This framework guides companies preparing an integrated report. The objective is to align capital allocation and corporate activity to create financial well being and sustainable expansion through integrated thinking and integrated reporting. Those earlier integrated reporting standards are now a subset under the IFRS Foundation.
Integrated thinking is not
A. The final step in the integrated reporting process.
B. The basis for integrated reporting and the integrated report.
C. A means of providing insight into the interdependencies between financial and nonfinancial aspects of the organization.
D. A process of decision making, management, and reporting.
A. The final step in the integrated reporting process.
