Finance, ESG and Professional Codes of Conduct & Ethics (8) Flashcards
(14 cards)
What is responsible financial management?
Ensuring that practices, systems and structures are put in place within the organisation to safeguard against reckless unsuitable financial decisions that are not in the best interest of securing the organisations objective.
What is CPE?
Customer Perceived Ethicality
What are some of the main types of breakdowns within company decision making?
Ill-conceived goals - goals and incentives may encourage breakdowns
Motivated blindness- unethical behaviour is overlooked when its in our interest to remain ignorant
Give a statement from the OECD 2015 guidelines on corporate governance principles
” the board should apply high ethical standards”
What is ESG investing?
ESG ( Environmental, Social and Governance) investing is the application of a set of agreed standards to filter investment opportunities.
What is the main idea behind ESG investing?
That investments are directed to green (good) companies, this will increase their share price meaning a decreased cost of capital. This will allow green companies to engage in more green projects.
The opposite also applies (bad companies receive less investment)
What is a counter argument to ESG investing?
A common counter-argument to ESG investing is that it may prioritize social or environmental goals over financial returns, potentially leading to underperformance.
What is ICAEW?
ICAEW stands for the Institute of Chartered Accountants in England and Wales.
What are some fundamental principles (ICAEW)?
Professional competence
Integrity
Profession behaviour
Confidentiality
Objectivity
Why should financial professionals be aware of fraud?
Because they play a critical role in detecting, preventing, and reporting unethical or illegal financial activity to protect stakeholders and maintain trust in financial systems.
What are the main theme areas that finance professionals should be looking at for fraud or misconduct?
Incentives and Pressures
Opportunity ( & Complexity)
Attitudes and Rationalisations
What is “incentives and pressures”?
Financial enticements can tempt individuals to commit ethically questionable or outright fraudulent acts.
What is “Opportunity ( & Complexity)”?
Opportunities for fraud such as: high turnover of auditors, lax corporate monitoring, complex financial transactions which are difficult to understand
What is “Attitudes and Rationalisations”?
Corporate environment and culture changing how attitudes and rationalisations develop in individuals.
