Topic 1: The

Broader Accounting
Landscape
Class Notes

Financial Capitals
· monetary resources, assets, funds used to finance operations,
investments & activities
· cash, savings, investment & other financial instruments with
monetary value
· used to generate income, facilitate transactions, support
economic endeavours

Manufactured Capital
· tangible assets & infrastructure (created by human effort &
ingenuity)that contribute to economic productivity
· buildings, machinery, equipment & infrastructure

Intellectual capital
· intangible assets that contribute to competitive advantage &
value
· knowledge, skills, expertise, patents, copyrights & other IP
· unique capabilities that differentiates entity

Human Capital
· knowledge, skills, expertise & abilities of workforce
· investing in employees (trainings) to enhance overall
contribution
Social & relationship Capital
· network of relationships, partnerships & social connections
· company cultivates & leverages these for mutual benefit
· collaborative ties with customers, suppliers, employees &
other stakeholders

Natural capital
· Earth's natural resources & ecosystems that provide range
of environmental & economic benefits
· elements - air, water, soil, biodiversity & ecosystems

IASB and IFRS

· IASB - International Accounting Standards Board
- independent, private-sector body
- develops & approves international financial Reporting
Standards (IFRS)

Accounting/ reporting definitions

· system that communicates financial effects of decisions
made by business

· process of collecting, summarising, analysing &

communicating info that enables users of info to
make informed decisions

· provision of info about aspects of performance of

business
· info to people with interest/ stake in Org - stakeholders

ESD
· factors
· set of criteria used to measure sustainability &
responsible business practices of companies
SDG - Sustainable Development Goals
· set of 17 goals
· adopted by UN
· end poverty, protect planet & ensure prosperity for all

Accounting language - non-financial info

· environment
- GHG Emissions
- air quality
- energy management
- water & wastewater management
- waste & hazardous materials management
- ecological impacts

· leadership & governance

- Business ethics
- competitive Behaviour
- management of legal & regulatory environment
- critical incident risk management
- systemic risk management

· Business Model & innovation

- product design & lifecycle management
- business model resilience
- supply chain management
- materials sourcing & efficiency
- physical impacts of climate change

· Social Capital
- Human rights & community relations
- customer privacy
- data security
- access & affordability
- product quality & safety
- customer welfare
- selling practices & product labeling
· Human Capital
- labour practices
- employee Health & safety
- Employee engagement, diversity & inclusion

Sustainability frameworks
· Carbon Disclosure Project (CDP) - GHG emissions
· Dow Jones Sustainability Indexes - industry-specific criteria
· Global Reporting Initiative (GRI) - Corporate social responsibility
· GRESB - environment, social & governance performance
· sustainability accounting Standards Board (SASB) - sustainability
performance

Reporting Landscape
· Global initiatives
- UNEP finance Initiative
- UN Global compact
- Sustainable Development Goals (SPG)
· Frameworks & standards for Reporting
- CDP
- GRI
- SASB Standards
· Regulation
- IFRS

Roles
· IFRS:
- Integrated Reporting
- IASB = already reflected in financial accounts
(financial GAAP)
- ASB& CDSB = Sustainability topics material to
enterprise value creation (sustainability
disclosure standards)
· Word economic forum, GRI
- reporting reflecting org's impact on economy,
environment & people
- Sustainability disclosure standards

Ensuring compliance
· Governance & Assurance language

· auditing
- Opinions issued by professionals regarding accuracy
& completeness

· IRBA, IAASB, King IV

Board of Directors
· CEO
· financial statements (compiled by management)
- reported by company (provides goods & services,
process transactions from clients & consumers,
internal controls and employees)
- audited by External Auditors
- used by shareholders & stakeholders

Landscape
1. International Federation of Accountants (IFAC):
- global org for accounting profession

2. IFAC Standard Sitting committees:

- IAASB: International Auditing & Assurance Standards
Board
- sets international standards
- auditing, assurance & quality control
 - IESBA: International Ethics Standard Board for
Accountants
- ethics standards for professional accountants
& auditor independence
- IAESB: International Accounting education Standards
Board
- Develops & enhances accounting education

3. Accounting & auditing professions in SA

- SAICA:
- Registered With IFAC
- Accounting body
- code of conduct
- IRBA:
- established by Auditing Profession Act
- Develop a maintain auditing & ethics standards
in SA
- code of conduct

Strategy & financial Decision making

· Financial Decisions:
- where funds from?
- owner (equity)
- borrow from 3rd parties (Liability)
· Investing Decisions:
- what done with funds?
- purchase assets for business
· Operating Decision:
- use asset to make profit
· Distribution Decision:
- what to do with profit?