Sheet1GOVERNANCE CONCEPTSAuthorsKey wordsPageOECD (1999)The CG strcuture specifies the distribution..monitoring performance4Stewardship theoryGood CG aims to ensure that organizations run in the best interests of their stakeholders5Donaldson & Davis (1991)naturally act favourably on behalf of the owners6Pastoriza and Arino (2008)Agency theorythe agent may not naturally act for thes best interest of the principal7Jensen & Meckling (1976)the agent will not always act in the best interest of the principal7Lord Cadbury (CFACG 1992)series of checks and balances8Milton Friedmanprimary responsibility of a corporation is to maximise the wealth of its shareholders12Anglo-American lawduty of board is firstly to shareholdersfrom duty of directrors to act in good faith in best interest of Coy16ASX Principles Remuneration committee's structure19Professional Accountants in Business Committee (PAIB) of IFACcompanies should establish a strategy committee28Nomination committee indentifies and selects ppl who will replace staff when they leave28Audit committee is in many ways the most important in relation to the conformance aspects of CG28US Sarbanes - Oxley Act 2002must have an audit committee29US Sarbanes - Oxley Act 2002provide audit committee has the responsibility to 'hire and fire' auditors29Percy (1995)audit committee's review should place particular focus on changes in accounting policies..29Bosch (1995)audit committee might merely impose an additional layer of bureaucracy30powers of shareholders31Australian Shareholders' Association (ASA)active in striving for improvements in CG of Australian companies32Institutional shareholderspossess great power to control corporations through voting power they exercise in respect of these shares32California Public Employees' Retirement System (CalPERS)33Milton Friedmanto use its resources and engage in activities designed to increase profit..without deception and fraud35Anglo-American lawdirectors must act in the best interests of the corpoation as a whole. But, if director belives that acting to this approach will lead to long-term success --> mistaken36

Milton Friedmanmaximise shareholder wealth 'within the rules'. 'Rules' include expectations about proper treatment of all stakeholders36

Edward Freeman (1984)important of stakeholders36Cadbury report - Financial Aspects of CGgave recommendations to companies. The concept of 'comply and explain'41Ramsay (2001)did not recommend a ban on the provision of non-audit services to audit clients43OECD Principlesprinciples-based - framework for individual nations (6 core principles)45OECDduties to stakeholders as an important and integral part of CG48Listing Rulestop 300 companies must not only have audit committee but also must meet recommendation 4.256Sarbanes-Oxleyrequire that all members of audit committee must be independent at all times 56Nestor & Thompson (2000)European emphasise 'cooperative relationship and consensus', whereases Anglo-Saxon emphasise 'competition and market processes'62

La Porta, Lopez-de-Silanes & Schleifer (1999)most European countries, ownership and control are held cohesive group of insiders63Nestor & Thompson (2000)the agency of problem of the market-based system is much less of a problem in the relationship-based system63

Weil, Gotshal & Manges (2002)63Yasui (1999)in the west, the board members are outsiders representing the shareholders. In Japan, insiders leading management67Pande & Kaushik (2011)71Harris (1997)74Uhrig (2003)74Monks & Minow (2008)there has been significant abuse, not just by director but by all..75Kirkpatrick (2009)the remuneration of boards and senior management also remains a highly controversial issue in many OECD countries76

IFAC PAIB (IFAC 2004)identified risk as being important for both performance and conformance aspects of governance78

Sheet4Ethics and Corporate Governance

Module 1: Accounting and SocietyPage #WorkshopPart A: Interaction with Society /Accounting in SocietyRecruiting the Best (Add value, Lifelong and Professiona capabilities)12Depiction of Accounting (Stereotype of Accounting Dimik&Felton)12Coate: +Prudence (Social skills), - Colourful Accountant(Downside of Service ideal)12Moral Agency (Ethical Approaches to achieve outcomes)13Technical Functions and Social Impact131.- Understanding Accounting (Social practice: Professional capabilities + Service ideal)TSKE/SSKE132.- Social Impact: Less Prescriptive more judgments) Lonegan: GFC133.- Theoretycal Analysis of Social Impact13Body of Knowledge: Parkers & Millers14Macro Level ( Business & goverments - Power and control)14Micro Level (Manager & Employee - Motivation and Behaviour)14Capabilities Considerations (Sufficient capabilities=complex&difficult professional Judgements)14TSKE: General Accounting Activities14SSKE: Social Skills & Capabilities well developed4Both vital : Lifelong learning for both activities.14Accounting roles, Activities & Relationship14PAIB : Professional Accounting in Business15IFAC-PAIB, value adding, Value creation,.15Contemporary role/Main activities of a Professional Accountant.151. Accountants employed in Large Business (Strategy development & implementation)152. Public Practice: Accounting Firm Environment-Big 4, Large 7 second tier firms)153. SME's ( very small SME's relying in SMP's practice. Large firms :few or one Accountant)15IFAC: SME'S focus on compliance, not being much value in performance(profitability)15PAIB: Accountans reponsible to generate value for the success of company.15Ethics ( Moral, Ethics, Business Ethics, Professional Ethics; APES 110, Guidelines &rules)15Accounting and Effective Governance15Accounting: OECD 2004, Social practice.15Corporate Governance: IFAC-Performance + Conformance15

Part B: Accountants as a member of a profession.Trust and Profession: Integrity, Autonomy, Professional Judgement16Atributte of a Profession: Autonomy and Service Ideal16A systematic Body of Theory and Knowledge16An Extensive Education Process16An Ideal Service to the Community16A High degree of Autonomy and Independence (Objectivity and integrity)16A code of Ethics for members (APES 110, AASB, AUASB, Corporate Law)16A Distintictive ethos or culture ( CPA)16Application of Professional Judgement (Schon 1988)17The Existence of Governing Body (CPA membership)17Professions: The 'market control' view (Monopolistic Power, Self Regulation (West 2003)17Evolution of the profession8Professionalisation: Larson - Power creation8Power and Exclusion: (Ethics Vs Profit - Gold Collarism, Kelley 1985)8Ideals of Accounting: E's Education, Ethics, expertise and Entrepreneuship8Accoutnting Under Challenge8Credibility of the profession: Ethics & Failure: GFC failure-Manage Risk & underdtanding Accounting valuation8Greater Regulation: AASB, Asic, FRC reporting, and Corporation8Restoring Credibility to accounting: IFAC 2009 Recomendations, Sarbanes Oxly 2002, Coso 2004, CLERP 9, CPA,)8

Reading 1.1: How softskills can boost your careerReading 1.2: The strategic accountantReading 1.3: Public practice: firm of the futureReading 1.4: Profile: Roel Van Vegel -The sweet sounds of success

Questions: 1.1 Recall Lonergan' GFC failured, Was that slow reaction the only cause of GFC?Questions: 1.2 Outline 4 possibles accountig-related roles with an SME and for each role indentify the task to be undertaken?Questions: 1.3 Reading 1.4. Is that busienss ME or an SME? How did the PAIB add value to Andrew Rueu's business?Questions: 1.4 Why have SME's not relied in the past on theirexternal accoutnants for business asvisory?Questions: 1.5 Discuss 4 situations where accountants may aplly professional judgements in their course of work?

Module 2: EthicsPage #WorkshopPart A: Professional ethics29Apply the concepts of service ideal29The well-being of society29The pursuit of excellence ( Professional Behaviour)29Community service (Relationship of trust)29A code of ethics for professional accountants210The conceptual framework (principles-based) approach (APESB : blended code of Principles and rules)210Threats210Examples of threats210Safeguards (Institutionals & In the work Environement)211The public interest - an introduction to the code (Accountat primary loyalty is with the public - not client/employer)211Fundamental principles of professional conduct212Integrity(Straigforward, honest - Financial information)212Objectivity (Impartial, honest, free from conflict of interest)212Professional independence to the provision (Independence=Objectivity + Integrity)12Independance of mind (reality ) and appereance(more desvastating, Lack of indepen)12of assurance service213Common threats to independence (Examples)213Professional independence in practice (s290-291)213Provision of non-audit service to an audit client (S290) - Additonal value for an Audit Client)213Professional competence and due care213Confidentiality213Professional behaviour214Code of ethics for members in public practice214Professional appointment (acceptance should no be granted automately - Solicitation)214Referrals (special assigment)214Conflicts of interest214Incompatible activities (self interest threat)214Conflicts between two or more clients (members must not provide services unless consent to do it is received)214Second opinions (seek permission from clients)214Fees and other types of remuneration214Professional fees (billing arrangements)214Contingent and referral fees (Actions of transactions/Result of services)214Commissions and soft-dollar benefits214(Inconsitent with CPA - Professionalims, Fees for commissions: Self interest threat to objectivity)14Marketing professional services (Consistency with Professional Behaviour)214Code of ethics for members in business2Potential conflicts (Undertake task inconsistent with professional duties)2Preparation and reporting of information and earnings management (Revenue Recognition, Greed)2Reporting with integrity (Public Interest - trust)2Professional And ethical failures by menbers/public practice - Sonya Denisse & Trevor Neil)2Financial interests (Threats and Safeguards)2Gifts, hospitality and inducements2Self-regulation and professional discipline2The profession's self-regulatory process2Accounting professional and ethical standards board (APESB) (high level of Professional Practice)2Roles of APESB2The quality assurance process (Components: Standard setting, Conformity withstadards, preactice review, Firm regulations)2APES 320 Quality control for firms2Policies and procedures for address each element2Professional discipline (To achieve credibility & confidence of the general Public / Sources of complaint, CPA)2Procedures2Penalties and appeals2Part B: A conceptual framework for ethical behaviourTheoretical approach to ethics218A concept map219Normative theory - 2 key functions:219(Framework for judging moral righteness and framework decision making to resolve Ethical problems)19Teleological theories (consequential)219Ethical egoism219Differences between psychological egoism, ethical egoism (table 2.5)219and utilitarianism219Utilitarianism219Five basic steps219Limitation of consequential and utilitarian analysis219Dentological theories (Duties)219Rights theory219Justice theory (Aristoteles)219A philisophical model of ethical decision-making (Mathison 1988)220Aplication of multiples theories to unethical dilemma20Virtue ethics220An introduction to professional and ethical judgment220Kohlberg's theory of cognitive moral reasoning and development220Six stages of cognitive moral development220Level 1: Pre-conventional220Level 2: Conventional220Level 3: Post-conventional220Levels of moral reasoning in accounting220Factors influencing decision-making220Individual (Cognitive development) - Kholbers theory220Organisational ( organisational culture, Code of ethics, Others significants)220Schein's six primary mechanisms(Leader rely on this, can achieve cultural success, cultural failure, cultural change)220Stress in the workplace220Professional (APESB)220Societal220Law and regulation220Culture (Confucionism: Japan, China), Relativism220Ethical decision-making models (Influences on an Individual Decision) - HEURISTIC221American Accounting Association Model (AAA) - Lagender & Rockness221Seven steps model221AICPA Decision Tree221Reading 2.1 Accountants, Ethical issues and the Corporate Governance text?Reading 2.2 Six cures forcurrent Ethical BreakdownsReading 2.3 Ethics Decision tree fro CPAs in business and industry

Questions: 2.1 Consider Implications of an accountant with isufficient time to perform duties? What should you do?Questions: 2.2 Your firm executes investment transactions for a client. You are now asked to audit this client, I s there a threat to yur independence?Questions: 2.3 A new qualified CPA is asked to perform an audit to small company, The accountant has not experience in that field, What should you do?Questions: 2.4 You have been asked to audti 1/2 year finanical statement, (second opninion?Questions: 2.5 You mamage fundraisng company, Soft dollar benefits?Questions: 2.6 New assurance Services without previuos experience, Does this complain with the Code of Ethics?Questions: 2.7 Explain why integrity is an essential attributer of the professionQuestions: 2.8 Quality assurance and ethical issues arising from?Questions: 2.9 Utiliarims definitions, problems and difffences?Questions: 2.10 Does you employee have a right to enquiie into activitiess of your personal life? In realtion of rights theory?Questions: 2.11 Which Stage of Kholbert theory of CMD best describe the decision making behaviour of Accountants

Module 3: GovernancePage #WorkshopPart A:Overview of Corporate Governance ( Information and Comunication)342Goverance(CG = Performance + conformance)34Accountants and Effective Governance35Key Factors driving the need for better Corporate Governance3Importance of CG35The Need of CG36Stewardship Theory36Governance Definintions / Governance Involves3Agency Theory (Jensesn and Meckling - 1976 : 2 Key assumptions, Barriers to Goal Congruence)37Agency Issues and Costs38Monitoring costs : Cost associated by principals in order to know & control agency matters)38Bonding costs : reducing residual & monitoring cost for a greater remuneration - borne by agent)39Residual costs: (Loss & Cost under performance : An agency cost borne by principals)39Excessive non-financial benefits: Over-consumption of perks (lack og goal congruence: reduce both profitability and Cash flow)39Empire building: Financial rewards: Power and influence increase: purcharse subsidiare)39Risk avoidance: (Risky investment avoidance because of fixed salary package)39Differing time horizons : Perpetual cash flows, interest in the firm for the duration of their employment)310323232

Components of Corporate Governance3112Corporations11Directors and Boards13Board of Directors (Bosh Report in Australia, Rogers CJ ( AWA Ltd)14Alternative board structures and relationships (2 tier board structures: top tier - supervisory and second tier - management16Board Chair - Independence( OECD: chair not mention should be Indep.. / UK CGC should be indep..)16Role of CEO - Agent of the Board ( Board member and CEO/ Agency relationship arise)16Independence of directors17Duties and Responsibilities of Directors19Conflict of interest (Independence od Ppereance and Independence of mind help to assess conflicts of interest)19Act in the corporation's best interest ( good faith, Honestly and without fraud or collusion)20Exercise powers for proper purpose: ( do not abuse their power - Example Advance Bank)21Nominee directors ( use power for proper Purposes when nominate & appoint directors))21Duty to retain discretion ( do not delegate to theird discretion to act as a director)21Duty of care, skill and diligence (Centro case)22Duty to avoid insolvent trading: (UK / US flexible system, Australia: stricter *Shut down the organisation)26Committees of the Board27Risk management committee27Nomination committee28Remuneration committee28Audit committee ( AASB: Objectives ans Resposabilitites, Benefists and limitations)28Shareholders ( Bosch -1995) rights and Obligations3313Individual Shareholders ( ASA , Media an Internet)3323Institutionals Shareholders (Insurance companies/ funds ) (Hampel Report, now reflected in UK CGC)3323Internal and External Auditors34Regulators : Essential to ensure that companies can compete against each other in a fair an reasonable manner)34Regulations versus De Regulations (Free market (self interest- Miltond Friedman)Principle based ( OCED, ASX CGC and UK FRC) versus rules -based regulations ( US Sarbanes - Oxley Act)35Stakeholders3364Stakeholder concept36Stakeholder map37Employees38Suppliers and lenders39Consumers (customers)39Part B:International Perspective on Corporate Goveranance3402Global Push for Improved Governance40Key Factors driving the need for better Corporate Governance40Thirty years of Corporate Goverance3415International Development Timetables3415United Kingdom415Cadbury report (1992) ( Concept of Comply or Explan / If not, Why not reporting)3415Financial aspects of corporate governance (1992)35Principal recommendations of the board35Non-executive vs independence directors35Strategic role of the board35Greenbury Committee3425Enhanced transparency on directors' remunerations35Hampel committee35Importance of corporate governance35The combined code and the turnbull guidance35Combined code of 18 principles and 48 code provisions35Number of non-executive directors35Higgs review and smith report35Composition of the board and sub-committee35UK combined code on corporate governance (FRC 2008)35United States3425Committee of sponsoring organisations of threadway commission (COSO)3425(Report realted to Internal control and Enterprise risk management)35Internal control - integrated framework35Fradulent financial reporting35Enterprise risk management35Sarbanes-Oxley act ( Strenghtened Audit requirements, increase financial disclosures, Internal controls)3425Audit reform35Corporate accountability35Financial disclosures,loans and code of ethics35Criminal fraud and whistleblowing35The business roundtable35Eight guiding principles of corporate governance35California public empliyees retirement system (CalPERS)35Corporate governance investment program35Other International Approaches3425International Corporate Goverance Network35OECD Principles of Corporate Goverance35APEC5Australia436Bosch committee (1995)36Significant corporate governance issues36Ramsay report (2001)3436Key recommendations on independence of auditors36ASX corporate governance principles and recommendations (2007)3436Eight Principles and recommendations36Corporate Law Economic Reform (CLERP) 9 Act (2004)3436Audit reform36Financial reporting36Other (Whistleblowing, shareholder participation)36Governance in other sectors36Corporate governance in not-for-profit sector36Corporate governance for SMEs36Public Sector ( Upright Report: Government entitites examination)6Part C:Codes and Guidance45OECD Principles of Corporate Governance456OECD principles of corporate governance3456Six principles of corporate governance3457Basis for effective corporate governance framework3457Rights of shareholders and key ownership functions3467Equitable treatment of shareholders3477Role of stakeholders in corporate governance3487Disclosure and transparency3497Other principles regarding disclosure/transparency3497Responsibilities of the board3497GFC Response: Understanding The OECD Principles7Steering Group: Complementary of OECD principles7UK Finanancial Reporting Council Corporate Governance Code (Apendix 3.1) last part of material Module 33517Main Principle: Comply or explain7Section A: Leadership (Roles of Board, Divison of Resposabilitites, chairman)7Section B: Effectiveness ( Board: Composition, Appointment, Commitment, Development, Information, Supprot, Evaluation, Reelection)7Section C: Accountability(Risk management and Internal control, Audit Committee and Auditors,)7Section D: Remuneration (Components of remuneration, Procedures)7Section E: Realtion with Shareholders( Dialogue, Constructive use AGM)7ASX CGC Recommendations (if not why not reporting requirement): 8 principles537Lay solid foundations for management and oversight547Structure the board to add value547Promote ethical and responsible decision making (code ofconduct)557Safeguard integrity in financial reporting (Audit committee)567Make timely and balanced disclosure567Respect the rights of shareholders577Recognise and manage risk577Remunerate fairly and responsibly - Remuneration Committee587Code for Institutional Investors ( ways for instituional Shs views to performance)The UK FRC Stewardship Code ( disclosure of voting activities)3The Blue Book : Guide for fund managers and Corporations 2009 - important for FSC)3Part C:International Perspective on Corporate Goveranance8Alternative International Approaches to Governance3598Market Based System (Outsider system, Shareholder systems or Anglo Saxon System)3608Corporate Goverance of US and UK (Shareholders primary focus)38CEO/Chair same - Principal agent realtionshipFocus in Funds and Insurance company, less in banks ( Disclosures based)8Realtionship Based System - European approaches3628Stakeholders Active recognized38Banks play an active role, long term large shareholders protect to threat of takeovers.38Insiders groups monitor management, Reduce of Agency problems38Different polititcal, legal and regulatory Structures (European contries)3638Company Law, Employee representation, Stakeholders issues, Shs rights and participation mechanics, Board Structure, roles and responsibilities, Supervisory body independence and leadership, Disclousre38Germany and France3648Relationship Based System - Asian Aproaches3658Differing Corporate Governance models ( Concentration of Ownership of companies)3658China: Governement - controlled organisation, 6 maint types of Enterprises.3678India3708Japan(Outsider boards representing SHs or board member are insiders leading managemet)3678Family Controlled companies and Business Networks - East Asian708Governance in Other Sectors71Not-for-profit organizations71Small and medium enterprises72Public sector73Part D:Governance Failures and Improvements75Common Failure Factors75Remuneration: 2 main issues76Wilful blindness76Sarbanes-Oxley regulations aims to prevent this type of approachby requiring CEO and CFO sign off on financial accountsand certify the appropriateness of internal controls

Complex financial instruments77Improving Corporate Governance77Risk Management77Internal control and risk management: ISA 215-Ifac2009, Sarbanex Oxley Act US 2002)77Internal Control and Risk systems - Including accounting , Risk Control and internal audit78Independence of the Chair79Continued evolution of CG79Part :Case Studies of Governance FailureExample 3.3 Centro caseExample 3.5 The Enron audit committeeCase 3.3 Global Financial Crisis3Bailouts, Bankrupticies and takeoversKey issues arising from the global financial crisis and Repsonses IFAC (paib 2004)

Reading 3.1: The corporate governance lessons from the financial crisisReading 3.2: The chairman reflectsReading 3.3: The social responsibility of business is to increase its profitsReading 3.4: Responsible business engagement with society

Question 3.1: What is major issue that arise form an agency relationship, where powers of control are delegated. (Conflict of intererst)8Question 3.2:Describe key aspects of the principal and agent problems that exist within corporations and that can result in loss of value for the shareholders.11Question 3.3:Classify each of the items above as having either a performance focus or a conformance focus15Question 3.4:Describe the role of the CEO, and give example of the types of activities the CEO and the board should perform17Reflective question: Do you agree with idea that different directos within same organization may be held to have a different standard of care based on their qualifications?25Question 3.5:Examine Enron audit committee actions in light of the earlier discussion on the benefits and limitations of audit committee. Evaluate effectiveness of the committee and what steps you would recommend to improve the Enron audit committee in this situation.31

Question 3.6:Discuss whether there is potential for conflict between Core principle 2, Item A4 and Core principle 3, Item A2.51Question 3.7:Evaluate the following case study using OECD principles51Question 3.8:a. Who is responsible for reviewing a company 's internal controls?51b. How often should a board undertake a formal evaluation of its own performance?c. Outline whether a chief executive may also be the chair. Suggest reasons why the FRC Code has taken this view.Question 3.9:Review the following case scenario52Question 3.10:Why is disclosure important for the integrity of equity markets? In your answer, you should address what occurs when information is monopolised by priviledge groups61

Question 3.11:Is interest in CG regulation and legislation inevitably associated with recession, market failure and corporate collapse, or is it possible to maintain attention on improving standards of CG at times of market expansion and biz growth?62

Question 3.12: Identify strengths and weaknesses of the market-based system of CG as practised in countries such as US, UK and Aus.62Question 3.13:Identify advantages and dis of European relationship-based insider system of CG.65Question 3.14:Outline the benefits and costs of the family-based insider system of CG practised in Asia.70Question 3.15:What are the key issues of governance affecting not-for-profit organizations?72Question 3.16: What do you consider to be the main CG issues affecting small biz?73

Module 4: Corporations and their stakeholdersCORPORATIONS AND OTHER ENTITIESPage #WorkshopCorporation Governance Success Factors449Board Appointment and Cessation459Appointment 459At least 18 yrs oldDisqualified from managing a corporation cannot be appointed a director, also a senior executive49De-staggering (max 10yrs for independece director 510Departures (Bosch 1995)4610Removal: (in Aus, 5% of issued captial or at least 100 small sh/h --> call extraordinary meeting to revmove individual directors by 50% votes cast4610410Two-strikes rule - Sh/h spill the whole board (provide for two-strikes and re-election of all board members, provide better information to sh/h)4610410Disqualification ( automatic, disqualified 5 years)4810Automatic disqualifications (criminal Offences)410Disqualifications on applications (5 to 20 years - civil penalties)410Ethics of disqualification (directors make poor performance or poor judgement)4910410Diversity - Fairness and Performance41010Board diversity (individual's race, gender, ethnicity, age, etc.)410Discrimination in employment is key area in diversityAdopting diversity (necessary to create an environment where diversity becomes part of culture of CG, NAB is an example)11Key points of NAB's diversity by AICD12Remuneration and Performance12Board and executives took higher risks when their remuneration based on financial performance --> personal gainUnderstanding the debate12Having a say on pay' in Aus, UK and USInternational Debates about Remuneration Levels and Fairness41412Remuneration of Executive & non executives director - UK FRC CGC 2010412Non executives Directors: not performance based incentives, Based only reasonable retur for time dedicated to corporation's businesses41512Executives Directors : Remuneration committee: remunerated for their perfomance/achieving of goal congruence41512Performance-based remuneration (Fixed:individual/corporation performace and At Risk portion: Reaching certain goals and performance beanchmarking)41512Disclosure and transparency and remuneration: no Individual should set their own remuneration levels.41612Remuneration Disclosure - International Approaches : France, UK, USA412Tightening rules regarding remuneration - Australian illustrations (true nature of current, past and future remuneration to executives)17Remuneration, risk and the GFC (remuneration based on profit -->take higher risk)18

Employees (vital and internal Stakeholders - OECD Guidelines)412Australian Consumer Law (unfair practices, penalties and compensation)412Occupational health and safety412Fair pay and working conditions412Family and Holiday Entitlements: Al, Paternity & maternity Leave, others type of entitlements)412Ethical obligations - Employee Goverance (Code of conduct - Satysfying the objectives of the OECD principles412Case examples of Failure : Nike, James Hardie412Whistleblowers412Australian Corporation Act Whistleblower Protection ( Example: Sherron Watkins - ENRON)412Trade and labour unions (Collectives Bargaining)412External Stakeholders ( Considered outsiders in term of Governance)413Global Society and Environment (corporations to asssume ethicals leadership)413The Economic and Legal System413The legal System as a Stakeholder (Good laws to achieve good outcomes and should do so reliably and acces to court)413Competition and Protecting Markets for Goods and Services ( monitor by ACCC)413Competition Policy ( Competitve markets to avoid Monopolist Corporation) - Policy Objectives413Workable Competititon ( requirements of workable or effective compettion) (judgements based in Balance of Probabilitites)413Competition and Stakeholders (Maintain competition btw technologies in the bradbank sector, internet providers)413Ethical obligations (Collusion btw competitor very bad) - Tab 4.2 International Competition legislation and Regualtions414Regulations on anti-competitive behavious (Detailed rules to regulate:414Abuse of market power ( Predatory Markets - ACCC: Penalties against Cabagge and Intel)414Mergers and acquisition (reduce # of competitors - prohibited or limited)414Agreement between competitors - Cartel Conduct414Compettitors Collusion -Cartel Behaviour414Output Restrictions ( Agreemts wil lcause Shortage in markets - price raises.414Allocating Customers Suppliers or territories ( Creating Artificial Monopolies)414Bid Rigging (Work collude - Competitve Tenders Inflate price to win a bid)414Price Fixing (Parallel Conduct) - Examples414Unilateral restrictions on Supply (exclusivng dealing) - Third line forcing: Ilegal, anticompetitive and lessen competition)414Resale Price Maintenance (Ilegal practice: sells products above a stated price)414Approvals Procedures (Franchises: formal mechanisms to authorise third line forcing - ACCC)414Proof, penalties and redress - Criminal and Civil415Laws Leading to Criminal Penalties (proof beyond reasonable doubt - Punishment: fines/Jail)4Laws with Civil Outcomes and Civil Penalties (Balance of probabilities - Fines: penalties payables to the state)415Redress and Penalties for anticompetitve breaches (Redress or remedies, Damages or compensation, Penalties,others)415Legal Compliances and Governance (Other real costs)415Compliance Programs : Competition Law, Consumer Law, corporate law and others) ) Main benefits)415Avoiding Harm ((posible benefits for Compliance programs, Benefits for all major stakeholders)415Consumers and Customers415Ethical obligations (Long term sustainable realtionshipconsumers (customers)and final product users)415Regulation and consumer protection( Table 4.3 Consumer protection Legislation)415Guarantees and warranties416Misleading Conduct a representation16Truth versus truthful impression in advertising (Examples :Joan Sutherland and Nudie Foods)416Puffery versus deception (Extreme exageration: Puffery is aceptable) (Deceitfull communication)416Unconscionable conduct ( sufficiently unfair as to be considered as Unconscienable)416Examples of transactions : Amadio Case - Consumer Law)416Tests for unconscionable conduct416Suppliers and lenders416Considering Suppliers and Lenders as a Stakeholders ( table 4.4)16Expanding Ethics (Minimum Ethical Standards should be displayed by supliers / HSBC Supplier code of Conduct)16Financial Markets as a Stakeholders (2 governing Theories:Efficency of Markets and Investor Confidence)17Roles of Markets ( ROI)17Roles of the Media17Role of Other Intermediaries ( Investments banks, Consultants and Auditors)17Protecting the Financial Markets (Directord / Officers breaking the law)17Insider Traiding rules (Key Test in determaining Insider trading, Examples of Insider Trading, Case: PAroo)417Owners ( UK FRC CGC (FRC 2010a: Succes of Companies and Informed Shareholders)17Shareholders group and descriptions (Table 4.5)417Rights, remedies and responsibilities (Table 4.6 OECD 2004: Shareholders rights)417Redress or remedy ( Shs unhappy, Unfairly treated: Example - Minority Shs)17Representation (OECD, UK FRC, ASC CGC : Guanrantee rights)417Shareholders representation ( Table 4.7), Example of iNstitutional Shs)17The corporation17Distinct features418Types of corporations (Table 4.8, Level of Companies: Figure 4.2)418Board of Directors / Board Structure418Directors should be formally appointed, Types of Behaviour:De facto,Shadow director, type of Agents)18Duties and responsibilities of directors - Key Duties:419Conflict of interest (Independence od Ppereance and Independence of mind help to assess conflicts of interest)419Act in the corporation's best interest ( good faith, Honestly and without fraud or collusion)419Nominee directors ( use power for proper Purposes when nominate & appoint directors))419Act for proper purpose ( do not abuse their power - Example Advance Bank)419Duty to retain discretion ( do not delegate to theird discretion to act as a director)419Duty of care, skill and dilligence (IN australia : SAFE HARBOUR RULE)419Insolvent trading (UK / US flexible system, Australia: stricter *Shut down the organisation)419Takeovers419Legal and ethical considerations (Conflict interest, Lack of Disclosure, Anti Trust andMOnopolies issues)419Remedies and Enforcement19Types of Remedies19If directors refuse to act - Statutory derivative action19Account for Profits19Compensation and damages19Rescission and restitution(restoration of property)19Injuction19Appointment and Cessation19Appointment (UH FRC 2010: directors of top 350: Every year to be subject to shs vote every year as a Director)419Resignation419Removal419Disqualification ( automatic, disqualified 5 years)419Automatic disqualifications (criminal Offences)419Disqualifications on applications (5 to 20 years - civil penalties)419Ethics of disqualification419

Question 4.1 Anglo American legal system : Commom Law and Cvil law system proved protection to Stakeholders interest?Question 4.2 Diffrences between Company and corporation?Question 4.3 Dexribe Key aspects of the pricncipal and agents problems thatexist within Corporations and result of loss of value for stakeholdersqueation 4.5 Withleblowing and why has become an inportant component of good corporate governance

Module 5: Corporate social responsibiliyPage #WorkshopDefinition and Overview5The evolution of CSR - A brief hstory5Definition (Commmision of European Communitites, CPA - CSR reporting, Australian CSR reporting practices)5The concept of accountability (Linkage between accounting and accountability, Responsabilitties)5Gray, Owen and Maunders (1987)5Role of Corporate report (and corporate reporting)5Social reporting (Components of CSR reporting)5GRI guidelines on Social performance indicators5The aspects that social reporting encompasses5Environment reporting (Component of CSR reporting)5GRI guidelines on Environmantal performance indicators5Sustainability reporting5Definition of Sustainability Reporting - GRI 2007 guidelines5GRI performance indicators - (Economic, social and Enviromental performance categories)5The externalities created by business organisations (Definition, Positive (benefits) or Negative (cost), qualitatives terms)5Gray and Bebbington (1992) on sustainable cost / Calculations5The importance of climate change and its relevance to CSR reporting (Carbon tax scheme)5Alternative perceptions about the responsibilities of organisations ( Organisations responsabilities/Accountabilities)5Milton Friedman on the role of business (shs focus - not strong advocate for Social and envirponemental reporting))5Alternative view - Mathews 1993 ( Community Expectations))5Who are the stakeholders of an organisation?5Definition (Freeman 1984) of stakeholders, BHP, Toyota and Amcor focus on Accountability)5The shareholder primary perspective5Shareholder primary Vs social contract perspective5Motivations for embracing CSR reporting (Accountability to Stakeholders or economic focused to protect Shs value)5Elightened self-interest5Good faith requirements5Drivers towards better CSR (BCA) "(Doing right thing" BCA is based in Managerial Reasosining rather than ethical)5Motivations for disclosing social and environment information in CSR (Deegan 2009)5Stakeholder management5Stakeholder theory - The Managerial branch5Gray, Owen and Maunders (1987) - (Powerful & Influence Stakeholders in order to get support and Approval)5Stakeholder theory - The ethical branch5(Managers have a fiduciary duty to all stakeholdersrather than just Shs)5Organisational legitimacy (highly motivation for corporations to provide CSR information)5Legitimacy theory ( Community perceptions - disclousres in order to survive - non to demostrate Accountability)5The social contract (Organisations to meet requirements of both legitmacy and relevance-Schocker&Setti)5Methods to legitimise its activities (Dowling & Pfeffer 1975)5Course of actions to repair legitimacy (Lindblom 1994)5Empirical evidence consistent with legitimacy theory5Other incentives tied to maximising the value of the organisation (WBC - Environmental issues ans Financial positions)5Preferential capital flow (Investments portfolis - VicSuper Sustainability report)5Brand and reputation (Social and Environmental performance - remedial actions to rebuild lost legitimacy (Islam &Deegan)5Risk management incentives(Direct&Indirect Costs, Reducing risk - climate change for transparent reporting)5Limitations of traditional financial reporting5Accounting framework focus in Shareholders primacy perspective.5Cannot answer questions related to SocIAL AND Enviromental Performance)5Definitions of Elements of Financial reporting5Enviromental Resources (Externalities(Benefits/Cost) not controlled by Entity - not considered Assets of the Entity)5The practice of discounting future cash flows5The Stern review on the Economics of climate changes (Value of the cost of climate change overstimated)5Issues of 'reliable measurement' and 'probability' (JI and Deegan - Laibilites & Provsions realted to Externalitites difficult to measure)5Yankelovich - Measurement issue - assessment - wrong practice)The entity assumption (Externalitites to be ignored)5Current regulations for CSR reporting5Requirements embodied within the Corporations Act and accounting standards5Corporation Act :Directors to Provide financial details of Environmtnal performance)5Corporations act section 299 (1)(f) on environmental performance / Asic require entities to disclose financial/non financial)5Corporations act section 299 A on Directors' report5AASB 137 Provisions, contigent liabilities and contigent assets -Uncertain(Entities no quantify externaliites, non measureable/reliable)5AASB 116 Property, plant and equipment5National Greenhouse and Energy Reporting Act 2007 - Objectives5NGER Act: Reporting thresholds5National Pollutant Inventory (NPI) - Howes 2001 - NPI compel's business to release information5Energy Efficiency Opportunities Act 2005 - required to undertake detailed energy assessment to identify oportunitites)5Other legislations aimed at motivating improvements in Social and Environmental performance)5Australia: Independent pricing and regualtion tribunal, NSW ENErgy Saving Scheme, Commonwealth Renewablwe Energy target Scheme)5European Union Emmisions Trading Scheme (Creation of Emmisions allowances)5Voluntary frameworks for CSR reporting5The global reporting initiative (GRI) - G3 Guidelines, Sectors Suplements, Protocols, National Annexures)5Practical applications and testo to help to apply this principle:External factors in defining material topics5Internal factors in defining material topics5The Guidelines then recommended content5International guidance in CSR-related performance and reporting5Carbon disclosure project (Carbon emission and climate change represent significant business risk - Investment decision)5Accountability AA1000 series & principles5Equator Principles (determine, assess ans manage Social and Environmental risk in project financing)5The Greenhouse gas protocol GHC Kyoto Protocol - 2 Standards / objectives5Trucost (Help to identify high -risk sectors for investments / cash flows - meet environemntal reporting requirments)5Eco-balance (mass balance:Inflows-production process/outflows -finished products, organisattion to formulate measure to reduce enviromental impact(recycled, waste products, waste and emissions)5Social audits and their relationship to CSR reporting (Elkington -Definintion: Assess performance in realtion to Society requirements and expectations)5The Body shop5Nike5Social Accountability International (SAI) - Social Accounting Standards SA2008)5Examples of best practice and innovative reporting5CSR The zone of acceptability (Identify leading edge / Reporting Sophisitcation)5ACCA sustainability reporting awards judging criteria (VicSuper, Fuji xerox, CPA Sustainability report - Positive attributes and recommendations)5Integrated Reporting: IIRC missions and objectives for an integrated reporting framework, roles of IIRCInternational initiatives on climate change - Institutional Framework to reduce emmision(mitigation) and adapting toclimatechange(Adaption). - Kyoto Protocolo5The Copenhagen accord (interim measure to address various aspects of climate change)5Climate change accounting techniques (Cap-and trade method for carbon emmision - designed as a market based aproach)5Financial accounting treatment for Cap and Trade scheme (Fixed price and Floating-price)5Accounting for the levels of actual emissions (3 Categories), NCOS -set up by Australian Governement; Genuine csrbon offset)5Greenhouse gas emissions ( yarra Valley Water Sustainability report5Environmental management accounting5IFAC to define EMA, IN realtion to waste - Glad Stated, Deegan: prescrition in relation to creating more refine accounts of waste)5Deegan - EMA BenefitsCorporate governance mechanisms aimed at improving social & environmental perf5Accountable and Transparent, Stakeholders engagement to fulfill thwir environmental and Social responsabilitiesISO 14001 Environemntal Management System and ISO 26000 Guidance on Social responsibility5Sustainability performance and remuneration - Amcor Sustainability Report: core values/Performance indicatorsQuestion 1 : Linkage between Accountability and CorporatereportingQuestion 2 Nature of Externality, (positive and negative externalityQuestion 6 Explain how any assessment undertaken by management can affect the audience of the reportsQuestion 7 Limitations of financial reporting practices realted to climatechangeQuestion 8 Enlightened self interest against Sustainbale development as a guiding principleQuestion 18 Identify 5 corporate governance policies thatcould act to enhance an organisation's social and environmental performance.