Ethics & Governance Content. PDF

Contents Preview

17

Introduction Objectives Teaching materials

Part A: Accountants as members of a profession Public interest or self-inte self-interest? rest?

19 19

Responsible decision-making

Enlightened self-interes self-interestt Ideals of accounting—entrepreneurialism and professionalism What is a profession? What is a professional professional?? Professions—the Profession s—the traditional view and the ‘market control’ view Trust and professions Attributes of the accounting profession

22 22 23 25 26 27 27

A systematic body of theory and knowledge An extensive education process An ideal of service to the community A high degree of autonomy and independence A code of ethics for members A distinctive ethos or culture Application of professional judgment The existence of a governing body

The profession’s regulatory process

34

Accounting Professional and Ethical Standards Board The quality assurance process Professional discipline

Part B: Interaction with society Accounting roles, activiti activities es and relationship relationshipss

39 39

Relationships and roles Accounting work environments Public practice accounting Professional accountants in business Accounting in small and medium enterprises (SMEs) Public sector Not for profits (NFPs)

Social impact of accounting

48

Social impact example—depreciation and behaviour

Credibility of the profession

50

Credibility under challenge Key issues causing reduced credibility Restoring credibility to accounting

Capability considerations

54

Business leadership capabilities Technical skills, knowledge and experience Soft skills, knowledge and experience TSKE and SSKE—career perspectives Career guidance system

Review

57

Readings Reading 1.1 Reading 1.2

59 59 63

Suggested answers

65

References

71

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Introduction Objectives Teaching materials

Part A: Professional ethics

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Impact of ethical or unethical decisions Ethics—an overview Ethics in accounting—real-life scenarios The accounting work environment Applying ethics

Part B: Ethical theories

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Teleological theories (consequential) Deontological theories (duty based)  Virtue ethics Many possible outcomes

Part C: Compiled APES 110

Code of Ethics for

Professional Accountants  The public interest—ethics in practice

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An introduction to the APESB Code of Ethics

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Part A of the Code—general application of the Code The conceptual framework approach (ss. 100.6–100.11) Part B of the Code—members in public practice Part C of the Code—members in business APES GN 40 Ethical Conflicts in the Workplace—Considerations for Members in Business

Examples of ethical failures by accountants

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Part D: Ethical decision-making

122 123

Factors influencing decision-making Individual factors Organisational factors Professional factors Societal factors

Ethical decision-making models

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Philosophical model of ethical decision-making American Accounting Association model

Review

135

Suggested answers

137

References

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Ethics websites

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Introduction Objectives

Part A: Overview of corporate governance Governance

163 163

Accountants and effective governance Importance of governance Governance and performance

The need for governance

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Stewardship theory Agency theory Agency issues and costs

Components of corporate governance

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Corporations Shareholders The board Directors The role of the board Committees of the board Internal and external auditors Regulators Stakeholders Management

Part B: International perspectives on corporate governance Global push for improved governance Thirty years of corporate governance

204 204 205

International development timetable United Kingdom United States Other international approaches Australia

Part C: Codes and guidance OECD Principles of Corporate Governance UK Financial Reporting Council Corporate Governance Code ASX Principles and recommendations Alternative international approaches to governance

209 209 215 217 225

Market-based systems Relationship-based systems—European approaches Relationship-based systems—Asian approaches

Part D: Non-corporates and governance

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Governance in other sectors Family-owned business and small and medium-sized enterprises Not-for-profit organisations Public sector enterprises The significance of the non-corporate sector to the economy

Part E: Governance failures and improvements Common failure factors

244 244

Remuneration Wilful blindness Complex financial instruments

Improving corporate governance Risk management Independence of the chair of the board Continued evolution of corporate governance

246

Review

250

Appendix Appendix 3.1

251 251

Suggested answers

259

References

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Introduction Objectives

Corporate governance success factors

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Board appointment and cessation Diversity—fairness and performance Remuneration and performance International debates about remuneration levels and fairness

Operational issues

293

Employees generally Occupational health and safety Fair pay and working conditions Family and leave entitlements Ethical obligations—employee governance Trade and labour unions Audit and related regulation

Impact of the legal system on the corporation

300

The legal system The economy and the legal system

Proof, penalties and redress—criminal and civil

301

Laws leading to criminal penalties Laws with civil outcomes and civil penalties Redress compared with penalties

Competition and protecting markets for goods and services

304

Competition policy Competition and stakeholders Regulating anti-competitive conduct Abuse of market power Mergers and acquisitions Agreements between competitors—cartel conduct Unilateral restrictions on supply (exclusive dealing) Resale price maintenance Approvals procedures

Legal compliance and governance

316

Whistleblower protection

Consumers and customers

322

Caveat emptor to consumer protection Misleading conduct and representations

Unconscionable conduct Governance issues in the non-corporate sector

327 329

Government bodies Charities and not-for-profits sector

The corporation and financial markets

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Role of markets Information and the media Protecting financial markets Insider trading Market manipulation Bribery International experience of bribery and corruption Rogue trading Ponzi schemes Phoenix companies Representation The representational role of institutional investors Expanding ethics

Review

357

Suggested answers

359

References

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Introduction Objectives Teaching materials

Overview and introduction to key elements

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The evolution of corporate accountability History of CSR reporting Environmental sustainability Social sustainability Economic sustainability Linking environmental, economic and social sustainability The board’s responsibility for sustainability of the organisation and organisational initiatives Introduction to the key elements

Drivers of increased business accountability

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The importance of climate change and its relevance to CSR reporting The Global Financial Crisis (GFC) and the recognition of market and ethical failures: a case for accountability and transparency Other incentives tied to maximising the value of the organisation and shareholder wealth Corporate identity and accountability The shareholder primacy perspective Externalities and potential government intervention

Linking to ethical theories

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Enlightened self-interest Stakeholder theory Organisational legitimacy Institutional theory Summary

What can be measured and reported?

408

What is measurable?

Limitations of traditional financial reporting

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Scope of reporting Elements of financial reporting The practice of discounting future cash flows Reliable measurement and probability Focus on short-term results The entity assumption

Reporting and guidelines

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What is required? (Mandatory reporting) Guidelines and non-mandatory reporting Other initiatives

Current reporting practice

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Surveys of current reporting practice Examples of best practice and innovative reporting

International initiatives on climate change

444

Climate change accounting techniques Accounting for the levels of emissions

Current developments Socially responsible investments Natural capital accounting

451

Review

455

Readings Reading 5.1 Reading 5.2 Reading 5.3

457 457 459 460

Suggested answers

463

References

475

Websites monitoring progress