F2D - Chapter 18: Integrated Reporting

Question 1

To help users make decisions, what non financial information may be helpful to provide?

Answer 1

How the business is managed
Its future prospects
The entity’s policy on the environment
It’s attitude toward social responsibility

Question 2

What is integrated reporting?

Answer 2

Integrated reporting is the process of producing an integrated report.
An integrated report should be a single document which is the organisation’s primary report

Question 3

What is integrated thinking?

Answer 3

The active consideration by an organisation of the relationships between its various operating and functional units and the capitals that the organisation uses or affects

Question 4

What is the aim of the international integrated reporting council?

Answer 4

Establish integrated reporting as the norm within mainstream business practice

Question 5

Who did the IIRC merge with to form the Value Reporting foundation?

Answer 5

Sustainability accounting standards board

Question 6

What was the VRF consolidated into in August 2022?

Answer 6

IFRS Foundation

Question 7

What is the IFRS foundation responsible for?

Answer 7

The work of the IASB and the ISSB which aims to develop uniform global requirements for sustainability disclosures

Question 8

What was the objective of the IIRC?

Answer 8

Develop an internationally accepted integrated reporting framework that created the foundations for a new reporting model to enable organisations to provide concise communications of how they create value over time

Question 9

What is the objective of the IR framework?

Answer 9

To establish guiding principles and content elements that govern the overall content of an integrated report
To explain the fundamental concepts that underpin integrated reports

Question 10

What are the objectives of integrated reporting?

Answer 10

Improve quality of information available to providers of financial capital to enable a more efficient and productive allocating of capital
To provide a more cohesive and efficient approach to corporate reporting that draws on different reporting strands and communicates the full range of factors that materially affect the ability of an org to create value over time.
To enhance accountability and stewardship for the broad base of capitals and promote understanding of their interdependencies
To support integrated thinking, decision-making and actions that focus on the creation of value over the short, medium and long term.

Question 11

What are the three fundamental concepts underpinning integrated reporting?

Answer 11

Value creation for the organisation and for others
The value creation process
The capitals

Question 12

What are the categories of capitals?

Answer 12

Financial
Manufactured
Intellectual
Human
Social and relationship
Natural capital

Question 13

What is financial capitals?

Answer 13

Pool of funds

Question 14

What is manufactured capital?

Answer 14

Manufactured physical objects that are available to an org for use in production of goods or the provision of services. It includes buildings, equipment and infrastructure.

Question 15

What is intellectual capital?

Answer 15

Organisational, knowledge-based intangibles.
Includes:
Intellectual properties, such as patents and copyrights
‘Organisation capital’ such as tacit knowlege

Question 16

What is human capital?

Answer 16

People’s competencies, capabilities and experience, and their motivations to innovate.

Question 17

What is social and responsibility capital?

Answer 17

The institutions and the relationships within and between communities, groups of stakeholders and other networks, and the ability to share information to enhance individual and collective well-being

Question 18

What is natural capital?

Answer 18

All renewable and non-renewable environmental resources and processes that provide goods or services that support the past, current or future prosperity of an organisation.

Question 19

What are the benefits of integrated reporting?

Answer 19

Increases in the level of forward looking information provided when enabling more informed user decisions
Disclosure of previously undisclosed information increases the understanding of the users
Improved stakeholder reputation due to increased transparency
Integrated thinking may lead to improved efficiencies within organisations

Question 20

What are the limitations of integrated reporting?

Answer 20

Potential for bias as reports are not required to be audited
Reluctance to disclose information for fear of losing competitive advantage
May provide too much information for users to digest

Question 21

What are the benefits of the IR framework?

Answer 21

Provides guidance for preparers as to the concepts and contents of the integrated report
Being principles based enables the application of the framework by entities operating in any industry
Increases user familiarity with the terminology and structure used with the IR

Question 22

What are the limitations of the IR framework?

Answer 22

Being principle based rather than rules based leads to increased subjectivity and potential bias
Difficult to compare across different entities and sectors
Requires experienced staff to apply concepts properly