Key Word/ Concept

Agency Cost

Agency Theory

Annual Leave Entitlements

ASIC

ASX

Cartel Behaviour

Corporate Governance

Criminal Penalty

Civil Penalty

CSR Theories

De-staggering

Earnings Mgw

Egoism (Teleological - Normative Theory)

"Self Interest"

Enligthned Self Interest

"Enlighthen+Self-interest= Enlighthend self interest"

Ethical consideration that arises during takeovers

Enron Case

Exclusive Dealing

G201OECD Principles of Corporate Governance.

Heuristic Approach (Rule of thumb)

Integrity

Lack of professionalisme & creditability

Legitamacy Theory (CSR)

Limitation of an audit committee

Market Based System

Market Control View of accounting Profession

Moral Agent

Monopolistic Market Structure

NFP Entity (Not-for-profit)

Nominee Director

PAIB (Professional Accountants in Business)

Pecuniary penalty

Predator Behaviour

Predator Pricing

Penalty of CPA Australia

Philosopical Model of Ethical Division

Professional Judgement

Responsibility of board of a large public co

Regulator Fiat

Residual Loss
Safe Habour Rules

Sarbanes-Oxley Act

SME

Social Contract

Stakeholder Theory

Stagerred

Stewardship

Traditional View of Accountant

Traditional View of Profession

Teleological Theory (Normative Ethics)

UK's FRC Corporate Governance Code

Virtue Ethics

Wilful Blindness
Defination/Description

Borne by Agent - Bonding Cost

Borne by Principal - Residual Losses, Monitoring Cost (Audit Fees, Internal Audit)

Agent r assumed to be in a position of power

Legal minimum of annual leave per annum in the UK is 4 weeks

Legal minimum of annual leave per annum in Australia is 4 weeks
Common for the US to grant two weeks of annual leave per annum to employees.

Role of ASIC
Make info about co available to public
Promote confidencen by investors in the FS
Review FS on an annual basis & raise concerns w/ the co if issue rises

Nomination requirements - minimum 3 members, the majority of whom r independent D &

chaired by an independent D

Agreement between competitors that is basically prohibited/ that has affects

competitions in the market

Ensure that the actions of the board of directors and executive mangement are performed in
the best interests of the company and its shareholders

Fines

Damages, Injunction, Pecuniary Penalty

Stakeholder theory, self interst, legitamacy theory, institutional theory

Appointment of all board members expire at the end of every financial year and new D
appointed or existing D reappointed subject to shareholder approval

Deffering income to a later period/ bringing income forward in the financials for a better
financial result

The choice of action/ decision is ethically correct if it results in benefits being received
by the decision maker
Philosophical Concept
Being well aware and well informed about our actions & decisions that
would result in present and future self- interest

Monopply issues, Lack of Disclosure, Conflict of interest

Highlights the importance of auuditor independence where fees for services r material
Collapse bc increased regulation & greater scrunity by the regulators
Reason of failure of corporate government due to misleading financial info

Characteristic
A decision made by a single organisation on its own
Refusing to deal which causes a material reduction in market competition
Imposing requirements on customers to purchase items from third parties

Breach
An article in the company's constitution whereby the voting rights of any shareholder
with more than 30% of the equity shares should be restricted to just 20%.
Using an individual or firrm of accountants as the external auditors, that is not
independent of the company.
Calling a general meetingof the company at short notice. Giving foreign shareholders no
time to arrange attendance or proxy voting

Ethical decision making is based on past experience, intituition/ mental short- cuts

Having courage to pursue one's conviction

Organisation take action to manage perceptions in order to maintain their position & benefits

The audit committee members may not have sucient nancial knowledge or experience

Characteristic
Dispersed investors require reliable and adequate information flows in order to make
informed investment decisions
Regulation is intended to ensure relatively complete information for investors and to prevent
privileged groups of shareholders sharing information only among themselves
Bank finance has tended to be short-term, and banks have tended to maintain arm’s length
relationships with corporate clients. Equity finance has been more important as a means of
developing companies

Acting in the best interest of client (own self interest)

A rational person who is capable of understanding what is means to act ethically

Become complacent & do not keep up w/ latest trends & technologies (Technology Obsolence)

Trust, Public co limited by guarantee, Foundations

D is ‘nominated’ by 3rd party to represent its interests on the BOD

Role - manging risks, upholding integrity, establishing a common "performance language"

The case was a claim to punish a civil wrongdoer.

Seen as abuse of market power under competition law

Supply of goods & services below cost price over a period of time

Fine, Forfeiture of membership, Publishing the member's action on CPA Aus websites
& journal

Rules-based approach to corporate governance

The ability to disgnose and solve complex, unstructured 'values-based' problems

1. Selecting & recommending auditors to S/H @ general meeting

2. Approving & working w/ & through CEO
3. Determining that the co accounts confirm w/ Australian Accounting Standards & r true&fair

When a rule is mandated, must be followed

Over-consumption of perks by agent (Reduction of residual loss results in increase in

monitoring cost
Protect D who has made a business judgement and can prove that they acted properly

Role of financial accountant to SME

Managing risk and measuring performance
Managing costs through rigourous budgeting and forecasting
Creating & implementing management information systems to bolster strategy & decision
making

Based on trust & ideal service, w/o this, public will withdraw approval

A wide range of groups that affect &/or r affected by the corporation

Process of directors is removed and replaced over time

D act in the best int of the co when using co resources

Specialist skills and experiences supported by a well-founded body of knowledge

Professional judgement to diagnose and solve complex, unstructured values-based
problems
A service ideal in which the reliable quantifying and reporting the basic facts of economic
life serves the public interest

Professionals behave in ethical & appropriate manner

Professionals have a significant level of training & competence
Professionals apply their skill & judgement In areas of importance

Outcomes Justify Method (Outocme of decision/ consequences)

Admendment to global financial crisis

1. The board should report on its gender diversity
2. The board should explain why they believe the annual report is fair and balanced.
3. There should be a tender for the external audit of a listed company every 10 years

becoming a professional knock the selfishness out of you

Individuals avoid legal liability for a wrongful act by making sure that they are unaware of the
facts making them liable (plausible deniability) and it is linked to governance failure
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Special Notes/ Cross referencing

Type of Cartel Behaviour - Price-Fixing, Output Restriction, Bid-Rigging & Market Division

Good Corporate Governance might reduce efficiency (temper growth)

If civil case fails, means cannot commence a criminal case

Providing employability training to employees who will be made redundant soon because they should be given re-
training in new skills that improve their prospects of nding a new job

(Robson & Cooper 1990, p. 379) “The accting profession would account for its existence in relation to the efficiency
benefits for society as a whole, arising from the existence of an institutionally-organised body of accounting
knowledge ... In return for their monopoly position concerning the right to practise particular accountancy & auditin

functions, accountants would see themselves as serving the public interest”

(Allan 2006, p. 144) “The independence of Andersen was also highly questionable. 3 former partners of the firm sat
on the HIH board. 1, who was the recipient of continuing benefits from Andersen, was made chairman and was
appointed to the audit committee only 17 months after his retirement. Another, who had been the engagement
partner, was made chief financial officer only the day after his resignation from the firm. The third was appointed to
the board only five months after his retirement having ‘played a significant role in the audit of HIH for 25 years’”
(West 2003, p.21) "Image of altruism, wthical & self-regulation were supplanted by a potray of professions as
self interested collectives"

Allocative ineciency, High barriers to entry, Only a few, very large suppliers in the market

Are the benefits and burdens justly distributed?

Do the benets outweigh the harm to your self?
Are the rights of individual stakeholders considered and respected?

Ex: Risk Avoidance (A manager who receives only a fixed sakary & given no guidance on the board's risk preference)
Opportunistic Residual Loss:
1. Purchase of an expensive painting for the managing director’s office
2. Delaying maintenance expenditure in order to meet current profit targets as this will result in profit-related
bonuses for a manager