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BTF > Chapter 10, 11, 12 > Flashcards

Chapter 10, 11, 12 Flashcards

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1
Q

CCAB

A

Consists of five major accounting bodies. Discussion forum and representative of profession.

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2
Q

IFAC

A

International organisation to promote high ideas of standards, ethics and accounting issues worldwide

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3
Q

what are the types of Regulation in the accountancy profession

A

Direct gouvernement regulation via legislation
Separate governed agency
Self regulation by industry itself
Combination of above

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4
Q

ICAEW Disciplinary procedures

A
  1. Complaint to PSD
  2. Conciliation possible?
  3. Investigation by the investigation committee
  4. Disciplinary procedures by Disciplinary committee
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5
Q

Make up investigation committee

A

Made up of 19 people with at least 25% not charted accountant

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6
Q

Outcomes of the investigation committee

A
  1. No case to answer so matter is closed
  2. Complaint is valid + accountant thinks its valid
  3. Complaint is Valid but member disagrees
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7
Q

Make up of Disciplinary committee

A

Made up of 3 people, 2 charted accountants and one non accountant

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8
Q

FRC’s Oversight mechanism roles

A

Non statutory
Statutory regulation
Independent monitoring

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9
Q

FRC’s accountancy scheme handles…

A

Important cases which can impact on the public interest

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10
Q

Financial conduct authority

A

An independent body regulating and supervising the financial services industry not covered by the FRC

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11
Q

Roles of the FCA

A

Promote effective competition
Ensuring the markets function well
Regulating the conduct of all financial service firms

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12
Q

Make up of a disciplinary tribunal

A

3 person - chairman is a lawyer, one layperson and one accountant

5 person - chairman is a lawyer, two laypersons and two accountants

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13
Q

Role of the executive council of FRC

A

Responsible for making preliminary enquiries into significant referrals and deciding if a full investigation is required

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14
Q

What is Governance

A

System by which organisations are directed and controlled

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15
Q

Corporate governance

A

set of relationships between a company’s management, its board, its shareholders and other stakeholders that provides the structure through which the objectives of the company are set, attained and monitored

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16
Q

Impacts of poor governance

A

falling share price
Corporate failure
criticism of accountants or auditors

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17
Q

Agency problem

A

Occurs when the managers pursue their own objectives rather than those of the shareholders

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18
Q

4 perspectives on corporate governance

A

Public policy perspective
Stakeholder perspective
Corporate perspective
Stewardship perspective

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19
Q

Public policy perspective

A

Meeting the interests of shareholders, other stakeholders and the public

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20
Q

Stakeholder perspective

A

Meeting the interests of shareholders plus parties with a different stake in the company

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21
Q

Corporate perspective

A

Aiming to achieve long term sustained value for shareholders

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22
Q

Stewardship perspective

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A

Fulfilling the legal duty to act in the best interest of the company

23
Q

Types of financial system

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A

Bank based

Market based

24
Q

Bank based financial system

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A

Volatile stock markets, more gov regulation of markets, households bear little risk so money held on deposit

25
Market based financial system
Stable stock markets, unregulated markets, households bear more risk so are more likely to hold equity investments
26
Hofstede model
Highlights the key dimensions upon which national culture varies. 1. Power distance 2. Uncertainty avoidance 3. Individualism and collectivism 4. Masculinity/femininity 5. Long term orientation 6. Indulgence versus restraint
27
Power distance
High power distance means more concentration of power
28
Uncertainty avoidance
High uncertainty avoidance means more rules, structure and clarity to reduce uncertainty and risk
29
Individualism and collectivism
concerns whether a country priorities the performance of individuals or teams. countries valuing individualism will have diverse personnel
30
Masculinity/femininity
Masculine is fact based and aggressive. Feminine is consultative and intuitive and prioritise work life balance.
31
Long term orientation
How they view planning and performance measurement. A short term view would focus on bonuses where as a long term view would focus on share options exercisable in a few years.
32
Indulgence versus restraint
Considers attitude toward personal gratification and fun
33
Governance structure
set of legal or regulatory methods put in place in order to ensure effective corporate governance
34
Principles based approach to governance
influenced by a desire to adhere to the principles of good corporate governance set out by the OCED
35
OCED's Principles of corporate governance
Promoting transparent and efficient financial markets Equitable treatment of all shareholders Relationships with institutional investors, stock markets and intermdeiaries Rights of stakeholders in corporate governance Accurate and timely disclosure and transparency of financial performance Responsiblities of the board and accountability of shareholders.
36
Shareholder led approach to governance
places more emphasis on the role of shareholders.
37
Potential consequences of poor business ethics
Negative publicity Loss of customers Failure to retain employees Falling share prices
38
Nolan principles of business values
``` Integrity Objectivity accountability openness honesty ```
39
The institute of business ethics business values
``` respect transparency fairness openness trust ```
40
Social responsibility
How far a company exceeds the minimum obligation it owes to stakeholders and society.
41
Core aspects of the king report
leadership sustainability good corporate citizenship
42
Uk Corporate governance code
Code of practice embodying a shareholder led approach to corporate governance
43
5 Sections of the UK corporate governance code
``` Board leadership Division of responsibilities Composition succession and evaluation Audit, risk and internal control Remuneration ```
44
Board leadership
The board should meet regularly enough to discharge their duties effectively with a formal agenda
45
Responsibilities of the board
Setting companies strategic aims making resources available encourage participation and effective management Set company values
46
Responsibilities of the chair
leadership of the board and ensuring its effectiveness in all aspects of its role
47
Responsibilities of NEDs
Reviewing financial controls and risk management Appoint, remove and remuneration of Eds Scrutinise management performance
48
Duties of company secretary
Ensuring good flow of information advising chair on all matters of governess Ensuring board procedures are complied with
49
Reasons why a NED may not be independent
Have been an employee within the last 5 years Had a material business relationship in last 3 years Served on the board for more than 9 years Represent a significant shareholder Have close family ties with the company
50
Nominations committee
Should lead process for board appointments.
51
In the annual report directors should
Confirm their responsibility for preparing the annual report and accounts state that they consider these to present a true and fair view Confirm whether going concern has been adopted report material uncertainties confirm they have carried out a robust assessment of principle risks
52
What should the Audit committee be made up of
at least 3 NEDs for premium listed | at least 2 NEDs for smaller listed
53
Responsibilities of Audit committee
Financial statements Financial controls External audit Whistle blowing
54
Stewardship
Is the accountability of management for the resources entrusted to them as agents of the companies owners

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