Integrated Reporting, Sustainability Reporting and Government Accounting — Practice

Question 1

Name the six capitals of the Integrated Reporting Framework.

Accepted Answer

Financial, Manufactured, Intellectual, Human, Social and Relationship, and Natural capital.

Question 2

Which companies are currently required to file a BRSR?

Accepted Answer

The top 1,000 listed companies by market capitalisation.

Question 3

On what basis (cash or accrual) is Indian government accounting prepared?

Accepted Answer

Cash basis.

Question 4

Distinguish the Consolidated Fund of India from the Public Account of India in terms of the appropriation requirement for withdrawal.

Accepted Answer

Withdrawals from the Consolidated Fund require Parliamentary appropriation (authorisation via the Appropriation Act), since it holds the government's own revenues and borrowed funds. Withdrawals from the Public Account do not require appropriation, since it holds money (such as provident fund deposits) the government merely holds as a banker or trustee for others, not its own revenue.

Question 5

A company's report describes its brand value, patents and accumulated organisational know-how. Which capital does this relate to?

Accepted Answer

Intellectual capital.

Question 6

Explain the rationale for BRSR's standardised, principle-by-principle disclosure format rather than a free-form company-written sustainability report.

Accepted Answer

A standardised format, requiring the same structured metrics and disclosures from every covered company, allows investors and stakeholders to compare ESG performance consistently across companies — a free-form, company-specific narrative report would make such comparison far more difficult, since each company could choose what to emphasise or omit.

Question 7

Explain why demonstrating budgetary compliance (spending only what was authorised, for the purposes authorised) is better served by cash-basis accounting than by accrual-basis accounting, using a concrete example.

Accepted Answer

Cash-basis accounting records money as it is actually received and paid, matched directly against the specific sanctioned budget heads Parliament approved, so a straightforward comparison between what was actually disbursed and what was authorised is immediately visible. Accrual accounting, by contrast, recognises expenses when incurred (an obligation arises) rather than when cash is paid, and can also involve non-cash items like depreciation or provisions that have no direct budgetary-authorisation equivalent — for example, a government department that has entered into a multi-year contract has 'incurred' an accrual-basis obligation for future payments, but the specific CASH disbursement in any given year, which is what Parliament actually authorised for that year through the Appropriation Act, is what budgetary accountability is actually checking against. Cash-basis accounting directly answers 'was the authorised amount actually spent, and only on what was authorised,' which is the government's core accountability question, more directly than an accrual measure would.

Question 8

Explain how Integrated Reporting's six-capital model differs conceptually from a traditional financial statement's focus, using natural capital as your example.

Accepted Answer

A traditional financial statement records only transactions that have a directly measurable financial effect recognised under accounting standards — a company's use of natural resources (water, raw materials, ecosystem services) generally appears in financial statements only indirectly, through the cost of materials purchased, with no direct representation of the natural capital being depleted or the environmental impact being caused. The six-capital model in Integrated Reporting makes natural capital an explicit, named category the report must address directly — describing how the business draws on natural resources as an input and what effect its activities have on natural capital as an output/outcome — surfacing an entire dimension of the business's value-creation story (and its risks) that a purely financial statement, focused only on transactions with a direct financial-recognition trig, would leave largely invisible.

Practice — Integrated Reporting, Sustainability Reporting and Government Accounting

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