Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CIMA F2 > D. Integrated Reporting > Flashcards

D. Integrated Reporting Flashcards

1
Q

According to the IASB, what is the objective of financial reproting?

A

to provide INFORMATION about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making DECISIONS about providing resources to the entity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what are the limitations of financial statements?

A

historic (not forward looking)
accruals (profit differs from cash)
financial information fails to give the full picture

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

why did the 2007 banking crisis cause a shift in focus of reporting priorities?

A

showed dependence on short-term factors rather than long-term benefits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

what non-financial information might decision makers need?

A
  • how business is managed
  • its future prospects
  • the entity’s policy on the environment
  • its attitude towards social responsibility
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

who produced the Integrated Reporting framework?

A

the Integrated Reporting Council (IIRC)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

what is integrated reporting?

A

process of producing an integrated report

  • single document
  • primary report of firm
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

on what basis is an IR produced?

A

annual basis

  • mostly voluntary
  • some are mandatory e.g SA, Brazil
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

what is the primary purpose of an IR?

A

to explain to providers of financial capital how an entity creates value over time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

what does IR demonstrate the linkages between?

A

the linkages between an organisation’s strategy, governance and financial performance and the social, environmental and economic context within which the entity operated

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

what is integrated thinking defined as within the IR framework ?

A

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
i.e how both financial and non-financial factors contribute to entity’s value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

why do businesses and investors need IR?

A

B: reporting environment that helps drive performance
I:understand how strategy being pursued creates value over time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

when was the IIRC formed?

A

August 2010

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

what are the aims of the IIRC?

A
  • to establish integrated reporting as the norm within mainstream business practice
  • create a globally accepted framework
  • secure adoption of framework by report preparers and gain the recognition of standard setters and investors
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

how will the IR framework accelerate the evolution of corporate reporting?

A

reflecting developments in financial governance, management commentary and sustainability reporting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

when was the first version of International Integrated Reporting Framework published?

A

December 2013

-aimed to develop by 2014

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

what is the objective of integrated reporting framework?

A
  • establish guiding principles and content elements that govern the overall content of an integrated report
  • to explain the fundamental concepts that underpin integrated reports
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

what is the aim of integrated thinking ?

A

support integrated thinking and decision making

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

what primary purpose does the set out of an integrated report?

A

to explain to providers of financial capital how an entity creates VALUE over time
-benefits all stakeholders interested in an entity’s ability to create value over time

19
Q

what are the objectives for integrated reporting?

A
  • IMPROVE QUALITY OF INFORMATION available to providers of financial capital to enable more efficient and productive and allocation of capital
  • 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 organisation to create value over time
  • to enhance ACCOUNTABILITY and stewardship for the broad base of CAPITALS and promote understanding of their interdependence
  • support INTEGRATED THINKING, decision-making and actions that focus on the creation of value over the short, medium and long term
20
Q

what are the three fundamental concepts of integrated reporting?

A
  1. value creation for the organisation and for others
  2. the value creation process
  3. the capitals
21
Q

what is the concept of value creation?

A

value created by an organisation over time MANIFESTS itself in increases, decreases or transformations of THE CAPITALS caused by the organisation’s business activities and outputs

22
Q

what is at the core of the value creation process?

A

the entity’s business model

23
Q

what are the 6 capitals identified in the framework?

A

FHMSIN

  • financial
  • human
  • manufacturing
  • social & relationships
  • intellectual
  • natural capital
24
Q

what are ‘capitals’?

A

resources and the relationships used and affected by the organisation
-stocks of value that are increased decreased and transformed through the activities and outputs of the organisation

25
Q

which capitals should an entity include in the integrated report?

A

on capitals that are relevant to the entity

26
Q

what are the flows of capitals?

A

how they transform between eachother e.g increased human capital causes decreased financial

27
Q

what is financial capital?

A
  • the pool of funds obtained through financing or generated through operations or investments
  • available to an organisation for use in the production of goods or the provision of services
28
Q

what is manufactured capital?

A

manufactures physical objects that are available to an organisation for use in the production of goods or provision of services
-contribute to production process, not actual output

29
Q

what are some examples of manufactured capital?

A
  • buildings
  • equipment
  • infrastructure such as roads, ports, bridges and waste and water plants
30
Q

who usually created manufactured capital?

A

other organisations but includes assets manufactured for sale or when they are retained for its own use

31
Q

what is intellectual captial?

A

organisational, knowledge-based intangibles

32
Q

what are some examples of intellectual capital?

A

IP:patents, copyrights, software, rights and licences

‘org capital’:tacit knowledge, systems, procedures and protocols

33
Q

what is human capital?

A

people’s competencies, capabilities and experience and their motivation to innovate

34
Q

what are some motivations of human capital?

A
  • alignment with org’s governance, framework, risk management approach and ethical values
  • ability to understand, develop and implement an organisation’s strategy
  • loyalties and motivations for improving processed, goods and services, including ability to lead, manage and collaborate
35
Q

which capital is needed for productive work?

A

human capital

-education and training enhances it

36
Q

what are social and relationship capital?

A

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

37
Q

what are some examples of social and relationship capital?

A
  • shared norms and common values and behaviours
  • key stakeholder relationships
  • intangibles associated with the brand and reputation that an organisation has developed
  • an organisation’s social licence to operate
38
Q

what is natural capital?

A

all renewable and non-renewable environmental resources and processes that provide goods or services that support the prosperity of an organisation

39
Q

what are some examples of natural capital?

A

air, water, land and, minerals and forests
bio-diversity and eco-system health
climate regulation, climate change, CO2 emissions

40
Q

what are the benefits of integrated reporting?

A
  • more forward looking info for decisions
  • disclosure of new non-financial info for users understanding
  • improved stakeholder reputation due to increased transparency
  • integrated thinking may lead to improved efficiencies within organisations
41
Q

what are the limitations of integrated reporting?

A
  • potential for bias as reports are not audited
  • reluctance to disclose information for fear of losing competitive advantages
  • may provide too much information for used to digest
42
Q

what are the benefits of IR framework?

A
  • provides guidance for preparers on 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 within the
43
Q

what are the limitations of IR framework?

A
  • principle based rather than rule based leads to increased subjectivity and potential bias
  • difficult to compare across different entities and sectors
  • requires experienced staff to apply concepts properly

CIMA F2 (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions