exam

Module Module Name pages

weighting

1 Accounting and Society 15% 37

2 Ethics 20% 68
3 Governance Concepts 25% 88
4 Governance in Practice 25% 78
5 Corporate Accountability 15% 67
338
M Key words Short explanation Page
M1 AASB Australian Accounting Standards Board 4
M1 Accountants' key professional 24
relationships
M1 Accounting work environments 25
M1 Altruism postive actions that bring no benefit to an individual and 3
may even be at their own expense
M1 APES 205 Conformity with accounting standards 19
M1 APES 210 Confirmity with auditing and assurance standards 19
M1 APES 320 Quality Control for Firms 19
M1 APESB Accounting Professional and Ethical Standards Board 5

M1 APESB (members) CPA australia, CAANAZ, and the IPA 18

M1 APESB (roles) 18
M1 APES 110 (APESB 2018) 15
M1 ASIC Australian Securities and Investments Commission 5
M1 ASX Australian Stock Exchange 4
M1 ATO Autralian Taxation Office 4
M1 Attributes of profession 8
M1 AUASB Auditing and Assurance Standards Board 5
M1 Audit deficiencies 33
M1 Australian Government's Financial 31
System Inquiry Final Report (2014)
M1 Autonomy Implies a self-principled, ethical and responsible approach 14
by the member
M1 Buisness leadership capabilities TSKE and SSKE 37
M1 CAANZ Chartered Accountants Australia and New Zealand 5
M1 Capability considerations 37
M1 Community service Offer their time and skills free of charge to the community 13

M1 Competition and Consumer Act (2010) 5

M1 Confirmity with standards APES 205 and APES 210 19

M1 Constitution of CPA Australia (Types of 21
compliant)
M1 Co-regulation regulation shared between the profession and external 10
sources. It promotes a consistently high level of
professional practice in the public interest.
M1 Corporations Act (2001) 5
M1 CPA australia - regulatory structures 15
M1 Creative accounting 34
M1 Creditibility of the profession 34

M1 Depreciation and behaviour (higher 32

levels)
M1 Depreciation and behaviour (lower levels) 33

M1 Disciplinary tribunal 21
M1 Doing well by doing good 6

M1 -Accounting and Society 2 of 60

M Key words Short explanation Page
M1 Enlightened self-interest Concepts by Lee (1995) 6
M1 Ethos or culture 16
M1 Extenstive Education process Accumulation of knowledge and experience through 13
mentoring, professional development and continuing
education programs
M1 Extra-legal Regulations in addition to what is prescribed in statute law 10
or common law

M1 FASEA Financial Adviser Standards and Ethics Authority 31

M1 Financial accounting distortions To understand the risk and true nature of complex 35
financial instruments
M1 Finanical Adviser 31

M1 Force of law standards Corporations Act 37

M1 FRC A government body to which AASB and AUASB reports 36

directly. FRC set up to oversee the effectiveness of
financial reporting

M1 Governing body of a profession (roles) 17

M1 Ideal of service to the community Wilensky - the pivot around which the moral claims to 13
professional status revolves

M1 Ideals of accounting professionalism 4 Es: Education, Ethics, Expertise, and Enterpreneurship 6

(Carnegie and Napier 2010)
M1 IFRS 5
M1 Individual member autonomy The concepts of professional judgement, adherence to a 14
code of professional conduct and professional
independence

M1 IPA Institutue of Public Accountants 5

M1 Issues causing reduced creditbility 34
M1 Key judgements of auditor 17
M1 Lack of auditor independence 35
M1 Market control view More critical and suggests that professional accountants 11
are self-intereted and less concerned with the broader
public interest than with their own careers

M1 Mid-sized enterprises The crucial roles of professional accountants in business in 29

Mid-sized Enterprises (IFAC 2008)
M1 Monopoly control Members of the profession control is allowed to work in 8
the industry
M1 MPC General Manager Professional Conduct of CPA Australia 21

M1 Multi-level regulatory framework 1. Standard setting 2. Conformity with standards 3. 19

Practice reviews 4. Accounting firm regulation
M1 NFP Not-for-profit 31
M1 OAIC Office of Australian Information Commissioner 5
M1 OPT One Person Tribunal 21

M1 -Accounting and Society 3 of 60

M Key words Short explanation Page
M1 Other people's money 31
M1 PAIB Professional Accountants in Business 27-28
M1 PAIB Committee table 1.6 29
M1 PAO Professional Accounting Orgranisation 5
M1 PCO Professional Conduct Officer 21
M1 Penalties and Appeals 21
M1 Philosphical notion of a social contract Any profession that abondons the service ideal will very 13
quickly lose the moral claim to professional status
(Wilensky - 1964)

M1 Poor audit quality the perceived inability of auditors to identify a company in 35

distress prior to collapse
M1 Privacy Act (1998) 5
M1 Private and Business Sector Environment PAIB in Large Businesses; PAIB in SMEs 27

M1 Professional Obligations and benefits 1

M1 Professional A person who has a significant level of training and a high 10
level of competence and skills in a specific area of
knowledge

M1 Professional discipline 20-21

M1 Professional judgement 16-17
M1 Professional judgement - situations Question 1.5 373
M1 Public practice environment (PPE) 25
M1 Public practice roles table 1.4 26
M1 Pursuit of excellence Performance of the professional 13
M1 Quality assurance process 19
M1 Regulation of member conduct 20
M1 Responsible decision making Governance, accountability, ethics 3
M1 Restoring creditbility to accounting 36
M1 Self-regulation Professions are given permission to provide services to the 9, 14
public through some regulatory process

M1 Service ideal 9
M1 Service ideal (3 perspectives) Wellbeing of society, pursuit of excellence, community 13
service
M1 SMPs - External advisers to SMEs Small and medium practices 26-27
M1 SMSF Self-managed superannuation funds 6
M1 Social contract Society grants the professions monopoly power over 13
professional affairs and the power to use this power as
they see fit, as long as the power is used iin the public
interest

M1 Social contract bewtween profession and Exhance between promises and benefits 9
society
M1 Social impact of accounting 32
M1 SOEs - Public Sector Environment State-owned enterprises 30
M1 Soft skills, knowledge and experience 38
(SSKE)
M1 Standard setting FRC with oversight responsibility for the AASB 19
M1 Symbols of a profession 16
M1 System of Qualtiy Control (elements) 19

M1 -Accounting and Society 4 of 60

M Key words Short explanation Page
M1 Systematic body of theory and knowledge a profesion lies in the element of superior skill. Supported 12
by a well-founded body of knowledge, which outlines
standard requirments to ensure an equivalent level of
competence and knowledge for all its members

M1 Systematic framework of principles Governance, accountability, ethics 3

M1 Technical skills, knowledge and 37

experience (TSKE)
M1 TPB Tax Practitioners Board 10-May
M1 Traditional view accounting profession as demonstrating a range of 11
attributes that are focused on servicing society
M1 Wellbeing of society Preparing and attesting information that ensures the 13
efficient and orderly funcationing

M1 -Accounting and Society 5 of 60

M Key words Short explanation Page
M2 Ethics What is right and wrong 43
M2 Professional ethics the application of ethical principles or framework to act in 43
the intersts of those who reply on their serices as in the
best interest of the public

M2 Ethical responsibilites of PA 43
M2 APES 110 Code of Ethics for Professional Accountants 43
M2 Roles of members APES 110 (para 200.2) 43
M2 ASIC and accounting standards ASIC conducts financial reporting surveillance and seeks 44
financial statements amendments from entities that failed
to properly apply a particular accounting standard

M2 Ethical surveys (Raymond Baumhart) What does ethics mean to you? 44

M2 Laws // Ethics Complying with the law does not mean you are acting 45
ethically
M2 Kidder Philosophy aka Ethical dilemna 1. Trust // Loyalty 2. Individual // Group 3. ST // LT 4. 45
Justice // Mercy
M2 Ethical issues (Most frequent) Misleading reporting (40.88%), Fraud/tax evasion 46
(13.87%), Lack of transparency in accounting decisions
(11.68%)

M2 Reasons for misconduct (Ethics) Pressure from client (21.43%), conflicts of interest 47
(18.91%), pressure from corporate management or BOD
(17.65%)

M2 Accountant responses to ethical Resisting pressure/said no (29.66%), seeking of advice 47

challenges (16.35%), educating fellow professionals (14.07), educating
clients (11.79%)

M2 Ethical theories Different cultural traditions, different principles and 51

backgrounds
M2 Ethical theories - Western tradition Moral philosophy - Plato, Aristotle, Kant, Rawls, Jonas 51
World religions - Christanity, Judaism, Islam

M2 Ethical theories - Eastern tradition Moral philosophy - Confucianism, Tagore 51

World religions - Buddhism, Hinduism, Sikhism, Shinto,
Daoism and Jainism

M2 Normative theories What people should do. Principles that distinguish right 51
from wrong by establishing a norm or standard of correct
behaviour that should be followed at all times.

M2 Normative theories - Two categories 1. Ethics of conduct 2. Ethics of character 51

M2 Ethics of character (Normative) Also called "Virtue ethics" 52
M2 Ethics of conduct (Normative) 1. Teleological (or consequential) 2. Deontological (or non- 52
consequential or duty-based)
M2 Teleological (Consequential) The need for individuals and groups to consider the 52
consequences of actions
1. Egoism 2. Utilitarianism

M2 Deontological (Duty-based) 1. Rights 2. Justice 3. Virtue 52

M2 Egoism (Teleological) + the best consequences for the individual taking the 52
action/making the decision
+ Self-interest
+ 1. Ethical egoism 2. Restricted egoism

M2 Utilitararianism (Teleological) Focuses on the greatest good for the greatest number of 52
people, not necessarily, the person making the decision.

M1 -Accounting and Society 6 of 60

M Key words Short explanation Page
M2 Deontonlogical theories The need of individuals and groups to consider the intent 52
of actions. (1) Rights (2) Justice
M2 Rights (Deontological) Taking actions that intend to recongise the rights of the 52
parties involved
M2 Justice (Deontological) Taking actions that intend to be fair and equitable to the 52
parties involved
M2 Ethical egoism + Evaluate the rightness of a proposed action by choosing 53
a course of action that maximises the net positive benefits
to themselves

M2 Happiness A feeling of joy or delight, satisfaction or peace of mind, 53

and the sense of achieving one's goals or desires

M2 Restricted egoism + Self-interest is not allowed to function unbridled by the 54

law or the disctates of what is considered fair competition
+ Can be seen as an ethically more acceptable form of
M2 Utilitarianism principle (5 basic steps) egosim. 54

M2 Utilitarianism principle (Main limitations) 55

M2 Ethical egoism (inc restricted egosim) + Normative theory, proposes how one ought to behave 55
+ Mix net positive benefits to oneself
+ Pursuit of self-interest should not come at the expenses
of others; Pursuit of happiness is constrained by the law
and the conventions of fair play

M2 Utilitariansim + Normative theory, proposes how one ought to behave 55

+ Max net postive benefits to the greatest no. of people
+ Produces the best overall consequences for everyone
concerned. Greatest happiness rule may come at the cost
of a minority.

M2 Deontological (Duty-based) Intention behind the act itself is more important than the 56
results of the act
M2 Immanuel Kant Persons of goodwill are motivated by a sense of duty to do 56
the right thing
M2 Motive 56
M2 Rights 56
M2 Legal and contractual rights 56
M2 Human rights 57
M2 Justice 57
M2 Equality principle 57
M2 Merit principle 57
M2 Needs principle 57

M1 -Accounting and Society 7 of 60

M Key words Short explanation Page
M2 Virtue ethics 58

M2 Virtues attitudes, dispositions or traits of character that enable us 58

to do what is ethically desirable and which through
consistent practice, become habitual acts

M2 Virtues Courage, courtesy, compassion, generosity, fairness, 58

fidelity, friendliness, honesty, integrity, prudence and self-
control

M2 Virtue ethics - limitations 58

M2 Moral agent a decision maker who has the ability to make moral 58
judgements based on some notion of right and wrong and
is held accountable for these actions

M2 Moral agent- accountants A class of professional that may be regarded as being 58

moral agents.
M2 APES 110 60
M2 NOCLAR Non-compliance with laws and regulations 60
M2 APESB pronuncements - structures 61
M2 APES 300 series 61
M2 APES 400 series 61
M2 APES 200 series 61
M2 APES GN 30 series 61
M2 APES GN 40 series 61
M2 APES GN 20 series 61
M2 Public interest 61
M2 Professional accountants - responsibilities 61

M2 Accountant's primary duty To the public 62

M2 Code of ethics (APES 110) 62
M2 Fundamental principles (Code of ethics) 63

M2 Integrity 63
M2 Objectivity 64
M2 Professional competence and due care 64

M2 Confidentiality 65
M2 Professional behaviour 65
M2 Conceptual framework 68
M2 Rule-based codes 68
M2 Threats 69
M2 Threats - evaluating 71
M2 Threats - addressing 73
M2 Safeguards 73
M2 Conflicts of interests 74
M2 Conflicts of interests - safeguards 75
M2 Self-interest threats 77
M2 Soft-dollar benefits 78
M2 APES 230 Financial planning services 78
M2 Inducements, inc gifts and hospitality 79

M1 -Accounting and Society 8 of 60

M Key words Short explanation Page
M2 Inducements - safeguards 80
M2 NOCLAR -non compliance 81
M2 NOCLAR regime 82
M2 Preparation and presentation of info 84
M2 Reporting with integrity 85
M2 Sufficient expertise 85
M2 Pressure to breach fundamental 86
principles
M2 Professional appointments - public 86
practice
M2 Communication with predecessor before 87
accepting a professional appointment

M2 Referrals 87
M2 Second opinions 87
M2 Independence 88
M2 Special purpose financial statements 89

M2 Audit and review engagements 90

M2 Independence checklists for employee 91

M2 Audit and review engagements - special 91

areas of concern
M2 Provision of non-assurance services to an 93
audit clients
M2 Assurance engagements 93
M2 Assurance engagements - threats and 93
safeguards
M2 Ethical decision making 99
M2 Individual decision - influences 99
M2 Decision making - factors influencing 100

M2 Individual factors - decision making 100

M2 Organisational factors - decision making 101

M2 Professional factors - decision making 103

M2 Societal factors -decision making 104

M2 Ethical relativisim 104
M2 Cultural relativism - cultural diversity 105

M2 Heuristics 105
M2 Ethical decision-making models 105
M2 APES GN 40 Ethical conflicts in the workplace - considerations for 106
accountants in business
M2 Ethical decision making- conceptual 106
framework
M2 Philosphical model of ethical decision 107
making

M1 -Accounting and Society 9 of 60

M Key words Short explanation Page
M2 AAA - American accounting association 1. What are the facts of the case? 108
model 2. What are the ethical issues in the case?
3. What are the norms, principles and values related to the
case?
4. What are the alternative courses of action?
5. What is the best course of action that is consistent with
the norms, principles, and values identified in Step 3?
6. What are the consequences of each possible course of
action?
7. What is the decision?

M1 -Accounting and Society 10 of 60

M Key words Short explanation Page
M3 Accounting in governance process To improve decision making and achieve goals and 140
objectives while maintaining and strengthening controls.

M3 ACNC governance standards 1. Purpose and not-for-profit nature 189

2. Accountability to members
3. Compliance with Australian laws
M3 ACNC guidance 188
M3 ACNC's External conduct standards 1. Activities and control of resources (including funds) 189
2. Annual review of overseas activities and record-keeping
3. Anti-fraud and anti-corruption
4. Protection of vulnerable individuals

M3 Agency costs + Monitoring costs 133

+ Bonding costs
+ Residual loss

M3 Agency issues + Info asymmerty 133

+ Poor communication
+ Innocent and unintended self-interest behaviour
+ Delibrate legal self-intersted behaviour
+ Illegal self-interested behaviour by agents

M3 Anglo-American approach Primarily focus on the benefits of shareholders.However, 131

failure by management to focus on the derivative duties of
other stakeholders would result in negative consequences
for shareholders. Therefore, management also has the
direct duty to other stakeholders.

M3 Appointment of directors 129

M3 ASBFEO report (Australian Small Business 195
and Family Enterprise Businesess)

M3 ASX Corporate Governance Principles and Established by CG Council, which comprises 160
Recommendations representatives from business, investment and
shareholder groups, aimed to develop a principles-based
framework

M3 ASX listing rules (principles and + Lay solid foundations for management and oversight 178
recommendations) + Structure the board to be effective and add value
+ Instil a culture of acting lawfully, ethically, and
responsibly
+ Safeguard the integrity of corporate reports
+ Make timely and balanced disclosure
+ Respect the rights and security holders
+ Recognise and mange risk
+ Remunerate fairly and responsibly

M3 Audit committee The AC comprises only NED with a majority being 147
independent. Communication with external auditors at a
formal level will take place without CFO

M3 Audit committee (Benefits) 148

M3 Audit committee (limitations) 148
M3 Auditors 150

M3 -Governance Concepts 11 of 60
M Key words Short explanation Page
M3 Avoid Conflict of Interest + Appearance and in fact (in mind) Webina
+ Bribes and secret commissions r
+ Abusing expense claims
+ Taking advantage of confidential info

M3 Best interests of the corporation (Act in + Good faith = Integrity and honesty 120
the best interests) + No fraud or collusion = must not be self-interested

M3 Board 144
M3 Board (primary functions) + Providing accountability (Outward looking, Past/Present 145
focused)
+ Stretegy formula (Outward looking, Future focused)
+ Monitoring supervising (Inward looking, Past/Present
focused)
+ Policy Making (Inward looking/ Future focused)

M3 Board (responsibilities) + Monitoring and supervising 146

+ Providing accountability
+ Strategy formulation
+ Policy making

M3 Board chair To lead the board of directors, in determining the board's 144
agenda, obtaining contribution from other members of the
board; and monitoring and assessing the performance of
the directors. The chair to be independent.

M3 Board powers Cannot manage the corporation's day-to-day businses 130

M3 Board structure, roles and responsibilities 164

M3 Bonding costs + Incurred by agents 133

+ Costs to demonstrate to the principal that they are goal
congruent.
+ Voluntary restrictions on the agent's behaviour

M3 Business judgement rule (Safe Harbour Protection for directors aganist personal liability 122
rule) + Make the judgement in good faith
+ not have a material personal interest in the subject
matter of the judgement
+ Judgement to the extent they reasonably believe to be
appropriate
+ the judgement is in the best interests of the corporation
Critera: 1. Good faith 2. No conflict of interest 3.
Appropriately informed 4. Third person test

M3 Business size by employement + Small (0-19 employees) 195

+ Medium (2-199 employees)
+ Large (200+ employees)

M3 Care and diligence The knowledge and experience of the director might be 122
expected to have done in the circumstances if he was
acting on his own behalf

M3 CEO powers Two roles - board member and manager. Agency 131
relationship with shareholders
M3 CLERP Act 2004 - Corporate Law + Audit reform 161
Economic Reform Program (Cwlth) + Finanical reporting

M3 -Governance Concepts 12 of 60
M Key words Short explanation Page
M3 Committees of the board + Effectiveness of the board 146-147
+ Particularly NEDs
+ Distibution of workload to allow a more detailed
consideration to be given to important matters
+ Four committees: nomination, remuneration, audit, risk
management

M3 Company secreatary 128

M3 Conflict of interest (avoid COI) + respect to all types of agency relationship 120
+ Agents: to be aware of conflicts and must manage them
correctly
+ Must not involved in decisions where COI are identified

M3 Conformance Focus on complying with rules, codes and regulations 139

M3 Consumers (Stakeholder) 155

M3 Continuous disclosure + High quality disclosures on the financial and operating 122
results of the company.
+ Failure to disclose material issues >> signficant fines and
banning of directors
+ Disclosure as a vital basis for the effective operation of
all the other mechanisms of governance and investment

M3 Corporate goverance + to create market confidence and business integrity. 139

+ to create the best possible conditions to allocate to its
most effective use.
+ to enable companies to access financing from a much
larger pool of investors (OECD)

M3 Corporate governance events and Financial scandals 159

responses
M3 Corporate governance frameworks + External governance 141
+ Internal governance
+ External auditor

M3 Corporate governance practices in US + Boards are dominated by the company management 163
+ Chair and CEO are to be the same person
+ Established committes to limt the powers of the CEOs
+ More active role played by institutional investors.
+ Issues with CG in US: (1) Shareholders still possess
limited power to appoint or remove directors due to
widely dispersed share ownership (2) administrative
hurdles

M3 Corporate social responsibility theory Engage in activities and promote causes and initiatives that 136
ar seen providing a social benefit to the community

M3 Corporation Separate legal entity >> Limited liability >>> Perpetual

sucession
M3 Differing time horizons Only have an interst in the firm for the duration of their 134
employment. Time frame is an important consideration
when designing remuneration schemes.

M3 -Governance Concepts 13 of 60
M Key words Short explanation Page
M3 Director independence All independent directors must be NED but not all NEDs 127
are independent. ASX Corporate Goverance Council
Recommendations (2019) provide the commentary on
indepence and directors

M3 Directors (key duties) + avoid conflicts of interest 119

+ act in good faith in the best interest of the company
+ power for proper purpose
+ retain discretionary powers and avoid delegating
director's responsibility
+ act with care and due diligence
+ remain informed
+ prevent insolvent trading

M3 Disclosure 165
M3 Discretionary powers (Do not delegate + Can delegate a range of functions 121
responsibility) + Where a director has delegated powers to anybody, the
director remains responsible for the director had exercised
the power themselves
+ To escape director's responsibilies, delegate needs to be
properly appointed by boards using professionally
acceptable prcedures. The board must carry out ongoing
oversight.
+ A word of caution is required
+ Non-delegable functions: Any major matters affecting
the finances of the corporation

M3 Distinctions among EU (political, legal and + Company law 164-165

regulatory) + Employee representation
+ Stakeholder issues
+ Shareholder rights and participation machanics
+ Board structure, roles and responsibilities
+ Supervisory body independence and leadership
+ Disclosure

M3 Empire building Increase power and influence in a company for reasons 134
associated with personal satisfaction
M3 Employee representation + Embedded in law (Austria, Denmark, Germany, 164
Luxembourg, Sweden)
+ Company articles: Employees of companies of a certain
size have the right to elect some members of the
M3 Employees (Stakeholder) supervisory board (France, Finland) 154
M3 Excessive non-financial benefits Over-consumpton of perquisites (perks) 134
M3 Executive directors Work for the company and are never independent 127
M3 External governance + Reporting and accountability to owners and boards 141
+ Review and recommend to management
M3 External governance + Governments- sets the legal and regulatory environment
+ Stakeholders - may set specific requirements
+ Industry/profesional bodies - accounting standards,
M3 Family-based insider system (CG) industry etc 168

M3 Family-owned business and SMEs 187

M3 Fictional entities (Distinct advantages) 1. Separate legal entity distinct from its owner 2. Limited 116
liability 3. Perpetual succession

M3 -Governance Concepts 14 of 60
M Key words Short explanation Page
M3 Flex commissions The lender fixed a base rate of interest that would be 143
changed under the loan agreement. If the dealer could
persuade the borrower to agree to pay a higher rate the
dealer received a large part of the interest payable over
and above the base rate.

M3 France - Relationship-based system 165

M3 German business sector (Relationship 165
based)
M3 Global awareness on CG 161
M3 Global push for improved governance 158

M3 Governance Governance = Conformance + Performance 139

M3 Governance systems + Market-based system - US, UK, AU, NZ 161
+ Relationship-based system - Continential Europe, Asia

M3 Independent non-directors Are free from influences that cause bias and exhibit the 127
characteristics of independence
M3 Independent of directors + not a previous employee (5 years) Webina
+ no material business relationships within 3 years r
+ no additional remuneration | share options|
performance related scheme
+ no close family ties
+ no cross-directorships
+ not representing a significant shareholder (FRC code)

M3 India (Relationship based) 167

M3 Individual shareholders ASA: Australian Shareholders' Association: the collective 142
interests of smaller shareholders
M3 Information asymmetry The differential of knowledge or information that two 394
parties to a transaction process. Where info asymmetry
exists, there is potential for 1) poor decisions being made
2) sneaky risky actions being taken

M3 Insolvent trading As per Company Act 123

+ A company must pay its debt. In solvency, must not
allow to incurr further debts
+ Serious penalites to directors, if they allow a company to
trade while insolvent

M3 Institutional shareholders Insurance companies, superanuation funds, investment 143

trusts and professional investment fund managers

M3 Institutional shareholders + Considerable growth in financial assets of Institutional 162

investors
+ Dominant owners of equity in UK and US
+ Securing max. return, balancing risk and return over time
+ More actively engaged nowadays

M3 -Governance Concepts 15 of 60
M Key words Short explanation Page
M3 Internal governance + Owners/Members - appointment and review boards; 141
confirm appointment of external auditor
+ Boards - reporting and accountabililty to owners;
recommend appointment of external auditor;
appointment and review of management team
+ Management led by a CEO - Reporting and accountability
to boards

M3 Japan (Relationship based) 167

M3 Key features of corporations 116
M3 Large proprietary company (Compliance) + Min 1 director (1 resident in AU) 118
+ Company secretary (optional)
+ Audit report: Yes but ASIC may provide relief in
appropriate causes
+ Financial records: electronic or convertible to hard copy.
Min 7 years for record management.
+ Ongoing disclosure: No
+ Reporting requirement: Annual financial report and
director report

M3 Listed public company (compliance) + Min 3 directors (2 residents in AU) 118

+ Company secretary (one who resides in AU)
+ Audit report: Yes but including independence
requirements
+ Financial records: electronic or convertible to hard copy.
Min 7 years for record management.
+ Ongoing disclosure: Yes (ASX listing rules)
+ Reporting requirement: Annual and half-year financial
report and directors report, to be presented at AGM and
to be submitted to ASIC.
ASX listing requirements: Quarterly runs

M3 Management (Stakeholder) 155

M3 Market sensitive information 123
M3 Market-based systems - Cons + overly dominant and overpaid CEOs 163,
+ weak BOD 396
+ failure in reporting and transparency
+ short-term investment
+ instabillity of governance and investment
+ cyclical volatility in a dynamic economy

M3 Market-based systems - Pros + dispersed ownership and strong institutional investors 163,
+ primary of SS interests in company law 396
+ protection of minority SS interests in law and regulation
+ strignent requirements for disclosure
+ fluid capital investment in dynamic economy
competitive performance

M3 -Governance Concepts 16 of 60
M Key words Short explanation Page
M3 Market-based systems (US and UK) + Widespread equity ownership 162
+ Shareholder interests
+ An emphasis on minority shareholder protection
+ Growing institutional investors: insurance co, pension
funds, mutual funds
+ disclosure based, to access a reliable and adequate flow
of info to make informed investment decisions
+ the role of the banks is less central
+ SS have the right to use their voting system to select the
board, appoint an external auditor, etc
+ Strategies when unhappy with board or management:
private meetings, voting aganist resolutions, and applying
public pressure using the media.

M3 Monitoring costs + Incurred by principals 133

+ Compulsory: Costs relating to annual reporting and
external auditing
+ Others are discretionary

M3 Moral hazard The situation where one party takes action knowing that 394
other party will bear the risk and any associated costs

M3 Napoleomic code France 164

M3 NFP - Not-for-profit organisations 188
M3 Nomination committee Recommending the succession procedures within an 147
organization. To identify and select people who will
replace senior staff when they leave.

M3 Nominee directors Appointed onto the board to represent a major 121

shareholder.
M3 Non-executive directors Do not work in the organisation but are not independent 127
because of relationship
M3 NPF (divesity) 190
M3 OECD principles + Ensuring basis for an effective CG framework 171
+ Rights and equitable treatment of shareholders and key
ownership functions
+ Institutional investors, stock markets and other
intermediaries
+ the role of stakeholders in CG
+ Disclosure and transparency
+ responsibilities of the board

M3 OECD principles - Public sector + Accountability 194

+ Transparency/openness
+ Integrity
+ Stewardship
+ Efficiency
+ Leadership

M3 Operation management 156

M3 Other governance theories + Stakeholder theory 135
+ Transaction cost theory
+ CSR

M3 -Governance Concepts 17 of 60
M Key words Short explanation Page
M3 Personal accountability Organisations need an appropriate system of checks and 140
balances in the form of a corporate governance framework

M3 Personal fiefdoms Where personal greed is put ahead of the interests of 140
shareholders and other stakeholders
M3 Powers for proper purpose 2 main areas: 120
+ act within power
+ do not abuse power

M3 Principles-based regulation 151

M3 Proprietary companies (Private unlisted + most common registered company type in AU. 117;
companies) + No more than 50 non-employee members. 392
+ Consolidated: gross operating revenue <25 m; net assets:
not more than $12.5 m
+ Require disclosure to investors, for offering for issue or
sale to the public.
+ issue shares to existing shareholders, employees,
subsidiary companies.
+ issue shares or corporate bonds: not more than $2 m, in
any 12-month period, to not more than 20 people.
+ ASIC may force it to change to a public company.
+ Subdivided into large and small proprietary companies

M3 Public companies + more than 50 members 117

+ may issue securities to the public
+ may apply to list on ASX

M3 Public company (Compliance) + Min 3 directors (2 residents in AU) 118

+ Company secretary (one who resides in AU)
+ Audit report: Yes but including independence
requirements
+ Financial records: electronic or convertible to hard copy.
Min 7 years for record management.
+ Ongoing disclosure: No
+ Reporting requirement: Annual financial report and
director report and auditor's report to be presented at
AGM

M3 Public entity - key parties + A minster 194

+ A department
+ A public entity board and NED
+ A board chair
+ Board committees
+ A board secretary
+ A CEO
+ A CFO or Chief Accounting Officer
+ Public entry managers and other employees
+ Other stakholders

M3 Public sector (Guidance) 193

M3 Public sector (Uniqueness) 192
M3 Public sector enterprises 191
M3 Ramsay report Independence of external auditors and made 160
recommendations for change

M3 -Governance Concepts 18 of 60
M Key words Short explanation Page
M3 Regulators 150
M3 Relationship-based systems (Asian) 166
M3 Relationship-based systems (EU) + diversity in corporate goverance practices and structure 164
+ emphasise cooperative relationships and consensus
+ Resilent and enduring
+ Aka Insider system: representation of interests on the
BOD
+ More diverse groups of stakeholders on the board:
workers, customers, banks, etc.
+ Stable investment and cross-shareholdings. Hostile
takeovers rarely occuring
+ Ownership and control by cohesive groups of insiders
+ Less agency problems
+ Longstanding relationships with banks. High debt-equity
ratios
+ More selective exchange of informatio among insiders,
rather than public disclosure

M3 Remuneration committee Setting appropriate remuneration policies for directors and 147
executives. The executives must not involve in making
remuneration policy.

M3 Remuneration of directors 129

M3 Residual loss + Incurred by principals 134
+ No matter how good monitoring efforts, agent makes
decisions that are not consistent with the principal's
interests
+ Costs such as (1) excessive non-financial benefits (2)
empire building (3) risk avoidance (4) differing time
horizons

M3 Residual loss + Excessive benefits 134

+ Empire building
+ Risk avoidance
+ Time horizons

M3 Responsible persons (duties) + Act with reasonable care and diligence 189
+ Act honestly in the best interests of the charity and for
its purpose
+ Not misuse the position of responsible person
+ Not to misuse info obtained in performing duties
+ Disclose any actual or perceived conflict of interests
+ Ensure that the charity's financial affairs are managed
responsibly
+ Not allow a charity to operate while insolvent

M3 Risk avoidance Little incentives for directors to engage in risk investments 134

M3 Risk management committee 150

M3 -Governance Concepts 19 of 60
M Key words Short explanation Page
M3 Roman law Many EU countries 164

M3 Rules-based regulation 151

M3 Safe harbour provision The provision: which protect directors in their attempt to 124
trade out of insolvency (Corporations Act)
M3 Shareholder activism (2 reasons) + The global aging population leads to demand adequate 158
financing of retirement
+ Growth in small shareholder ownership of major
M3 Shareholder powers +corporations
Power to appoint directors
internationally 129
+ Approve director remuneration
M3 Shareholder rights and participation 164
mechanics

M3 Shareholders (different types) + Individual shareholders 141

+ Institutional shareholders

M3 Small proprietary company (Compliance) + Min 1 director (1 resident in AU) 118

+ Company secretary (optional)
+ Audit report (only in certain circumstances)
+ Financial records: electronic or convertible to hard copy.
Min 7 years for record management.
+ Ongoing disclosure: No
+ Reporting requirement: Annual financial report and
director report (only in some circumstances). No need for
IAS compliance

M3 SME sector 195

M3 Stakeholder concept 152

M3 Stakeholder theory Managers in an entity mange their relationships with all of 135
their internal and external stateholders.
M3 Stakeholders issues Broader range of stakeholder interests // The ownership 164
rights of shareholders
M3 Stateholder map 152
M3 Stewardship theories + Directors are appointed as 'stewards'. 132
+ Carefully look after the resources they have been trusted
with.
+ Will naturally act favourable on behalf of the owners
(control their own self-interest)
+ Directors are professionals able to demonstrate their
commitment to the company in a virtuous and capable
way.

M3 Supervisory body independence and 165

leadership

M3 -Governance Concepts 20 of 60
M Key words Short explanation Page
M3 Suppliers ande lenders (Stakeholder) 154

M3 Theories of corporate goverance + Stewardship theories 132

+ Agency theories
M3 Transaction cost theory + Sometimes referred to as transaction cost economics. 135
+ Deals with the notion of why firms or entities exist in
markets and what the boundaries are within a
M3 Tricker (1984) - Governance and The management role is to run the business efficiently and
marketplace 140
performance effectively while the governance role is to give strategic
direction to the enterprise as well as ensuring
accountability.

M3 Types of corporations 1. Proprietary (Small private or Large private) 2. Public 116-117

(listed or unlisted)

M3 UK FRC Corporate Code + Workforce and stakeholders 176-177

+ Culture
+ Succession and diversity
+ Remuneration

M3 UK FRC Corporate Code (Principles and Category 1 - Board leadership and company purpose 197-204
provisions) Category 2 - Division of responsibilities
Category 3 - Composition, succession and evaluation
Category 4 - Audit, risk and internal control
M3 UNCTAD - Financial disclosure Category
United 5 - Remuneration
Nations Conference on Trade and Development 122
+ financial reporting standards required for corporate
reporting are contained in the GAAP
M3 Victorian public sector accountability A series of stakeholders involved in the running of any 194
framework (VPSC) individual public entity.
Parliament > Minister > Portfolio Dept. > Portfolio Entities

M3 Voluntary administration (liquidator) To have an independent and suitably qualified person take 124
the control of the company so that its affairs can be wound
up in an orderly and fair way for the benefits of its
creditors

M3 -Governance Concepts 21 of 60
M Key words Short explanation Page

+ abouse of market power

+ mergers and acquisitions
M4 Anti-competitive behaviour + agreements between competitors (cartel conduct) 250
+ unilateral restrictions on supply (exculsive dealings)
+ resale price maintenance (vertical price controls)

M4 Approvals procedures 257

M4 Audit quality and audit regulation 227

M4 Auditing the financial statements 225

The court requires each party to argue its case as strongly
as possible and the person with the case that is
M4 Balance of probabilities 239
determined to be stronger decision to the relevant law will
win

M4 Beyond reasonable doubt 239

Similar to price fixing in that there is a collusion between

suppliers, to submit similar pricing or allow one of the
M4 Bid-rigging 254
competitors to win the work by having the rest of the
cartel artificially inflate prices.

M4 Board appointment (selection, monitoring, 210

evaluation and cessation)
+ Governance
+ Company strategy, culture and performance
M4 Board evaluation - parameters + Stakeholder engagment 213
+ Board structure and composition
+ Board operations
The board reviews its own performance at least annually
+ measure performance against objectives
M4 Board performance - evaluation + obtain feedback from each board member 212
+ agree on actions to address issues identified
+ establish accountability for addressing issues

M4 Bribery 273-274
M4 California Public Employees’ Retirement System + It is an extremely large institutional investor that invests 280
(CalPERS) the pension funds for many people (over 1.6 million) in the
state of California.
+ This quote describes their philosophy on corporate
governance.
+ It has been a prominent voice and has clearly stated its
position on corporate governance.
+ It considers better corporate governance by profit
earning corporations as a way of attaining better value
from the companies in which it and other shareholders
invest.
+ It does so by using disclosure at public and private levels
to achieve results for its beneficiaries.

M4 - Governance in Practice 22 of 60
M Key words Short explanation Page

+ output restrictions
M4 Cartel behaviour + allocating customers, suppliers or territories 253
+ bid-rigging
+ price-fixing

+ the existence of a cartel provision is a contract,

arrangement or understanding between competitors.
M4 Cartel conduct = pricing fixing agreement + Such collusion is effectively a form of conspirarcy; and 253
conspiracies to cause harm are usually considered harshly
by societies and legislations.
+ largest penalties in many jurisdications.

+ Agreement
M4 Cartertel - criteria + Between competitors 253
+ Specifically prohibited or has an impact on competition

'Let the buyer beaware'. Providing honest info and suitable

M4 Caveat emptor to consumer protection 259
products to the buyers
M4 Chair of the board 230
M4 Charities and not-for-profit sector 232
M4 Churning 271
+ damage
+ injunctions
M4 Civil case - penalties 238
+ other court order
+ pecuniary penalties
M4 Code of conduct with employees 246

+ It is the agreement between competitors who should be

actively competing rather than conspiring that makes
collusion highly inappropriate.
M4 Collusive behaviour + Any horizontal agreement or even a mere understanding 253
between competitors in a market that affects competiton
or that is otherwise defined by the law as simply not
permitted.

M4 Competition and stakeholders 248-249

M4 Competition policy - anit-competitive practices 247
M4 Compliance program 241 -
242
M4 Consumer protection (common approaches) 259

M4 Corporate collapses - key drivers (KPMG 2016) 9 points 209

+ Poor strategic decisions

+ Greed and the desire for power
+ Overexpansion and ill-judged acquisitions
M4 Corporate failure - common causes 208
+ Dominant CEOs
+ Failure of internal controls
+ Ineffective boards

+ cash flow issues

M4 Corporate failure - other causes 208
+ corporate culture
M4 Corruption 273-274
M4 Credit Suissee 2012 - countires with greater + Norway, France and Spain 217
diversity
+ fines
M4 Criminal case - penalties + jail sentence 238
+ both fines and jail
M4 Criminal intent 239

M4 - Governance in Practice 23 of 60
M Key words Short explanation Page

+ US: Breach of anti-trust law >> jail sentences of up to 10

years along with fines
M4 Criminal sanctions + AU: Carterl conduct>> penalties of up to 150 years jail 239
for individuals and up to $150 m or as much as 10% of
group turnover for corporations

+ A legal person of at least 18 years of age

+ A person currently disqualified from manging a
corporation cannot be appointed a director
+ Majority of directors to have qualifications relevant to
their appointed executive position.
M4 Directors - appointment 211
+ Shareholders vote in favour of candidates recommended
by the director at AGM.
+ Where Casual vacancy, the board to use its power to
appoint a director immediately, for later ratification by
shareholders' vote at the next AGM

+ resign during the current term, or choose not to stand

for re-election at the end of their current board term
+ resignation or death of a director results in a board
M4 Directors - departure vacancy, and to make temporary appointment, later 212
shareholder vote
+ director's resignation: to informed to shareholders for
the reasons behind any particular resignation

Staggered approach
+ 3 years of terms, re-elected by shareholders each year
under staggered voting.
+ one-third of the directors are required to resign and
most of these individuals will stand for re-election.
M4 Directors - election 211
Other approach (De-staggering)
+ placing all directors up for election each year.
+ gaining acceptance as it is set to enhance director
accountability and shareholder power
+ annual voting is common for US

3 ways to remove directors

+ individual or group of SS holding 5% of the votes, to call
an extraordinary general meeting; with the cost beared by
the company.
+ individual or group of SS holding 5% of the votes, to call
M4 Directors - removal an extraordinary general meeting; with their own cost 213
+ The company already called a general meeting,
shareholders holding 5% of the votes or 100 members
entitled to vote, can seek to give the company notice of a
proposed resolution to put to the meeting

M4 - Governance in Practice 24 of 60
M Key words Short explanation Page

Element of legally defined commercially unacceptable

behaviour or legal wrongdoing.
+ responsibility for certain civil wrongs
+ financial market misconduct
+ responsibility for multiple insolvencies
M4 Disqualification + significant dishonest actions and corporate crimes 215
+ civil and criminal wrongs in relation to anti-competitve
conduct
Automatic, without any formal declaration of
disqualification occuring (for 5 years); or an order of the
court (20 years)

+ Gender diversity is mandatory for ASX listed companies

as per ASX principles.
+ importance of improving the gender balance of boards is
backed by research: Companies with female board
M4 Diversity 216-218
representation outperformed those with no women pn the
board, in terms of share price performance.
+ diverse boards may help improve strategic directions,
expand networks, and engage talent

Key points of National Australia Bank (NAB)'s diversity

M4 Diversity approach by NAB 218
approach by the AICD

This presents the company's financials in a misleading way

that looks more favourable to stakeholders and is contrary
M4 Earnings management 225
to what directors are required to do according the
Corporation act.

+ Importance of legal system to corporations

+ In contrary with legal system, imprisonment or face
harsh financial penalties
M4 Economy and the legal system (1) proof, penalties and redress - criminal and civil 238
(2) laws leading to criminal penalties
(3) Laws with civil outcomes and penalties
+ Redress compared with penalties

M4 Ethical obligations 246

M4 Exclusive dealing 255
M4 Fair pay and working condition 244

+ Board selection, operation, evaluation and departures

+ executive remuneration and performance appraisal
M4 Financial failure - risk reducing areas 208
+ compliance with the Corporations Act 2001
+ auditing the financial statements

M4 Financial market

M4 - Governance in Practice 25 of 60
M Key words Short explanation Page

+ corporate governance routines did not serve their

purpose to safeguard against excessive risk taking
+ risk management system was often activity rather than
enterprise based. (did not reach the board)
+ did not establish suitable metrics to monitor its
M4 GFC - corporate governance lessons implementation 209
+ Insufficient in leading the relevant accounting
standards/regulatory requirements to undertake a review
+ remunration systems have not been closely related to
the strategy and risk appetite of the company and its
longer-term interests

M4 Government bodies 231

M4 Inducing persons to deal

M4 Information and the media - roles 266-267

M4 Insider / people with inside knowledge 269

+ inside information: not generally available, material

impact
M4 Insider trading 268
+ possess the information: know it is inside information
+ use the information: act on the info; share (tip) the info

M4 Insider trading - prevention procedures 270

M4 Internal contorl and risk management 229

The process designed and effected by those charged with

governance (usually the board but in some audit
circumstances, may be audit committee), management,
and other personnel to provide reasonable assurance
M4 Internal control - definition 229
about the achievement of the entity's objectives with
regard to reliability of financial reporting, effectiveness and
efficiency of operations and compliance with applicable
laws and regulations

+ good IC is good business

+ more org are required to report on the quality of IC over
Internal control systems - reasons of improving the
M4 financial reporting 230
quality
+ IC assists in providing reasonable assurance that the
entity is complying with appliable laws and regulations

M4 Leave entitlements 245

M4 Legal system 237
M4 Legislation to goverance 237
a product that is sold below cost price to entice
M4 Loss leader 257
resellers/customers into a selling outlet

M4 Market efficiency 269

M4 Market manipulation 270

271 -
M4 Market manipulation activities
272

M4 - Governance in Practice 26 of 60
M Key words Short explanation Page

M4 Market power - misuse or abuse 250

M4 Market regulators - roles 266
M4 Market sensitive
Market sharing or allocating customers, suppliers or
M4 254
terrorities
M4 Merger and acquisition 252
M4 Misleading conduct 260
M4 Misuse of fundraising documents 272
M4 Monopolist corporations 247
M4 Obligations to employees ` 242 -
247

M4 Occupational health and safety 243

M4 Output restrictions 254

M4 Payments for past and future performance 220-224
M4 Phoenix companies 276

M4 Ponzi schemes 276

M4 Pools 272

+ Bank disasters: collapse of Baring Brothers in 1990s and

recently the fixing of the rates with LIBOR; that was
M4 Poor risk management 210
manipulated by a large number of international banks, to
have excessive interest payments by customers

+ the abuse of market power

M4 Predatory pricing + the supply of goods or services below cost price over a 250
period of time
M4 Price-fixing 254
M4 Prohibited behaviours - questions 253
M4 Prospects 272
M4 Protecting financial market 268

M4 Public sector - fraud and fraud risks 231-232

'Extreme subjective exaggeration', is found in misleading in

M4 Puffery 261
advertising
M4 Rating agencies - role 268
Real costs for wrongdoings - Competition and
M4 241
consumer protection laws
M4 Remuneration - disclosure 222
M4 Remuneration - ED or other senior executives 221

M4 Remuneration - issues 1. Remuneration methods may fail to achieve alignments 210

or congruency between the agent and principal.
M4 Remuneration - NED 220
M4 Remuneration - performance-based 221
M4 Remuneration -risks and GFC 223

M4 Representation 277

+ when a supplier stipulates that the goods it provides

must only be resold at or above a certain minimum price.
M4 Resale price maintenance It is regarded as anti-competitive. 256
+ to do so by means of incentives, discounts, instructions
or withholding supply is not permitted

M4 - Governance in Practice 27 of 60
M Key words Short explanation Page

M4 Risk management 229

M4 Rogue trader 275

M4 Rogue trading 275
M4 Runs 272
M4 Shareholder representations 278
M4 Shareholder rights 279
M4 Trade and labour unions 247

+ Two-strikes and re-election of all board members of

listed companies.
First-strike: 25% or more of the eligible shareholders vote
'No' on the mandatory resolution by the board and
shareholders accept the corporation's remuneration
report present in the annual report
Second-strike: at the same AGM, a resolution to spill must
be put to shareholders.
M4 Two-strike rule - spill the whole board 214
+ Spill resolution is successful if a simple majority (>50%)
of eligible votes in favour of the spill at that time.
+ No key management personnel (KMP) are eligible to
vote on either the remuneration reports or the spill motion
+ large no. of shares often held by directors and exectives
are not permitted to vote
+ to elect new board within 90 days. All shareholders are
permitted to vote, including KMP

261 -
M4 Unconscionable conduct
263

M4 Whistleblower 283

M4 Whistleblower protection act 284-285

+ types of cases involving serious corporate governance

failure
+ a term referred to in US legislation
+ the situation where individuals seek to avoid their legal
liability for a wrongful act by deliberately putting
M4 Wilful blindness / wilful ignorance themselves in a position where they are unaware of facts 210
that will make them liable
+ Example case: Enron CEOs
+ Allegations of wilful blindness can have serious
reputational consequences for the individuals and
organisations cconcerned

M4 Window dressing / earnings management 225

M4 Workable competition 248

M4 - Governance in Practice 28 of 60
M Key words Short explanation Page
M5 Accountability 324
M5 Brand and reputation - CSR 300
M5 Cap-and-trade 356/
357
M5 Capital options 1. Traditional investment 303
2. Responsible investment
3. Sustainable investment
4. Thematic investment
5. Impact investment

M5 Carbon neutrality 358

M5 Carbon offsetting 358

M5 CDP - Carbon Disclosure Project 342

M5 CG requirements- main drivers for 298
improvement
M5 Clean Energy Regulator Act 2011 Businesses are required to apply for registeration with the 333
CER if they
+ are a constitutional corporation
+ meet a reporting threshold for greenhouse gases or
energy use or production for a reporting year

M5 Climate change reporting 355

M5 Climate change risks 355
M5 Conceptual framework - limitaitons on 297
social and environmental costs & benefits

M5 Corporate social responsibility 308

M5 Corporate value chain (scope 3) 345
accounting and reporting standards
M5 Cost of capital benefits 302
M5 CSR a stron role to play in the provision of information for risk 301
management purposes
M5 CSR 324
M5 CSR reporting - issues + Qualification 326
+ Monetisation
+ Narrative reporting

M5 CSR theories - summary + Englightened self-interest 317

+ Stakeholder theory
+ Legitimacy theory
+ Institutional theory

M5 Direct environmental costs clean-up orders, levies and remediation expenses 301
M5 Disclosure - CSR CG related 332
M5 Disclosure issues - Australian mandatory 335
reporting requirements
M5 Discounting future cash flow application Some related costs may not be in cash outflows, but 295
on environmental issues ethical problems can arise. Discounting the costs of
something that will occur in the future may be seen as
shifting the problems of one generation on to future
generations, that is not consistent with the sustainable
agenda.

M1 -Accounting and Society 29 of 60

M Key words Short explanation Page
M5 Economic reporting - measures + market share 328
+ quality rankings
+ customer satisfaction
+ employee satisfaction
+ turnover rates
+ innovation

M5 Economic stability 321

M5 Economic stability - issues + Long-term viability of businesses 322
+ Stability of economic system
+ Transparency

M5 Elements of finanical reporting 294 -

295
M5 EMA - Environmental Management 350
Accounting
M5 Emission trading 356
M5 Emissions trading/reporting scheme 358/
359
M5 Employment model 305
M5 Enlightened self-interest 313

M5 Environmental costs (AICPA and CIMA) 351

M5 Environmental reporting - measures + Materials usage and product resource consumption 327
+ resource usage
+ emissions, effluents and waste
M5 Environmental sustainability 319

M5 Environmental sustainability issues + Climate change 320

+ Waste
+ Pollution
+ Biodiversity

M5 Equator principles 344

M5 EU emissions trading scheme 336
M5 Externalities 309
M5 EY's global climate risk disclosure 301
barometer (EY 2018)
M5 Friedman - CSR and accountability 305
M5 FSB - Finanical Stability Boards's Task 360
Force- recommendations & disclosures

M5 GHG - Greenhouse Gas Protocol 345

M5 GHG emission metrics Greenhouse gas emission metrics 301
M5 GHG protocol - three categories 358
M5 Give back model 305

M5 Global Compact 343

M5 Global finanical crisis - courses 298
M5 Government intervention 309

M5 Green marketing 358

M1 -Accounting and Society 30 of 60

M Key words Short explanation Page
M5 GRI - Global Reporting Initiatives 339

M5 GRI reporting principles 339

M5 Humanistic perspective 319
M5 Impact investment 304

M5 Indirect environmental costs loss of business to increased risk, resulting in higher 301
insurance and financing costs and the opportunity coss of
waste production, treatment and disposal
M5 Innovation model 305
M5 Institutional theory 316
M5 Integrated reporting 325
M5 Integrated reporting 340
M5 Integrated thinking 325
M5 IPCC - Intergovernmental Panel on 355
Climate Change
M5 ISO 26000 - Guidance on social 349
responsibility
M5 KPMG surveys 2013 - CSR 323
M5 Kyoto protocol 345/
355
M5 Legitimacy theory 315
M5 Mandatory reporting - CSR 330
M5 Measurable - CSR 325
M5 Modern slavery act 2018 + Entities operating in AU have consolidated revenue in 334
excess of $100 m per reporting period are required
+To report how they identify and address risks of modern
slavery in their operations and supply chains.
+ Modern slavery relates to issues such as human
trafficking and child labour

M5 National pollutant inventory - NPI + The first national environmental protection measures 335
established by NEPC.
+ enables the public to find out via internet, what
businesses are discharging into the environment as well as
showing what actions an organisation may be taking to
reduce its emissions
+ To estimate emission of 93 substances exceeding a
specified threshold amount
+ NPI reporting period is from 1 Jul to 30 June

M5 Natural capital 325

M5 Natural capital accounting 325
M5 Natural capital protocol 341
M5 Naturalistic argument 319
M5 NGER - National greenhouse and energy 333
reporting act - reporting thresholds

M5 Non-mandatory reporting
M5 Non-mandatory reporting guidelines - 336-
CSR 337

M1 -Accounting and Society 31 of 60

M Key words Short explanation Page
M5 OECD guidelines for MNE 341
M5 Paris Agreement 356
M5 Relevance and faithful representation Fundamental qualitative characteristics of finanical 296
reporting has significant ramifications for sustaibablilty
reporting issues.

M5 Responsible investment 303

M5 Risk management incentives 301
M5 SASB - Sustainability accounting 346
standards board
M5 Scope of reporting 294
M5 Social and environmental reporting 331
requirements - Mandatory on annual
report

M5 Social audits 347

M5 Social contract Community licence to operate 298
M5 Social contract 315
M5 Social enterprises 304
M5 Social reporting - measures + labour practices and workplace 326
+ human rights
+ society
+ product responsibilities

M5 Social sustainability 320

M5 Social sustainability - issues + Child labour 321
+ Ethical trading
+ Supply chain management

M5 Socially responsible investments (SRI) 302

M5 Stakeholder theory 314

M5 Stakeholder theory - Managerial 315
M5 Stakeholder theory - Normative 314
M5 Surveys of current reporting practice 352
M5 Sustainability 325
M5 Sustainability - BoD's responsibilities 323

M5 Sustainability - three pillars Social, Environmental, Economic 322

M5 Sustainability reporting 325
M5 Sustsainable investment 303
M5 TFCD Task Force on Climate related Financial Disclosures 301
M5 Thematic investment 304
M5 UN Sustainable Development Goals 17 goals 293
M5 Vision 2050 - WBCSD To live well without exhausting the natural capitals of the 299
world
M5 WBCSD World Business Council for Sustainable Development 299

M5 WBCSD - Environmental issues impact on 299

company's profitability & SOFP

M1 -Accounting and Society 32 of 60

 CPA Program
Ethics Governance - Index

Key words Short explanation Page Module

AAA - American accounting association model 1. What are the facts of the case? 108 M1
2. What are the ethical issues in the case?
3. What are the norms, principles and values related to the
case?
4. What are the alternative courses of action?
5. What is the best course of action that is consistent with
the norms, principles, and values identified in Step 3?
6. What are the consequences of each possible course of
action?
7. What is the decision?

AASB Australian Accounting Standards Board 4 M5

Accountability 324 M2
Accountant responses to ethical challenges Resisting pressure/said no (29.66%), seeking of advice 47 M1
(16.35%), educating fellow professionals (14.07), educating
clients (11.79%)

Accountants' key professional relationships 24 M2

Accountant's primary duty To the public 62 M3

Accounting in governance process To improve decision making and achieve goals and 140 M1
objectives while maintaining and strengthening controls.

Accounting work environments 25 M3

ACNC governance standards 1. Purpose and not-for-profit nature 189 M3
2. Accountability to members
3. Compliance with Australian laws
4. Suitability of Responsible Persons
5. Duties of Responsible Persons

ACNC guidance 188 M3

ACNC's External conduct standards 1. Activities and control of resources (including funds) 189 M3
2. Annual review of overseas activities and record-keeping
3. Anti-fraud and anti-corruption
4. Protection of vulnerable individuals

Agency costs + Monitoring costs 133 M3

+ Bonding costs
+ Residual loss

Agency issues + Info asymmerty 133 M1

+ Poor communication
+ Innocent and unintended self-interest behaviour
+ Delibrate legal self-intersted behaviour
+ Illegal self-interested behaviour by agents

Altruism postive actions that bring no benefit to an individual and 3 M3

may even be at their own expense
Anglo-American approach Primarily focus on the benefits of shareholders.However, 131
failure by management to focus on the derivative duties of
other stakeholders would result in negative consequences
for shareholders. Therefore, management also has the M4
direct duty to other stakeholders.

33 of 60
 CPA Program
Ethics Governance - Index

Key words Short explanation Page Module

M1
+ abouse of market power
+ mergers and acquisitions
Anti-competitive behaviour + agreements between competitors (cartel conduct) 250
+ unilateral restrictions on supply (exculsive dealings)
+ resale price maintenance (vertical price controls)

APES 110 Code of Ethics for Professional Accountants 15 M2

APES 110 Code of Ethics for Professional Accountants 43 M2
APES 110 60 M2
APES 200 61 M1
APES 205 Conformity with accounting standards 19 M1
APES 210 Confirmity with auditing and assurance standards 19 M2
APES 230 Financial planning services 78 M1
APES 300 61 M2
APES 320 Quality Control for Firms 19 M2
APES 400 series 61 M2
APES GN 20 series 61 M2
APES GN 30 series 61 M1
APES GN 40 Ethical conflicts in the workplace - considerations for 106 M1
accountants in business
APES GN 40 series 61 M1
APESB Accounting Professional and Ethical Standards Board 5 M2
APESB (members) CPA australia, CAANAZ, and the IPA 18 M3
APESB (roles) 18 M4
APESB pronuncements - structures 61 M3
Appointment of directors 129 M1
Approvals procedures 257 M2
ASBFEO report (Australian Small Business and 195 M1
Family Enterprise Businesess)
ASIC Australian Securities and Investments Commission 5 M3
ASIC and accounting standards ASIC conducts financial reporting surveillance and seeks 44 M3
financial statements amendments from entities that failed
to properly apply a particular accounting standard

Assurance engagements 93 M1
Assurance engagements - threats and 93 M1
safeguards
ASX Australian Stock Exchange 4 M1
ASX Corporate Governance Principles and Established by CG Council, which comprises representatives 160 M3
Recommendations from business, investment and shareholder groups, aimed
to develop a principles-based framework

ASX listing rules (principles and + Lay solid foundations for management and oversight 178 M3
recommendations) + Structure the board to be effective and add value
+ Instil a culture of acting lawfully, ethically, and
responsibly
+ Safeguard the integrity of corporate reports
+ Make timely and balanced disclosure
+ Respect the rights and security holders
+ Recognise and mange risk
+ Remunerate fairly and responsibly

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Key words Short explanation Page Module

ATO Autralian Taxation Office 4 M3
Attributes of profession 8 M1
AUASB Auditing and Assurance Standards Board 5 M4
Audit and review engagements 90 M4
Audit and review engagements - special areas 91 M3
of concern
Audit committee The AC comprises only NED with a majority being 147 M1
independent. Communication with external auditors at a
formal level will take place without CFO

Audit committee (Benefits) 148 M1

Audit committee (limitations) 148 M3
Audit deficiencies 33 M4
Audit quality and audit regulation 227 M3
Auditing the financial statements 225 M4
Auditors 150 M4
Australian Government's Financial System 31 M3
Inquiry Final Report (2014)
Autonomy Implies a self-principled, ethical and responsible approach 14 M3
by the member
Avoid Conflict of Interest + Appearance and in fact (in mind) Webinar M3
+ Bribes and secret commissions
+ Abusing expense claims
+ Taking advantage of confidential info

The court requires each party to argue its case as strongly

Balance of probabilities as possible and the person with the case that is determined 239 M4
to be stronger decision to the relevant law will win

Best interests of the corporation (Act in the + Good faith = Integrity and honesty 120 M3
best interests) + No fraud or collusion = must not be self-interested
Beyond reasonable doubt 239 M4
Similar to price fixing in that there is a collusion between
suppliers, to submit similar pricing or allow one of the
Bid-rigging 254 M4
competitors to win the work by having the rest of the cartel
artificially inflate prices.
Board 144 M3
Board (primary functions) + Providing accountability (Outward looking, Past/Present 145 M3
focused)
+ Stretegy formula (Outward looking, Future focused)
+ Monitoring supervising (Inward looking, Past/Present
focused)
+ Policy Making (Inward looking/ Future focused)

Board (responsibilities) + Monitoring and supervising 146 M3

+ Providing accountability
+ Strategy formulation
+ Policy making

Board appointment (selection, monitoring, M5

210
evaluation and cessation)

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Board chair To lead the board of directors, in determining the board's 144
agenda, obtaining contribution from other members of the
board; and monitoring and assessing the performance of
the directors. The chair to be independent. M4

M1
+ Governance
+ Company strategy, culture and performance
Board evaluation - parameters + Stakeholder engagment 213
+ Board structure and composition
+ Board operations
M3

The board reviews its own performance at least annually

+ measure performance against objectives
Board performance - evaluation + obtain feedback from each board member 212
+ agree on actions to address issues identified
+ establish accountability for addressing issues

Board powers Cannot manage the corporation's day-to-day businses 130 M3

Board structure, roles and responsibilities 164 M1

Bonding costs + Incurred by agents 133 M4
+ Costs to demonstrate to the principal that they are goal
congruent.
+ Voluntary restrictions on the agent's behaviour

Brand and reputation - CSR 300 M1

Bribery 273-274 M5
Buisness leadership capabilities TSKE and SSKE 37 M5
Business judgement rule (Safe Harbour rule) Protection for directors aganist personal liability 122 M5
+ Make the judgement in good faith
+ not have a material personal interest in the subject
matter of the judgement
+ Judgement to the extent they reasonably believe to be
appropriate
+ the judgement is in the best interests of the corporation
Critera: 1. Good faith 2. No conflict of interest 3.
Appropriately informed 4. Third person test

Business size by employement + Small (0-19 employees) 195 M5

+ Medium (2-199 employees)
+ Large (200+ employees)

CAANZ Chartered Accountants Australia and New Zealand 5 M3

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Key words Short explanation Page Module

California Public Employees’ Retirement System + It is an extremely large institutional investor that invests 280
(CalPERS) the pension funds for many people (over 1.6 million) in the
state of California.
+ This quote describes their philosophy on corporate
governance.
+ It has been a prominent voice and has clearly stated its
position on corporate governance.
+ It considers better corporate governance by profit
earning corporations as a way of attaining better value M4
from the companies in which it and other shareholders
invest.
+ It does so by using disclosure at public and private levels
to achieve results for its beneficiaries.

Capability considerations 37 M4
Cap-and-trade 356/ 357 M4
Capital options 1. Traditional investment 303
2. Responsible investment
3. Sustainable investment
4. Thematic investment M4
5. Impact investment

Carbon neutrality 358 M5

Carbon offsetting 358 M3
Care and diligence The knowledge and experience of the director might be 122 M5
expected to have done in the circumstances if he was
acting on his own behalf

+ output restrictions
+ allocating customers, suppliers or territories
Cartel behaviour 253 M4
+ bid-rigging
+ price-fixing

+ the existence of a cartel provision is a contract,

arrangement or understanding between competitors.
+ Such collusion is effectively a form of conspirarcy; and
Cartel conduct = pricing fixing agreement 253 M4
conspiracies to cause harm are usually considered harshly
by societies and legislations.
+ largest penalties in many jurisdications.

+ Agreement
Cartertel - criteria + Between competitors 253 M4
+ Specifically prohibited or has an impact on competition

'Let the buyer beaware'. Providing honest info and suitable

Caveat emptor to consumer protection 259 M4
products to the buyers
CDP - Carbon Disclosure Project 342 M5
CEO powers Two roles - board member and manager. Agency 131 M3
relationship with shareholders
CG requirements- main drivers for improvement 298 M5

Chair of the board 230 M5

Charities and not-for-profit sector 232 M4
Churning 271 M2

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+ damage
+ injunctions
Civil case - penalties 238 M4
+ other court order
+ pecuniary penalties
Clean Energy Regulator Act 2011 Businesses are required to apply for registeration with the 333 M3
CER if they
+ are a constitutional corporation
+ meet a reporting threshold for greenhouse gases or
energy use or production for a reporting year

CLERP Act 2004 - Corporate Law Economic + Audit reform 161 M1

Reform Program (Cwlth) + Finanical reporting
Climate change reporting 355 M3
Climate change risks 355 M1
Code of conduct with employees 246 M4
Code of ethics (APES 110) 62 M4

+ It is the agreement between competitors who should be

actively competing rather than conspiring that makes
collusion highly inappropriate.
Collusive behaviour + Any horizontal agreement or even a mere understanding 253 M4
between competitors in a market that affects competiton
or that is otherwise defined by the law as simply not
permitted.

Committees of the board + Effectiveness of the board 146-147 M5

+ Particularly NEDs
+ Distibution of workload to allow a more detailed
consideration to be given to important matters
+ Four committees: nomination, remuneration, audit, risk
management

Communication with predecessor before 87 M2

accepting a professional appointment
Community service Offer their time and skills free of charge to the community 13 M1

Company secreatary 128 M3

Competition and Consumer Act (2010) 5 M3
Competition and stakeholders 248-249 M1

Competition policy - anit-competitive practices 247 M4

Compliance program 241 - 242 M3

Conceptual framework 68 M3
Conceptual framework - limitaitons on social 297 M1
and environmental costs & benefits
Confidentiality 65 M4
Confirmity with standards APES 205 and APES 210 19 M4
Conflict of interest (avoid COI) + respect to all types of agency relationship 120
+ Agents: to be aware of conflicts and must manage them
correctly
+ Must not involved in decisions where COI are identified M4

Conflicts of interests 74 M3
Conflicts of interests - safeguards 75 M3
Conformance Focus on complying with rules, codes and regulations 139 M3

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Constitution of CPA Australia (Types of 21 M3
compliant)
M5
Consumer protection (common approaches) 259
Consumers (Stakeholder) 155 M3
Continuous disclosure + High quality disclosures on the financial and operating 122 M5
results of the company.
+ Failure to disclose material issues >> signficant fines and
banning of directors
+ Disclosure as a vital basis for the effective operation of all
the other mechanisms of governance and investment

Co-regulation regulation shared between the profession and external 10 M3

sources. It promotes a consistently high level of
professional practice in the public interest.

M1
Corporate collapses - key drivers (KPMG 2016) 9 points 209

+ Poor strategic decisions

+ Greed and the desire for power
+ Overexpansion and ill-judged acquisitions
Corporate failure - common causes 208 M4
+ Dominant CEOs
+ Failure of internal controls
+ Ineffective boards

+ cash flow issues M5

Corporate failure - other causes 208
+ corporate culture
Corporate goverance + to create market confidence and business integrity. 139 M1
+ to create the best possible conditions to allocate to its
most effective use.
+ to enable companies to access financing from a much
larger pool of investors (OECD)

Corporate governance events and responses Financial scandals 159 M1

Corporate governance frameworks + External governance 141

+ Internal governance M4
+ External auditor

Corporate governance practices in US + Boards are dominated by the company management 163 M1
+ Chair and CEO are to be the same person
+ Established committes to limt the powers of the CEOs
+ More active role played by institutional investors.
+ Issues with CG in US: (1) Shareholders still possess limited
power to appoint or remove directors due to widely
dispersed share ownership (2) administrative hurdles

Corporate social responsibility 308 M4

Corporate social responsibility theory Engage in activities and promote causes and initiatives that 136
ar seen providing a social benefit to the community M4

Corporate value chain (scope 3) accounting and 345

reporting standards M4

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Corporation Separate legal entity >> Limited liability >>> Perpetual M5
sucession
Corporations Act (2001) 5 M5
Corruption 273-274 M5
Cost of capital benefits 302 M5
CPA australia - regulatory structures 15 M2
Creative accounting 34 M2
Credit Suissee 2012 - countires with greater M2
+ Norway, France and Spain 217
diversity
Creditibility of the profession 34 M1
+ fines M1
Criminal case - penalties + jail sentence 238
+ both fines and jail
Criminal intent 239 M3
M5
+ US: Breach of anti-trust law >> jail sentences of up to 10
years along with fines
Criminal sanctions + AU: Carterl conduct>> penalties of up to 150 years jail for 239
individuals and up to $150 m or as much as 10% of group
turnover for corporations
CSR a stron role to play in the provision of information for risk 301 M3
management purposes
CSR 324 M4
CSR reporting - issues + Qualification 326
+ Monetisation M4
+ Narrative reporting

CSR theories - summary + Englightened self-interest 317

+ Stakeholder theory
+ Legitimacy theory M4
+ Institutional theory

Cultural relativism - cultural diversity 105 M4

Decision making - factors influencing 100 M3
Deontological (Duty-based) 1. Rights 2. Justice 3. Virtue 52 M1
Deontological (Duty-based) Intention behind the act itself is more important than the 56 M3
results of the act
Deontonlogical theories The need of individuals and groups to consider the intent 52 M5
of actions. (1) Rights (2) Justice
Depreciation and behaviour (higher levels) 32 M5

Depreciation and behaviour (lower levels) 33 M2

Differing time horizons Only have an interst in the firm for the duration of their 134 M5
employment. Time frame is an important consideration
when designing remuneration schemes.

Direct environmental costs clean-up orders, levies and remediation expenses 301 M3
Director independence All independent directors must be NED but not all NEDs are 127
independent. ASX Corporate Goverance Council
Recommendations (2019) provide the commentary on M4
indepence and directors

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M3
+ A legal person of at least 18 years of age
+ A person currently disqualified from manging a
corporation cannot be appointed a director
+ Majority of directors to have qualifications relevant to
their appointed executive position.
Directors - appointment 211
+ Shareholders vote in favour of candidates recommended
by the director at AGM.
+ Where Casual vacancy, the board to use its power to
appoint a director immediately, for later ratification by
shareholders' vote at the next AGM

+ resign during the current term, or choose not to stand for

re-election at the end of their current board term
+ resignation or death of a director results in a board
Directors - departure vacancy, and to make temporary appointment, later 212 M4
shareholder vote
+ director's resignation: to informed to shareholders for the
reasons behind any particular resignation

Staggered approach
+ 3 years of terms, re-elected by shareholders each year
under staggered voting.
+ one-third of the directors are required to resign and
most of these individuals will stand for re-election.
Directors - election 211 M4
Other approach (De-staggering)
+ placing all directors up for election each year.
+ gaining acceptance as it is set to enhance director
accountability and shareholder power
+ annual voting is common for US

M1

3 ways to remove directors

+ individual or group of SS holding 5% of the votes, to call
an extraordinary general meeting; with the cost beared by
the company.
+ individual or group of SS holding 5% of the votes, to call
Directors - removal an extraordinary general meeting; with their own cost 213
+ The company already called a general meeting,
shareholders holding 5% of the votes or 100 members
entitled to vote, can seek to give the company notice of a
proposed resolution to put to the meeting

Directors (key duties) + avoid conflicts of interest 119

+ act in good faith in the best interest of the company
+ power for proper purpose
+ retain discretionary powers and avoid delegating
director's responsibility
+ act with care and due diligence M4
+ remain informed
+ prevent insolvent trading

Disciplinary tribunal 21 M5

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Disclosure 165 M5
Disclosure - CSR CG related 332 M5
Disclosure issues - Australian mandatory 335
reporting requirements M4
Disclosure of confidential information 65 M2
Discounting future cash flow application on Some related costs may not be in cash outflows, but ethical 295 M5
environmental issues problems can arise. Discounting the costs of something
that will occur in the future may be seen as shifting the
problems of one generation on to future generations, that
is not consistent with the sustainable agenda.

Discretionary powers (Do not delegate + Can delegate a range of functions 121 M5
responsibility) + Where a director has delegated powers to anybody, the
director remains responsible for the director had exercised
the power themselves
+ To escape director's responsibilies, delegate needs to be
properly appointed by boards using professionally
acceptable prcedures. The board must carry out ongoing
oversight.
+ A word of caution is required
+ Non-delegable functions: Any major matters affecting the
finances of the corporation

M5
Element of legally defined commercially unacceptable
behaviour or legal wrongdoing.
+ responsibility for certain civil wrongs
+ financial market misconduct
+ responsibility for multiple insolvencies
Disqualification + significant dishonest actions and corporate crimes 215
+ civil and criminal wrongs in relation to anti-competitve
conduct
Automatic, without any formal declaration of
disqualification occuring (for 5 years); or an order of the
court (20 years)

Distinctions among EU (political, legal and + Company law 164-165 M5

regulatory) + Employee representation
+ Stakeholder issues
+ Shareholder rights and participation machanics
+ Board structure, roles and responsibilities
+ Supervisory body independence and leadership
+ Disclosure

M3

+ Gender diversity is mandatory for ASX listed companies

as per ASX principles.
+ importance of improving the gender balance of boards is
backed by research: Companies with female board
Diversity 216-218
representation outperformed those with no women pn the
board, in terms of share price performance.
+ diverse boards may help improve strategic directions,
expand networks, and engage talent

Key points of National Australia Bank (NAB)'s diversity M3

Diversity approach by NAB 218
approach by the AICD
Doing well by doing good 6 M3

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M5
This presents the company's financials in a misleading way
that looks more favourable to stakeholders and is contrary
Earnings management 225
to what directors are required to do according the
Corporation act.
Economic reporting - measures + market share 328 M1
+ quality rankings
+ customer satisfaction
+ employee satisfaction
+ turnover rates
+ innovation

Economic stability 321 M5

Economic stability - issues + Long-term viability of businesses 322 M5
+ Stability of economic system
+ Transparency

M5
+ Importance of legal system to corporations
+ In contrary with legal system, imprisonment or face harsh
financial penalties
Economy and the legal system (1) proof, penalties and redress - criminal and civil 238
(2) laws leading to criminal penalties
(3) Laws with civil outcomes and penalties
+ Redress compared with penalties

Egoism (Teleological) + the best consequences for the individual taking the 52 M5
action/making the decision
+ Self-interest
+ 1. Ethical egoism 2. Restricted egoism

Elements of finanical reporting 294 - 295 M5

EMA - Environmental Management Accounting 350 M2

Emission trading 356 M5

Emissions trading/reporting scheme 358/ 359 M2
Empire building Increase power and influence in a company for reasons 134 M1
associated with personal satisfaction
Employee representation + Embedded in law (Austria, Denmark, Germany, 164 M2
Luxembourg, Sweden)
+ Company articles: Employees of companies of a certain
size have the right to elect some members of the
supervisory board (France, Finland)
+ Shareholders to elect the members of the supervisory
board (other EU countries)

Employees (Stakeholder) 154 M2

Employment model 305 M4
Enlightened self-interest Concepts by Lee (1995) 6 M2
Enlightened self-interest 313 M2
Environmental costs (AICPA and CIMA) 351 M2
Environmental reporting - measures + Materials usage and product resource consumption 327 M2
+ resource usage
+ emissions, effluents and waste
+ transport usage
+ compliance

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Environmental sustainability 319 M2
Environmental sustainability issues + Climate change 320 M2
+ Waste
+ Pollution
+ Biodiversity

Equality principle 57 M2
Equator principles 344 M2
Ethical decision making 99 M1
Ethical decision making- conceptual framework 106 M5

Ethical decision-making models 105 M3

Ethical egoism + Evaluate the rightness of a proposed action by choosing a 53
course of action that maximises the net positive benefits to M4
themselves

Ethical egoism (inc restricted egosim) + Normative theory, proposes how one ought to behave 55 M3
+ Mix net positive benefits to oneself
+ Pursuit of self-interest should not come at the expenses
of others; Pursuit of happiness is constrained by the law
and the conventions of fair play

Ethical issues (Most frequent) Misleading reporting (40.88%), Fraud/tax evasion (13.87%), 46 M1
Lack of transparency in accounting decisions (11.68%)

Ethical obligations 246 M3

Ethical relativisim 104 M3
Ethical responsibilites of PA 43 M5
Ethical surveys (Raymond Baumhart) What does ethics mean to you? 44 M1
Ethical theories Different cultural traditions, different principles and 51 M5
backgrounds
Ethical theories - Eastern tradition Moral philosophy - Confucianism, Tagore 51
World religions - Buddhism, Hinduism, Sikhism, Shinto, M4
Daoism and Jainism

Ethical theories - Western tradition Moral philosophy - Plato, Aristotle, Kant, Rawls, Jonas 51 M3
World religions - Christanity, Judaism, Islam

Ethics What is right and wrong 43 M3

Ethics of character (Normative) Also called "Virtue ethics" 52 M1
Ethics of conduct (Normative) 1. Teleological (or consequential) 2. Deontological (or non- 52 M3
consequential or duty-based)
Ethos or culture 16 M1
EU emissions trading scheme 336 M4
Excessive non-financial benefits Over-consumpton of perquisites (perks) 134 M4
Exclusive dealing 255 M1
Executive directors Work for the company and are never independent 127 M3
Extenstive Education process Accumulation of knowledge and experience through 13 M1
mentoring, professional development and continuing
education programs

External governance + Reporting and accountability to owners and boards 141 M3

+ Review and recommend to management

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External governance + Governments- sets the legal and regulatory environment M1
+ Stakeholders - may set specific requirements
+ Industry/profesional bodies - accounting standards,
industry etc

Externalities 309 M5
Extra-legal Regulations in addition to what is prescribed in statute law 10 M5
or common law
EY's global climate risk disclosure barometer 301 M2
(EY 2018)
Fair pay and working condition 244 M3
Family-based insider system (CG) 168 M4
Family-owned business and SMEs 187 M5
FASEA Financial Adviser Standards and Ethics Authority 31 M5
Fictional entities (Distinct advantages) 1. Separate legal entity distinct from its owner 2. Limited 116 M5
liability 3. Perpetual succession
Financial accounting distortions To understand the risk and true nature of complex financial 35 M5
instruments
M3
+ Board selection, operation, evaluation and departures
+ executive remuneration and performance appraisal
Financial failure - risk reducing areas 208
+ compliance with the Corporations Act 2001
+ auditing the financial statements

Financial market M5
Finanical Adviser 31 M5
Flex commissions The lender fixed a base rate of interest that would be 143 M3
changed under the loan agreement. If the dealer could
persuade the borrower to agree to pay a higher rate the
dealer received a large part of the interest payable over
and above the base rate.

Force of law standards Corporations Act 37 M3

France - Relationship-based system 165 M3
FRC A government body to which AASB and AUASB reports 36 M1
directly. FRC set up to oversee the effectiveness of financial
reporting

Friedman - CSR and accountability 305 M4

FSB - Finanical Stability Boards's Task Force- 360 M5
recommendations & disclosures
Fundamental principles (Code of ethics) 63 M5
German business sector (Relationship based) 165 M5

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M5

+ corporate governance routines did not serve their

purpose to safeguard against excessive risk taking
+ risk management system was often activity rather than
enterprise based. (did not reach the board)
+ did not establish suitable metrics to monitor its
GFC - corporate governance lessons implementation 209
+ Insufficient in leading the relevant accounting
standards/regulatory requirements to undertake a review
+ remunration systems have not been closely related to the
strategy and risk appetite of the company and its longer-
term interests

GHG - Greenhouse Gas Protocol 345 M2

GHG emission metrics Greenhouse gas emission metrics 301 M2
GHG protocol - three categories 358 M5
Give back model 305 M1
Global awareness on CG 161 M1
Global Compact 343 M1
Global finanical crisis - courses 298 M2
Global push for improved governance 158 M5
Governance Governance = Conformance + Performance 139 M3
Governance systems + Market-based system - US, UK, AU, NZ 161 M3
+ Relationship-based system - Continential Europe, Asia

Governing body of a profession (roles) 17 M3

Government bodies 231 M5
Government intervention 309 M1
Green marketing 358 M3
GRI - Global Reporting Initiatives 339 M4
GRI reporting principles 339 M4
Happiness A feeling of joy or delight, satisfaction or peace of mind, 53 M3
and the sense of achieving one's goals or desires

Heuristics 105 M5
Human rights 57 M4
Humanistic perspective 319 M4
Ideal of service to the community Wilensky - the pivot around which the moral claims to 13
professional status revolves M4
Ideals of accounting professionalism 4 Es: Education, Ethics, Expertise, and Enterpreneurship 6 M3
(Carnegie and Napier 2010)
IFRS 5 M3
Immanuel Kant Persons of goodwill are motivated by a sense of duty to do 56 M3
the right thing
Impact investment 304 M5
Independence 88 M5
Independence checklists for employee 91 M5
Independent non-directors Are free from influences that cause bias and exhibit the 127 M5
characteristics of independence

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Independent of directors + not a previous employee (5 years) Webinar M2
+ no material business relationships within 3 years
+ no additional remuneration | share options|
performance related scheme
+ no close family ties
+ no cross-directorships
+ not representing a significant shareholder (FRC code)

India (Relationship based) 167 M4

Indirect environmental costs loss of business to increased risk, resulting in higher 301
insurance and financing costs and the opportunity coss of M4
waste production, treatment and disposal

Individual decision - influences 99 M4

Individual factors - decision making 100 M3
Individual member autonomy The concepts of professional judgement, adherence to a 14 M1
code of professional conduct and professional
independence

Individual shareholders ASA: Australian Shareholders' Association: the collective 142 M5

interests of smaller shareholders
Inducements - safeguards 80 M5
Inducements, inc gifts and hospitality 79 M1
Inducing persons to deal M3
Information and the media - roles 266-267 M2
Information asymmetry The differential of knowledge or information that two 394 M2
parties to a transaction process. Where info asymmetry
exists, there is potential for 1) poor decisions being made
2) sneaky risky actions being taken

Innovation model 305 M3

Insider / people with inside knowledge 269 M1
M2
+ inside information: not generally available, material
impact
Insider trading 268
+ possess the information: know it is inside information
+ use the information: act on the info; share (tip) the info

Insider trading - prevention procedures 270 M5

Insolvent trading As per Company Act 123 M5
+ A company must pay its debt. In solvency, must not allow
to incurr further debts
+ Serious penalites to directors, if they allow a company to
trade while insolvent

Institutional shareholders Insurance companies, superanuation funds, investment 143 M1

trusts and professional investment fund managers

Institutional shareholders + Considerable growth in financial assets of Institutional 162 M3

investors
+ Dominant owners of equity in UK and US
+ Securing max. return, balancing risk and return over time
+ More actively engaged nowadays

Institutional theory 316 M2

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Integrated reporting 325 M4
Integrated reporting 340 M2
Integrated thinking 325 M4
Integrity 63 M4
Internal contorl and risk management 229 M5
M3

The process designed and effected by those charged with

governance (usually the board but in some audit
circumstances, may be audit committee), management,
and other personnel to provide reasonable assurance
Internal control - definition 229
about the achievement of the entity's objectives with
regard to reliability of financial reporting, effectiveness and
efficiency of operations and compliance with applicable
laws and regulations

+ good IC is good business

+ more org are required to report on the quality of IC over
Internal control systems - reasons of improving
financial reporting 230 M4
the quality
+ IC assists in providing reasonable assurance that the
entity is complying with appliable laws and regulations

Internal governance + Owners/Members - appointment and review boards; 141 M3

confirm appointment of external auditor
+ Boards - reporting and accountabililty to owners;
recommend appointment of external auditor; appointment
and review of management team
+ Management led by a CEO - Reporting and accountability
to boards

IPA Institutue of Public Accountants 5 M5

IPCC - Intergovernmental Panel on Climate 355 M1
Change
ISO 26000 - Guidance on social responsibility 349
M4
Issues causing reduced creditbility 34 M4
Japan (Relationship based) 167 M4
Justice 57 M4
Justice (Deontological) Taking actions that intend to be fair and equitable to the 52
parties involved M4
Key features of corporations 116 M4
Key judgements of auditor 17 M3
Kidder Philosophy aka Ethical dilemna 1. Trust // Loyalty 2. Individual // Group 3. ST // LT 4. 45
Justice // Mercy M4
KPMG surveys 2013 - CSR 323 M3
Kyoto protocol 345/ 355 M3
Lack of auditor independence 35 M3

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Large proprietary company (Compliance) + Min 1 director (1 resident in AU) 118 M5
+ Company secretary (optional)
+ Audit report: Yes but ASIC may provide relief in
appropriate causes
+ Financial records: electronic or convertible to hard copy.
Min 7 years for record management.
+ Ongoing disclosure: No
+ Reporting requirement: Annual financial report and
director report

Laws // Ethics Complying with the law does not mean you are acting 45
ethically M4

Leave entitlements 245 M2

Legal and contractual rights 56 M1
Legal system 237 M4
Legislation to goverance 237 M4
Legitimacy theory 315 M5
Listed public company (compliance) + Min 3 directors (2 residents in AU) 118 M3
+ Company secretary (one who resides in AU)
+ Audit report: Yes but including independence
requirements
+ Financial records: electronic or convertible to hard copy.
Min 7 years for record management.
+ Ongoing disclosure: Yes (ASX listing rules)
+ Reporting requirement: Annual and half-year financial
report and directors report, to be presented at AGM and
to be submitted to ASIC.
ASX listing requirements: Quarterly runs

a product that is sold below cost price to entice

Loss leader 257 M4
resellers/customers into a selling outlet
Management (Stakeholder) 155 M1
Mandatory reporting - CSR 330 M2
Market control view More critical and suggests that professional accountants 11 M2
are self-intereted and less concerned with the broader
public interest than with their own careers

Market efficiency 269 M3

Market manipulation 270 M2
Market manipulation activities 271 - 272 M1
Market power - misuse or abuse 250 M1
Market regulators - roles 266 M3
Market sensitive M5
Market sensitive information 123 M5
Market sharing or allocating customers, M5
254
suppliers or terrorities
Market-based systems - Cons + overly dominant and overpaid CEOs 163, 396 M5
+ weak BOD
+ failure in reporting and transparency
+ short-term investment
+ instabillity of governance and investment
+ cyclical volatility in a dynamic economy

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Market-based systems - Pros + dispersed ownership and strong institutional investors 163, 396 M5
+ primary of SS interests in company law
+ protection of minority SS interests in law and regulation
+ strignent requirements for disclosure
+ fluid capital investment in dynamic economy
competitive performance

Market-based systems (US and UK) + Widespread equity ownership 162 M2

+ Shareholder interests
+ An emphasis on minority shareholder protection
+ Growing institutional investors: insurance co, pension
funds, mutual funds
+ disclosure based, to access a reliable and adequate flow
of info to make informed investment decisions
+ the role of the banks is less central
+ SS have the right to use their voting system to select the
board, appoint an external auditor, etc
+ Strategies when unhappy with board or management:
private meetings, voting aganist resolutions, and applying
public pressure using the media.

Measurable - CSR 325 M1

Merger and acquisition 252 M3
Merit principle 57 M5
Mid-sized enterprises The crucial roles of professional accountants in business in 29 M2
Mid-sized Enterprises (IFAC 2008)
Misleading conduct 260 M3
Misuse of fundraising documents 272 M3
Modern slavery act 2018 + Entities operating in AU have consolidated revenue in 334 M3
excess of $100 m per reporting period are required
+To report how they identify and address risks of modern
slavery in their operations and supply chains.
+ Modern slavery relates to issues such as human
trafficking and child labour

Monitoring costs + Incurred by principals 133 M5

+ Compulsory: Costs relating to annual reporting and
external auditing
+ Others are discretionary

Monopolist corporations 247 M5

Monopoly control Members of the profession control is allowed to work in 8 M2
the industry
Moral agent a decision maker who has the ability to make moral 58 M2
judgements based on some notion of right and wrong and
is held accountable for these actions

Moral agent- accountants A class of professional that may be regarded as being moral 58 M3
agents.
Moral hazard The situation where one party takes action knowing that 394 M1
other party will bear the risk and any associated costs

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Key words Short explanation Page Module

Motive 56 M2
MPC General Manager Professional Conduct of CPA Australia 21
M4
Multi-level regulatory framework 1. Standard setting 2. Conformity with standards 3. Practice 19
reviews 4. Accounting firm regulation M4
Napoleomic code France 164 M5
National pollutant inventory - NPI + The first national environmental protection measures 335 M3
established by NEPC.
+ enables the public to find out via internet, what
businesses are discharging into the environment as well as
showing what actions an organisation may be taking to
reduce its emissions
+ To estimate emission of 93 substances exceeding a
specified threshold amount
+ NPI reporting period is from 1 Jul to 30 June

Natural capital 325 M3

Natural capital accounting 325 M3
Natural capital protocol 341 M1
Naturalistic argument 319 M3
Needs principle 57 M1
NFP Not-for-profit 31 M4
NFP - Not-for-profit organisations 188 M1
NGER - National greenhouse and energy 333 M1
reporting act - reporting thresholds
NOCLAR Non-compliance with laws and regulations 60 M1
NOCLAR -non compliance 81 M5
NOCLAR regime 82 M4
Nomination committee Recommending the succession procedures within an 147 M1
organization. To identify and select people who will replace
senior staff when they leave.

Nominee directors Appointed onto the board to represent a major 121 M1

shareholder.
Non-executive directors Do not work in the organisation but are not independent 127 M3
because of relationship
Non-mandatory reporting M3
Non-mandatory reporting guidelines - CSR 336- 337 M1

Normative theories What people should do. Principles that distinguish right 51
from wrong by establishing a norm or standard of correct
behaviour that should be followed at all times. M4

Normative theories - Two categories 1. Ethics of conduct 2. Ethics of character 51 M4

NPF (divesity) 190 M4
OAIC Office of Australian Information Commissioner 5 M1
Objectivity 64 M4
Obligations to employees ` 242 - 247 M3
Occupational health and safety 243 M4
OECD guidelines for MNE 341 M4

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Key words Short explanation Page Module

OECD principles + Ensuring basis for an effective CG framework 171 M3
+ Rights and equitable treatment of shareholders and key
ownership functions
+ Institutional investors, stock markets and other
intermediaries
+ the role of stakeholders in CG
+ Disclosure and transparency
+ responsibilities of the board

OECD principles - Public sector + Accountability 194 M1

+ Transparency/openness
+ Integrity
+ Stewardship
+ Efficiency
+ Leadership

Operation management 156 M1

OPT One Person Tribunal 21 M1
Organisational factors - decision making 101 M1
Other governance theories + Stakeholder theory 135 M2
+ Transaction cost theory
+ CSR

Other people's money 31 M2

Output restrictions 254 M2
PAIB Professional Accountants in Business 27-28 M1
PAIB Committee table 1.6 29 M2
PAO Professional Accounting Orgranisation 5 M1
Paris Agreement 356 M4
M3
Payments for past and future performance 220-224
PCO Professional Conduct Officer 21 M4
Penalties and Appeals 21 M4
Personal accountability Organisations need an appropriate system of checks and 140 M3
balances in the form of a corporate governance framework

Personal fiefdoms Where personal greed is put ahead of the interests of 140 M3
shareholders and other stakeholders
Philosphical model of ethical decision making 107 M3

Philosphical notion of a social contract Any profession that abondons the service ideal will very 13 M2
quickly lose the moral claim to professional status
(Wilensky - 1964)

Phoenix companies 276 M1

Ponzi schemes 276 M1
Pools 272 M4
Poor audit quality the perceived inability of auditors to identify a company in 35 M3
distress prior to collapse
M3
+ Bank disasters: collapse of Baring Brothers in 1990s and
recently the fixing of the rates with LIBOR; that was
Poor risk management 210
manipulated by a large number of international banks, to
have excessive interest payments by customers

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Powers for proper purpose 2 main areas: 120 M3
+ act within power
+ do not abuse power

+ the abuse of market power

Predatory pricing + the supply of goods or services below cost price over a 250 M4
period of time
Preparation and presentation of info 84 M1
Pressure to breach fundamental principles 86 M1

Price-fixing 254 M3
Principles-based regulation 151 M4
Privacy Act (1998) 5 M4
Private and Business Sector Environment PAIB in Large Businesses; PAIB in SMEs 27 M2
Professional Obligations and benefits 1 M1
Professional A person who has a significant level of training and a high 10 M3
level of competence and skills in a specific area of
knowledge

Professional accountants - responsibilities 61 M3

Professional appointments - public practice 86 M3

Professional behaviour 65 M5
Professional competence and due care 64 M4
Professional discipline 20-21 M4
Professional ethics the application of ethical principles or framework to act in 43
the intersts of those who reply on their serices as in the M4
best interest of the public

Professional factors - decision making 103 M4

Professional judgement 16-17 M4
Professional judgement - situations Question 1.5 373 M3
Prohibited behaviours - questions 253 M3
Proprietary companies (Private unlisted + most common registered company type in AU. 117; 392
companies) + No more than 50 non-employee members.
+ Consolidated: gross operating revenue <25 m; net assets:
not more than $12.5 m
+ Require disclosure to investors, for offering for issue or
sale to the public.
+ issue shares to existing shareholders, employees,
subsidiary companies.
+ issue shares or corporate bonds: not more than $2 m, in
any 12-month period, to not more than 20 people. M4
+ ASIC may force it to change to a public company.
+ Subdivided into large and small proprietary companies

Prospects 272 M4
Protecting financial market 268 M4
Provision of non-assurance services to an audit 93 M3
clients
Public companies + more than 50 members 117 M3
+ may issue securities to the public
+ may apply to list on ASX

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Public company (Compliance) + Min 3 directors (2 residents in AU) 118 M1
+ Company secretary (one who resides in AU)
+ Audit report: Yes but including independence
requirements
+ Financial records: electronic or convertible to hard copy.
Min 7 years for record management.
+ Ongoing disclosure: No
+ Reporting requirement: Annual financial report and
director report and auditor's report to be presented at
AGM

Public entity - key parties + A minster 194 M5

+ A department
+ A public entity board and NED
+ A board chair
+ Board committees
+ A board secretary
+ A CEO
+ A CFO or Chief Accounting Officer
+ Public entry managers and other employees
+ Other stakholders

Public interest 61 M3
Public practice environment (PPE) 25 M1
Public practice roles table 1.4 26 M2
Public sector - fraud and fraud risks 231-232 M2
Public sector (Guidance) 193 M2
Public sector (Uniqueness) 192 M3
Public sector enterprises 191 M4
'Extreme subjective exaggeration', is found in misleading in M3
Puffery 261
advertising
Pursuit of excellence Performance of the professional 13 M5
Quality assurance process 19 M4
Ramsay report Independence of external auditors and made 160
recommendations for change M4

Rating agencies - role 268 M2

Real costs for wrongdoings - Competition and M3
241
consumer protection laws
Reasons for misconduct (Ethics) Pressure from client (21.43%), conflicts of interest 47 M3
(18.91%), pressure from corporate management or BOD
(17.65%)

Referrals 87 M4
Regulation of member conduct 20 M3
Regulators 150 M5
Relationship-based systems (Asian) 166 M5

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Relationship-based systems (EU) + diversity in corporate goverance practices and structure 164 M1
+ emphasise cooperative relationships and consensus
+ Resilent and enduring
+ Aka Insider system: representation of interests on the
BOD
+ More diverse groups of stakeholders on the board:
workers, customers, banks, etc.
+ Stable investment and cross-shareholdings. Hostile
takeovers rarely occuring
+ Ownership and control by cohesive groups of insiders
+ Less agency problems
+ Longstanding relationships with banks. High debt-equity
ratios
+ More selective exchange of informatio among insiders,
rather than public disclosure

Relevance and faithful representation Fundamental qualitative characteristics of finanical 296 M1

reporting has significant ramifications for sustaibablilty
reporting issues.

Remuneration - disclosure 222 M1

M3
Remuneration - ED or other senior executives 221
M3
1. Remuneration methods may fail to achieve alignments
Remuneration - issues 210
or congruency between the agent and principal.

Remuneration - NED 220 M4

Remuneration - performance-based 221 M4
Remuneration committee Setting appropriate remuneration policies for directors and 147 M3
executives. The executives must not involve in making
remuneration policy.

Remuneration of directors 129 M3

Remuneration -risks and GFC 223 M3
Reporting with integrity 85 M3
Representation 277 M1
M1
+ when a supplier stipulates that the goods it provides
must only be resold at or above a certain minimum price. It
Resale price maintenance is regarded as anti-competitive. 256
+ to do so by means of incentives, discounts, instructions or
withholding supply is not permitted
Residual loss + Incurred by principals 134 M5
+ No matter how good monitoring efforts, agent makes
decisions that are not consistent with the principal's
interests
+ Costs such as (1) excessive non-financial benefits (2)
empire building (3) risk avoidance (4) differing time
horizons

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Residual loss + Excessive benefits 134 M5
+ Empire building
+ Risk avoidance
+ Time horizons

Responsible decision making Governance, accountability, ethics 3 M1

Responsible investment 303 M5
Responsible persons (duties) + Act with reasonable care and diligence 189 M5
+ Act honestly in the best interests of the charity and for its
purpose
+ Not misuse the position of responsible person
+ Not to misuse info obtained in performing duties
+ Disclose any actual or perceived conflict of interests
+ Ensure that the charity's financial affairs are managed
responsibly
+ Not allow a charity to operate while insolvent

Restoring creditbility to accounting 36 M1

Restricted egoism + Self-interest is not allowed to function unbridled by the 54 M5
law or the disctates of what is considered fair competition
+ Can be seen as an ethically more acceptable form of
egosim.
+ It sanctions corporate self-interest and encourages
competition to the extent that it leads to the maximisation
of utility and is in the interests of society as a whole.

Rights 56 M1
Rights (Deontological) Taking actions that intend to recongise the rights of the 52 M5
parties involved
Risk avoidance Little incentives for directors to engage in risk investments 134 M5

Risk management 229 M5

Risk management committee 150 M5
Risk management incentives 301 M1
Rogue trader 275 M1
Rogue trading 275 M3
Roles of members APES 110 (para 200.2) 43 M3
Roman law Many EU countries 164 M5
Rule-based codes 68 M5
Rules-based regulation 151 M5
Runs 272 M3
Safe harbour provision The provision: which protect directors in their attempt to 124 M1
trade out of insolvency (Corporations Act)

Safeguards 73 M3
SASB - Sustainability accounting standards 346 M3
board
Scope of reporting 294 M3
Second opinions 87 M3
Self-interest threats 77 M5
Self-regulation Professions are given permission to provide services to the 9, 14 M5
public through some regulatory process

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Key words Short explanation Page Module

Service ideal 9 M5
Service ideal (3 perspectives) Wellbeing of society, pursuit of excellence, community 13 M5
service
Shareholder activism (2 reasons) + The global aging population leads to demand adequate 158 M5
financing of retirement
+ Growth in small shareholder ownership of major
corporations internationally

Shareholder powers + Power to appoint directors 129 M5

+ Approve director remuneration
Shareholder representations 278 M1
Shareholder rights 279 M1
Shareholder rights and participation mechanics 164 M1

Shareholders (different types) + Individual shareholders 141 M1

+ Institutional shareholders
Small proprietary company (Compliance) + Min 1 director (1 resident in AU) 118 M1
+ Company secretary (optional)
+ Audit report (only in certain circumstances)
+ Financial records: electronic or convertible to hard copy.
Min 7 years for record management.
+ Ongoing disclosure: No
+ Reporting requirement: Annual financial report and
director report (only in some circumstances). No need for
IAS compliance

SME sector 195 M2

SMPs - External advisers to SMEs Small and medium practices 26-27 M5
SMSF Self-managed superannuation funds 6 M5
Social and environmental reporting 331 M3
requirements - Mandatory on annual report

Social audits 347 M1

Social contract Society grants the professions monopoly power over 13
professional affairs and the power to use this power as
they see fit, as long as the power is used iin the public M4
interest

Social contract Community licence to operate 298 M1

Social contract 315 M3
Social contract bewtween profession and Exhance between promises and benefits 9 M3
society
Social enterprises 304 M4
Social impact of accounting 32 M3
Social reporting - measures + labour practices and workplace 326 M3
+ human rights
+ society
+ product responsibilities

Social sustainability 320 M3

Social sustainability - issues + Child labour 321 M5
+ Ethical trading
+ Supply chain management

Socially responsible investments (SRI) 302 M4

Societal factors -decision making 104 M3
SOEs - Public Sector Environment State-owned enterprises 30 M2

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Soft skills, knowledge and experience (SSKE) 38 M2

Soft-dollar benefits 78 M2
Special purpose financial statements 89 M2
Stakeholder concept 152 M3
Stakeholder theory Managers in an entity mange their relationships with all of 135 M2
their internal and external stateholders.
Stakeholder theory 314 M2
Stakeholder theory - Managerial 315 M2
Stakeholder theory - Normative 314 M2
Stakeholders issues Broader range of stakeholder interests // The ownership 164 M5
rights of shareholders
Standard setting FRC with oversight responsibility for the AASB 19 M3
Stateholder map 152 M5
Stewardship theories + Directors are appointed as 'stewards'. 132 M5
+ Carefully look after the resources they have been trusted
with.
+ Will naturally act favourable on behalf of the owners
(control their own self-interest)
+ Directors are professionals able to demonstrate their
commitment to the company in a virtuous and capable
way.

Sufficient expertise 85 M1
Supervisory body independence and leadership 165
M4
Suppliers ande lenders (Stakeholder) 154 M4
Surveys of current reporting practice 352 M4
Sustainability 325 M4
Sustainability - BoD's responsibilities 323 M4
Sustainability - three pillars Social, Environmental, Economic 322 M2
Sustainability reporting 325 M2
Sustsainable investment 303 M2
Symbols of a profession 16 M2
System of Qualtiy Control (elements) 19 M2
Systematic body of theory and knowledge a profesion lies in the element of superior skill. Supported 12
by a well-founded body of knowledge, which outlines
standard requirments to ensure an equivalent level of
competence and knowledge for all its members M2

Systematic framework of principles Governance, accountability, ethics 3 M2

Technical skills, knowledge and experience 37
(TSKE) M2
Teleological (Consequential) The need for individuals and groups to consider the 52
consequences of actions M2
1. Egoism 2. Utilitarianism

TFCD Task Force on Climate related Financial Disclosures 301 M2

Thematic investment 304 M2
Theories of corporate goverance + Stewardship theories 132
+ Agency theories M2

Threats 69 M2
Threats - addressing 73 M2
Threats - evaluating 71 M2

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Key words Short explanation Page Module

TPB Tax Practitioners Board 10-May M2
Trade and labour unions 247 M2
Traditional view accounting profession as demonstrating a range of 11
attributes that are focused on servicing society M2
Transaction cost theory + Sometimes referred to as transaction cost economics. 135
+ Deals with the notion of why firms or entities exist in
markets and what the boundaries are within a marketplace
+ Focuses on the aspects of opportunism M2

Tricker (1984) - Governance and performance The management role is to run the business efficiently and 140
effectively while the governance role is to give strategic
direction to the enterprise as well as ensuring M2
accountability.

+ Two-strikes and re-election of all board members of

listed companies.
First-strike: 25% or more of the eligible shareholders vote
'No' on the mandatory resolution by the board and
shareholders accept the corporation's remuneration report
present in the annual report
Second-strike: at the same AGM, a resolution to spill must
be put to shareholders.
Two-strike rule - spill the whole board 214 M2
+ Spill resolution is successful if a simple majority (>50%) of
eligible votes in favour of the spill at that time.
+ No key management personnel (KMP) are eligible to
vote on either the remuneration reports or the spill motion
+ large no. of shares often held by directors and exectives
are not permitted to vote
+ to elect new board within 90 days. All shareholders are
permitted to vote, including KMP

Types of corporations 1. Proprietary (Small private or Large private) 2. Public 116-117

(listed or unlisted) M2
UK FRC Corporate Code + Workforce and stakeholders 176-177
+ Culture
+ Succession and diversity M2
+ Remuneration

UK FRC Corporate Code (Principles and Category 1 - Board leadership and company purpose 197-204
provisions) Category 2 - Division of responsibilities
Category 3 - Composition, succession and evaluation
Category 4 - Audit, risk and internal control M2
Category 5 - Remuneration

UN Sustainable Development Goals 17 goals 293 M2

Unconscionable conduct 261 - 263 M2
UNCTAD - Financial disclosure United Nations Conference on Trade and Development 122
+ financial reporting standards required for corporate
reporting are contained in the GAAP M2

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Key words Short explanation Page Module

Utilitararianism (Teleological) Focuses on the greatest good for the greatest number of 52
people, not necessarily, the person making the decision. M2

Utilitarianism principle (5 basic steps) 54 M2

Utilitarianism principle (Main limitations) 55 M2
Utilitariansim + Normative theory, proposes how one ought to behave 55
+ Max net postive benefits to the greatest no. of people
+ Produces the best overall consequences for everyone
concerned. Greatest happiness rule may come at the cost
of a minority. M2

Victorian public sector accountability A series of stakeholders involved in the running of any 194
framework (VPSC) individual public entity.
Parliament > Minister > Portfolio Dept. > Portfolio Entities M2

Virtue ethics 58 M2
Virtue ethics - limitations 58 M2
Virtues attitudes, dispositions or traits of character that enable us 58
to do what is ethically desirable and which through
consistent practice, become habitual acts M2

Virtues Courage, courtesy, compassion, generosity, fairness, 58

fidelity, friendliness, honesty, integrity, prudence and self- M2
control

Vision 2050 - WBCSD To live well without exhausting the natural capitals of the 299
world M2
Voluntary administration (liquidator) To have an independent and suitably qualified person take 124
the control of the company so that its affairs can be wound
up in an orderly and fair way for the benefits of its creditors M2

WBCSD World Business Council for Sustainable Development 299

M2
WBCSD - Environmental issues impact on 299
company's profitability & SOFP M2
Wellbeing of society Preparing and attesting information that ensures the 13
efficient and orderly funcationing M2

Whistleblower 283 M2
Whistleblower protection act 284-285 M2

+ types of cases involving serious corporate governance

failure
+ a term referred to in US legislation
+ the situation where individuals seek to avoid their legal
liability for a wrongful act by deliberately putting
Wilful blindness / wilful ignorance themselves in a position where they are unaware of facts 210 M2
that will make them liable
+ Example case: Enron CEOs
+ Allegations of wilful blindness can have serious
reputational consequences for the individuals and
organisations cconcerned

Window dressing / earnings management 225 M2

Workable competition 248 M2

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