CIMA F3 Syllabus A. Financial policy decisions - Limitation of FS - non-financial capital - Notes ^{8 / 13}

The objective of financial reporting is

to provide information about the financial position that is useful to users in making economic decisions.

• However, the FSs provide only financial information and therefore do not provide a full picture.

  Non-financial information (capital) is important in economic decisions.

What is Non-financial capital

1. People in your company

2. Natural resouces

3. Trade marks

The objectives of non-financial reporting are:

1. to become more transparent

   e.g. future plans

2. to understand the company's Responsibility

   e.g. Social and environmental responsibilities the company has.

3. to reach out to more than just shareholders

   e.g. wider stakeholders

Non-financial information can be reported using the following guidance:

• GRI

  Global Reporting Initiatives

• IR

  Integrated Reporting framework

• These 2 give us the structure on how to report on non-financial information.

  If we all use it, it will help us to compare the non-financial information.

Limitation of FS:

They dont show us :

• What will happen in the future

• What's the competition doing

• What environmental changes have been

• What our R+D results are