Accg 100: Accouting in Socitey Lecture Notes

ACCG100: ACCOUTING IN SOCITEY LECTURE NOTES

Lecture 1:

What is accounting?

• Management of assets and money
• Analyse and interpret information

What is accounting in the business world?

• Goal → how to make your business grow? Where do you get money to finance the expansion? Ensure you are making profit, and then plan how to achieve this e.g. meetings to make professional judgement
• Decision → Success requires countless decisions
• Financial Information → decisions require financial and other types of information

What is accounting in the business world?

• Is a “Process of identifying, measuring, recording and communicating in economic transactions and events of a bussiness operation”
• Plays a key role in the provision of financial information for decision-making
• It must bring economic business and financial benefit

• When someone provides service, there is a economic transaction (when he is paid)

“Accountability”

• Accounting is a process constructed on the need to be ‘accountable’
• Accountability: “The duty to provide an account (by no means necessarily a financial account) or reckoning of those actions for which one is held responsible” Gray et al. (1996:38)

Accounting and its stakeholders

• Shareholders, customers, government, society, environment
• Certain companies need to provide sustainability reports to protect the environment

Management and Financial Accounting:

[pic 1]

• Management accountants- internal focus: report to managers by helping them make decisions, e.g. how to reduce costs and therefore increase profit.
• Financial account – external focus

Various Types of Business Organisations

• Sole Proprietorship (sole trader) → owned by one person. Since the business is not separate, you are personally liable
• Partnership →owned by more than one individual
• Company → organised as a SEPARATE LEGAL ENTITY and owned by shareholders (e.g. BHP, Qantas). There is limited liability, therefore the maximum you suffer is the company.

Lecture 2: ETHICS

• a system of moral principles that guide a person behaviour.
• “Ethics in its broader sense, deals with human conduct in relation to what is morally good and bad, right and wrong. It is the application of values to decision making. These values include honesty, fairness, responsibility, respect and compassion”
• Ethics is societal and ethics is personal
• [pic 2]
• Ethics refers to how society wants us to act, whereas morals refers to one’s personal beliefs and values and the way we act depends on our own judgement and beliefs.

Example: Andrew, who is a bank robber, has sought out yourself, a criminal defense lawyer, to defend his case. You are somehow aware that Andrew is guilty of robbing a bank.

Morals:

You may not want to defend Andrew as you may likely feel that robbing a bank is morally questionable. You may not take up the case.

Ethics:

If you take up the case, you are obligated to defend Andrew with the utmost effort. Ethics dictates that any subjective beliefs that you may entertain must be put aside for justice to prevail, so that Andrew is provided a fair and objective trial, and it is up to the prosecution to prove Andrew’s guilt beyond any reasonable doubt.

Ethical theories:

• Teleological/consequential ethics (OUTCOME):

• The consequences of a decision or action is the sole determinant of what is right from wrong.
• A morally correct action occurs when benefits outweigh costs.
• How you get to the result is less important that the outcome itself

• Deontology or non-consequential ethics (INTENTION):

• Consequences are not important
• The intention to do the right thing is more important than the result
• One does the right thing because it is the ‘right thing to do’

• E.g. telling a lie is never ok regardless of whether people are better off or not.

Ethical issues in business:

• 711 Case- they were originally paying each worker $25p/h, however they could not afford to pay weekend rates, therefore they demanded each worker pay back $11 for each hour.
• VW- they lied about the about of carbon emission that their car produced, this led to a drop in their shares, a loss of customers and a $4.3 million fine to the American government
• Dick smith
• Target

Ethical Decision Making:

[pic 3]

Codes of ethics: Accounting

Accounting professional and Ethical Standards Board (APESB)

Fundamental principles:

1. Integrity: be straightforward and honest in all professional and business relationships
2. Objectivity: professional or business judgments cannot be compromised because of bias, conflict of interest or the undue influence of others
3. Professional competence and due care: must attain and maintain professional a technical knowledge for clients or employers, and requires diligence and appropriate training and supervision
4. Confidentiality: must not disclose outside of the firm, confidential information acquired as a result ofvc professional and business relationships, unless the client or employer authorizes it or there is a legal duty to disclose it
5. Professional behavior: members must comply with relevant laws and regulations

1. Must avoid any action or omission which may discredit the image of profession

Ethical Requirement of independence (section 290.6)

• Independence of mind:

• a state of mind which permits the expression of a conclusions without being affected by influences that comprise your professional judgment.
• Don’t think about unethical behavior

• Independence in appearance (How others view us):

• Avoidance of facts and circumstances that are so significant that a reasonable and informed third party, having knowledge of all relevant information, would reasonably conclude… integrity, objectivity or professional sceptisism has been impaired
• Don’t place yourself in uncompromising positions

Lecture 4: SUSTAINABILLITY

What is it?

• “Sustainable development is ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs.’ (Brutland, 1987)
• about balancing the fine line or the company needs and protecting the environment
• examining the long-term effect of our actions for the future
• Sustainability revolves around ensuring the social, economic and environmental needs of our society are met and are preserved for future generations
• Sustainability deals with ethical issues and conserving future resources by ensuring they are not depleted
• Also deals with protecting the environment from global warming

3 pillars of sustainability

1. Economic performance
2. Society
3. Environment

Key drivers of sustainability

The need for a sustainability focus

• competition for resource

• our needs is growing more quickly than these natural processes to replenishes themselves.
• We use 40% more resources every year that we can put back

• climate change

• widely believed that organisations are responsible for climate change

• economic globalisation
• connectivity and communication

• in a modern society, we use a lot of resources, and with time, our resources are slowly decreasing as
• we use more than 40% of resources each year than the year before quicker than what we can put back
• there is a growing concern for environmental and social issues amongst stakeholders

Sustainable development[pic 4][pic 5][pic 6][pic 7][pic 8]

Environmental; protection of the environment is a primary concern of the future of humanity, e.g. recycling, reducing power consumption. Cannabises are regulating by laws to reduce their harm on the environment. Incentives are also used to ensure companies are partaking in the use of renewable resources.