Sustainability and Ethics Flashcards
what are the two schools of thoughts in ethics
objectivism = there is an objective right and wrong
relativism = morality is relative to norms, values of culture
example of ethical scandal PwC
PwC Australia
Australian Government was a client, tax
Using this unpublished tax information to advise other clients
what is CSR
Corporate Social Responsibility
the responsibility of enterprises for their impact on society
what is aim of CSR
maximise value for shareholders and wider society
where is guidance available for CSR and ESG
UN Global Compact 10 principles
is ESG reporting standardised
not yet
so it is hard to COMPARE the reports of entities
what are the three ESG reporting initiatives
- EU Corporate Sustainability Reporting Directive (CSRD)
- International Sustainability Standards Board (ISSB)
- Global Reporting Initiative (GRI)
what is the EU Corporate Sustainability Reporting Directive (CSRD)
disclosure of info concerning sustainability related impact
who are the users of sustainability information
investors (understand risks and opportunities)
civil society actors (to hold companies accountable, monitor trends, compare companies)
what are European Sustainability Reporting Standards (ESRS)
12 standards
3 pillars (ESG)
What is double materiality in ESRS
if it is material from EITHER of these perspectives, it must be disclosed:
- Financial materiality on the company
- Impact on society and the environment
what does ISSB stand for
international sustainability standards board
what is the purpose of ISSB
promote comparability (via content and presentation) of sustainability reporting
requires the disclosure of information that is material to aid investor’s decision making
what are the two exisiting standards under ISSB
IFRS S1 (sustainability)
IFRS S2 (climate)
what does GRI stand for
global reporting initiative
what is GRS
voluntary group
draws on UN global impact 10 principles
if company uses this they must self declare
what are the 3 levels in the GRI system
A B and C
A is highest
how do GRI levels gain a + grading i.e. A+ B+ C+
verified by an external assessor
what is IESBA
international ethics standards board for accountants
they set out ethical guildelines for accountants
what are the 5 principles for accountants
integrity
objectivity
professional competence and due care
confidentiality
professional behaviour
what is principle 1. integrity
straightforward, honest, truthful in all professional and personal relationships
what is principle 2. objectivity
no bias or conflicts of interest or undue influence to make judgements
what is principle 3. professional competence and due care
requirement to maintain skills and knowledge
be up to date with the newest practices and regulations
what is principle 4. confidentiality
information shouldn’t be disclosed
should not be small talk in the office
should not be used for personal gain
what is principle 5. professional behaviour
avoid anything that brings the profession into disreview
what are the threats to the codes of ethics
self interest
self review
advocacy
familiarity
intimidation
what is a self interest threat
eg holding shares in a company they are auditing
eg relatives in the company
anything that link accountant to work outside of work
could influence their judgement
what is a self review threat
eg secondment to a client and now auditing their accounts they prepared
not going to pick up on their own errors
what is an advocacy threat
eg client facing legal case asking accountant to give evidence, professional objectivity is compromised
what is a familiarity threat
worked with client for long timel related, married, too sympathetic to their interests to be objective
what is an intimidation threat
subject to pressure from powerful or large client
safeguards against threats
education, training
policies in place
regulatory monitoring
external review by legally empowered 3rd party when issues arise
