Sustainable initiative reporting

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statement on sustainability initiatives;

 related party transactions;

 the nature of the related party relationships and transactions as well as information about the transactions necessary to understand the potential effect of the relationship on the financial statements.

Accounting and risk management issues The board of every public company should ensure that the company’s annual report makes sufficient disclosure on accounting and risk management issues. In particular, the following matters must be disclosed:

 the statement of the directors’ responsibilities in connection with the preparation of financial statements;

 details of accounting policies utilized and reasons for changes in accounting policies;

 where the accounting policies applied do not conform to standard practice, the external auditor should express an opinion on whether they agreed with the departure and the reasons for such departure;

 a statement from the directors that the business is a going concern;

 executive directors remuneration and share options;  non-executive directors fees and allowances and share options if any;

 risk management indicating the board’s responsibility for the total process as well as its opinion on the effectiveness of the risk management procedures.
The chairman’s primary responsibility is to ensure effective operation of the board and that it works towards achieving the company’s strategic objectives.

 

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Management commentary is useful to the users of financial statements because it provides them with additional information that supplements the figures in the accounts.

It also gives them an insight into how management view the performance of the business and what they hope to achieve in the future.

An assessment of the risks and opportunities facing the entity can also be useful for an investor who may want to make a decision as to whether to continue investing in the entity.

Management commentary is common in many countries. In the European Union, companies are required to include a business review in their annual report and accounts.

A business review is a management commentary, and might sometimes be called an Operating and Financial Review (OFR).

In the UK there is a statement of best practice that gives guidance on the content and presentation of information in an OFR, which is consistent with the statutory requirements for the content of the business review.

 

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IFRS Practice Statement:

Management commentary This is a non-mandatory document that sets out guidelines to be followed by companies who wish to or are required to produce a management commentary in accordance with IFRS.

The guidance is intended to provide a basis for the development of good management commentary.

It offers a non-binding framework which could be adapted to the legal and economic circumstances of individual jurisdictions.

The Practice Statement (PS) defines management commentary as a narrative report accompanying financial statements prepared in accordance with IFRSs that provides users with historical and prospective commentary on the entity’s financial objectives. position, financial performance and cash flows, and a basis for understanding management’s objectives and its strategies for achieving those objectives.

 

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There is now a widely-accepted view that companies should be answerable to a wider range of ‘stakeholders’ who are taking an increasing interest in their activities.

They are interested in the good and bad aspects of a company’s operations – its products and services, its impact on the environment and local communities and how it treats and develops its workforce.

Many large companies now accept (possibly for commercial reasons) that their responsibilities extend beyond their shareholders to other stakeholders – their employees, the government, the local community and society in general.

Initiatives include sourcing goods from deprived countries at fair prices, campaigns to promote re-cycling of materials, job-sharing and flexi-time working to improve working opportunities and conditions for employees.