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Open Access
Article
Publication date: 14 December 2021

Josef Baumüller and Karina Sopp

This paper outlines the development of the principle of materiality in the European accounting framework, from the Modernization Directive (2003/51/EC) to the NFI Directive…

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Abstract

Purpose

This paper outlines the development of the principle of materiality in the European accounting framework, from the Modernization Directive (2003/51/EC) to the NFI Directive (2014/95/EU) and on to the proposals for a Corporate Sustainability Reporting (CSR) Directive (2021/0104 (COD)). The authors highlight how the requirements for corporate reporting in terms of sustainability matters have changed, underlining the main issues that require further attention by practitioners, researchers and legislators.

Design/methodology/approach

This paper is based upon a historic analysis of European Union (EU) regulations in the field of non-financial and sustainability reporting and how these have changed over time. A conceptual comparison of different reporting concepts is presented, and changes in their relevance to the EU accounting framework are discussed as part of the historic analysis. Implications from corporate practice are derived from previous empirical findings from the EU Commission's consultations.

Findings

The proposed change from non-financial to sustainability reporting within the EU affects more than simply the terminology used. It implies that a different understanding is needed of both the purposes of company reporting on sustainability matters and the aims of carrying out such reporting. This change was driven by the need and desire to appropriately interpret the principle of materiality set forth in the NFI Directive. However, the recent redefinition in the shift within the EU Commission's proposals presents considerable challenges–and costs–in practice.

Research limitations/implications

Future research on the conceptualization and operationalization of ecological and social materiality, as well as on the use of this information by different stakeholder groups, is necessary in order to (a) help companies that are applying the reporting requirements in practice, (b) support the increased harmonization of the reports published by these companies and (c) fully assess the costs and benefits associated with the increase in reporting requirements for these companies.

Practical implications

Companies have to establish relevant reporting processes, systems and formats to fulfil the increasing number of reporting requirements.

Originality/value

This paper outlines the historic development of the principle of materiality regarding mandatory non-financial or sustainability reporting within the EU. It outlines a shift in rationales and political priorities as well as in implications for European companies that need to fulfil the reporting requirements. In consequence, it describes appropriate interpretations of this principle of materiality under current and upcoming legislation, enabling users to apply this principle more effectively.

Details

Journal of Applied Accounting Research, vol. 23 no. 1
Type: Research Article
ISSN: 0967-5426

Keywords

Open Access
Article
Publication date: 4 December 2017

Syed Musa Alhabshi, Hafiz Majdi Ab Rashid, Sharifah Khadijah Syed Agil and Mezbah Uddin Ahmed

This paper aims to address the financial reporting dimensions of intangible assets with specific reference to International Accounting Standards (IAS) 38 as well as relevant…

15142

Abstract

Purpose

This paper aims to address the financial reporting dimensions of intangible assets with specific reference to International Accounting Standards (IAS) 38 as well as relevant International Financial Reporting Standards (IAS 38 exclusion) that are embedded within intangible assets. These have implications for Islamic financial assets with identifiable and measurable intangible components.

Design/methodology/approach

The study uses the qualitative research method by way of interviews followed by focus group discussions with professional accountants/accounting academics and Sharīʿah scholars/advisors from academia, the industry and regulatory bodies. Analysis of relevant literature is made to understand the subject matter and Sharīʿah-related issues.

Findings

The study observes that the accounting dimensions of tangible assets are generally consistent with Sharīʿah requirements. However, significant variation arises when the dimensions of intangible assets are represented in financial assets.

Research limitations/implications

The paper presents an exploratory in-depth analysis within the context of intangible assets as specified in IAS 38.

Originality/value

The paper elucidates the comparative accounting dimensions and Sharīʿah requirements in reporting financial assets.

Details

ISRA International Journal of Islamic Finance, vol. 9 no. 2
Type: Research Article
ISSN: 0128-1976

Keywords

Open Access
Article
Publication date: 25 May 2023

Mercedes Luque-Vílchez, Michela Cordazzo, Gunnar Rimmel and Carol A. Tilt

This paper aims to investigate the current state of knowledge in key reporting aspects in relation to sustainability reporting in general and to reflect on their relevance to…

3204

Abstract

Purpose

This paper aims to investigate the current state of knowledge in key reporting aspects in relation to sustainability reporting in general and to reflect on their relevance to Global Reporting Initiative (GRI) in particular. In doing so, the major gaps in that knowledge are identified, and the paper proceeds to suggest further research avenues.

Design/methodology/approach

The authors conduct a review of papers published in leading journals concerning sustainability reporting to analyse the progress in the literature regarding three important reporting topics: materiality, comparability and assurance.

Findings

The review conducted in this study shows that there is still work to be done to ensure high-quality and consistent sustainability reporting. Key takeaways from the review of the extant literature are as follows: there is ongoing debate about the nature of sustainability reporting materiality, and single versus double materiality. Clearer guidance and better contextualisation are seen as essential for comparability, and, as GRI suggests, there is an important link to materiality that needs to be considered. Finally, assurance has not been mandatory under the GRI, but the current development at EU level might lead to the GRI principles being incorporated in the primary assurance standards.

Practical implications

In this paper, the authors review and synthesise the previous literature on GRI reporting dealing with three key reporting aspects.

Social implications

The authors extract some takeaways from the literature on materiality, comparability and assurance that will all be key challenges for GRI in the future.

Originality/value

This paper provides an updated review of the literature on GRI reporting dealing with three key reporting aspects.

Details

Sustainability Accounting, Management and Policy Journal, vol. 14 no. 4
Type: Research Article
ISSN: 2040-8021

Keywords

Open Access
Article
Publication date: 2 June 2021

Ewelina Zarzycka and Joanna Krasodomska

The paper aims to examine if corporate characteristics, general contextual factors and the internal context differentiate the quality and quantity of the disclosed non-financial…

10382

Abstract

Purpose

The paper aims to examine if corporate characteristics, general contextual factors and the internal context differentiate the quality and quantity of the disclosed non-financial Key Performance Indicators (KPIs).

Design/methodology/approach

The study is based on content analysis of the disclosures provided by large public interest entities operating in Poland after the introduction of the Directive 2014/95/EU. The quality of the KPIs disclosures is measured with the disclosure index. Regression analysis and selected statistical tests are used to examine the influence of the selected factors on the differences in the index value and corporate disclosure choices as regards the KPIs.

Findings

The study findings indicate that the sample companies provide a variety of non-financial KPIs in a manner that makes their effective comparison difficult. The research confirms that mainly industry, ecologists and the reporting standard determine the significant differences in the quality of the KPIs disclosures and the quantity of presented KPIs.

Research limitations/implications

The paper adds to the understanding of the differences in the quality of KPIs presentation and the choice of disclosed KPIs.

Practical implications

The paper includes suggestions on how to change corporate practice with regard to the non-financial KPIs disclosures.

Originality/value

We shed additional light on the importance of internal contextual factors such as the reporting standard and the reporters' experience in providing non-financial KPIs disclosures.

Details

Journal of Applied Accounting Research, vol. 23 no. 1
Type: Research Article
ISSN: 0967-5426

Keywords

Open Access
Article
Publication date: 3 November 2022

Maria Aluchna, Maria Roszkowska-Menkes and Bogumił Kamiński

Non-financial reporting (NFR) is viewed as a major step towards organisational transparency and accountability. While the number of non-financial reports published every year has…

6602

Abstract

Purpose

Non-financial reporting (NFR) is viewed as a major step towards organisational transparency and accountability. While the number of non-financial reports published every year has been growing exponentially over the last two decades, their quality and effectiveness in managing environmental, social and governance (ESG) performance have been questioned. Addressing these concerns, several jurisdictions, including EU Member States, introduced mandatory NFR regimes. However, the evidence on whether such regulation truly translates into enhanced ESG performance remains scarce. This paper aims to fill this gap in the literature by investigating the impact of the EU’s Directive 2014/95/EU (Non-financial Reporting Directive, NFRD) on the ESG scores of Polish companies.

Design/methodology/approach

Drawing upon institutional and strategic perspectives on legitimacy theory, the authors test the relationship between the introduction of the NFRD and the ESG scores derived from the Refinitiv database, using a sample of all those companies listed on the Warsaw Stock Exchange whose disclosure allows for measuring ESG performance (yielding 171 firm-year observations from 43 companies).

Findings

This study’s findings show an improvement of ESG performance following the introduction of the NFRD. The difference-in-differences approach indicates that the improvement is larger for companies that are subject to the legislation when it comes to overall ESG performance, particularly for environmental and social performance. Nonetheless, to the best of the authors’ knowledge, no significant effect is found for performance in the governance dimension.

Originality/value

This study investigates the role of transnational mandatory reporting regulation in the first years of its enactment. The evidence offers insights into the effects of disclosure legislation in the context of an underdeveloped institutional environment.

Details

Meditari Accountancy Research, vol. 31 no. 7
Type: Research Article
ISSN: 2049-372X

Keywords

Open Access
Article
Publication date: 13 October 2023

Zack Enslin, Elda du Toit and Mangwakong Faith Puane

Risk information provides information to enable stakeholders to make informed decisions about a company. Corporate communications should be readable and unbiased so as not to…

Abstract

Purpose

Risk information provides information to enable stakeholders to make informed decisions about a company. Corporate communications should be readable and unbiased so as not to hamper disclosure usefulness. This study assesses whether risk disclosures in the integrated reports are readable and unbiased.

Design/methodology/approach

The readability and narrative tone of South African listed companies' risk and risk management disclosures as disclosed in their integrated reports are analysed using automated software for the Top 40 JSE listed companies from 2015 to 2019.

Findings

The results show that risk and risk management disclosures are unreadable and lack any improvement in readability during the period. Additionally, these disclosures are biased toward narrative tones signalling communality and certainty.

Originality/value

The study adds to the literature on the readability of corporate reports, by focussing on the readability and narrative tone of risk and risk management disclosures during a period of increased scrutiny over the content of such disclosures. Also, by analysing risk disclosure and risk management disclosure separately, and by performing trend analysis to determine whether requirement changes related to content (specifically King IV) affect readability and narrative tones.

Details

Journal of Accounting in Emerging Economies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2042-1168

Keywords

Abstract

Details

Obsessive Measurement Disorder or Pragmatic Bureaucracy?
Type: Book
ISBN: 978-1-80117-377-3

Open Access
Article
Publication date: 30 October 2023

Albert Anton Traxler, Daniela Schrack, Dorothea Greiling, Julia Feldbauer and Michaela Lautner

Companies must no longer just report on corporate sustainability (CS) performance but also demonstrate that they are aligning their strategies with sustainability. However…

Abstract

Purpose

Companies must no longer just report on corporate sustainability (CS) performance but also demonstrate that they are aligning their strategies with sustainability. However, suitable management control systems (MCS) are required to implement a sustainability strategy. Thereby, sustainability reporting (SR) can also be employed for control purposes. On the other hand, existing MCS can be used to develop SR that goes beyond accountability. Accordingly, this paper explores how this interplay can be designed.

Design/methodology/approach

For the study, 20 semi-structured interviews were conducted with persons from ATX and DAX companies. Since the interplay should be examined from a holistic control perspective, the authors used the MCS package of Malmi and Brown as an analysis framework.

Findings

Nowadays, merely focusing on reporting is too narrow a view. It is therefore not surprising that the investigation was able to reveal various possible linkages between MCS and SR that span the full range of the MCS package of Malmi and Brown.

Research limitations/implications

Future research should also consider non-listed companies to investigate potential differences and take a closer look at the proposed reciprocal nature of the interplay.

Practical implications

The findings expand the knowledge of how companies can use SR for control purposes and how existing MCS can help develop a reporting that goes beyond accountability.

Originality/value

The study contributes by highlighting the potential of SR to control CS performance from a holistic MCS perspective and likewise the impact of existing MCS on reporting. In addition, different theoretical perspectives are used to explain why the interplay can be designed differently in practice.

Details

Journal of Applied Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0967-5426

Keywords

Open Access
Article
Publication date: 17 March 2020

Ioanna Falagara Sigala, William J. Kettinger and Tina Wakolbinger

The purpose of this study is to explore what design principles need to be considered in Enterprise Resource Planning (ERP) systems for humanitarian organizations (HOs) to enable…

5375

Abstract

Purpose

The purpose of this study is to explore what design principles need to be considered in Enterprise Resource Planning (ERP) systems for humanitarian organizations (HOs) to enable agile, adaptive and aligned (Triple-A) humanitarian supply chain capabilities and digitize humanitarian operations.

Design/methodology/approach

This study follows an embedded case study approach with a humanitarian medical relief organization, Médecins Sans Frontières (MSF), which engaged in a multiyear ERP design at its humanitarian field missions.

Findings

This research shows that ERP systems for humanitarian organizations should be designed as unique systems addressing humanitarian organizations' challenges and unique missions, their value generation processes, and resource base in an effort to improve organizational performance. This study presents 12 general design principles that are unique for humanitarian organizations. These design principles provide a high-level structure of guidance under which specific requirements can be further defined and engineered to achieve success.

Research limitations/implications

The results of this study are based on a single case study limiting generalizability. However, the case study was analyzed and presented as an embedded case study with five autonomous subunits using different business processes and following different adoption and implementation approaches. Therefore, the findings are derived based on considerable variance reflective of humanitarian organizations beyond MSF.

Practical implications

This study recognizes that HOs have unique routines that standard commercial ERP packages do not address easily at the field level. The primary contribution of this research is a set of design principles that consider these unique routines and guide ERP development in practice. National and international HOs that are planning to implement information systems, private companies that are trading partners of HOs as well as vendors of ERP systems that are looking for new opportunities would all benefit from this research.

Originality/value

This study fills the gap in the humanitarian literature regarding the design of ERP systems for humanitarian organizations that enable Triple–A supply chain capabilities and it advances the knowledge of the challenges of ERP design by HOs in the context of humanitarian operations.

Details

Journal of Humanitarian Logistics and Supply Chain Management, vol. 10 no. 2
Type: Research Article
ISSN: 2042-6747

Keywords

Open Access
Article
Publication date: 12 May 2022

Noelle Greenwood and Peter Warren

Framed within global policy debates over the need for private financial flows to align with the capital requirements of the Paris Agreement, this paper examines UK asset managers…

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Abstract

Purpose

Framed within global policy debates over the need for private financial flows to align with the capital requirements of the Paris Agreement, this paper examines UK asset managers in their approaches to disclosing and managing climate risk. This paper identifies and evaluates climate risk management practices among this under-researched investor group in their capacity to address fundamental behavioural obstacles to low-carbon investment.

Design/methodology/approach

This paper takes an inductive approach to document analysis, applying content and thematic analysis to the annual disclosures of the 28 largest UK asset managers (by assets under management), including the investment management arms of insurance and pension companies.

Findings

The main takeaway from this research is that today’s climate risk management strategies hold potential to effectively address traditionally climate risk-averse investor behaviour and investment processes in the UK asset management context. However, this research finds that the use of environmental, social and governance (ESG) investment strategies to mitigate climate risks is a “grey area” in which climate risk management practices are undefined within broad sustainability and responsible investment agendas. In doing so, this paper invites further research into the extent to which climate risks are considered in ESG investment.

Originality/value

This paper contributes to research in sustainable finance and behavioural finance, by identifying the latest climate risk management techniques used among UK-headquartered asset managers and uniquely evaluating these in their capacity to address barriers to low-carbon investment arising from organisational behaviours and processes.

Details

International Journal of Climate Change Strategies and Management, vol. 14 no. 3
Type: Research Article
ISSN: 1756-8692

Keywords

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