Ch 3 - Strategic Analysis - Ethics and CSR

Question 1

What is CSR ?

Answer 1

A firms obligation for maxing positive impacts to stakeholders while minimising negative effects

Question 2

Arguments for CSR

Answer 2

• Attract Customers
• Attract higher calibre staff
• Access wider HR base (avoid discrimination)
• Avoid fines and taxes
• form of advertising
• increase financial value of the business

Question 3

Arguments against CSR

Answer 3

• the business of business is business - Milton Friedman i.e to earn a profit so mgrs duty to act in way to max wealth if do anything else he fails to meet this duty !
• Practical reasons - cost / time / money / turning aware unethical customers, suppliers

Question 4

Approaches to CSR - Carrolls model was a 4 part model helps orgs understand obligations society expects. What is it.

Answer 4

Philantropic Resps - be a good citizen
Ethical - Be ethical
Legal - obey the law
Economic - Be proftiable

Question 5

Carolls 4 strategies for CSR

Answer 5

1) Reaction - denies resp for social issues
2) Defense - admits resp but fights it typically to defend it current position
3) Accomodation - Accepts and does what is demanded of it by groups
4) Proaction - Go beyond industry norms, attempt to improve society

Question 6

Ethical Stances. J, S and W suggested 4 stances in relation to the extent orgs with exceed its min obligations to stakeholders. what were they ?

Answer 6

1) Short term shareholder interest (Laissez fair)
- Max profit in fin year
- Believe gov response to set legal min standard anything above is detriment to taxpayers

2) LT S interest (enlighted self interest)
- same as abve but for LT, may incur cost now to achieve returns in the future.
- Aware of stakeholders and impact on LT

3) Multiple stakeholder Obligation
- Org exists for more than profit -
- Vier orgs as having a role to play in society

4) Shaper of Society
- Idealogicially driven stance - see vision as being focus for all its actions
- fin and other stake interests are sconds to overiding prpose of org

Question 7

Sustainability - What is it

Answer 7

• use of resources in a way that does not compromise future gens
• Not only helps env but also strengthens the bus and ensure LT survival

Question 8

CIMA identified implications and considerations for incorporating sustainability and CSR into strategy. What were they

Answer 8

a) Ethical principles go beyond law - create brand value
b) once adopted bottom line benefits
c) tone comes from top
d) MI on performance vital for monitoring impact
e) comms / reporting needs to be more than lip service it needs evidence
f) Accountants VIP for ethical resp

Question 9

Why do have sustainability plans ?

Answer 9

1) Compliance 2) Reputation Risk 3) Cost cutting and efficiency

Question 10

What are the 10 elements of org sustainability

Answer 10

1) Mgmt committment
2) Understand key sustain drivers for org
3) Implement driveres into orgs strategy
……… Strategies and Oversirght
4) Resp of all
5) breakdown of targets into smaller for divs
6) processes tat enable sust issues to be taken into account
……….. execution and alignment
7) training
8) Include targets in perf appraisal
9) champions
10) Monitoring and Reporting
……………………… Performance and Reporting

Question 11

What is CIMA Code Ethics

Answer 11

Integrity, Objectivity, Professionalism, Confidentiality, Competence and due Care

Question 12

What is CIMA Ethic - Inegrity

Answer 12

• Fair dealing and truthfulness

- Not associate with comm / report where info is false / provided recklessley or is incomplete

Question 13

What is CIMA Ethic - Objectivity

Answer 13

Ensure judgement is not compromised because of conflict of interest

Question 14

What is CIMA Ethic - Competence / Due Care

Answer 14

Knowledge and skill is kept up to speed, CPD done etc

Question 15

What is CIMA Ethic - confidentiality

Answer 15

info is not disclosed / or used for personal advantage

Question 16

How to resolve ethical conflicts

Answer 16

1) Gather facts
2) Establish issue
3) Refer to fundamental principles
4) Follow internal procedure
5) Look at alt courses of action
6) Conult appropiate person in firm
7) Obtain advise from profession intsitutttes
8) Leave / Resign

Question 17

What are ethical threats

Answer 17

An advocacy threat occurs if a professional accountant is promoting a client or employer’s position or opinion to the extent that the accountant’s subsequent objectivity is compromised.

A self-interest threat occurs if a financial or other interest inappropriately influences the accountant’s judgment or behaviour.

A self-review threat is the danger that the accountant will not properly evaluate the results of a previous judgment (by themselves or another member of their organisation) but will then rely on that judgment as part of a current service they are providing.

An intimidation threat arises when the accountant is deterred from acting objectively by an actual or perceived threat

A familiarity threat arises when the accountant becomes so sympathetic to the interest of another as a result of a close relationship that their professional judgment becomes compromised.