Chartered Institute of Management Accountants (CIMA) Ethics, Governance and Sustainability Flashcards

24 sample cards from the Ethics, Governance and Sustainability deck

Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.

1. Define 'accountability' in the context of corporate governance.

   The obligation of an individual or organisation to account for its activities, accept responsibility for them, and disclose results transparently to stakeholders.

2. What is the difference between accountability and responsibility?

   Responsibility is the obligation to perform a task or duty; accountability is the obligation to answer for the outcome of that duty and accept the consequences.

3. What is meant by a 'regulatory regime' for financial reporting and governance?

   The framework of laws, regulations, standards and oversight bodies that govern how companies operate, report and are held accountable.

4. Name two key external regulatory/oversight bodies relevant to UK corporate governance and reporting.

   The Financial Reporting Council (FRC) and the Financial Conduct Authority (FCA). (The IFRS Foundation/IASB sets accounting standards.)

5. What was the main purpose of the US Sarbanes-Oxley Act (2002)?

   To strengthen corporate governance and financial disclosure following scandals (e.g. Enron, WorldCom), imposing strict rules on internal controls, auditor independence, and executive accountability for financial statements.

6. Define Corporate Social Responsibility (CSR).

   The concept that organisations have responsibilities to society and the environment beyond profit and legal obligations, balancing the interests of all stakeholders.

7. What is 'stakeholder theory' as it relates to CSR?

   The view that a company should be managed in the interests of all its stakeholders (employees, customers, suppliers, community, environment), not solely its shareholders.

8. Contrast 'shareholder' and 'stakeholder' views of the firm.

   The shareholder view holds the firm's sole social responsibility is to maximise owner wealth within the law; the stakeholder view holds the firm is accountable to a wider range of interested parties.

9. What is the 'triple bottom line' (TBL) approach to performance?

   Measuring corporate performance against three dimensions: Profit (economic), People (social) and Planet (environmental) — often called the 3Ps.

10. What are Carroll's four levels of the CSR pyramid (from base to top)?

    Economic responsibilities, Legal responsibilities, Ethical responsibilities, and Philanthropic responsibilities.

11. What is 'integrated reporting <IR>'?

    A reporting framework (developed by the IIRC, now part of the IFRS Foundation) that communicates how an organisation's strategy, governance, performance and prospects create value over time.

12. What is the central concept underpinning the <IR> framework?

    'Value creation' over the short, medium and long term, explained through the organisation's business model and its use of the capitals.

13. List the six 'capitals' used in the Integrated Reporting <IR> framework.

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

14. Name four of the eight content elements of an integrated report under the <IR> framework.

    Any four of: Organisational overview and external environment; Governance; Business model; Risks and opportunities; Strategy and resource allocation; Performance; Outlook; Basis of preparation and presentation.

15. Name three of the seven guiding principles of the <IR> framework.

    Any three of: Strategic focus and future orientation; Connectivity of information; Stakeholder relationships; Materiality; Conciseness; Reliability and completeness; Consistency and comparability.

16. How does integrated reporting differ from traditional financial reporting?

    Traditional reporting focuses on historical financial (mainly financial-capital) performance; integrated reporting connects financial and non-financial information across all six capitals to explain holistic value creation over time.

17. Define 'sustainability' using the Brundtland Commission's definition.

    Development that "meets the needs of the present without compromising the ability of future generations to meet their own needs."

18. What is 'sustainable finance'?

    Financial activity (investment, lending, insurance) that integrates environmental, social and governance (ESG) factors into decision-making to support long-term sustainable economic activity.

19. What do the letters 'ESG' stand for in investment and reporting contexts?

    Environmental, Social and Governance — the three central factors used to assess the sustainability and ethical impact of an investment or organisation.

20. What is 'greenwashing'?

    Misleadingly presenting an organisation, product or investment as more environmentally responsible or sustainable than it actually is.

21. What is a 'green bond' in sustainable finance?

    A fixed-income instrument whose proceeds are earmarked exclusively to finance or refinance environmentally beneficial ('green') projects.

22. What is the role of the TCFD (Task Force on Climate-related Financial Disclosures)?

    To provide recommendations for consistent climate-related financial disclosures across four pillars: Governance, Strategy, Risk management, and Metrics & targets.

23. What is the purpose of the IFRS Sustainability Disclosure Standards issued by the ISSB?

    To create a global baseline of sustainability-related financial disclosures (e.g. IFRS S1 general requirements and IFRS S2 climate-related disclosures) for investors and capital markets.

24. What is 'materiality' in the context of sustainability and integrated reporting?

    The principle of disclosing information about matters that substantively affect the organisation's ability to create value (or that are significant to stakeholders' decisions) over the short, medium and long term.

What this deck covers

Ethics, Governance and Sustainability flashcards FAQ