- 20 Marks
SCS – Mar 2025 – L3 – Q5 – Environmental Disclosures
Explain importance of environmental disclosures for AML and key EPA disclosure requirements in sustainability reports.
Question
a) On September 21, 2024, a local advocacy group, Democracy Hub, launched a three-day protest dubbed “Stop Galamsey Now” to demand stronger government action against illegal mining. The protest drew national attention to the severe pollution of water bodies and the degradation of forest reserves caused by illegal mining operations. Activists called on regulatory bodies, including the Environmental Protection Agency (EPA), to strictly enforce environmental laws and ensure greater corporate accountability in the mining sector.
Akosa Minerals Limited (AML), a key player in the mining industry, operates in regions affected by illegal mining activities. As part of its corporate governance and sustainability strategy, AML must ensure compliance with environmental regulations and provide transparent environmental disclosures in its corporate reports. Regulatory bodies such as the EPA require mining firms to disclose the impact of their operations on local ecosystems and outline measures taken to mitigate environmental damage.
Required:
i) Explain the importance of environmental disclosures in corporate governance, particularly for mining companies like AML.
ii) Discuss THREE key environmental disclosure requirements that the Environmental Protection Agency (EPA) would expect AML to include in its sustainability reports. Provide examples based on AML’s operations.
b) The Government of Ghana holds a stake in Akosa Minerals Limited (AML), making it a partially state-owned entity. As a result, AML is subject to oversight and governance requirements under Ghanaian law, including compliance with the State Interests and Governance Authority (SIGA) Act, 2019 (Act 990). This law establishes governance frameworks for state-owned enterprises (SOEs) and entities in which the government has an interest, ensuring transparency, accountability, and efficiency in their operations.
Given the increasing public scrutiny of state-owned entities, AML’s Board of Directors must ensure compliance with Act 990 while balancing the government’s interests with those of private investors and other stakeholders.
Required:
i) Explain the purpose of the State Interests and Governance Authority (SIGA) Act, 2019 (Act 990) and its relevance to state-owned enterprises in Ghana.
(4 marks)
ii) Discuss THREE key governance requirements under the SIGA Act that apply to AML as a partially state-owned entity. Provide examples of how these requirements influence AML’s corporate governance structure.
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CR – May 2016 – L3 – Q5 – Integrated Reporting
Discuss the purpose of Management Commentary, why it is not mandatory, and the most relevant elements for Umu Amaeshi Plc to focus on in its management commentary.
Umu Amaeshi Plc is a conglomerate that has diverse businesses cutting across some social and environmental sensitive sectors listed on the Nigeria Stock Exchange. In compliance with financial reporting regulatory directives of Nigeria, it has adopted IFRS in preparing its financial statements. The board is aware that this step will enhance the transparency of its reporting and assist in attracting foreign institutional investors who may be desirous of investing in Nigeria. However, in one of the company’s board meetings, the CFO briefed members that given the social and environmental sensitive nature of its operation, the adoption of IFRS may not be good enough to bring that transparency relating to its policies and practices relating to social and environmental disclosures. He makes reference to Para 14 of IAS 1 – Presentation of Financial Statements, which clearly stated that:
“Many entities also present, outside the financial statements, reports and statements such as environmental reports and value-added statements, particularly in industries in which environmental factors are significant and when employees are regarded as an important user group. Reports and statements presented outside financial statements are outside the scope of IFRS.”
The board does not want to engage in social and environmental reporting disclosures since many who do engage in what the business community see as marketing and reports filled with rhetoric. The CFO has therefore suggested the use of Management Commentary.
Required:
a) Briefly explain the purpose of Management Commentary and why it was not made a mandatory requirement for all companies by the IASB. (6 Marks)
b) Identify the three most relevant elements of Management Commentary that Umu Amaeshi Plc should focus on in its management commentary and explain how they will assist the company to achieve the above objectives, given that it does not want to engage in social and environmental disclosure. (9 Marks)
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