Ethics, corporate governance and social responsibility

Question 1

How can a government influence the economy?

Answer 1

Macroeconomics
Legal and market regulations
corporate governance and social responsibility

Question 2

Define: Fiscal Policy.

Answer 2

Government policy on taxation and government spending

Question 3

What are the differences between direct and indirect taxes?

Answer 3

Direct - Income and corporate tax

Indirect - VAT , duty fuel and council tax

Question 4

Define: Monetary policy

Answer 4

government policy on money supply, the monetary system, interest rates and the availability of credit.

Question 5

What happens if interest rises?

Answer 5

Spending falls
Investment falls
Foreign interest
Exchange rate increases
Inflation rate falls

Question 6

Define: CPA

Answer 6

Corporate political activities.

The involvement of companies in the political process with the aim of influencing policies towards their preferences

Question 7

What are the types of CPS?

Answer 7

Buffering - Warning the government about the impact

Bridging - being aware of new legislations

Question 8

What are the institutes involved in the global trade and growth?

Answer 8

WTO
The G8 (Russia, GB, USA, Japan, Canada, Italy, France, Germany)
IMF
World Bank
EBRD

Question 9

What are the different market regulations?

Answer 9

The Competition Act 1998
Industry regulators
The competition and market authority
The restrictive practices court
European union competition court
Self regulation

Question 10

Define: Corporate governance

Answer 10

The system in which companies and other entities are directed and controlled

Question 11

What are the types of stakeholders?

Answer 11

Internal - Employees and management
Connected - Shareholders, customers, suppliers, financiers
External - Community, government, trade unions, pressure groups

Question 12

Design the Mendelow diagram

Answer 12

Power/Influence

Level of interest

Question 13

What are the failures of corporate governance?

Answer 13

Domination by a single individual
Lack of involvement of board
Lack of adequate control function
Lack of supervision
Lack of independent scrutiny
Lack of contact with shareholders
Emphasis on short term liability
Misleading accounts and information

Question 14

Benefits of corporate governance?

Answer 14

Risk reduction
Performance
External support

Question 15

Define UK Corporate Governance Code

Answer 15

Government led Governance code mainly for the FTSE350. Companies must comply or explain any departures from it in the financial statements

Question 16

What is the UK Corporate Governance Code Framework? LEARR

Answer 16

Leadership (chairman, chief executive, EDs and NEDs)
Effectiveness (board should have a wide range of skills)
Accountability (present a balanced assessment)
Remuneration (balance of directors and NEDs)
Relations with shareholders - AGM meetings

Question 17

Factors to determine if something is ethically wrong?

Answer 17

Values - rights and obligations from society
Principles - eg. CIMAs ethical principles
Motivation - why a person acted as they did
Consequences - does the outcome justify how it was carried out.

Question 18

What are the range of approaches when making ethical decisions? UPACE

Answer 18

Egoists - looks after their own needs
Pluralists - Considers if stakeholders are impacted
Absolutists - is it fundamentally correct? Legal?
Consequentialists - focuses of the consequences
Utilitarians - maximising the benefit to society

Question 19

What are CIMAs fundamental principles?

Answer 19

Integrity - Not to be party to anything misleading
Objectivity - avoiding all forms of bias, prejudice and partiality
Professional competence and due care- remain up to date
Professional behavior - protect CIMAs reputation

Question 20

What are Caroll and Buchholtz’s layers of CSR?

Answer 20

Economic responsibilities - Make sure the company is making a return for shareholders
Legal responsibilities - To obey the law
Ethical responsibilities - Must a ethically
Philanthropic responsibilities - Donations