F3 - 1/2. Business Objectives and Sustainability

Question 1

What impact does rising interest rates have on:
- borrowing;
- demand;
- inflation; and
- exchange rates?

Answer 1

• More expensive
• Falls
• Falls
• Strengthen

Question 2

What impact does rising inflation rates have on:
- costs;
- exports;
- imports; and
- exchange rates?

Answer 2

• Increase
• More expensive
• Relatively cheaper
• Weaken

Question 3

What impact do strengthening exchange rates have on:
- revenues and costs in foreign entities;
- exports; and
- imports?

Answer 3

• Worth less
• Less competitive
• More attractive

Question 4

What are the 4 driving principles of sustainability report content?

Answer 4

1. Stakeholder inclusiveness
2. Sustainability context
3. Materiality
4. Completeness

Question 5

What are the 6 factors of sustainability report quality?

Answer 5

1. Balance
2. Accuracy
3. Comparability
4. Timeliness
5. Clarity
6. Reliability

Question 6

What are the 2 categories of disclosure within sustainability reporting?

Answer 6

1. General standard
2. Specific Standard

Question 7

What are the 4 main general standard disclosures?

Answer 7

1. Strategy and analysis
2. Material aspects
3. Stakeholder engagement
4. Ethics and Integrity

Question 8

What are the 2 aims of integrated reporting?

Answer 8

1. To explain how businesses create value over time
2. Demonstrate link between strategy, performance and capitals

Question 9

What are the 6 capitals explored in integrated reporting?

Answer 9

1. Financial
2. Manufactured
3. Intellectual
4. Human
5. Social and Relationship
6. Natural

Question 10

What 3 approaches can be taken to enhancing the value of manufactured capital?

Answer 10

1. Maintenance programmes
2. Security measures
3. Replacement cycle

Question 11

What 3 approaches can be taken to enhancing the value of intellectual capital?

Answer 11

1. Investment in R&D
2. Use of new technologies
3. Internal software development

Question 12

What 3 approaches can be taken to enhancing the value of human capital?

Answer 12

1. Investment in training
2. Reduction in sickness and absenteeism
3. Improvement in minimum pay levels

Question 13

What 3 approaches can be taken to enhancing the value of social and relationship capital?

Answer 13

1. Focus on customer satisfaction
2. Involvement in local community
3. Staff time for volunteer work

Question 14

What 3 approaches can be taken to enhancing the value of natural capital?

Answer 14

1. Waste avoidance
2. Reduction in energy consumption
3. Effective management of environmental risks

Question 15

What are the 5 main principles of integrated reporting?

Answer 15

1. Strategic/future focus
2. Connectivity of information
3. Stakeholder responsiveness
4. Materiality
5. Consistency/comparability

Question 16

What are the 5 important elements of an integrated report?

Answer 16

1. Organisational overview and environment
2. Governance structure and value creation
3. Impact and management of R&Os
4. Strategy and resource allocation
5. Performance and outlook

Question 17

What are the 4 main benefits of IR?

Answer 17

1. Demonstrates commitment to issues to stakeholders
2. Identification and management of risks, possible reduction in costs
3. Improved profitability
4. Better employee morale

Question 18

What are the 4 main arguments against IR?

Answer 18

1. Lack of comparability
2. Lack of reliability (unaudited)
3. Bias/only positive
4. Danger of information overload