Materiality in Global Reporting Initiative (GRI G4), and the ISO 31000 Guidelines for Risk Management.

Reporting standards worldwide are working towards convergence.  There is an interesting relationship between the 'Materiality' focus of the recently released GRI G4 Guidelines, and the ISO 31000 Standard for Risk Management.

Materiality is defined as the tolerable error in statistical sampling.  In Accounting, Materiality is that threshold amount which, if known, would change the decision of the decision maker. e.g. if a transaction amount were to change by 10% from $100 to $110, would this effect a decision?

In Auditing,  The term audit risk refers to the probability of the statements not giving a true and fair view after the audit is completed.

In Financial Auditing, Risk and Materiality must be considered together.  The more material an item the greater the audit risk.  This means, an account or transaction of large dollar size represents a significant threat to the audit if it is misstated.

Materiality in GRI may also be thought of as a 'threshold'.  But unlike financial reports, the focus is much broader - encompassing economic, social and environmental impacts.  Also, the 'decision maker' here is a much wider groups of stakeholders who impact, and are in turn impacted by, the organization.  Thus, the threshold for being a 'Material' issues in GRI should ensure inclusion of all economic, social and environmental opportunities and risks that are regarded as significant by its stakeholders

Risk in ISO 31000 is the effect of uncertainty on the ability of an organisation to meet its objectives.  It is a combination of the Causes for the occurrence of some Events, the Likelihood of such occurrence, and the Consequences of such occurrence.  Risk Management is the deliberate set of actions that an organisation takes on acknowledging these effects of uncertainty.  

Risk and Materiality seem to be joined at the hip, irrespective of the framework through which one is trying to assess organisation health. Both the GRI and the ISO 31000 standards have been put together by panel of highly qualified international experts.  However one wants to name it, following the essential tenets of these guidelines in their spirit to identify Material issues, and applying the principles of Risk Management on such issues will let organisations leverage the full potential of these frameworks, instead of merely reducing them to reporting and compliance necessities.

How and Why Monsanto is spinning the Climate Corporations founder David Friedberg

Goliath gobbles David and David suffers from the Stockholm syndrome.

author - Mo Polamar

Monsanto's billion dollar purchase of the Climate Corporation met with much criticism and accusation. In an effort to appease his employees, David wrote a letter explaining the purchase and quell suspicion. But David Friedberg of Climate Corporation did not write this letter published by the Newyorker. Why?

This letter is written by an expert at spin. This person is obviously the best in the business and that is why it is brazenly self evident. I am aware that by writing this I am a victim to the strategy where the issue in question will take a back seat and the mode of communication is intended to divert us. Below is an analysis of the letter that Mr. Friedberg wrote to his staff.

Evil:
This is a polarizing word that was first used by the Jr. Bush campaign to decisive effect. In using this word multiple times the reader is supposed to experience a certain disdain leading to gradual loss of association of the word to the topic in discussion called Monsanto.

Why Google:
The rest of us that survived this “Evil” onslaught were reminded of Google’s vision statement and thereby side tracking our rational faculty. I witnessed by mind entangled about Google’s nature of business which is far away from the reason I started reading this article.

Billion:
Why was the sale worth Billion or is it important to understand the value? Again! the intention is to spin you and keep you in the world of disbelief with a simple word, “Billion”!

What must it be worth for Monsanto:
A Billion is just a number to Monsanto in the business of dominance of global agri produce but for Climate Corporation it is a number that is so vast that I am afraid to even get into the mind of the Mr. Friedberg. Monsanto gets 2 birds here with the accounting error of a Billion dollars. one, it picks up a respected climate research organisation and the scientists that come with it and two, it is a strategic investment to make if one has a vision and we know Monsanto has one hell of a vision.

“Dear David, I wish I was your Dad”
I wish David blogged the research and the reasoning that his quasi hippie father bought into. I wonder why the mother has no role to play. The theme of making ones father happy is a eastern one and for David to adapt that line is certainly un american and forced. The assumption that I would like to come to is that there are many peers of his dad in Climate corporation that David wants to retain by placing an emotional and personal argument. It is deliberately indirect for it leads one to a space of reflection and in this space of reflection and imagination a few danglers in form of millions of dollars will hang loose like candy. I wonder why everyone of us must research and find the truth when David can simply communicate it. Instead of this long winding missive he could have replaced them with facts that he found comfort it and rationale that he invented to accept the Billion.

As said earlier he did not write this letter.

Biblical:
This purchase of an angel by Satan (I use this loosely) is one that can have biblical proportions embedded in it. Is satan tired of his demonic ways and wants to change and so buys an Angel, perhaps. Or is satan sending a message that the exodus from the angel world is begun. This exchange of demons to the angel world and vice versa is a perpetual occurrence. As far as I am concerned, since David took a convoluted path to explain a decision I will conclude that either he is got something to hide or he is in sway to the wonderful delusion that money creates. Either way, I do not want to be in David’s place. I will defer my appointment with satan till he chooses to make one, with me.