Chartered Global Management Accountant (CGMA) Business Ethics, Governance, and Integrated Reporting Syllabus

Name three common ethical decision-making frameworks used to evaluate dilemmas.

The AAA (American Accounting Association) seven-step model, Tucker's 5-question model, and Kohlberg's stages of moral development; the IFAC/CGMA conceptual (threats-and-safeguards) framework is the profession's primary tool.

What are the five questions in Tucker's model for an ethical decision?

Is the decision (1) profitable, (2) legal, (3) fair, (4) right, and (5) sustainable? A decision should pass all five tests to be ethical.

Contrast deontological (duty-based) and teleological (consequence-based) ethics.

Deontological ethics judges actions by adherence to rules, duties, and rights regardless of outcome; teleological (consequentialist, e.g., utilitarianism) judges actions by their consequences—the greatest good for the greatest number.

What does the CGMA Ethical Checklist provide for practitioners?

A practical step-by-step tool to work through an ethical dilemma: recognize the threat, gather facts, evaluate against the fundamental principles, consider alternatives and consultation, and decide on action while documenting the process.

Distinguish between 'rules-based' and 'principles-based' approaches to governance and ethics.

A rules-based approach (e.g., SOX) prescribes specific legal requirements with penalties for non-compliance; a principles-based approach (e.g., UK Corporate Governance Code) sets broad principles applied on a 'comply or explain' basis, allowing judgment.

What does the 'comply or explain' principle mean in corporate governance codes?

Companies must either comply with the code's provisions or publicly explain why they have not, leaving the judgment of adequacy to shareholders rather than regulators.

Define corporate governance.

The system of rules, practices, relationships, and processes by which a company is directed and controlled, balancing the interests of shareholders, management, and other stakeholders.

What is the OECD's role in corporate governance?

The OECD publishes the G20/OECD Principles of Corporate Governance, an international benchmark covering shareholder rights, equitable treatment, stakeholder roles, disclosure and transparency, and board responsibilities.

What is the agency problem in corporate governance?

The conflict arising when managers (agents) act in their own interests rather than those of the shareholders (principals); governance mechanisms and incentives aim to align these interests and reduce agency costs.

What is the difference between a unitary board and a two-tier board structure?

A unitary board (US/UK) has executive and non-executive directors on a single board; a two-tier board (e.g., Germany) separates a management board (executives) from a supervisory board (non-executives/stakeholders).

Why is separating the roles of Chair and CEO considered good governance?

It splits the running of the board (Chair) from the running of the business (CEO), preventing excessive concentration of power in one individual and strengthening board oversight.

What is the role of non-executive directors (NEDs) on a board?

To provide independent judgment and constructive challenge on strategy, performance, risk, and resources; to scrutinize management; and to staff key committees (audit, remuneration, nomination).

Name the three principal board committees and one core function of each.

Audit committee (oversees financial reporting, internal control, and external audit); Remuneration committee (sets executive pay); Nomination committee (oversees board appointments and succession).

To whom is the board of directors ultimately accountable?

To the shareholders (and, more broadly, stakeholders), primarily through the annual report and the annual general meeting (AGM).

What major scandals prompted the US Sarbanes-Oxley Act of 2002?

The collapses of Enron and WorldCom (and the demise of auditor Arthur Andersen), which exposed accounting fraud and audit failures.

What does Section 302 of the Sarbanes-Oxley Act require?

That the CEO and CFO personally certify the accuracy and completeness of the company's financial statements and the effectiveness of disclosure controls in each periodic report.

What does Section 404 of the Sarbanes-Oxley Act require?

That management assess and report on the effectiveness of internal control over financial reporting (ICFR), and that the external auditor attest to that assessment.

What body did Sarbanes-Oxley create to oversee auditors of public companies?

The Public Company Accounting Oversight Board (PCAOB).

How does the COSO framework relate to internal control and SOX compliance?

COSO's Internal Control–Integrated Framework provides the widely used model (control environment, risk assessment, control activities, information & communication, monitoring) companies apply to design and evaluate ICFR for SOX Section 404.

What is the link between governance, risk, and compliance (GRC)?

GRC integrates corporate governance, enterprise risk management, and regulatory compliance into a coordinated framework so that risk-taking, controls, and oversight are aligned with strategy and legal requirements.

What are the main mechanisms for shareholder engagement with a company?

Annual general meetings (AGMs) and voting, proxy voting, dialogue with the board/institutional investor stewardship, resolutions, and engagement on ESG and remuneration ('say on pay').

What is a 'say on pay' vote?

A shareholder vote on the company's executive remuneration policy or report, giving owners a formal voice on pay; it may be advisory or binding depending on jurisdiction.

What are the core components of a public company's annual reporting obligations?

Audited financial statements, a management commentary/MD&A, a directors'/governance report, a remuneration report, and increasingly non-financial/ESG and risk disclosures.

What is the purpose of the Integrated Reporting <IR> Framework?

To communicate how an organization creates, preserves, or erodes value over time by connecting financial and non-financial information into a concise, integrated report focused on value creation.

List the six capitals identified in the Integrated Reporting Framework.

Financial, Manufactured, Intellectual, Human, Social and Relationship, and Natural capital.

Name four of the eight content elements of an integrated report.

Any four of: organizational overview and external environment; governance; business model; risks and opportunities; strategy and resource allocation; performance; outlook; and basis of preparation and presentation.

What are the guiding principles of the Integrated Reporting Framework?

Strategic focus and future orientation; connectivity of information; stakeholder relationships; materiality; conciseness; reliability and completeness; and consistency and comparability.

What does 'value creation' over time mean in integrated reporting, and over which time horizons?

The increase, decrease, or transformation of the capitals caused by the organization's business activities and outputs, assessed over the short, medium, and long term.

What is ESG reporting and what do its three pillars cover?

Reporting on Environmental (e.g., emissions, resource use), Social (e.g., labor, diversity, communities), and Governance (e.g., board structure, ethics, controls) factors that affect sustainable performance.

What is the Triple Bottom Line (TBL) concept?

A framework measuring performance across three dimensions—People, Planet, and Profit (social, environmental, and economic)—rather than financial profit alone, to capture true long-term value.

How does the CGMA describe the finance professional's role in driving sustainable business?

As a value steward integrating financial and non-financial information, embedding ESG and risk into strategy and decision-making, ensuring ethical conduct, and reporting transparently on long-term value creation to stakeholders.