Currently, the company has reported good earnings per share, increased profits and increased dividends over a three-year period. Share prices have increased to reflect this performance. The company’s board and executives have received a report from an external environmental and social consultant, which contains the following advice.
1. There is raw material that is a substitute for the raw material currently used by Asbos in the three products it manufactures, but the substitute costs about 50% more than the current material.
2. The availability of the current raw material will be limited in the future.
3. There is mounting strong evidence that the current raw material is linked to long-term health problems for employees, installers, customers and school children.
The company’s board and executives know they have a stockpile of the current raw material and a contract to purchase it for another two years. The company would incur extra cost if it were to breach the contract with the supplier. They decide to continue to use the current raw materials until the cost of the substitute is about the same price as the current raw material or the current raw material resources is depleted.
1. What contemporary management accounting information gathering system should the company’s board and executives consider before making their decision?
2. What two forms of reporting are available to different internal and external stakeholders if Asbos Linings Ltd adopted EMA?
3. Explain the benefits of EMA to both internal decision making and external reporting.
4. What three factors should influence the company’s board and executives to engage integrated GRI reporting that includes both financial performance and environmental, social and governance (ESG) performance?
The question first appeared on Write My Essay