CPA Ethics & Governance – Introduction



good evening everybody and welcome to ethics and governance subject introduction and what I'm going to be doing today is just a quick overview of ethics and governance so that you can ask some questions find out more and if you're thinking of enrolling now for many students you would have already done I think some governance first some of you might have to be doing it again or a bit nervous how you went so what I want to do is talk about the key themes and ethics and governance and how you can approach it the key concepts we cover so that you can be ready so let's get into it straight up I've got 20 minutes I'll be prompt and we've got a Q&A box so please ask your questions and I'll do my best to to answer them what we've got is what is Eng what is the overarching reason for doing it and one of the problems is when students study but they don't think why am i studying this and if your answer is I needed to get my CPA qualification that's not a good enough answer we need to think a little bit beyond that and say how is this useful what does this mean to me as a student aiming to become an accounting professional so then the next thing we've got is what's in this subject how does it click together followed by that Shelley Chris the aschen myself who are we I'm knowledge equity with us about 14 or 15 of us bar only a few of us represented so I want you to introduce a bit to the team so you can see who they are and their different backgrounds which I think complement each other really well and finally a little bit of marketing you know how collage equity help you why would I even bother sometimes people say why would I study ethics and governance with knowledge equity I'll use them for financial reporting I've heard that's really tough but ethics and governments I can get through myself now our our mission here isn't to help you pass our focus is on looking you well beyond the pasture to distinction high distinction but also learning faster learning deeper which means actually remembering it for more than just one semester and then forgetting all about it so I hope that we can convince you that studying with us coming to our webinars will keep you on track you'll learn a lot you might you might enjoy it and there we go so let's jump into it what is ethics and governance all about what we've got is this idea of accountants and not just people who turn up to work and just do technical work jobs done that's unrealistic we live in a complex political environment and the key thing is when we're recording numbers and those numbers have an impact on people's profits their salaries who gets a share of it then we go look at things like ethical dilemmas and how do we govern our organizations how do they work properly 7-eleven is a perfect example of this in the media right now 7-eleven have been literally screwing their employees and they've been doing that because they needed to make money they want more money and their franchisees are stuck because they're paying too many fees to head office and people are losing out and getting really ripped off so what we have is as an accountant you can't just sit back and say hey I'm just here to do technical accounting I don't care that the law is being broken I don't care that people are being abused I don't care that they're threatening people with deportation what we want to be able to say is how are we interacting with these issues how are we causing them to happen which we do because we're involved in recording profits and talking about it how can we be an influence for the public good and that's key aims so hopefully that gives you a bit of a snapshot on some of the key issues we've got the ethical factors as well as the governance how do we direct these organizations now a little bit more specifically here's a road map very colorful I hope it's waking you up and what we've got is we start off with what is a profession what does it mean to be a professional and how can I think about my role as an accountant as a professional and you are not just a number cruncher you're not just a what we call a technician you're someone who thinks who brings judgment to the situation and then we're going to look at what is ethics and one of the key ethical dilemmas that will be faced from there we have how do I resolve an ethical dilemma so there's tools and techniques for getting you through an ethical dilemma because they can be quite difficult to resolve and sometimes the ethical answer is obvious but the ramifications that impact on you are severe whistleblowers often get penalized they often get sacked they often lose their jobs they often are ostracized by their community so there are serious costs to be considered when resolving an ethical dilemma and then we look at governance how we govern how do we direct how do we lead our organizations and what used to be acceptable 20 30 years ago is no longer appropriate most of the time there's a lot of changes where we've said that old-school way of doing business is no longer acceptable so we look at a whole new range of principles now what tends to happen is there's a governance failure followed by a governance change and improvement followed by new regulations and then people find loopholes and make more mistakes so we look at the ASX principles later I'll give you an example of those from there we go to directors duties and so we've gone from ethics to legal duties and the law sets the minimum benchmark and ethics sense that the top benchmark so we want to aspire towards the top level ethics but the law sets a minimum benchmark of behavior that you cannot go below and there's strict penalties here so as accountants we need to make sure we protect ourselves from breaking the law and we also give good advice to our employees employers and clients to make sure that they aren't in breach of their their laws and we're going to make sure they don't breach their directors duties so from there we've got competition and sneaky behavior dishonest behavior a competitive behavior some of its great some of its not and if you studied GSL global strategy and leadership a lot of it is about how can you do clever tricks to to make more money where as ethics and governance is more about what are the laws and rules in place to stop companies being a little bit too creative finally we go into anti-competitive laws and consumer protection so think about misleading and deceptive conduct and why we have protections in place to look after consumers so this no longer happens so that is a very rapid module one to four summary and then that's the past so you can say this is what's happened it's evolved over time we ever moved to ethics governance changes taking place so now we look at the future accountability is module five and it used to be called triple bottom line then it was called CSR corporate social responsibility but now we're talking about ability and we look at what causes that we look at externalities we're looking at things like the limitations what are the problems with financial reporting why doesn't work how do we extend it to include environmental factors social factors governance and strategy items how do we mention these problems we look at article theories from module two and how they pull into module five and this helps integrate the material together and then we look at voluntary and and external reporting and certain accounting techniques so there's a move towards reporting physical factors and we look at this in contemporary business issues as well as ethics and governance and strategic management accounting so if you're thinking mmm accounting career don't just think dollars and debits and credits you have to be thinking about recording reporting physical numbers so that's that's the quick overview now I want to go into just a little bit more detail of some of the key themes in in each of these topics just to get you familiar with with what's available now this is a flow chart created by key action and it's a summary of the whole first part of module 1 I can't talk through all of it but what I'm saying is it talks about attributes to the profession to module 1 women accountants to be professional what does that mean so some key items here there's a body of knowledge there's an education process there's a code of ethics one of the things we do is that the study guides very long and it's very text-based so we create a lot of resources like flowcharts PDFs colors graphs stories to bring it to life to help make it more clear help you understand better learn faster so this is an example of how we would explain the professions and you could walk through step by step this then becomes your study notes foundation because you can write little little commentary about each section and then instead of rereading 30 pages of notes you can just sort of read this one page with some summary notes and it can sink in much more deeply so we start there the study guide with the attributes of the profession but these change over time and accountants used to have a lot of autonomy self-control but over the last 15 years a lot of misbehavior a lot of abuse and manipulation has seen the government say hang on a minute we're stepping in as well we want to be part of this regulation we're not just going to let you set your own accounting standards we're not going to let you make all the decisions so the accountants been penalized because I haven't been professional enough and so we explain how all these factors come together and this is a good example on the screen of where that study guide is all text-based we pulled that together to create a mind map or a flowchart of who sets the standards where are the accountabilities so firstly it's easier to remember secondly if you get a specific question about who's in control of what or who sets a particular standard it's going to be quite easy for you to get the correct answer from there the final sections in module 1 go beyond professions and say what's our impact on society and and accountants have a significant impact because we influence people's decisions so what we report how we report it changes behavior and we've also been compelled some some accountants to do some pretty creative and dodgy situations so creative accounting manipulation of the results accounting distortions poor quality audits and auditors who lost their independence because they're chasing a dollar have led to this huge reduction in our credibility which caused that government interference and regulation so what we've got all these factors reducing credibility then in the study guide you're going to learn all the factors we're putting in place to increase our credibility and gain our status back and so module 1 is all about this from profession to losing it a bit to building it back up and once you've got that set down you can say how can I become a better accountant in the community and that's one reason why this is the first subject that most people study so jump into module 2 module 2 is about ethics but there's not just one way of doing ethics there's lots of different theories and so you need to be across a whole range of ethical egoism utilitarianism rights Theory justice theory and you need to be able to resolve situations from each of these perspectives and this is really useful because sometimes you mean a fight with someone and they'll think they're ethical and you'll think you're ethical and you come to a different conclusion this is often because you have different perspectives so some people have a strong rights theory protectors perspective like human rights and others are more about what what's the greater good for the greater number so from the government perspective it's not only you latarian ISM so you need to be aware of these we use lots of stories of examples and practice questions so that you can learn your way through these ethical and dilemmas and case studies on top of the ethical theory says the Code of Ethics recounts and said what we have is a range of fundamental principles integrity objectivity confidentiality we have to comply with all the time but when we hit an ethical dilemma and the example areas you know someone's breaching confidentiality they're breaching the code of ethics that's totally unacceptable so we look at mechanisms for diagnosing ethical issues and figuring out how to resolve them we have our fundamental principles like integrity and objectivity but we also have all these threats that are trying to you know prevent them so that's people saying hey can you help me cheat on my tax I don't want to pay as much money or someone putting pressure on you say push the profit result up and then I'll get myself a bonus please do it and if you don't do it I'm fine so what we have is this range of threats from self interest self review intimidation we need to be able to diagnose them and then the next step of course is to put in some safeguards protecting ourselves from this pressure protecting ourselves from these threats so that we can continue to act in an ethical way so module two it's about what is ethics what are the different types of ethics one of the dilemmas I'm going to face how do I fix those dilemmas by resolving them with safeguards and coming to group reasoned conclusions and there's a lot of research that shows accountants are always facing ethical diamonds so it's a very valuable tool for you to be an accounting professional so you can see the link between module 1 module 2 module 3 talks about defining governance and it's about how do all of these different factors around a company combine together the board that manages the shareholders the customers have to work together to lead forward and they're often fighting and they're often adversarial so governance is about pulling these threads together in a consistent way module 3 focuses very heavily on how directors govern organizations and the different types of director so we look at this executives non executives in a lot of detail and once again you'll see we use a lot of graphics a lot of color a lot of text so that you can quickly visualize what might take three or four pages in the study here it is oh that helps me remember I'm going to make sure I get that right in an exam one of the other themes in module 3 is about agency theory and all of the directors duties that come from that because you have your shareholders over here and you have your directors over here so this is separation of ownership and control and sometimes the managers the the agents are tempted to just take the money away from the shareholders rather than try and work for the shareholders so we have a whole lot of directors duties in place laws that make sure that the managers don't just pinch the money but actually work for the principle so avoiding conflicts of interests acting with proper purpose there's a whole lot of law that you have to comply with and that's the core of module 3 so for module 3 the other thing we have to look at is principles that lead to best practice and the two types of the OECD principles and we also look at the ASX principle so the Australian Securities Exchange we even look at the UK version which are very similar so by showing you all of this best practice you can think about how best to structure the organization you work with and so when you're has an accountant you doing more than technical work you're also looking at governance structures and helping support managers in all of these areas so there's a broad range of work to be performed we get to module 4 and it's about all of the different stakeholders so how does the company interact and the laws that exist in this situation so there's some mores about avoiding anti-competitive conduct going into cartel behavior and then we also get consumer protections like avoiding can misleading deceptive conduct the use of things like deliberate misstatements to trick people to invest in in particular areas and inflating stock prices so module four is all about laws and regulations protecting all of these stakeholders and then finally module five is about the future what is the future of accounting and that links to dealing with reporting and recording climate change waste pollution biodiversity is very very different from the financials but absolutely critical so we look at this idea of integrated thinking is a new way of approaching this so it's going well beyond finance and thinking social environmental governance factors all together and we'll look at natural capital sustainability CSR these all get woven together into a story that you have to be familiar with because this is the future of the profession if you want to be in a successful area this is where it needs to be the study guide is very minty greedy here because in all these different types of reporting for environmental and social factors Equator Principles GRI integrated reporting there's a whole bunch of them and you'll actually have to know them in quite a bit of detail so don't be intimidated but there certainly is some work to do you can't just skim over everything so that was 15 minutes of ethics and governance in a nutshell I hope it's helped I just want to take a minute or two now to tell you about the team that we've got to have got Chris who you won't see much of in ethics and governance he's more of a strategy guy so he's about how to make a business make lots of money challenge the other competitors but he brings to life a lot of areas because of his 15 20 years worth of work experience brings really good stories and examples then we've got the aschen who's passionate about audit finance reporting and also involved in ethics and governance heaps of experience with the big four as well as several accounting bodies some professional accounting bodies and previously at CPA Australia and he is the flow chart King he he is so good at summarizing complex information into really clear diagrams and then we have Shelly who's just joined us from the public sector deep experience with agricultural water based things fisheries management areas like that and that's very valuable especially in the management accounting areas so we've got a broad team of presenters that you'll get to know in our LMS what we do is we provide a whole range of support resources that go alongside the CPA study guide so you have to read the study guide we're not a replacement for that we are trying to bring it to life so when you first log in you'll see three different areas if you're up to full focus you get access to live webinars practice exams and our main course where we host our content and here's an example of a list of items so what you'll get is a whole bunch of units where we have videos and mini quizzes PDF resources and examples to help bring the material to life and at the end of that we have module practice quizzes so you you slowly work your way through these items step-by-step and you'll see there's only a couple of modules listed there but there's five modules with the stuff there's plenty of content to keep you busy then when you get into a module itself you'll see these little pockets or chunks of data we're trying to make it nice and simple lots of little five and ten minute pieces because people find it hard to study but for an hour two at a time so it's just watch something read something learn something do a quiz and then let that sink in and then the next day do something else on the next day do something else so we also have a progress bar to help you sort of keep track to help throughout semester so you don't fall too far behind we've got some quizzes and then these are timed and they give good feedback so you can see how you're going throughout the semester and we're going to continually add more questions as we go along and one of the things we do with the written practice exams we write so there's at least two detailed practice exams lots of feedback to the customer student to say hey this is what you do really well but this was missing we need more here so we want to make sure that when you do a practice exam you don't just get a partial fail in a result you actually know where am i week what do I need to do better and what exam tips can I do to write a better answer so we work very hard at helping you prepare in a diligent manner so I've got about a minute or two left what I want to do is tell you our our contact details I'm sure you've found us already because you're in the webinar but if you haven't already liked us on Facebook please because more numbers means more reach more customers more students joining us means we can create more questions more resources my details are there at the arch into details there because we'll be the two people mainly running this subject go to our website and if you have any inquiries if you didn't come in by a registered email and you want to contact us then inquires at knowledge equity comm Don are you thank you for listening hope you found that helpful and I look forward to having you on board in 2016

Maurice Vega

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