Accounting: Business Reporting for Decision Making 7th Edition by Jacqueline Birt Solution manual
Economic globalisation
The integration of national economies into the global economy brings opportunities for business, but often with significant risks. More and more companies operate in or source from multiple countries with wide disparities in enforced environmental and social standards. Whatever the local enforced standard, many stakeholder groups demand, at a minimum, that companies meet international expectations.
Connectivity and communication
Advances in digital communication over the last two decades have reduced not only the time it takes to build a reputation, but also the time it takes to destroy one. Communication is increasingly disaggregated across multiple social networks. Facebook has over 65 million users, and is growing by more than 200 per cent per year. Twitter, while having a ‘mere’ 7 million users, has shown year-to-year growth of over 1000 per cent. Using these types of tools, it has never been easier for people to track a company’s sustainability performance and to widely disseminate their perspectives on it. We have entered an era of ‘radical transparency’.
1.23 List the qualities needed in providing external audit and assurance services to organisations in relation to CSR reports.
According to GRI (2018, pp. 41–42), it is important that assurance providers:
- are independent from the organisation and therefore able to reach and publish an objective and impartial opinion or conclusions about the report
- are demonstrably competent in both the subject matter and assurance practices
- apply quality control procedures to the assurance engagement
- conduct the engagement in a manner that is systematic, documented, evidence-based and characterised by defined procedures
- assesses whether the report provides a reasonable and balanced presentation of performance — considering the veracity of data in the report as well as the overall selection of content
- assess the extent to which the report preparer has applied the GRI Standards in the course of reaching its conclusions
- issue a written report that is publicly available and includes: an opinion or set of conclusions; a description of the responsibilities of the report preparer and the assurance provider; and a summary of the work performed, which explains the nature of the assurance conveyed by the assurance report. (GRI 2018, Consolidated set of GRI Sustainability Reporting Standards 2018, GRI 102 General disclosures 2016, Disclosure 102-56 External assurance, pp. 41–42.)
1.24 Compare the principles underlying the GRI sustainability reporting Standards with the principles underlying the preparation of GPFS.
The list below shows that for both sustainability and financial reporting materiality, timeliness and comparability are the same. Given that general purpose financial statements are deliberately limited in scope, it is less important to have stakeholder inclusiveness. However, it is vitally important for there to be understandability for widespread stakeholder use. The faithful representation required for the financial reports would capture the context, completeness and balance required in the sustainability reports. Similarly, for financial statements to be verifiable they would need to be accurate, have clarity and be reliable.
| GRI principles | Qualitative characteristics of financial statements |
Content principles:
|
Relevance and materiality Faithful representation Comparability Verifiability Timeliness Understandability |
Problems
1.25 Business sustainability
Read the article on environmental auditing at