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Financial Reporting & Analysis > Sustainability and Ethics > Flashcards

Sustainability and Ethics Flashcards

1
Q

what are the two schools of thoughts in ethics

A

objectivism = there is an objective right and wrong

relativism = morality is relative to norms, values of culture

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2
Q

example of ethical scandal PwC

A

PwC Australia
Australian Government was a client, tax

Using this unpublished tax information to advise other clients

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3
Q

what is CSR

A

Corporate Social Responsibility

the responsibility of enterprises for their impact on society

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4
Q

what is aim of CSR

A

maximise value for shareholders and wider society

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5
Q

where is guidance available for CSR and ESG

A

UN Global Compact 10 principles

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6
Q

is ESG reporting standardised

A

not yet

so it is hard to COMPARE the reports of entities

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7
Q

what are the three ESG reporting initiatives

A
  1. EU Corporate Sustainability Reporting Directive (CSRD)
  2. International Sustainability Standards Board (ISSB)
  3. Global Reporting Initiative (GRI)
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8
Q

what is the EU Corporate Sustainability Reporting Directive (CSRD)

A

disclosure of info concerning sustainability related impact

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9
Q

who are the users of sustainability information

A

investors (understand risks and opportunities)

civil society actors (to hold companies accountable, monitor trends, compare companies)

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10
Q

what are European Sustainability Reporting Standards (ESRS)

A

12 standards
3 pillars (ESG)

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11
Q

What is double materiality in ESRS

A

if it is material from EITHER of these perspectives, it must be disclosed:

  1. Financial materiality on the company
  2. Impact on society and the environment
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12
Q

what does ISSB stand for

A

international sustainability standards board

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13
Q

what is the purpose of ISSB

A

promote comparability (via content and presentation) of sustainability reporting

requires the disclosure of information that is material to aid investor’s decision making

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14
Q

what are the two exisiting standards under ISSB

A

IFRS S1 (sustainability)
IFRS S2 (climate)

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15
Q

what does GRI stand for

A

global reporting initiative

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16
Q

what is GRS

A

voluntary group
draws on UN global impact 10 principles

if company uses this they must self declare

17
Q

what are the 3 levels in the GRI system

A

A B and C

A is highest

18
Q

how do GRI levels gain a + grading i.e. A+ B+ C+

A

verified by an external assessor

19
Q

what is IESBA

A

international ethics standards board for accountants

they set out ethical guildelines for accountants

20
Q

what are the 5 principles for accountants

A

integrity
objectivity
professional competence and due care
confidentiality
professional behaviour

21
Q

what is principle 1. integrity

A

straightforward, honest, truthful in all professional and personal relationships

22
Q

what is principle 2. objectivity

A

no bias or conflicts of interest or undue influence to make judgements

23
Q

what is principle 3. professional competence and due care

A

requirement to maintain skills and knowledge

be up to date with the newest practices and regulations

24
Q

what is principle 4. confidentiality

A

information shouldn’t be disclosed
should not be small talk in the office
should not be used for personal gain

25
Q

what is principle 5. professional behaviour

A

avoid anything that brings the profession into disreview

26
Q

what are the threats to the codes of ethics

A

self interest
self review
advocacy
familiarity
intimidation

27
Q

what is a self interest threat

A

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

28
Q

what is a self review threat

A

eg secondment to a client and now auditing their accounts they prepared

not going to pick up on their own errors

29
Q

what is an advocacy threat

A

eg client facing legal case asking accountant to give evidence, professional objectivity is compromised

30
Q

what is a familiarity threat

A

worked with client for long timel related, married, too sympathetic to their interests to be objective

31
Q

what is an intimidation threat

A

subject to pressure from powerful or large client

32
Q

safeguards against threats

A

education, training

policies in place

regulatory monitoring

external review by legally empowered 3rd party when issues arise

Financial Reporting & Analysis (7 decks)

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