Question

1. company: AGL energy. prepare a presentation to the CEO of the organisation (AGL Energy) discussing i) the limits of the 2018 IFRS Conceptual Framework and ii) how the integrated reporting/sustainability report addresses some of the limits of the 2018 IFRS Conceptual Framework by providing relevant examples from the organisation you selected.

Answer 1

The irevised iConceptual iFramework ifor iFinancial iReporting i(Conceptual iFramework) iissued iin iMarch i2018 iis ieffective iimmediately ifor ithe iInternational iAccounting iStandards iBoard i(Board) iand ithe iIFRS iInterpretations iCommittee.

The iConceptual iFramework isets iout ithe ifundamental iconcepts ifor ifinancial ireporting ithat iguide ithe iBoard iin ideveloping iIFRS iStandards. iIt ihelps ito iensure ithat ithe iStandards iare iconceptually iconsistent iand ithat isimilar itransactions iare itreated ithe isame iway, iso ias ito iprovide iuseful iinformation ifor iinvestors, ilenders iand iother icreditors.

The i2018 irevised iConceptual iFramework isets iout:

Ø the iobjective iof igeneral ipurpose ifinancial ireporting;

Ø the iqualitative icharacteristics iof iuseful ifinancial iinformation;

Ø a idescription iof ithe ireporting ientity iand iits iboundary;

Ø definitions iof ian iasset, ia iliability, iequity, iincome iand iexpenses iand iguidance isupporting ithese idefinitions;

Ø criteria ifor iincluding iassets iand iliabilities iin ifinancial istatements i(recognition) iand iguidance ion iwhen ito iremove ithem i(derecognition);

Ø measurement ibases iand iguidance ion iwhen ito iuse ithem;

Ø concepts iand iguidance ion ipresentation iand idisclosure; iand

Ø Concepts irelating ito icapital iand icapital imaintenance.

The iprimary ipurpose iof ian iintegrated ireport iis ito iexplain ito iproviders iof ifinancial icapital ihow ian iorganization icreates ivalue iover itime. iAn iintegrated ireport ibenefits iall istakeholders iinterested iin ia icompany’s iability ito icreate ivalue, iincluding iemployees, icustomers, isuppliers, ibusiness ipartners, ilocal icommunities, ilegislators, iregulators iand ipolicymakers, ialthough iit iis inot idirectly iaimed iat iall istakeholders. iProviders iof ifinancial icapital ican ihave ia isignificant ieffect ion ithe icapital iallocation iand iattempting ito iaim ithe ireport iat iall istakeholders iwould ibe ian iimpossible itask .

Historical ifinancial istatements iare iessential iin icorporate ireporting, iparticularly ifor icompliance ipurposes, ibut ido inot iprovide imeaningful iinformation iregarding ibusiness ivalue. Companies ihave irecognized ithe ibenefits iof ishowing ia ifuller ipicture iof icompany ivalue iand ia imore iholistic iview iof ithe iorganization.

Principle-based iframework

iThe iculture ichange ishould ienable icompanies ito icommunicate itheir ivalue icreation ibetter ithan ithe ioften iboilerplate idisclosures iunder iInternational iFinancial iReporting iStandards i.The ireport iacts ias ia iplatform ito iexplain iwhat icreates ithe iunderlying ivalue iin ithe ibusiness iand ihow imanagement iprotects ithis ivalue. iThis igives ithe ireport imore ibusiness irelevance irather ithan ithe icompliance iled iapproach icurrently iused.

The iintegrated ireport iaims ito iprovide ian iinsight iinto ithe icompany’s iresources iand irelationships ithat iare iknown ias ithe icapitals iand ihow ithe icompany iinteracts iwith ithe iexternal ienvironment iand ithe icapitals ito icreate ivalue. iThese icapitals ican ibe ifinancial, imanufactured, iintellectual, ihuman, isocial iand irelationship, iand inatural icapital, ibut icompanies ineed inot iadopt ithese iclassifications. iThe ipurpose iof ithis iframework iis ito iestablish iprinciples iand icontent ithat igoverns ithe ireport, iand ito iexplain ithe ifundamental iconcepts ithat iunderpin ithem. iThe ireport ishould ibe iconcise, ireliable iand icomplete, iincluding iall imaterial imatters, iboth ipositive iand inegative iin ia ibalanced iway iand iwithout imaterial ierror.

Integrated ireporting iis ibuilt iaround ithe ifollowing ikey icomponents:

Ø Organisational ioverview iand ithe iexternal ienvironment iunder iwhich iit ioperates

Ø Business imodel

Ø Risks iand iopportunities iand ihow ithey iare idealing iwith ithem iand ihow ithey iaffect ithe icompany’s iability ito icreate ivalue

Ø Strategy iand iresource iallocation

Ø The ibasis iof ipresentation ineeds ito ibe idetermined, iincluding iwhat imatters iare ito ibe iincluded iin ithe iintegrated ireport iand ihow ithe ielements iare iquantified ior ievaluated.

The iframework idoes inot irequire idiscrete isections ito ibe icompiled iin ithe ireport ibut ithere ishould ibe ia ihigh ilevel ireview ito iensure ithat iall irelevant iaspects iare iincluded. iThe ilinkage iacross ithe iabove icontent ican icreate ia ikey istoryline iand ican idetermine ithe imajor ielements iof ithe ireport isuch ithat ithe iinformation irelevant ito ieach icompany iwould ibe idifferent.