Sustainable Solutions April 2009

CASE STUDY
How the
1. Reporting and either maintain or assure the For example:
2. Economic instruments collection of information. Potentially - through the possession of emission
3. Assurance in an environment where there is a lack permits, allowances and corresponding
number
4. Governance of speciﬁ c reporting guidance from assets and liabilities
5. Accounting. government, or where there are difﬁ culties - through the various instruments in use
ACCA will also publish a complementary in capturing and collating social and and the regulatory framework within
crunchers
paper summarising the sustainability environmental data and integrating them which the business is operating
elements of ACCA's qualiﬁ cation. into mainstream information functions - knowing what its liabilities and
The ﬁ rst two brieﬁ ng papers on reporting 4. Policy: to advise on the development obligations are
and economic instruments have been of policies for determining 'necessity to - eligibility for environmental tax
are going
published - the third on assurance is to report' decisions (where they exist) and to incentives and legal considerations.
follow. The ﬁ nal two should be published by contribute to the materiality process to help 2. Information ﬂ ows: Accountants need
May 2009. identify what to include in the report to ensure the presence of necessary
green
Each of the ﬁ ve brieﬁ ng papers will 5. Information provision: to provide clear, information ﬂ ows to capture information
count as CPD material and have been reliable information and, where required, for the relevant economic instruments and
prepared in collaboration with KPMG and assurance of it, build the evidence base for ensure that potential consequences are
AccountAbility. a business case, and establish the necessary included in plans and forecasts.
Reporting sustainability
supporting processes and procedures. 3. Policy: Accountants must give
Furthermore, through the assurance consideration to and develop a coherent
Accountants in both private and public prac-
tice, SMEs, multinational corporations and
process there is a requirement to report policy towards areas where there are
the public sector have qualiﬁ cations, skills
directly to the board of directors or top opportunities to reduce the ﬁ nancial
and experience that have long been used to
management, requiring the auditor to know implications of economic instruments.
provide legitimacy and coherence to ﬁ nancial
the business as well as responding on the 4. Liabilities and opportunities:
and business reporting. scope of the audit. Accountants should help their ﬁ rm or
It is the accountant's involvement in the
Economic instruments
client to navigate the maze of economic
twin issues of organisational decision-making
Economic instruments affect the decisions,
instruments, and provide ﬁ nancial advice
and external reporting that imposes on the
budgets, and management of enterprises
keeping up to date on current and potential
accounting profession the responsibility for
through attaching economic incentives and
instruments that affect the business in order
understanding, absorbing and articulating
disincentives to elements of behaviour. Eco-
to manage risk.
performance on a range of material issues.
nomic instruments can provide an efﬁ cient
Increasingly, sustainability issues are and effective way of achieving sustainable For more details, visit www.accaglobal.com
among those material considerations.
development policy objectives.
This paper provides an overview of
Accountants need to be aware of the short
ﬁ nancial reporting's changing landscape and
term ﬁ nancial risks
and opportunities such
increasing encroachment of and demands for,
instruments present, as
sustainability disclosures.
well as their potential to
Mandatory reporting requirements, trends
provide incentives for
in voluntary reporting, where reporting is
more sustainable longer
heading in the future and the role of the
term business models.
accountant are also explained. Instruments such
The paper's aim is to help accountants
as carbon trading have
understand the implications for them.
placed new demands on
Thus within sustainability reporting the
the accounting profes-
sion, and these will only
role of the accountant is increasingly to apply
increase as more and more
skills in the following key areas:
economic instruments are
1. Reporting: to understand the regulatory
built into the architecture of
and voluntary reporting environment in
sustainability management.
which businesses (regardless of size) and
governments operate, and respond to new The role of accountants,
demands resulting from changes in the within the context of
level and nature of business activity and economic instruments,
new legal requirements falls into the following four
2. Risk: to advise on risk management and areas:
the implications of entering into voluntary 1. Knowledge: It is
reporting mechanisms critical for accountants
3. Frameworks: to develop frameworks to understand where
which allow for the efﬁ cient measurement business may be affected by
of ﬁ nancial and non-ﬁ nancial information economic instruments.
SUSTAINABLE SOLUTIONS April 2009 45
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