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BTF > Chapter 10, 11, 12 > Flashcards

Chapter 10, 11, 12 Flashcards

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

A

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

23
Q

Types of financial system

A

Bank based

Market based

24
Q

Bank based financial system

A

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

25
Q

Market based financial system

A

Stable stock markets, unregulated markets, households bear more risk so are more likely to hold equity investments

26
Q

Hofstede model

A

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
Q

Power distance

A

High power distance means more concentration of power

28
Q

Uncertainty avoidance

A

High uncertainty avoidance means more rules, structure and clarity to reduce uncertainty and risk

29
Q

Individualism and collectivism

A

concerns whether a country priorities the performance of individuals or teams. countries valuing individualism will have diverse personnel

30
Q

Masculinity/femininity

A

Masculine is fact based and aggressive. Feminine is consultative and intuitive and prioritise work life balance.

31
Q

Long term orientation

A

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
Q

Indulgence versus restraint

A

Considers attitude toward personal gratification and fun

33
Q

Governance structure

A

set of legal or regulatory methods put in place in order to ensure effective corporate governance

34
Q

Principles based approach to governance

A

influenced by a desire to adhere to the principles of good corporate governance set out by the OCED

35
Q

OCED’s Principles of corporate governance

A

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
Q

Shareholder led approach to governance

A

places more emphasis on the role of shareholders.

37
Q

Potential consequences of poor business ethics

A

Negative publicity
Loss of customers
Failure to retain employees
Falling share prices

38
Q

Nolan principles of business values

A 
Integrity 
Objectivity
accountability
openness
honesty
39
Q

The institute of business ethics business values

A 
respect
transparency
fairness
openness
trust
40
Q

Social responsibility

A

How far a company exceeds the minimum obligation it owes to stakeholders and society.

41
Q

Core aspects of the king report

A

leadership
sustainability
good corporate citizenship

42
Q

Uk Corporate governance code

A

Code of practice embodying a shareholder led approach to corporate governance

43
Q

5 Sections of the UK corporate governance code

A 
Board leadership
Division of responsibilities
Composition succession and evaluation
Audit, risk and internal control
Remuneration
44
Q

Board leadership

A

The board should meet regularly enough to discharge their duties effectively with a formal agenda

45
Q

Responsibilities of the board

A

Setting companies strategic aims
making resources available
encourage participation and effective management
Set company values

46
Q

Responsibilities of the chair

A

leadership of the board and ensuring its effectiveness in all aspects of its role

47
Q

Responsibilities of NEDs

A

Reviewing financial controls and risk management
Appoint, remove and remuneration of Eds
Scrutinise management performance

48
Q

Duties of company secretary

A

Ensuring good flow of information
advising chair on all matters of governess
Ensuring board procedures are complied with

49
Q

Reasons why a NED may not be independent

A

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
Q

Nominations committee

A

Should lead process for board appointments.

51
Q

In the annual report directors should

A

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
Q

What should the Audit committee be made up of

A

at least 3 NEDs for premium listed

at least 2 NEDs for smaller listed

53
Q

Responsibilities of Audit committee

A

Financial statements
Financial controls
External audit
Whistle blowing

54
Q

Stewardship

A

Is the accountability of management for the resources entrusted to them as agents of the companies owners

BTF (4 decks)

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