APM's and other reporting Flashcards
What are the three advantages of APM’s?
Help users evaluate accounts through the eyes of management
Enables comparison between entities in the same sector/industry
Strips out information not relevant to current or future years performance.
What are the 5 drawbacks of AMP’s?
- Inconsistent methods of calculations year on years
- Two entities may calc differently
- APM’s may be selected and calc’d to show the best light - over optimistic
- Too much info to digest
- Giving APM undue prominence is misleading for users
What are the 6 capitals of integrated reporting?
Financial Manufacturing Intellectual Human Social and relationship Nature
What is value creation?
the process that results in the increase, decrease or transformation of the capital caused by the organisations business activities and outputs.
Define integrated reporting?
A process founded on integrated thinking that results in a periodic report by an organisation on their value creation over time and related communications regarding aspects of value creation.
What is the purpose of integrated reporting?
Explain to the providers of financial capitol how an entity is creating value over time.
It demonstrates the linkage between the financial, strategy and governance, and the social, economic and environmental context in which the entity operates.
What are the advantages of integrated reporting?
It’s forward looking
Increased disclosures are useful
Increases reputation and transparency
Improves efficiencies
What are the disadvantages of integrated reportnig?
Potential for management bias
Reluctance to disclose for fear of losing a competitive advantage
Too much information for users to digest - becomes less useful
What are the benefits and limitations of IR framework?
Benefits:
Provides guidance
Principles based therefore flexible
Increased familiarity with terminology
Drawbacks
- Subjectivity
- Difficult to compare
- Requires experiences staff to apply properly
What is integrated thinking?
The active consideration by an organisation of the relationships between its various operating and functional units and the capitals the organisation uses or effect.
Integrating thinking = integrated decision making = creation of value over time
What functions do successful integrated reporting teams include?
Risk management Financial Performance reporting Human Resources Stakeholder engagement Sustainability Corporate communication Information technology Governance a regulatory.
