P1-01

Card Set Information

Author:
levsha74
ID:
198096
Filename:
P1-01
Updated:
2013-02-05 10:33:05
Tags:
ACCA P1 Corporate Governance principles
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Description:
Basic Principles of CG / Agency Theory
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  1. Define Corporate Governance
    The system by which companies are directed and controlled in the interest of shareholders and stakeholders
  2. What are the key concepts of CG? (9)
    • Fairness
    • Transparency
    • Independence
    • Probity
    • Responsibility
    • Accountability
    • Reputation
    • Judgment
    • Integrity
  3. Explain this key concept of CG:
    FAIRNESS
    Equal treatment of all Stakeholders
  4. Explain this key concept of CG:
    TRANSPARENCY
    • Observe clarity (not ambiguous)
    • Do not withhold information
    • Provide relevant information

    usually done through news release or annual report
  5. Explain this key concept of CG:
    INDEPENDENCE
    • No conflict of interest
    • Act to avoid being unduly influenced by vested interest
  6. Explain this key concept of CG:
    PROBITY
    • Do not mislead when providing information
    • Honesty
  7. Explain this key concept of CG:
    RESPONSIBILITY
    • Authority assumes responsibility:
    • - accepts liability and duty willingly
    • - bear the consequences of failure
  8. Explain this key concept of CG:
    ACCOUNTABILITY
  9. Explain this key concept of CG:
    REPUTATION
    • Responsibility of management to uphold good reputation
    • Develop and maintain personal reputation and moral stance of organization as well as accounting professionalism
  10. Explain this key concept of CG:
    JUDGEMENT
    • Directors decisions to achieve objectives
    • Directors must be able to communicate a meaningful conclusion based on their judgement/decisions
    • Ability to interpret codes as well as their compliance
  11. Explain this key concept of CG:
    INTEGRITY
    • Adhere to a strict moral and ethical standards
    • Do not compromise under any pressure
    • Highest moral standard 

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