01 June 2016

Requirements of European directive on non-financial information

In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again.

  1. In December 2014, a new European Directive came into force, as regards the disclosure of non-financial and diversity information. Which of the following entities are not required to comply with the requirements of the Directive unless designated by Member States?

  2. The European Commission launched a public consultation in January 2016 on the Directive. ACCA has responded to the European Commission’s consultation. Which of the following statements is not a view expressed by ACCA in their response to the consultation?

  3. The Directive contains an option for member states to allow entities, either to include the disclosures in the management report or to prepare a separate report containing non-financial information. One of the issues facing entities is the pressure of having to prepare and publish their non-financial information to the same deadline as their financial statements. What does the Directive allow in order to alleviate the pressure of having to publish the non-financial statement?

  4. In June 2013 Eurosif and ACCA published a survey of investors, analysts and other stakeholders in order to gather views and opinions on their use of environmental, social and governance information. It was found that the key sources of non-financial information for investors were corporate social responsibility (CSR) reports and annual reports. Which of the following statements was not a finding of the survey?

  5. It is generally felt that appropriate flexibility should be left to companies to decide on the material issues to be included in the non-financial disclosure. It is difficult for legislation to provide an exhaustive list of topics and therefore legislation should focus on the principles. Many countries require quoted companies to report on their Greenhouse Gas Emissions. What does the Directive state as regards the disclosure of Greenhouse Gas Emissions?

  6. The content of the non financial disclosure should be consistent with the existing international frameworks, such as the UN Global Compact, OECD Guidelines for Multinational Enterprises, and ISO 26000 Social Responsibility. What does the Directive require entities to do where they have chosen to use a recognised international framework?

  7. Investors are increasingly looking to assess not just the financial performance of the companies, but also their environmental, social and governance performance. The European Commission have stated that only 2,500 of large companies in the European Union currently prepare some form of separate non-financial report. What is the European Commission estimate of the number of entities that will be affected by the proposals?

  8. The non financial report should include a brief description of the business model and the principal risks including how its business model could cause adverse impacts in certain areas. Which of the following are not an example of the areas which are required to be disclosed by the Directive?

  9. Entities normally have internal processes for validating the non-financial information disclosed in their Annual Report. What does the Directive state as regards the validation of the non-financial information?

  10. The Directive will require qualifying entities to issue a non-financial statement setting out its development, performance, position and impact of its policies and outcomes relating to, as a minimum, environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters. Under what circumstances may an entity choose not to disclose information relating to impending developments or matters in negotiation?

Read the article