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Disclosure Frameworks

5 months ago

What disclosure frameworks does your organization use to report how value has been created? 

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  • David Chiang 5 months ago
    We don’t yet apply TCFD broadly (as its new and optional) but I’m interested in what your experience has been if you do. Check out Teck Resources for an example of what a company is doing to report climate related disclosures which are value added activities that investors are becoming more interested in when making financial decisions.
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  • David Chiang 3 months ago
    The current disclosure framework is getting a lot of consideration these days. Lots of conversation around subsequent events and going concern. And, it’s working the way it’s supposed to! Kudos to our predecessors who contributed to our financial accounting frameworks. Now, when we build new frameworks, let’s see if thise too can withstand a crisis such as this.
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  • David Chiang 4 months ago
    The IASB is proposing changes to the statement of revenue and expenses. Could result in significant general presentation and disclosures which could be useful in decision making by investors and management. There are online consults in April and May. Have I excited you yet? Maybe yes but Likely not.... and that’s precisely the issue Im raising. To discuss and eventually enact good positive change to existing frameworks or to develop new ones, how do we motivate / incentivize “mass involvement in setting frameworks”?
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  • MGGuy 5 months ago
    Speaking from the viewpoint of Classical Economics, when one discusses the “measurement and quantification of value”, one must very carefully disclose the epistemological foundation of the idea that value is quantifiable, because in the epistemology of classical economics, value is irrational. It is ordinal, not cardinal, and it is not consistent from person to person, or even from moment to moment within the same person. A person may value coffee more than beer in the morning, but then value beer more than coffee in the evening. There is no quantifiable relationship. It makes no sense to say, “Lisa prefers coffee 12 times as much as beer in the morning”. That would infer she would prefer coffee to beer before work, unless someone were to offer her an entire case of beer, in which case she would take the day off to drink. Places can change values as well. I personally prefer beer to coffee in the morning only IF I am in the Frankfurt airport, mainly because of the novelty. If I go to that airport a lot, then likely the activity will lose value for me.

    Economists worked for centuries to answer the question “what is value?” They started with the utility theory of value, thinking that things that were more useful would be more valuable, but it made no sense that gold was more valuable than the more useful iron. They later tried the labor theory of value, which was the best they could do for centuries, but they always knew it to be wrong, because diamonds had the same input costs as other gems yet were more highly valued. Eventually David Hume stated in the mid 1700’s his basic observation about humankind that would become the basis of the theory of value and the epistemological foundation of economics. Humans choose their ends irrationally, and their means rationally. Yet it would still be 100 years until Carl Menger would publish Principals of Economics, where the theory of value that still stands today is laid out.


    So, if an employee of mine were to write something claiming they had “calculated value”, that would start a long chain of discussions where I would educate them on the subject. Most of my employees seem to enjoy this sort of thing, because people are starved for real knowledge about economics.

    However, if a contractor proposed to me that they had found a way to “calculate value” then that is the only disclosure I need (the only way one can observe the value society as a whole puts on a particular good or service is by examining the market price). I do not have the time to engage in epistemology with contractors. I would listen them for a bit, just out of curiosity, but people who incorrectly seek to apply inductive reasoning to deductive fields are generally not people I am interested in doing business with. I understand that computers are making this logical fallacy popular because storage and calculation costs have fallen so dramatically, and universities love it when people believe that “scientific management” is possible, so that people keep paying for their expensive degrees. I don’t blame people for being confused, but that doesn’t make me want to do business with them.

    Basically, if one is going to seek to “calculate value”, then in the disclosures one needs to start with a counter argument to 500 years of economic thought. It is the age of the Internet, and classical economics, which has been suppressed by universities since the 1930’s, is coming back. Using the modern technique of simply going with what universities and authority figures say and ignoring all counter arguments is not going to wash for much longer. Going forward, professionals will be expected to defend the epistemological foundations of their ideas.
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    • MGGuy 5 months ago
      I had paragraph breaks for readability but this system seems to erase them.
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      • Admin Commented mmassoud 5 months ago
        Thanks a lot for sharing your insights on this topic. I'm sorry that the page didn't allow you to add paragraph breaks, we’ll check and will get back to you see if we can fix that matter. Thanks again.
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  • David Chiang 5 months ago
    Another framework is by SASB - Sustainability Accounting Standards Board. They have been working for several years to develop ESG standards for key issues for various industries. There are just under 100 companies who are early adopters as the standards were just adopted in 2018. Read how they’re doing in this Forbes article:

    https://www.forbes.com/sites/bobeccles/2020/03/22/encouraging-news-for-companies-and-investors-from-some-sasb-early-adopters/
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    • Admin Commented mmassoud 5 months ago
      This is good info David, thanks a lot for sharing. Please keep these ideas coming ...
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  • Admin Commented mmassoud 5 months ago
    Good morning everyone
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