Further consideration of the reporting boundary How far would Brucester & Co. realistically…

Further consideration of the reporting boundary How far would Brucester & Co. realistically extend the reporting boundary, and why? Given what we know about Brucester & Co. and the company’s inclusive policies, it’s reasonable to believe that the managers of the organisation would accept responsibility for ensuring that their operations do not negatively impact the wellbeing of people throughout their supply chain (and hopefully, that their activities have positive impacts upon people). A business with these core philosophies would likely extend its reporting boundary to the outer circles. However, it needs to be accepted that, as the reporting boundary extends outwards, the costs associated with collecting, analysing and reporting information increase, constraining the extent of the reporting undertaken.

Would Brucester & Co.’s reporting boundary for reports that address social and environmental impacts be different to the reporting boundary for its financial reports? Financial reporting typically does not address the impacts of an organisation’s operation on stakeholders outside the organisation, including the impacts on owners. Financial reporting treats the organisation as an entity quite distinct from the stakeholders and environments with which it engages or affects, hence the reporting boundary does not extend far. However, once we start considering the social and environmental impacts of an organisation, we are looking at stakeholders and environments beyond the organisation, and this necessarily requires the extension of the reporting boundary. The differences between the reporting boundaries of financial reporting and those of social and environmental reporting will become clearer as we work our way through this book.

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