ACCA P1 复习框架

1、ACCA P1 EXAM NOTESJune 2010Part 1: FrameworkChapter 1: Introduction of CG (Corporate Governance)Segregation of the ownership and control-Shareholders are the owner of the company-Control usually delegated to director-Interest of shareholders and directors may conflict-Directors may not act in the be

2、st interest of the shareholderCorporate GovernanceLargely concerned with governing the relationship between shareholders and directorsAccountability&fiduciary duties:-No conflict of interests-Confidenciality-ObedienceCG concepts:-Fairness-Transparancy -Independence -Accountability-Integrety 09 D

3、ecImpact on organization:-Duties of directors and function of the board-Composition and balance of the board and board committee-Reliability of financial reporting and external auditing-Directors remuneration and rewards-Risk management and internal control systemDefinition:A system by which organiz

4、ations are directed and controlledPurpose and objectives:-Monitor those who control the assets owned by investors-Contribute to improved corporate performance and accountability in creating long term shareholder value-Underpin the confidence that markets have in listed companiesKey points:1. Definit

5、ion of CG, agency relationship, accountability,2. Underlying concepts of CG Transparancy Full, complete and timely disclosure financial or non financial information which will affect investors financial decisionIndependence NED and AuditorsAccountability Directors should be accountable to Shareholde

6、rsChapter 2: Agency relationship and theoriesStakeholder theoryAgency relationship and theoriesAgency theoryMendelows MatrixClasificationDefinitionDefinition:Principal delegates decision making authority to agents Power LKeep informedMinimal effort Interest HKey concept:AgentPrincipalAgency costsTra

7、nsaction costsAccountabilityFiduciary duty Key playersKeep satisfied Key points:1. Agency theory: Agency is defined in relation to a principal. A principal appoints an agent to act on his or her behalf. In the case of corporate governance, the principal is a shareholder and the agents are the direct

8、ors. Directors shoud be accountable for the investment of shareholders2. Transaction theory: 3. Stakeholder theory: shareholder, employee, borad of director, institutional investor, customer & supplierGovornment, trade union and external auditors.Definition: a stakeholder in terms of any organis

9、ation or person that can affect or be affected by the policies or activities of an entity.4. Fiduciary duty/responsibility,A fiduciary responsibility is a duty of trust and care towards one or more parties. It describes direction of accountability in that one party has to another. The fiduciary duty

10、 of directors in public companies is to act in the economic interests of shareholders who invest in the company but are unable to manage the company directly.Chapter 3: Board of directors, Board of Committee & RemunerationBoard of directors:Insider & outsiderBoard of directorsBoard structure

11、UnitaryTwo tier boardSingle boardSupervisory boardManagement boardNEDEDNEDEDInduction program: 09 DecGives incoming director:-An understanding of nature of the company, its business and the market in which it operates-Understanding of companys main relationship, culture, people and structure Charact

12、eristic and composition:-Balance of ED and NED-Not be dominated by a single powerful individual-Role of chairman and the CEO should be separated Roles and responsibilities:-Act in good faith in the interests of the company as a whole-Display a certain amount of skills and exercise reasonable care-En

13、sure company maintains full and accurate accounting records-Produce and present annual accounts CPD:Companies need to provide resources for developing and refreshing the knowledge and skill of directorChairman:-Runs the board-Ensures that the board sets and implements the companys direction and stra

14、tegy effectively-Acts as companys lead representativeLegal and regulatory framework:- Appointment and retirement- Service contract- Removal- Disqualification- Conflicts of interest- Insider dealingRole of Non Executive Director (NED):-Strategy-Scrutiny and monitor-Risk -PeopleExecutive Director (ED)

15、:-Members of a board of directors who are also senior managers of the company-Usually paid as full time employee for their workCEO:-Runs the company-Take the responsibility for the performance of the company as determined by the boards strategy-Investment and financing-Be responsible for managing ri

16、sk profileIndependence of NED:-No business, finnancial or other connections-Not take part in share option scheme-Independent judgement-No Cross directorshipsKey points:1. Role of board: 2. Board structure: Advantages and disadvantages of unitary board and two-tier board 3. Difference between ED and

17、NEDExecutive directors are full time members of staff, have management positions in the organisation, are part of theexecutive structure and typically have industry or activity-relevant knowledge or expertise, which is the basis of their value to the organisation.Non-executive directors are engaged

18、part time by the organisation, bring relevant independent, external input and scrutiny to the board, and typically occupy positions in the committee structure.4. Roles of NED a. The strategy role recognises that NEDs are full members of the board and thus have the right and responsibility to contrib

19、ute to the strategic success of the organisation for the benefit of shareholdersb. In the scrutinising or performance role, NEDs are required to hold executive colleagues to account for decisions taken and company performance.c. The risk role involves NEDs ensuring the company has an adequate system

20、 of internal controls and systems of risk management in place.d. the people role involves NEDs overseeing a range of responsibilities with regard to the management of the executive members of the board.5. Threats to independence of the NED Independence can be judged as:-Not being an employee of the

21、company within last 5 years-Not having material business relationship with the company in last 3 years-Not receiving any remuneration except a directors fee (including share option)-Not having any family ties with the firm-Not holding cross directorships with other director-Not being an significant

22、shareholder-Not having served on the board for over nine years-The board should consist of half independent excluding the chair6. Role of chairman and CEO a.The chairman is the leader of the board of directors in a private or public company. b.He or she is responsible for setting the boards agenda a

23、nd ensuring that board meetings take place on a regular basis. c.The chairman represents the company to investors and other outside stakeholders/constituents. d.Facilitating good relationships between executive and non-executive directors.7. Cross directorshipA cross directorship is said to exist wh

24、en two (or more) directors sit on the boards of the other. Cross directorships undermine the roles of remunerations committees in that a director deciding the salary of a colleague who, in turn, may play a part in deciding his own salary, is a clear conflict of interests.Board committeeAudit committ

25、eeSee turnbull reportRisk committeeNomination committeeRemuneration committee 100% 100%NEDNEDMajority NEDMajority NEDStructure of boardPay & Benefits of EDCompany risk exposureKey points:Roles of remuneration committee,a.the committee is charged with determining remunerations policy on behalf of

26、 the board and the shareholders. b. the committee ensures that each director is fairly but responsibly rewarded for their individual contribution in terms of levels or pay and the components of each directors package.c. the remunerations committee reports to the shareholders on the outcomes of their

27、 decisions. d. where appropriate and required by statute or voluntary code, the committee is required to be seen to be compliant with relevant laws or codes of best practiceRoles of risk management committeea. To agree and approve the risk management strategy and policies.b. Receiving and reviewing

28、risk reports from affected departments.c. Monitoring overall exposure and specific risks.d. Assessing the effectiveness of risk management systems.e. To work with the audit committee on designing and monitoring internal controls for the management and mitigation of risks.General roles of a nominatio

29、ns committeea. It advises on the balance between executives and independent non-executive directors and establishes the appropriate number and type of NEDs on the board. b. It establishes the skills, knowledge and experience possessed by current board and notes any gaps that will need to be filled.c

30、. It establishes the desirable and optimal size of the board, bearing in mind the current size and complexity of existing and planned activities and strategies.d. It seeks to ensure that the board is balanced in terms of it having board members from a diversity of backgrounds so as to reflect its ma

31、in constituencies and ensure a flow of new ideas and the scrutiny of existing strategies.Chapter 4: Different approaches to corporate governanceMultiple jurisdictions-OECD principle-ICGN principleHampelGreenburyCadburyHiggsTurnbullCombined codeSmithAudit committeeCompany must have an audit committee

32、-will be disallowed from trading if it does not have oneAuditor independenceAuditors are restricted in the additional service they can provide to the clientUS stock exchange regulationsRequired under the Act-very similar to UK regulationAudit committeeAnnual report must include statements concerning

33、 the internal control system in the companySOXIncreased financial disclosuresFinancial report to detail off balance sheet financingKey points:1. Turnbull report and combined code See apendix turnbull report2. SOXChapter 5: Corporate governance, social responsibility and disclosureCG is how an organi

34、zation is governed in pursuit of its objective and includes:-how it behaves in relation to its environment-how it interests its shareholderCSR (Corporate social responsibility)Is how an organization manages the impact of their operations on the wider environment, including consideration for stakehol

35、der groupStakeholdersAn organization has different objectives which need to be managed in terms of organizational strategy.Shareholders are particularly important stakeholders to the company.ShareholderAre company owners and entitled to information from the directors. Usually in the form of-Annual r

36、eport-General meetingReporting and disclosure-Voluntary-MandatoryGeneral meetingBest practiceGuidance provided by the combined codeProxy votingKey points:1. CSR & Corporate citizenship2. Mandatory and voluntary disclosure:3. Sustainability and environmental issuesSustainability means limiting us

37、e of resources to what can be replenished4.Reputation risk concerns any kind of deterioration in the way in which the organisation is perceived from the point of view of external stakeholders. The effect is an aspect of corporate behaviour below that expected by one or more stakeholders.Chapter 6: M

38、anagement control systems in corporate governanceInternal management controlKey process concerned with management of risks and achievement of objectiveInternal control systemRoles and responsibility-Board of directors-Executive managementRelevance to corporate governance-Internal control and risk ma

39、nagement are fundamental components of good corporate governance-CG has key links to risks and internal controlInternal control Individual components of an internal control systemObjectives and functions-Ensure goals and objectives of the organization are met-Ensure reliable financial and management

40、 reporting-Ensure compliance with laws-Protect organizations reputationElements:-Risk assessment-Control environment-Information and communication-Monitoring-Control activitiesKey points:1. Definition of IC:2. Elements of IC:Internal control Method SPAMSOAPSegregation of dutiesWith no one person hav

41、ing total control of an area ,eg the chairman/CEO roles should be splitPhysical measures to secure the custody of assets ,eg access control to buildings, passwordAuthorization and approval of all business activities by appropriate personsEg non-executive directors to decide directors pay and sit on

42、a remuneration committeeManagement should provide control through analysis and review of accounts, for example internal auditSupervison of the recording and operations of day to day transactions eg budget monitoring through exceptionOrganization identifies reporting lines, levels of authority and re

43、sponsibility. This ensures everyone is aware of their control responsibilities, especially in ensuring adherence to management policiesArithmetic and accuracyCheck the correct and accurate recording and processing of transactions, eg bank account reconciliationPersonnelAttention should be given to s

44、election, training and qualification of personnelChapter 7: Internal control, audit compliance and reporting in CGInternal control-Monitoring, testing and reporting on the effectiveness of controlInternal audit-Perform an important function in testing and reporting on internal control External audit

45、Performs a statutory functionAudit committeeHave responsibility for review and monitoring of internal controls and auditFunction and importance-Review of accounting and internal control system-Detailed testing-Review of operations-Review of implementation of corporate policy Internal Audit Perform a

46、n important function in testing and reporting on internal controlsImportance:If auditors are not independent, work may be biased and therefore not reliableThreats to independence:-Self interest-Self review-Advocacy-Intimidation-FamiliarityKey points:1. Function, objective and importance of the inter

47、nal audit FIVE general objectives of internal control,a. To ensure the orderly and efficient conduct of business in respect of systems being in place and fully implemented.b. To safeguard the assets of the businessc. To prevent and detect fraudd. To ensure the completeness and accuracy of accounting

48、 records.e. To ensure the timely preparation of financial information which applies to statutory reporting2. Audit committee and internal audit & external audit Chapter 8: Risk management, assessment and risk managementRiskControlling riskMeasurement of riskCategorization of riskManagement perce

49、ption of riskKey points:1. Risk category:Strategic risks arise from the overall strategic positioning of the company in its environment.Operational risks refer to potential losses arising from the normal business operations. They affect the day-to-day running of operations and business systems in co

50、ntrast to strategic risks.2. Risk analysis/ risk management strategy: TARATransference involves the company accepting a portion of the risk and seeking to transfer a part to a third party.Risk avoidence involves discontinuing the activity that is exposing the company to risk.A risk reduction strateg

51、y involves seeking to retain a component of the risk but to reduce it to acceptable level.A risk acceptance strategy involves taking limited or no action to reduce the exposure to risk and would be taken if the returns expected from bearing the risk were expected to be greater than the potential lia

52、bilities.3. Impact on the stakeholders: stakeholder matrix4. Role of risk management committee See Page 65. Role of risk manager June 2009Chapter 9 Ethic theories and professional ethicCodes of ethicsCorporate social responsibility/CitizenshipEconomic, legal, ethical philanthropicEthic theory-Kohlberg theory-Tuckers modelProfessional Ethic CodesPublic interestCorporate soci