Your browser version is out of date and no longer supported. Please upgrade to one of our supported browser versions. The International Auditing and Assurance Standards Board sets high-quality international standards for auditing, assurance, and quality control that strengthen public confidence in the global profession.
The International Accounting Education Standards Board establishes standards, in the area of professional accounting education, that prescribe Integrated reporting boundaries in dating competence and professional skills, values, ethics, and attitudes. The International Ethics Standards Board for Accountants sets high-quality, internationally appropriate ethics standards for professional accountants, including auditor independence requirements.
The International Public Sector Accounting Standards Board develops standards, guidance, and resources for use by public sector entities around the world for preparation of general purpose financial statements. Decisions on reporting boundaries need to be informed and transparent if investors and other stakeholders are to be able to compare and benchmark non-financial performance.
Seeking to address this need, and a lack of guidelines in the area, the Climate Disclosure Standards Board CDSB has a released a paper, currently open for consultation, that nails down the critical issues for groups of companies determining boundaries for non-financial reporting.
Proposals for Boundary Setting in Mainstream Reports discusses the extent to which non-financial reporting should include information about the activities of a parent company and its subsidiaries, joint ventures, associates, investees, suppliers, and upstream and downstream activities.
The paper explains how organizational boundary setting affects usefulness and understandability of non-financial information.
The CDSB has usefully navigated the complex and multifaceted issue of boundary setting, which is caused by various reporting frameworks and regulations, and because the financial world has traditionally been largely disconnected from the physical world in reporting. The application of the concept of consolidation used in financial reporting to non-financial reporting extends the scope and content of disclosure beyond those matters where an organization has direct control or significant influence.
The CDSB makes six proposals to encourage a standardized and practical approach to organizational boundary setting in mainstream corporate reporting. I encourage you to respond to CDSB, or in our comments section below, with any suggestions regarding the design and application of these proposals. The proposals are summarized Integrated reporting boundaries in dating. Clarify the link between the objectives of non-financial reporting, materiality, the audience for reporting, and organizational boundary setting.
This proposal is designed to help reconcile a wider stakeholder view of what is material for disclosure while also recognizing the limitations of matters over which the organization has control or influence.
Risks arising beyond the organizational boundary, such as supplier vulnerability, would be reported as risks. But the difference between these objectives needs to be understood and distinguished. What does this mean in practical terms? If any information is required about the outcomes or impacts of business activity beyond the reporting boundary used for mainstream reporting, the circumstances in which such information should be provided should be specified and the
Integrated reporting boundaries in dating information separately labeled.
There should be a single, standardized approach to group organizational boundary Integrated reporting boundaries in dating in mainstream reporting that should have the characteristics outlined in proposals Using IFRSs, consolidation does not involve aggregating local statutory accounts prepared for each of the entities within the consolidation.
Rather, consolidation requires the preparation of a group account. Where an organization is subject to different reporting demands including boundary demands from local authorities, these should be disregarded for consolidation as these reports are local statutory reports that cannot be the base for a group report. Furthermore, in
Integrated reporting boundaries in dating case of large conglomerates with intercompany trading, an approach that simply aggregates national, entity level reporting could result in double counting, particularly where two or more entities within the group have prepared entity level results with different boundaries.
Additionally, the user of an asset is, in many cases, more likely to have access to information that supports the production of disclosures on results and performance. As the user of an asset or resource should report on the results and outcomes from that use, the type of arrangement under which use is permitted becomes irrelevant to reporting. Policies applied for the preparation of consolidated climate change-related disclosures should be stated.
Based on the assumption that investors demand consistency in financial and non-financial reporting, then action is needed. Do these proposals work in practice to help meet this objective? Stathis Gould heads up the development of international services for professional accountants working in business and industry at IFAC. A key element of his work is developing thought leadership and guidance in support of finance professionals and their roles facilitating sustainable organizational performance.
Prior to serving the accountancy profession, Mr.
Gould worked in various roles in the private and public sectors in the UK. See more by Stathis Gould. Like what you see here?
Subscribe to The Latest "Integrated reporting boundaries in dating," our customizable update sent every two weeks. Do you have a perspective you'd like to share with the global profession? To leave a comment below, login or register with IFAC. I like your response, Stathis. It provides a bridge between the consistency argument so eloquently expressed by Bill and the need for flexibility that I maintain is an essential element of effective corporate reporting.
Companies need to be free to tell their story in their own words through integrated narrative reporting but, I accept, this needs to be firmly based on consistent and comparable financial indicators.
I would generally agree with your thoughts Nick. As is the case when thinking about how various definitions of materiality are applied, I think there might two aspects to this debate.