Module 11 Non financial reporting: Frameworks and standards

Question 1

What are some factors that have increased the extent of non-financial reporting?

Answer 1

• The increase in size, influence and impact of large multinational corporations
• Difficulty of capturing value of key resources such as staff knowledge and reputation
• A rise in responsible investing
• Increase in geopolitical uncertainty and risks arising from social and environmental challenges
• Workers desire to work for employers with good values
• Consumer interest in products that do no have a negative environmental impact

Question 2

What is Double Materiality

Answer 2

Double Materiality = Financial Materiality + Impact Materiality

Question 3

What is Financial Materiality?

Answer 3

Considers the impact ON the business on environmental and social issues

Question 4

What is Impact Materilaity?

Answer 4

Considers the impact OF the business on the environment and society

Question 5

What standard considers Financial Materiality?

Answer 5

IFRS

Question 6

What standard considers Impact Materiality?

Answer 6

Global Reporting Initiate Standard

Question 7

What skills do accountants have that will assist organizations in presenting non financial information?

Answer 7

• Knowledge of internal controls
• Analysing and evaluating data
• Carrying out assurance
• Obtaining and evaluating evidence

Question 8

What are the advantages of IFRS sustainability disclosures standards?

Answer 8

• The IFRS foundations track record is in financial accounting setting
• Its existing relationships with regulators, exchanges, businesses and educators
• The possibility of achieving further global consistency and reduced complexity in sustainability reporting
• The possibility of enforcing politically desirable mandatory climate change disclosures on businesses

Question 9

What are disadvantages of IFRS sustainability disclosure standards?

Answer 9

• Focus on the financial impact of sustainability rather than people and planet
• IFRS foundations lack of experience on sustainability
• The lack of collaboration with existing sustainability organisations and initiatives

Question 10

Disclosures are required by IFRS S1 in relation to four ares:

Answer 10

• Governance
• Strategy
• Risk management
• Metrics and targets

Question 11

Under IFRS useful information is defined as:

Answer 11

Relevant
Comparable
Verifiable
Timely
Understandable

Question 12

What does IFRS S2 require?

Answer 12

Requires an organisation to disclose information about its climate related risks and opportunities

Question 13

Disclosures required by IFRS S2 are:

Answer 13

Governance
Strategy
Risk management
Metrics and targets

Question 14

Under CA 2006 which companies must produce a strategic report?

Answer 14

All UK companies apart from small companies

Question 15

What are the different sections that should be included in the strategic report?

Answer 15

• Strategic management
• Business environment
• Business position and performance

Question 16

What does the strategic report do?

Answer 16

Helps shareholders assess whether the directors of a company have promoted the success of the company

Question 17

What are the three types of standards in the GRI standards system?

Answer 17

• Universal standards
• Sector standards
• Topic standards

Question 18

Under GRI information should be:

Answer 18

• Accurate
• Balanced
• Clear
• Comparable
• Provide a sustainable context
• Timely
• Verifiable

Question 19

What are the six capitals listed in the IRF?

Answer 19

• Financial capital
• Manufactured capital
• Intellectual capital
• Human capital
• Social and relationship capital
• Natural capital

Question 20

Which standard is expected to be used as a basis for the UK Sustainability Disclosure Standards?

Answer 20

IFRS sustainability disclosure standard