With respect to the sustainability development, MTR Corporation ( MTR ) does non merely accent on doing high net income with economic of graduated table, but besides supplying more occupations chances to the society and protecting the environment. The sustainability study of MTR conforms to the Global Reporting Initiative ( GRI ) and gives a position of the policies and issues of such affairs to a group of people, such as stockholders, providers, investors, and the community.
Part A
Undoubtedly, stockholders would concentrate more on the economic facet of the corporation, but this study would besides concentrate on the environmental and societal public presentation of the MTR. The undermentioned four qualitative features are good indexs to measure the MTR sustainability Report:
Relevance
“ Information in fiscal statements is relevant when it influences the economic determinations of users. It can make that both by ( a ) assisting them measure yesteryear, present, or future events associating to an entity and by ( B ) confirming or rectifying past ratings they have made. ”[ 1 ]
The study achieved relevancy by supplying prognostic value. ISBA Framework specifies that information about an economic phenomenon has prognostic value if it has value as an input to prognostic procedures used by capital suppliers to organize their ain outlooks about the hereafter. For illustration, in the MTR ‘s sustainability study, the ‘Sustainability Performance Highlights ‘ shows the information of turnover, fixed assets growing and debt equity ratio for the twelvemonth 2008 and 2009. These figures help stockholders to see how MTR is executing ; how is the future chance of MTR ; and whether there will be chance to have dividends in future.
The study stated that MTR expected to widely put in HB-LED illuming in the Stationss. This point is relevant to stockholders because this piece of information can be used to foretell future result. Stockholders can anticipate that electricity disbursal will be significantly reduced by 40 % due to the lower entire electricity ingestion and hence net income may be improved.
Beside this, the information in the sustainability study provided collateral value. ISBA Framework specifies that information about an economic phenomenon has confirmatory value if it confirms or changes the yesteryear ( or nowadays ) outlooks based on old ratings. The sustainability study included a subdivision ‘Performance against Qualitative Safety Targets ‘ . It is relevant information about riders and public safety, staff safety and contractor safety which relates to the societal facet. It achieved relevancy because is shown the budgeted mark done at the beginning of 2009 and helped stockholders to corroborate present result have achieved expected consequences.
Dependability
“ Information in fiscal statements is dependable if it is free from material mistake and prejudice and can be depended upon by users to stand for events and minutess dependably. ”[ 2 ]
MTR seeks external confidence from independent certified comptrollers ( the Pricewaterhouse Coppers ) for the sustainability study. This point involves the quality of dependability because 3rd party verified the informations in the sustainability study based on the International Standard on Assurance Engagements 3000 “ Assurance Engagements other than Audited accounts or Reviews of Historical Information ” which enhanced credibleness and transparence of the study.
The study stated that there are no staff redundancies due to fiscal crisis. This achieved the quality of dependability because it is a faithful representation with back uping. It is proved by the information in the subdivision of staff development which showed that two 1000s more employees are hired to make full up the vacancies for a undertaking alternatively of disregard the bing staff.
In add-on, since the study was prepared harmonizing to the Guidelines to Account for and Report on Greenhouse Gas Emissions and Removals for Buildings in Hong Kong, there is sensible confidence about the appraisal on nursery gas emanations of MTR Corporation. Therefore MTR ‘s revelation in this country is dependable for stockholders to trust on.
Comparison
“ Users must be able to compare the fiscal statements of an entity over clip so that they can place tendencies in its fiscal place and public presentation. Users must besides be able to compare the fiscal statements of different entities. Disclosure of accounting policies is of import for comparison. ”[ 3 ]
The information of the MTR sustainability study achieves comparison because it helps stockholders to compare over clip. For illustration, since the MTR Sustainability Report shows the precedence concern hazards and public presentation for the old ages 2007 to 2009, the stockholders are able to compare easy and place the tendency and development of specific issue, like the fiscal stableness, staff development and preparation, and long-run energy supply without renewable. This helps stockholders to do appropriate determinations about puting in MTR.
MTR besides provided cardinal environmental informations for five twelvemonth, from 2005 to 2009. It showed how the company is covering with the affairs of GHG Emissions, electricity ingestion, waste coevals and H2O use. Stockholders can so compare the consequences and determined whether MTR has adopted related policies for bettering these affairs.
The qualitative feature, comparison, besides implies that the sustainability study should be comparable with different entities. However since MTR is a monopoly in the market once it taken over the KCR, so the MTR Sustainability Report can non be comparable with corporate within same industry. It can merely be compared with other companies for specific common issues, for illustration, how different are the companies ‘ policies for covering with client service on one manus and with the purpose to environmental protection on the other manus.
Comprehensibility
“ Information should be presented in a manner that is readily apprehensible by users who have a sensible cognition of concern and economic activities and accounting and who are willing to analyze the information with sensible diligence. ”[ 4 ]
The information provided in the MTR Sustainability Report is a good piece of information because it is readily apprehensible by the users. It is presented in a concise and clear format with brief descriptions and accounts on the issue. For illustration, diagrams, saloon chart in the sustainability study demo different information about the entity in different dimensions. This benefits most of the users that they can understand all those significances even they have no deep knowledge about the company.
Besides, the MTR sustainability study contains back uping information subdivision at the last few pages. It provides many extra information which the stockholders may concern about, for illustration, future program on railroad web extensions, cardinal figures in MTR fiscal statements, and some benchmarking consequences. Besides, in the Glossary and definitions subdivision, some relevant information including reading of proficient footings is included. These involve the characteristic of comprehensibility.
However, MTR Corporation ‘s sustainability study did non accomplish comprehensibility because there is merely English version for this study. It did non take into history the demands of extended stockholders which their female parent linguistic communication is Chinese, non English. It would be hard for stockholders, particularly housewife and aged, to read the information in the study and they may non unclutter about the state of affairss of the company and besides the effects of the company policies sing economic, environmental and societal countries.
Decision
Except some of the particular points stated above, information provided in the sustainability study provided by MTR achieved the qualitative features about, particularly the characteristic of dependability. From the position of stockholders, it is a satisfied sustainability study but with some room for betterment, for illustration, at least provide stockholders a Chinese version sustainability study.
Part B
Although all the above qualitative features serve for the same intent, that is doing the fiscal information useful to users, dependability[ 5 ]seems the most of import 1 for the chief ground that it gives acknowledgment to the fiscal coverage.
Even the other qualitative features have their ain importance ; a faithful representation can non be neglected. For illustration, MTR ‘s coverage is valuable and enhances the credibleness of the statements as it complied with specific describing guidelines and industry prospective. Besides, if MTR provides faithful representation, it will intend that the study preparer has carefully considered all internal and external factors and important impacts of the affairs. Therefore, the fiscal information in the study as a whole reflects complete, just and accurate state of affairss and events of the entity which the stockholders most concern about.
Supplying faithful representation is more of import than supplying confirmatory and prognostic value. It is already plenty for an entity to supply faithful information about the entity ‘s policies and events. Something to make with prediction can be done by the possible investors with their ain analysis. If MTR provided relevant information for stockholders but this information is non based on the construct of prudence or substance over signifier, the information will be nonmeaningful ; or if MTR provides fiscal growing prediction for stockholders, it is most likely to impact their determinations and this would travel against the original thought of fiscal coverage.
Besides, dependability helps heightening the degree of truth and transparence of the information provided by describing entity. For illustration, the study of MTR enhances credibleness as it is assured by professional comptroller. Although this does non vouch the study is perfectly free from fraud, this would cut down the uncertainness about stuff deceit made by the managers. That besides helps demoing the existent consequences of company policies. Therefore, it can undertake the job of colored coverage and hence avoid possible losingss of stockholders who relied on the false information.
Furthermore, dependable information implies that the study is based on sufficient back uping paperss and figures generated internally. In this instance, the supporting paperss are seen as strong grounds for the coverage content. Besides it means that the information has been criticized by expertness or with audience which enhance credibleness of the information provided.
Comprehensibility is non of import as dependability for some investors. As the sustainability study of MTR is normally provided to two sorts of people: professional investors and nescient, such as homemaker and the aged. It is common that the ignorant do non read the study exhaustively and therefore even if there is no Chinese version of the study, comprehensibility may non be so of import to the knowing investors.
All the above grounds illustrate why dependability is the cardinal characteristic. To reason, among the qualitative features, it seems that describing entity should pay the highest attending on dependability of information. Other features are complementary to dependability merely.
Note that it is non possible ever satisfy all the qualitative features at the same clip. However, dependability retains the original intent of coverage and suits for the users ‘ demands, so it is the most of import 1. Balancing between dependability and others should be necessary merely in some state of affairss with farther professional judgement.
Overall Decision
Although there is non compulsory proviso for companies to fix sustainability study at present, there is increasing public consciousness for the affair. Global Reporting Initiative therefore is a high quality coverage pattern guideline for steering the sustainability coverage procedure which is of import to public.
In the instance of MTR Corporation, it can be found that the overall one-year study contains the characteristics of dependability, comparison, comprehensibility and relevancy as stated in Part A. Although this is rather good voluntary pattern, MTR Corporation should seek to be more considerate about the stockholders ‘ demands. It should fix a sustainability study without elements hat harm the quality of its coverage.
Note that it is non ever possible all qualitative features at the same clip. However dependability retains the original intent of describing which most suits the stockholders ‘ demands, so it is the most of import one.
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