Learning Unit 21 - Reporting and performance analysis

Question 1

What is the purpose of a Integrated Report?

Pg 345 Managerial Finance 10th addition

Answer 1

The purpose of a integrated report is a concise communication about an organization’s strategy in the context of its external environment and business model that leads to value creation in short, medium and long term.

Question 2

List the six capitals.

Answer 2

• Financial
• manufactured
• intellectual
• human
• social and relationship
• nature capital

Question 3

List the seven guiding principles.

Answer 3

1. Strategic focus and future orientation
2. Connectivity of information
3. Stakeholder relationships
4. Materiality
5. Conciseness
6. Reliability and completeness
7. Consistency and comparability

Question 4

What are the eight content elements?

Answer 4

1. Organizational overview and external environment
2. Governance
3. Business model
4. Risks and opportunities
5. Strategy and resource allocation
6. Performance
7. Outlook
8. Basis of presentation

Question 5

When assessing an entity’s performance management system including remuneration or bonus incentive schemes, what are the four considerations?

Answer 5

1. There should be a link between management’s performance and the entity’s KPIs
2. Strategic objectives and financial and non-financial performance indicators should be incorporated into the KPIs
3. The KPI should be in management’s control
4. The management performance appraisal should meet legitimate needs and interest of stakeholders