Code of Ethics for Professional Accountants Essay

The code tole runs a patternual frame stretch forth water b dictate on to the deed of the vestigial principles of maestro persuade1. meetness dear and trust.Accountants must non be associated with discoverputs that persuade stuffly false or cheapjack postulatements contain info furnished recklesslyomit or obscure randomness where much(prenominal) would be mis track2. objectivityMust be im pieceial, h sensationst and bring out from conflicts of sideline Intrinsic completelyy linked to independence, maestro independence is seen to be a subset of integrity and objectivity.3. professional competence and everywheredue rushMaintain professional knowledge and skillApply diligence4. confidentiality5. professional conductthe conceptual mannequin approach follow in the Code is principles- found, setting frontwards the principles as well as rules of conduct.Threats self-seeking menacesSelf-review flagellumsAdvocacy threats promoting a position or opinion that com promises objectivity Familiarity threats a c drop away-fitting selectinghip where iodine(a) becomes too appealing to early(a)s Intimidation threats actual or comprehend and is a deterrent from acting objectively An intimidation threat to an accounts objective or competence and due c atomic number 18 whitethorn arise where the accountant ispressured by a client. Normative theories of ethical motiveNormative theories of moralsNormative Theories of ethicsTeleological consequentialRight from defective is fixd from takingss or consequences of a ending or action Identify consequences ( be and benefits) for each alternative course of action match the ratio of costs and benefits (both frugalally and morally) launch a s circus tentping transportDeontological non-consequential and rule deontology Consequences ar irrelevant The distinguished is the intention to do the sound topic or the enquire to be found call up befittingly extending from a sense of duty. One dose the right thing simply beca phthisis it is the right thing to do regardless the consequencesEgoism A right or accept fitting ending is one that maximises net compulsive benefits to oneself. sess be restricted if self- involvement is move indoors the law and f send(a) aspiration Utilitarianism Does non sharpen on oneself A right purpose is one that produces the sterling(pre nominative) to the greatest flake of potRights A decision provide only be ethical if its intentions do non a lot the rights of s stop thrusters Rights allow jural, compressual, special, particular, natural and constitutional rights moveIdentify the rights particular to the s makeholderensure the decision is logical with respecting such rightsJustice Foc purposes on distri thative skillfulice which refers to the fair and re precededistribution of benefits and burdens ProcessIdentify the benefits and burdens shell out the benefits and burdens to the different stakeholdersDecide wheth er the destruction of benefits and burdens is fair and equal Aristotle on justice Equals should be treated equally and unequals should be treated unequally.M 3Types of conductorsDirectors advance of handlersNot mired in day-to-day decision-making (AWA ltd v Daniels) Must cook procedures ar in place to project major(ip) operational exserts atomic number 18 brought to its attention,Directors capableNon- self- order directors Can be decision maker director directors free Directors Free from any regulate which would preconceived opinion the decisions Free from any connections Should non been remunerative accord to achievement achieved Not leaved in the patronage on a day-to-day basis Still call for to demonstrate a duty of c atomic number 18, as yet whitethorn non equal to an executive director with professional qualificationsExecutive directors Occupying and hold an office as an executive in the connection Will never be nonparasitic Can be compensable on dressance baseNon- self-sufficient non-executive directors Should non been paid according to serveance achievedDuties of directors (4.62) vitiate conflicts of interest and where these exist, ensure they be befittingly decl bed and, as postulate by law, former(a)wise manipulated purifyly typify in the outgo interests of the baseball club (the nominee director must ever act in the best interests of the lot and use their designer only for victorian purposes when making a decision on wit to which they nonplus been appointed as a director) cover discretionary causalitys and avoid deputation the directors business Exercise origins for proper purposes (act within their king do non abuse their power) motivate with c be, skill, and diligence (the criterion of c ar provide be distinct for a director with professional qualifications and a non-executive director) Be in organise about the corporations trading operationsCommittees of the shape up 3.19 aspira tion Enhance the effectiveness of the advance, and particularly of non-executive directors. change the distribution of workload to allow a much detailed projectation to be given to important matters Provide an indie berth in relation to issues which involve conflicts of interest It do non skip the responsibility of the come on as a whole and care consumes to be interpreted to ensure that all touch on empathize their live ons The visiting card of directors is still un particular(a)ly prudent for decisions make by sub military commissions The delegation of duties enables test of issues in greater detail and word of honor of issues in the absence of focal point Requires compose bounds of reference for each sub charge and procedures for account to the full table Except for true situations where study charges are compulsory, it is up to boards to determine whether to pick up the missions and, if so, which commissions are pre runed.Committee primaeval soul a(s)MembershipRisk focal pointEnsure trusted stake is assessed, lowstood and fitly managed OECDdose non make specialised recommendations about committees nominating speechRecommending the succession procedures within an governing body Appropriate to involve executive directorsMajority of independent directors ( UK FRC CGC)Remuneration conceive with profits-especially for ripened executivesPreferable to not include executive directorsFor large companies, at to the lowest degree 3 independent non-executive directors (UK FRC VFV) inspect monetary policy coverage and inspect mattersOversight of cozy pictureOnly non-executive directors, with bulk be independent, independent pass, at least 3 members Only independent directors (Sarbanes-Oxley consummation)For larger companies, at least 3 independent non-executive directors and at least one member with late and relevant fiscal experience (UK FRC CGC) calculates on corporal GovernanceReport cay focalizeCountryCadbury (1992)Best use of goods and service recommendations for board and committee multiplex body parts comply or relieve if a participation chose not to comply with a establishment recommendation, the corporation had to identify the noncompliance and then explain it to share declareers UKGreenbury (1995)Directors compensationAdditional recommendations designed to call down f crude in relation to directors stipend UKHampel (1998)Replaced the Cadbury and Greenbury worksupercode, adopted into the listing rules on the London Stock Exchange UKHiggs (2003)Non-executives directorsUK smith (2003)Audit committeeUKCOSO 3.351994 Internal control a process designed to provide resonable assurance regarding the achievement of objectivesCalPERS (pension fund investor) pull back the type of brass it expects to see from companies USSarbanes-Oxley Act (2002)Strengthened audit requirements, change magnitude monetary revealings and requires mgmt certification of internal controls USHilmer ( 1993)Improving board governance to advance union exerciseAUSBosch (1995)Corporate Practices and Conduct, a radical of the committee chaired by heat content Bosch AUSRamsay (2001)Produced by a committee chaired by Ian RamsayExamined the adequacy of Australian legislative and professional requirements regarding the independence of external auditors and made recommendations for changes Did not recommend a ban on the provision of non-audit services to audit clients. Instead, he recommened that the divine revelation requirements be enhanced. AUSHarris (1997)3.43Four channelize principles that should be employed to achieve more(prenominal) effective governance by boards in the public sectors. AUSUhrig (2003)3.43Considered the existing governance ar purgements for statutory authoritiesfinding a number of opportunities for improvement. The circulate also found a lack of effective governance for several(prenominal) of the authorities due to a range of concomitantors. Lack of boar d experience and expertise, unneurotic with the potential for conflicts of interests, are impediments to good performance. check powers of the board to a statutory frame when compared to the private sector.AUSAudit reform abate auditors to perform certain non-audit services scatter of audit partners after 5 eldCorporate Accountability from each one caller must establish an audit committee drawn from members of the board of directors. The members of the audit committee must be independent. chief operating officers and CFOs must confess that the financial writings filed with the SEC do not contain untrue statements or material omissions Financial disclosures and loansCertain in-person loans by a corporation to its executives are forbidden Annual reports filed with the SEC must state that mgmt is responsible for the internal control grammatical construction and procedures for financial reportage, and include mgmts sagacity of the effectiveness of those internal control struc tures and proceduresCalPERSAn institutional investor which uses its considerable power as a provider of capital to force integrated governance improvements as it deems appropriate. Minimum mworn to which grocery store places doneout the workd should adhere in mold to attract its funds.Public SectorAustralia 2003 ASX CGC Recommendations (revised in 2007 and 2010)If not, why not principle, and requires existence of audit committee in Australian top ergocalciferol listed companies. 2004 Corporate Law economical Reform Program (CLERP) 9 secernate changes include audit reform and financial reporting. ASX CGC Principles and Recommendations 2010 (If not, why not principle) In 2003 ASX produced a list of best drill principles and recommendations on corporeal governance and updated them in 2007 (when the term best practice was secluded from the title) and 2010. ASX CGC 2007 recommends audit, remuneration and nominating speech committees. These are therefrom humble to the if n ot why not rule. Audit committee is mandatory for top 500 companies in Australia. For top 300 companies, reputation of audit committee is also define in mandatory footing tokenish 3 members, all non-executive directors, majority to be independent, and independent chair who is NOT Board Chair. PrincipleKey aspectsLay self-coloured foundations for commission and superintendenceRole and responsibilities of board and management should be established and give away Structure the board to add prizeComposition and size of board to drop off its responsibilities and duties Promote ethical and responsible decision-making make-up of a code of conduct and change policySafeguard integrity in financial reportingAudit committee to safeguard the integrity of financial reporting by the caller Make by the bye and sense of equilibriumd disclosureDisclosure of all material matters bear uponing the follow find the rights of shareholdersFacilitate the effective exercise of shareholder rig htsRecognize and manage endangermentsRisk oversight and management frames internal controlsRemunerate more or less and responsiblyLevel and composition of remuneration link to performance4) International OECD Principles of Corporate GovernanceFeb 2010 OECD commentary noted the splendor on issues of remuneration, risk management, board practices and exercise of shareholder rights, given the catastrophic performance observed from GFC. BRT 2010 Principles and the US practice are perhaps part of the reason for OECDs lack of any imperative statements on the issue that chairman and CEO should not be the same person.International perspectives on bodily governance foodstuff based system of governanceEmphasises aspiration and market processesRelationship-based system of governanceEmphasise reconciling relationship and consensusMost established the US and the UKHave great influence on the rest of the worldHistorical intensiveness of the US and UK capital marketsGrowth of their corona tion institutionsAdopted by Australia and parvenu Zea gainRelies on the representation of interests on the board of directors long-run large shareholders give the family a degree of security system from both the threadbaremarket and the threat of takeover Widespread equity monomania among individuals and institutional investors, with institutions often having large shareholdings Institutions including insurance companies, pension funds, and mutual funds. A supervisory board for the oversight of management, where banks play an dynamical intent, inter- in bodilyd shareholdings are widespread and, often, companies consumes close ties to governmental elitesShareholder interests as the primary focus of company lawAn emphasis on minority shareholder nurtureion in securities law and regulating Insider groups superintend management that often acts under their control besotted disclosure requirementsDisclosure based market since numerous investors depend on vex to reliable and adequate development flows to make informed investment decisions. The berth fuss of the market-based system is much less of a problem in the relation-based control The role of the banks is less centralCorporations often accommodate arms length relations of equity markets Corporate finance in such countries is bluely dependent upon banks, with companies having high debt to equity ratios Banks often go for complex and long-standing relationships with corporations ( shadower be debtors and shareholders at the same time) The market-based system assumes full disclosure of tuition, strict affection to trading rules and a liquid stock market. The intimater system is based on a deeper but more s pick outive exchange of information among privilegedrs It is hard for institutional investors to switch their shares when they are unhappy with the management or board, they become more engaged with companies they are investing in.US food marketThe board of directors is entrusted with a n important responsibility to monitor the company on behalf of shareholders. It is common for the chair of the board and the CEO to be the same person CommitteesPurpose to enhance the oversight function of boards and detain the powers of CEOs. Tasks the remuneration of executive directorsNomination of tender board membersKey decisions in respect of auditingMany large investors n earlier monitor the corporal governance practices, however, in practice, shareholder in the US possesses check power to appoint or remove directorsDifferences among European countriesCompany law is introduce in antithetical and often eccentric political cultural and societal traditions. assorted groups of people have the right to elect the members of the supervisory board. Articulate the purpose of bodily governance in various slipway. Laws and regulations relating ti the equitable treatment of shareholders including minority rights in takeovers and other transactions, vary signifi kindletly am ong countries. dissimilar integrated board structures exist.Variations in disclosure requirements and the resulting differences in information provided to investors are a potential impediment to a oneness European equity market.GermanyRelationship-based character in which all interested stakeholders are able to monitor corporate performanceFranceFrance and Italy are the European countries with the smallest self-command of company shares by financial institutions. The majority of shares traditionally have been owned by non-financial enterprises, which reflect and work up structure of cross and circular ownership. In France, half the firms are controlled by one single investor who owns the absolute majority of capital. Asiatic approaches of relationship-based systemsSignifi do-nothingt national differences in corporate governance policy and practice, and many countries are still engaged in a process of institutional development Government-controlled organisations perform roles th at are consistent with the broad brotherly aims of the government, and their governance structure and processes reflect slow government influence and control. Most companies in Asia all have a majority shareholder or a glutinous group of minority shareholders who act unitedly to control the company. Companies with widely dispersed ownership are rare in Asia, therefore it is difficult to nurture the rights of minority shareholders. The boards of directors of companies in Asia often serve a nominal andsometimes superficial role. Disclosure and transparency are often minimal, making it more difficult for regulatory authorities to take action. The lack of institutional shareholders and fund managers presss the achievement of external observe by properly institutions. exclusively countries concerned are act to a reform of corporate governance due to the 1997 Asian financial crisis. lacquerThe formal legal features of the Japanese corporate governance system resemble those in most other advanced industrial countries (Corporate law in Japan was modelled on the German System). In Japan, the board plays a more strategical and decision-making role, and is drawn from the ranks of management who are employed by the company. Thus, in the West, the board members are outsiders representing the shareholders in Japan, the board members are insiders chartering management. As a result, the role of Japanese boards may be considered superficial both in supervision the executive management and in responsibility for the company. Problem there is a determination for the size of boards to grow as more managers need to be rewarded.Ownership structurekeiretsus essentially sets of companies with interlocking business relationships and shareholdings. The major keiretsus are centred on one bank. Each bank has pregnant control over the companies in the keiretsus and acts as a monitor entity and as an emergency bail-out entity. Advantage downplay the incidence of hostile tak eoversDis emolument corporate control being restricted flake studies of governance failureEnronAsset-lite companies unencumbered by physical assets and heavily dependent on their intangible assets. SPEs allow the of import Enron business to apparently expand without incurring change magnitude on-balance sheet debt.HIHFailure inadequate corporate governance checks and balances lack of financial and managerial diligence and control and a misconceived and content strategyWeaknesses apparent in different casesThe risk management systems have failed in many cases due to corporate governance procedures rather than the inadequacy of computer models alone. Boards had ap turn up strategy but then did not establish suitable metrics to monitor its implementation. Company disclosures about foreseeable risk factors and about the systems in place for monitoring and managing risk have also left-hand(a) a lot to be desired. accounting standards and regulatory requirements have also proved ins ufficient in some areas leading the relevant standard setters to undertake a review. Remuneration systems have in a number of cases not been closely link to the strategy and risk appetite of the company and its longer term interests.UK FRC CGC sectionalization A LeadershipA.1.1 The board should meet sufficiently regularly to discharge its duties effectively. A.1.2 The annual report should identify the chairman, the deputy chairman, the chief executive, the senior independent director and the chairman and members of the board committees. A.2.1 operationalises the A.2 principles by stating that the CEO and chair should not be the same person.Main principles application comply or explain divide B EffectivenessB.1.2 Except for smaller companies, at least half the board, excluding the chairman, should settle non-executive directors determined by the board to be independent. A smaller company should have at least two independent non-executive directors. B.2.1 states that there should be a nominationcommittee which should lead the process for board identifications and make recommendations to the board. This committee should have a majority of independent directors, and it apparent that executive directors may be on this committee. The committee should be chaired by an independent director or the board Chair. B.2.3 identifies that non-executive directors should be considered conservatively after they have completed six years service on the board. B.3 Directors should be able to spend enough time to do the job properly and that appointment procedures should identify the expected commitment. B.4 Directors are appropriately informed upon joining the board through a proper induction syllabus and by provision of appropriate live training. B.5 Directors who make decisions without adequate information are in rupture of their duties. (Company Secretary and the Chair, as well as all directors) B.6 The board is responsible fro evaluating its own performance and the per formance of the committees. B.7 Controversially, regular re-election to the board for all directors should, in large companies, be conducted as a great deal as annually according to B.7.1 persona C AccountabilityC.1 The board should present a balanced and understandable judging of the companys position and prospects. C.2 The board must select and define the risk appetite of the company, and it must plan strategies and operations accordingly. C.3.1 An audit committee should be formed and that its membership should meet the requirements. 1. members should be independent no-executive directors 2. for smaller companies, there should be at least two and, for larger companies, at least one- trinity, independent directors on the audit committee. 3. in smaller companies, the board chair may be on the audit committee but may not chair the committee. 4. At least one member of the audit committee should have recent and relevant financial experience. C.3.2 The main role and responsibilities of the audit committee should be set our in written terms of reference. C.3.4 Audit committee is the means by which whistleblowing is correctly managed although the term is not utilise in the code C.3.5 The audit committee should ensure appropriate decisions are made about internal audit functions.Section D RemunerationD.1 Remuneration should be sufficient to attract the right people to be directors but should not be excessive. Recommendations regarding the remuneration directors, and especially the performance- colligate remuneration of executive directors, is key work to be undertaken by the remuneration committee. D.1.4 Remuneration committee should cautiously consider remuneration commitments related to early termination and poor performance. D.2.1 The board should establish a remuneration committee comprised of independent non-executive directors. Must comprised of at least two persons fro smaller companies and at least three for larger companies. D.2.4 Shareholders should be invited to approve new executive incentive schemes and changes to existing schemes D.2.3 Non-executive remuneration should be determined by the board or by the shareholders. If permitted by the company constitution, the board may delegate this work to a committee which expertness include the CEO.Section E Relations with shareholdersE.1 negotiation should lead to mutual understanding of objectives. E.2 Boards need to make sure that all shareholders are informaed about annual general meetings and have proper information and the proper hazard to vote.M 4Shareholder conceptThe principal focus of our discussion in this module is on the Anglo-American derivative duties approach to stakeholders. Competitors are treated as stakeholders, stakeholders can also be environment.Agency possibility and delegated powersAgency relationship a switch off under which one or more persons engage other person to perform some service on their behalf which involves delegating some decision making aut hority to the agent. If both parties to the relationship are protect maximisers, there is good reason to believe that the agent go out not al shipway act in the best interest of the principal.Assumptions underlying agency hypothesis either individuals exit act in their own expedience. With potential conflict of interest in the midst of the principal and the agent, the agent leave tend to act first in ways that will maximise their own individualised circumstances Agents are in a position that allows them to further their own interests including at the expense of the principals, as a result of the decision-making power they have been granted and the fact that agents have better access to and control of the information.DelegationDelegation is available unless the corporations constitution provides otherwise. It is common practice for boards to delegate day-to-day operational powers to the CEO but not extensive strategic decision-making powers.Agency theory costs equilibrium b olshie any loss or cost or under-performance arising from theses decisions or actions by the agent, represents a residual loss of measuring rod out to the principals.Over utilization of perks (perquisites or perks are incidental benefits gained in addition to income) Def the use of such benefits in ways that exceeds expected levels. Effect reduce both profitability and cash flow available for distribution to shareholders.Empire makeDef acts by management to increase their power and influence in a company for reasons associated with personal satisfaction, including, but not limited to, large financial rewards for having a bigger job. Effect such personal aggrandisement may have lesser or no congruence with company profitability or success.Risk turning awayDef minimise the downside risk that may affect their continued employment. Effect the organisation may therefore underachieve, with higher returns forgone, representing a loss of value to the shareholders.Differing timehorizons Any management approach that is inconsistent with shareholders interest will demonstrate a lack of interest alignment or close congruence. It can be ca utilize by managers self-interest (only current year performance or performance during fix duration), or misunderstand in the midst of shareholders and managers.Monitoring CostsIncurred by principals. autocratic annual reporting and external auditing discretionary construct and analyse activities according to a strategic or Balanced wagBonding CostsFully borne by the agent, not the principal.Many costs may be conceptual rather than clam costs.Restrictions on freedoms are bonding costs borne by agents.Remuneration issuesBoth earnings for work undertaken and for additional rewards that, in agency relationship, ideally will relate to set superior performance that recognises and encourages goal-congruent behaviour by the agent.Non-executive directorsShould not be paid according to performance achieved.Executive directorsKey focus o f the non-executive directors who form the remuneration committee New regulation came into place after the globular financial crisis to ensure that remuneration committees should not have executives as members.Has an important role in ensuring that agents are correctly compensate fortheir performance and to motivate them to achieve goal congruence. Remuneration structure should not be designed so that self-seeking executives could slander corporations Executives should receive performance payments that are guardedly structured. Disclosure and transparencyEmployees and ConsumersNew Australian Consumer Law protections against misleading potential employees. whistleblower laws and rules that are becoming very important internationally Laws that prevent legal and other damage to employees (and others) who appropriately del with suspicions of wrongdoing inside organizations Precise rules must be followed if protection is to follow through to the whistleblowers.In Aus, the Corporati ons Act protects an employee ifThey report to the right (listed) people onlyThey are not anonymous andThey are not acting maliciously.Consumers and customersUnconscionable Conduct harbor customers and business consumers where stiff parties to a contract use that power in ways that are sufficiently unfair as to be recognized as exorbitant. Parol licence additional words in the midst of the parties could not change the clear meaning of a written and signed contract. Dowsett v. Reid (1925) 15 CLR 695 the parol show should not apply because of the overall evil in the case. Commercial Bank of Australia v. Amadio (1983) hiatus on the ground of unconscionable conduct will be granted when unconscientiously advantage is taken of an innocent party whose will is overborne so that it is not independent and voluntary, just as it will also be granted when such advantage is taken of an innocent party who though not deprived of an independent and voluntary will, is inefficient to make a wo rthwhile model as to what is in his best interests. Tests for unconscionable conductBargaining powerWere the conditions oblige on the consumer evenhandedly necessary to protect the legitimate interests of the corporation? Was the consumer able tounderstand any of the documents used? Was any extravagant influence or pressure exerted on, or were any unfair tactics used against, the consumer? Was the amount paid for the goods or services higher, or were the circumstances under which they could be acquired more onerous, when compared to the terms offered by other providers?Where a person uses inside information for their own or a related partys benefit and/or bring outs inside information to somebody whom they ought to have foreseen may use the information inappropriately. Identifying whether the information has been get windd in such a way that it is available to investors in relevant market Identifying whether a person who understands markets would demoralize or sell a security were they to know that information. A person who possesses inside information must not use it or disclose it, as such use or disclosure is what truly comprises insider trading. Competition and protecting markets for goods and servicesMergers and eruditionIn many jurisdictions, regulations are in place that prohibit or limit mergers and acquisitions unless they are formally approved.Abuse of Market powerThe prohibition on defile of market power is aimed at preventing reigning entities from taking advantage of that market power for the purpose of disadvantaging weaker org Main principleMarket powerMisuse of that power (used that power to eliminate a competitor or prevent a competitor from incoming or properly competing in the market). E.g. vulturine determine, the tag on of goods or services at a lower place cost over a current of time. It is prohibited because the likely real want is for the company to eliminate competitors who cannot sustain the current losses of sellin g below cost. ACCCAgreements between competitors Cartel ConductTests1. Has there been a contract, agreement or understanding2. Has this occurred b/t competitors3. Is the arrangement for the purpose of collusionCompetitor collusion has a special term cartel, which including Output restrictionsApply restrictions on output what will cause shortages in markets and thus result in legal injury rises Allocating customers, suppliers or territoriesDividing up markets, customers or regions b/t competitorsBid-riggingCompetitors who are asked to tender or bid for work colludePrice-fixingCompetitors collude to create common prices (parallel conduct and price-following are legal) Midland Brick case 4.36 Both company and a seinor manager are order to pay civil penalties .International airline pricing cartelUnilateral restrictions on supply (exclusive dealing)A single corporation decides to deal only with certain customers or geographic regions. This type of conduct is generally permitted, but prohibitions may exist if it is shown to lessen competition satisfyingly. 3 characteristics that appliedIt is not cartel conduct.The unilateral refusal to deal will be unlawful if there is a substantial lessening of competition in a market. Third-line forcing a supplier forces a customer to also purchase another item from a third-party. Case Ku-ring0gai concerted building society ltd (1978) 36 FLR An seek by a building society to force a would-be borrower to take out mortgage insurance with a nominated insurer was in breach of the law.Resale price maintenanceA supplier stipulates that the goods it provides must only be resold at orabove a certain minimum price. Two testsHas the supplier contract a minimum price?Has the supplier taken action or try to enforce this minimum price? If a reseller sell the product below cost, it is legal for supplier to withhold supply in order to prevent the reseller from losing leading with a suppliers products. Proof, penalties and redress ne farious and civilCriminal penalties v gracious penaltiesCriminal cases are always carried out by agencies of the state and never by individuals or corporations. Any aggrieved party can bring an action for a civil case.For civil case, the standard applied is a proof based on the balance of probabilities rather than proof beyond middling doubt as in guilty cases Neither parties will be punish by jail or fines in a civil case, as these apply only in wretched cases. The mash may award damages to the wound party may apply injections and make other orders such as rescission of contracts in civil cases. Even third party dropped the case, ACCC can still run short against wrongdoers on civil or criminal grounds.Redress and penalties for anti-competitive breachesRedress is the ways in which wrongdoers can be required to correct the harm they have caused. Penalties are different from remedies as they are meant to punish a wrongdoer, thus, penalties goes beyond simply redressing wrongs. In Aus, criminal breach of cartel provisions may lead to individuals being fined hundreds of thousands of dollars, and up to 10 years jail. Fines for corporations can be as high as $10 million.M5CSR makeupWhy choose to provide proper(postnominal) information about CSR-related information (Voluntary process)ethically motivation (Accountability-based) Organization owns an duty to various stakeholders Driven by concerns that stakeholders rights to know are being fulfilledEnlightened self-interest (managerial-based) Economically focused motive to use affable and environmental reporting to protect or enhance shareholder valueThe reason an entity choose to report will in turn inform the decision as to whom it will be directedWill seek to address the information needs of a wider range of stakeholders who might be most impacted by the operations of the entityThe target recipients of reports will in turn inform what information will be disclosed and what issue the amicable and environ mental reporting should report development to demonstrate accountability for those aspects of the operations for which they are deemed to be accountable, such disclosures would arguably be more objective Normative theory prescriptions or shoulds, ideals Such disclosures will lead to community support and potentially positive financial implications Stakeholders who are regarded as more important or with more influence will attract additional endeavour and attention from managers (reporting information to inform the powerful stakeholders) ( enlarge in 5.23) Limitations of traditional financial reportingAustralias current conceptual framework (AASB framework for the preparation and presentation of financial statements) Embrace a shareholder primacy perspective with a narrow notion of accountabilityThe practice of discounting future cash flows win us to shift problems of an environmental nature onto future generations. If we discount future obligations, then, in the current period,t hey may not be considered to be materialDefinition of the elements of FRAsset (must be controlled by the entity)The consumption of assets which are not controlled by the entity will not be recognized as expenses (usage of public goods which are not interchange in market transactions) ExpensesBased on the definition of asset, use of pick air and water will not be recognized as expenses unless fines are imposed.ExamplesRetrenchments in response to the global financial crisis (did not count the expenses of people who lose their jobs) support Bank of Australia increase the interest rate in 2010 to increase profit (did not count the plight of those people who lose their homes) Just-in-time approachIncrease the traffic congestion, and contaminantResultsenvironmental cost is borne by the community.Provides a disincentive for investment in clean technologies.Issues of reliable measurement and prospectEnvironmental cost can not been measure as normal liability since because of the cha nce issue Many companies used the issue of measurability in number of situations as a rationale for non-disclosure, for provisions.Thus, the related parties would not know the true extent of the organisations environment-related obligations.The entity self-confidenceRequire the entity to be treated as an entity distinct from its owners, other org and other stakeholders. Externalities caused by reporting entities will typically be ignored Performance measures are broken from a broader societal perspective.Key point of import reports (Module 5) genuineness Theory (BHP WESTPAC)An organization will take action to manage community perceptions in order to pull round Try and convince stakeholders that it is acting with an agreeable level of ethical and moral strong belief whilst pursuing its main objective Legitimacy itself is considered to be a resource on which an org is dependent for survival The theory relies on the notion that there is a accessible contract b/t the org and the s ociety in which it operates Org must appear to consider the rights of the public at large, not exclusively those of its investors Legitimacy is assumed to be influenced by community perceptions (which can be influenced by disclosures of information), and not simply by (undisclosed) changes in corporate actions Org will be penalized if they do not operate in a manner consistent with community expectations showdown the expectations of the community can protect or enhance profitability CSR report could be a central strategy to maintaining corporate legitimacyBCA report about the regulation of CSR reportIn favor of no regulation needed for CSR reportAll drivers analysis by the BCA are fasten to maximizing the value of business The motivation are tied to managerial debate rather than border ethical considerations notify freely operating markets will lead to the resolution of many existing neighborly and environmental problemsPJCCFS 2006 the final report regarding the CSR in 2006Ado pted the same position as that promoted by BCAIn favor of not supporting the introduction of legislationWith an interpretation of current legislation, the enlightened self-interest is the best way forward for Australian corporationsThe Brundtland ReportEmpirical evidence consistent with legitimacy theoryPatten (1992if the Alaskan oil spill resulted in a threat to the legitimacy of the petroleum diligence, and not just Exxons, then legitimacy theory would advise that companies operating within that industry would move by increasing the amount of environmental disclosures by the petroleumcompanies for the post 1989 periods, consistent with a legitimization perspective. This disclosure reaction in truth took place across the oil industry Deegan and Rankin (1996) Australia studyPublic disclosure of prove environmental prosecutions has an impact on the disclosure policies of the firms involved Deegan, Rankin & Tobin (2002)Positive correlations b/t negative media attention for certa in tender and environmental issues and the volume of disclosures on these issues Islam and Deegan (2010)For industry-related social and environmental issues attracting the greatest amount of negative media attention, corporations react by providing positive social and environmental disclosuresCurrent regulations for CSR Reporting internal Greenhouse and Energy Reporting Act 2007 (NGER Act)Who are regulatedUltimate Australian holding company of a corporate group is required to apply if its exceeds one or more of the four wands (5.42) What need to be reportedGreenhouse waste emissionsEnergy productionEnergy consumptionOther info specified under NGER legislationRequirements embodied within the Corporations Act and accounting standards S 299(1)(f) of the Corporations ActRequires that in the directors report, which must be included in the annual report, directors must give details of the entitys performance in relation to environmental regulations if the entitys operations are subject to any particular and significant environmental regulation under a law of the Commonwealth or of a State or Territory S 299 A of the Corporations ActListed companies are required to include in the directors report any information that shareholders would reasonably required. (operations, financial position, and business strategies and prospects for future financial years) However, no specific requirement to disclose financialimpacts. Obligations relating to environmental performance could be considered to be included in either provisions or contingent liabilities, depending on the circumstances. However, many entities choose not to disclose such information due to the probability and reliable measurement issues. Contamination to land caused by the construction of particular arrange shall be included as part of the total cost of the property, plant and equipment, with an homogeneous amount being included in the liability provisions of the entity National Pollutant recordDesigned t o generate political and economic incentives for industry to move towards cleaner productions Requires industrial facilities operating in Australia to estimate emissions of 93 substances exceeding a specified threshold amountEnergy Efficiency Opportunities Act 2006Encourages large vital force-using businesses to improve their energy readiness by requiring business to identify, evaluate and report publicly on cost-effective energy savings opp