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Accounting can be defined as the process of identifying, measuring and

communicating economic information about an entity to a variety of users


for the purpose of decision making.
The process of accounting: identifying- transactions that effect the
entitys financial position are taken into consideration. They must be able
to reliably measured and recorded; measuring- this stage includes
analysis, recording and classifying of business transactions;
communicating- accounting information is used for a range of decisions
by external and internal users.
Bookkeeping- the recording and summarising of financial transactions
and the preparation of basic reports book keeping represents the first
two stages of the accounting process: identifying and measuring.
Financial accounting- preparation and presentation of financial
information for users to enable them to make economic decisions
regarding the entity. Provides information for external parties to make
economic decisions regarding the entity and can be used by management
for internal decision making.
Management accounting- field of accounting that provides economic
information for use by management in internal planning and decision
making.
Differences between financial accounting and management accounting
Financial Accounting
1. Regulations

2. Timeliness

3. Level of Detail

Bound by GAAP. GAAP


are represented by
accounting standards
(including those issued
by both the AASB and
IASB), the Corporations
Act, and relevant rules
of accounting
association and other
organisations such as
the ASX.
Information is often
outdated by the time
the statements are
distributed to the users.
The financial statements
present a historical
picture of the past
operations of the entity.
Most financial
statements are of
quantitative nature. The
statements represent
the entity as a whole,
consolidating income
and expenses from

Management
accounting
Much less formal and
without any prescribed
rules. The reports are
constructed to be of use
to the managers.

Management reports
can be both a historical
record and a projection,
e.g., a budget.

Much more detailed and


can be tailored to suit
the needs of
management. Of both a
quantitative and
qualitative nature.

4. Main users

different segments of
the business.
Prepared to suit a
variety of users
including management,
suppliers, consumers,
employers, banks,
taxation authorities,
interested groups,
investors and
prospective investors.

Main users are the


managers in the entity,
hence the term
management
accounting.

Regulation
ASIC (Australian securities and investments commission) acts as
the company watchdog, and enforces company and financial laws
such as the Corporations Act 2001- national scheme of legislation,
administered by ASIC, dealing with the regulation of companies and
the securities and futures industries in Australia. Government body
which regulates company borrowings, and investments advisers and
dealers.
The ASX (Australian securities exchange- Australian market place
for trading equities, government bonds and other fixed-interest
securities) regulates companies through the market rules (rules
governing the operations and behaviour of participating entities of
the ASX and affiliates) and listing rules (rules governing the
procedures and behaviour of all ASX listed companies).
APRA (Australian Prudential Regulation Authority) is responsible for
ensuring that financial institutes honour their commitments to their
stakeholders.
The ACCC (Australian competition and consumer commission)
administers the Competition and Consumer Act 2010, which coves
for anti-competitive behaviour and unfair market practices, mergers
and acquisitions of companies, and product safety and liability.
Qualitative Characteristics

Relevance: The characteristic of relevance implies that the information


should have predictive and confirmatory value for users in making and
evaluating economic decisions. This characteristic also includes
materiality- Information is material if omitting it or misstating it could
influence decision making.
Faithful Representation- This characteristic implies that the financial
information faithfully represents the phenomena it purports to represent.
This depiction implies that the financial information will be complete,
neutral and free from error.

Enhancing qualitative characteristics

Comparability- This characteristic implies that users of financial


statements must be able to compare aspects of an entity at one time over
time, and between entities at one time and over time. Therefore the

measurement and display of transactions and events should be carried out


in a consistent manner throughout an entity, or fully explained if they are
measured or displayed differently.
Verifiability- This characteristic provides assurance that the information
faithfully represents what it suggests that is representing.
Timeliness- This characteristic means that the accounting information is
available to all stakeholders in time for decision making purposes.
Understandability- This characteristic implies that preparers should
present information in the most understandable manner to users, without
sacrificing relevance or reliability.
Limitations of accounting information: time lag (often up to a delay of
up to 3 months from the end of the financial year until the information is
published), historical information, subjectivity of information
Costs of providing accounting information: information costs, release
of competitive information.
Accounting Judgments and
Policy Choices have
economic
Consequences for
contracting parties.
If there is a conflict of
interest between principal
and agent there is
Incentive to manipulate
the accounting numbers.
Hence we have financial
accounting standards
(regulations), and auditors
(to assure the financial
statements are True &
Fair).

Why consolidate think back to advantage of a company: separate legal


entity, thus setting up each part of a business as a separate company can help
limit losses across the whole company, i.e. if one Woolworths store goes
bankrupt, losses are limited to the one store, the rest of the company is not
directly responsible.
Cash actual money and whats in your normal every day accounts
Cash equivalents held for the purpose of meeting short-term cash
commitments rather than for investment or other purposes. For an investment to
qualify as a cash equivalent it must be readily convertible to a known amount of
cash and be subject to an insignificant risk of changes in value.
Trade receivables: - is it probable we will receive everything owed? If
we show 100% of trade receivables is it a faithful representation?
Inventory: What is the future benefit? - can we still sell stock at the recent
selling price? (Does stock need to be revalued at lower of cost or NRVobsolescence, lowering demand, damage). What inventory cost flow assumption
is a faithful representation of what inventory was sold? FIFO, weighted average,
should have been specific identification- too time consuming and costlyrelevance vs faithful representation.
Non-current assets: valuation: historical cost less accumulated depreciation:
cost is reliable (faithfully represented) however the older the asset the less
relevant this is for decision making. Fair value (market value- in absence of
market can estimate this through either current(replacement) cost or present
value of future cash flows(value in use)) more relevant to decision making
being current however it is an estimate and thus less reliable as true value can
only be established through selling it. Depreciation applies for both methods
and the estimations of useful life, residual value and method of depreciation
however relevant, compromises reliability.
Different companies-> same asset different valuation methods cant simply
compare values.

Duality -> describes how every business transaction has at least two effects on
the accounting equation.
Goodwill cannot be revalued and must be tested for impairment at least
annually. Identifiable intangibles can only be revalued an active and liquid
market exists.
Explain the nature and purpose of the balance sheet: The balance sheet
lists the entitys assets, the external claims on the assets (the liabilities) and the
internal claim on the assets (the equity). The balance sheet reports the entitys
financial position at a point in time. The financial position of the entity refers to
the entitys economic resources (assets), economic obligations (liabilities),
financial solvency and financial structure.
Discuss the limitations of the balance sheet: When analysing the financial
numbers in the balance sheet, it is necessary to consider issues associated with
the preparation of the statement that potentially limit the inferences made. The
balance sheet is a historical snapshot of the entitys economic resources and
obligations at a point in time only, and this may not be representative of its
resources and obligations throughout the reporting period. Further, the balance
sheet does not represent the value of the entity. That is due to the existence of
assets and liabilities that are not reported on the balance sheet, and the
measurement systems used to recognise assets and liabilities. Finally, the
definition and recognition of items on the balance sheet involve management
choices, estimations and judgements.

Discuss the measurement of various assets and liabilities on


the balance sheet.
Numerous measurement systems can be used to measure elements on the
balance sheet. Items are initially recorded at their historical cost. At the time of
acquisition, this reflects the items fair values. Subsequent to acquisition,
receivables are recorded at their expected cash equivalent and inventory is
measured at the lower of cost and net realisable value. Property, plant and
equipment can either remain at their cost price or be revalued regularly to fair
value. Regardless, the carrying amount of an asset must not exceed it
recoverable amount. If it does the asset is impaired and must be written down.
There are some asset classes (such as agricultural assets and derivative financial
instruments) where accounting rules specify that the assets must be recognised
at their fair value. Non-current assets with limited lives must be depreciated.
Goodwill cannot be revalued and identifiable intangible assets can be only
revalued if an active and liquid market exists. Goodwill and intangible assets
must be tested for impairment at least annually. The value assigned to such
assets on the balance sheet is their cost or revalue amount, less the
accumulated depreciation charges, les any impairment charges. It is important
for a user to identify the basis for measuring assets and liabilities on the balance
sheet.

Contingent
liability- conditions existing at balance date where
uncertainty exists as to: outcome, valuation. Future benefit is
beyond entitys control. Can be either and asset or liability.
Provisions- liability
class involving more
uncertainty regarding
the monetary
value to be
assigned to the
future sacrifice
of economic benefits.
E.g. Employee
benefits, warranty,
lease provisionsreturning stores to
original
condition at the
end of the lease.
Derivative financial liability- financial liability whose value depends on the
value of underlying security, reference rate or index.
Financial liability- Liability that is a contractual obligation to deliver cash or
another financial asset to another entity or a contractual obligation to exchange
financial assets or financial liabilities with another entity under conditions that
are potentially unfavourable to the

entity.

Present value (value in use) - used to value and asset. Future profit
from using the equipment in todays dollar value.

-Same annual profit- use the PV of a series (annuity) table. Different,


for residual value- use present value of $1 table.
Multiple projects: Beware highest NPV is not always the best: length of time
(quicker is often better as can reinvest), available budget ( the best way may not
be affordable), reliability of cash flows, cash flows beyond the calculated period,
non-financial reasons.

Advantages of NPV method are that it


takes into account:
-all of the expected cash flows
-the timing of expected cash flows (with cash
flows received sooner being more beneficial to
the entity)
-cash flows only, so it is not subject to
changing accounting rules and standards as
profit figures are.
In addition, the decision rule is explicit, in that
positive NPVs will increase entity value if the
data are correct.
The disadvantages of the NPV method
are that:
-the method relies on the use of appropriate
discount factor for the circumstances
-the actual return in terms of percentage of the investment outlay is not revealed
-ranking of projects in terms of highest NPVs may not lead to optimum outcomes
when capital is rationed.
Apply the liability definition and recognition criteria:
Liabilities: A legal obligation is a liability; however, a non-legal obligation may
also be a liability. To be recognised on the balance sheet, the outflow and
resources embodying economic benefits must be probable and capable of being
measured reliably. An entity can always disclose information about a liability that
fails the definition or recognition criteria in the notes to the accounts.
Discuss and calculate the net present values (NPV) and apply the
decision rule:
Discounted cash-flow techniques overcome the problem of the time value of
money by specifically recognising that $1 received sometime in the future is
worth less than $1 received now. The NPV measure compares the sum of present
values (PVs) of all of the expected cash inflows form the project with the PVs of
the expected cash outflows. The NPV is the net outcome. Positive NPVs indicate
that projects are acceptable. Negative NPVs indicate that projects will not
increase wealth.

Explain the relationship between the income statement, the balance


sheet, the statement of comprehensive income and the statement of
changes in equity.
The income statement reports for profit or loss generated in the reporting period
that belongs to the owners of the business. It is added to the retained earnings
from previous periods to determine the pool of retained earnings available for

distribution to owners. Retained earnings is included in the equity section of the


balance sheet as at the end of the period. The statement of comprehensive
income details the profit or loss for the period (i.e. the income statement) as well
as items of income and expense that are not recognised in profit or loss as
required as permitted by accounting standards. These items of income and
expense bypass the income statement and are recorded directly in the equity
section of the balance sheet. (These include: non-current asset revaluations
directly taken to a revaluation surplus, net exchange differences associated with
translating foreign currency denominated accounts of a subsidiary into the
reporting currency of the group, adjustments to equity allowed pursuant to the
operation of a new accounting standard). The statement of changes in equity
explains the change in equity from the start to the end of the reporting period.
The statement shows the changes in equity arising from transactions with
owners in their capacity as owners (such as equity contributions, dividends paid
and shares purchased) separately from non-owner changes in equity (e.g. profit).
The statements are also related, given that recognising income and expenses
involves simultaneously recognising (or reducing) assets or liabilities.
Discuss the definition, recognition and classification of income:
Income is defined as increases in economic benefits- in the form of inflows or
enhancement of assets or decreases of liabilities of the entity- that result in
increases in equity during the reporting period. Contributions by owners are not
recognised as income. Income comprises revenue and gains.
Discuss the definition, recognition and classification of expenses:
Expenses are decreases in economic benefits- in the form of outflows of assets or
increases of liabilities- that result in decreases in equity during the reporting
period. Distributions to the owners are not expenses. Expenses can be classifies
to their nature or function.
Differentiate between cash and accrual accounting:
An accrual system of accounting focuses on when a transaction takes place (e.g.
sale) and not when the payment for that transaction occurs. In contrast, cash
accounting is concerned with the receipts and payments and not the timing of
the underlying transaction. Relevance Vs Faithful Representation, reporting
period, going concern
To recognise income in the income statement, the increase in economic
benefits related to an increase in asset or decrease in in a liability must have
arisen and be capable of being measured reliably. To recognise an expense in
the income statement, the decrease in economic benefits related to decrease
in an asset or an increase in a liability must have arisen and be capable of being
reliably measured.
Income and expenses are generated from various activities. Income
comprises revenue (income arising in the ordinary course of an entitys
activities) and gains. Sources of income include the provision of goods and
services (sales), investing or lending, selling assets, and receiving contributions
such as government grants. Items of expense include the cost of providing goods
and services (cost of sales), wages and salaries, depreciation and amortisation,
and selling, administrative, investing and financing expenses.

Outline the effect of accounting policy choices, estimates and


judgements on the financial statements.
Even when preparing financial statements in compliance with approved
accounting standards, preparers are provided with choices and are required to
use estimations and judgements. Therefore, users of financial statements need
to appreciate that accounting flexibility and discretion exist, consider the
incentives that may affect the choices, estimations and judgements being made,
and be aware of the impact of the choices, estimations and judgements on the
financial information reported.

Statement of Cash flows


-

The purpose of the statement is to show the cash flows of an entity over a
set period, in order to enable users of the financial statements to evaluate
the entitys ability to generate positive cash flows in the future, pay
dividends and finance growth.
A statement of cash flows is needed as it summarises the cash and types
of cash flows coming into and flowing out of the entity.
Relationship to other financial statements: The income statement shows
the result of an entitys performance for a particular period of time, and
the balance sheet shows the entitys financial position at a particular point
in time. The statement of cash flows shows the cash flows relating to the
entitys performance and helps to identify the changes in the balance
sheet items.
Define cash: The definition of cash includes cash and cash equivalents.
Cash includes cash on hand and demand deposits and cash equivalents
are highly liquid investments and short-term borrowings.
Direct method: Method of preparing a statement of cash flows that
discloses major classes of gross cash receipts and gross cash payments.
Indirect method: Method of preparing a statement of cash flows that
adjusts profit or loss for the effects of transactions of a non-cash nature
and deferrals or accruals of operating revenue and expenses. (The
indirect method is the reconciliation or the profit/loss with the cash flows
from operating activities).
Usefulness: The statement of cash flows is useful in assessing an entitys
ability to generate cash and to meet future obligations. The heightened
awareness of the management of earnings in the income statement has
elevated the performance of reviewing the statement of cash flows in
conjunction with the income statement. Limitations- since it only shows
cash position, it is not possible to arrive at actual profit or loss of the
company by just looking at the statement alone, in isolation this is of no
use and it requires other financial statements like balance sheet, profit
and loss etc.., and therefore limiting its use.
The interpretation of the statement of cash flows requires a general
evaluation, as well as the use of trend and ratio analysis. Cash flow
warning signals can also indicate a cash flow problem. Cash-based ratios
include the cash adequacy ratio, the cash flow ratio, the debt coverage
ratio, the cash flow to sales ratio, and free cash flow. Despite the

complexity of transactions, the basic purpose of a statement of cash flows


is to report what cash came in and how it was spent.

Classify costs into direct and indirect costs for individual cost objects.

A direct cost is traceable to a particular cost object. The tracing is made possible
by the implementation of a tracking system to link the cost to the cost object. An
indirect cost (costs that are not economically feasible (cost/benefit test- assesses
the costs and benefits of tracing costs to cost objects) to trace to the cost object)
is used for the benefit of multiple costs, and the cost is linked to the individual
cost objects by the identification of an appropriate cost driver- measure of the
activity, related to cost pool (collection of similar costs), that is used to allocate
costs.
Discuss the allocation process of indirect costs:
An indirect cost (also referred to as overhead) is used for the benefit of multiple
cost objects. Therefore, an allocation of costs is necessary to enable the cost to
be assigned to the many cost objects that make use of the resource. By
allocating indirect costs, an entity is able to determine the full cost (direct costs
plus allocated indirect costs) of the cost object.
Calculate the full cost of a cost object:
Full cost is equal to direct costs plus indirect costs. The accuracy of the cost is
strengthened by the choice of cost driver for indirect cost allocation. Cost drivers
can be based on either volume or activity. Volume drivers assign indirect costs
based on the same measure of the volume of output; for example, units of
output, direct labour hours or machine hours. In contrast, activity drivers
recognise that factors other than volume will cause indirect costs to be
consumed; for example, number of invoices processed, number of orders
processed, or time taken to set up machines.
Calculate and inventoriable product cost:
An inventoriable product cost (costs of converting raw material into finished
products) is calculated by manufacturing entities to satisfy the requirements of
having and inventory value in financial reports, in line with the International
Financial Reporting Standards (IFRSs). An inventoriable product cost includes
only manufacturing costs (e.g. direct labour, direct material, manufacturing
overhead). All non-manufacturing (e.g. selling expenses, administrative
expenses, advertising, corporate salaries, office rent) costs are expensed in the
current accounting period.
Define a cost object and explain how cost information is used:
A cost object is anything for which a separate measurement of cost is required.
Examples are customers and individual business units. Cost information is used
for a variety of purposes to assist in day-to-day management and strategic
management- in determining inventory values, analysing product profitability,
identifying relevant costs for outsourcing decisions and so on.
Discuss pricing issues for products and services:
An entity has the option of applying either a cost-based or market-based pricing
strategy for its products or services. A cost-based price will add a mark-up to the
calculated cost of the product or service. A market-based price will be set at the
higher possible price that a customer will pay and this will be dependent on the
degree of product differentiation and competition.

Uses of management information:


Pricing: based on understanding of: competitor pricing, costs, estimated sales
volume and required return.
Cost decisions-finding opportunities for cost reduction, alternative ways of
manufacturing product/ creating service, outsourcing decisions, evaluation of
alternatives in all management decisions.
Building budgets: making forecasts, assessing what if alternatives
Measuring divisional performance: assessing whether the business strategy is
working, providing feedback to mangers

Define fixed, variable and mixed costs:


Fixed costs are commonly identified as those that remain the same in total (with
a given range of activity and timeframes), irrespective of the level of activity.
Variable costs are commonly identified as those that change in total as the level
of activity changes. Mixed costs are those that appear to possess fixed and
variable characteristics.
Outline the concepts of
margin of safety and
operating leverage.
The margin of safety is commonly
regarded as the excess of revenue (or unit of
sales) above the break-even point. It
provides an indication of how much
revenue (sales in units) can decrease
before reaching the break-even
point. Operating leverage refers
to the mix between fixed and variable
costs in the cost structure of an
entity. A knowledge of operating leverage
helps in understanding the impact
of changes in revenue on profit.
Those entities with a higher
proportion of fixed costs than variable
costs within their cost structure are often classified as having a high operating
leverage. Such entities are commonly thought to be more risky, as fluctuations in
sales will produce higher fluctuations in profit for entities with a high operating
leverage than they would for entities with lower operating leverage.
Relevant range: The traditional definition of fixed and variable costs relates to
the concept of the relevant range. The relevant range is the range of activity
over which the cost behaviour is assumed to be valid. If the activity level goes
outside the relevant range, then the expected behaviour of costs may changefor example, fixed costs can no longer be assumed to be fixed as the entity may
be able to renegotiate contracts or change the level of resources to support
operating activities.
Apply the contribution margin ratio to break even calculations:
The contribution margin ration can be used to perform break even calculations
by focussing on the ratio of the contribution margin to sales. This can be
particularly useful when seeking the total break-even sales dollars, rather than
the per unit number.
Contribution margin per unit= (selling price per unit) (variable cost per unit);
Contribution margin= (total revenue) (total revenue costs)
Contribution margin ratio = (contribution margin per unit)/selling price per unit =
x%
Or Contribution margin ratio = (total contribution margin)/total sales = x %

Prepare a cost-volume-profit (CVP) analysis for single-product and


multi-product entities:

When

CVP analysis commonly requires the use


of the contribution margin concept to
calculate the break-even number of
units. Data are needed on fixed and variable
costs in order to execute the calculation.
calculating break-even for multi-product or
service entities, we need to calculate the
weighted average contribution margin before
calculating the break-even units.

Outline the key assumptions underlying CVP analysis:


The key assumptions underlying CVP analysis include the assumption that the
behaviour of costs can be neatly classified as fixed or variable- which may not be
the case, as some costs do not behave as expected; cost behaviour is generally
assumed to be linear; fixed costs are believed to remain fixed over the time
period and/or given range of activity (often referred to as the relevant range);
unit price and cost data are assumed to remain constant over the time period
and relevant range; and, for multi-product entities, the sales mix between the
products is assumed to be constant.
Outline the uses of break-even data:
Break-even data can be used in a number of ways, including identifying the
number of products or services required to be sold to meet break-even or profit
targets; planning products and allocating resources by focussing on those
products that contribute more to profitability, determining the impact on profit of
changes in the mixed of fix and variable costs; and pricing products.

Explain what a budget is and describe the


key steps in the budgeting process:
The key steps in the budgeting process are
consideration of past performance, an
assessment of the expected trading and operating
conditions, preparation of the initial budget estimates, adjustments to estimates
based on communication with and
feedback from managers, preparation of
the budgeted financial statements and
any sub-budgets, monitoring of actual
performance against the budget over the
budget period, and, where necessary,
adjusting the budget during the budget period.
Discuss the issues associated with the
behavioural aspects of budgeting:
The
behavioural aspects
of
relate to

budgets
the

involvement in decision
making. They include: the
budgeting process used, such
participative; attempts by senior
targets that are too difficult to
unit managers to set targets that are too

human

style of
as authoritarian or
management to set
achieve; and attempts by
low.

Master budget: coordinates all the financial projections in the


organisation
A master budget is a set of interrelated budgets for a future period. It provides a
framework for viewing the relevant budgets of the entity. While the nature of the
budgets prepared will vary according to the nature of the entity and its operating
environment, the master budget is commonly classified into operating budgets
and financial budgets. The operating budgets usually include the sales budget
and operating expenses budget, while the financial budgets commonly include
the broader budgeted income statement, the budgeted balance sheet, the cash
budget and the capital budget. The plans developed for a master budget are
summarised in a set of budgeted financial statements. To enable the budget to
be used as a control too to monitor the entitys achievement of its plans, the
classification of items included in the master budget needs to mirror the entitys
chart of accounts. The chart of accounts is the detailed listing/ index that guides

how transactions will be classified and recorded in the financial reporting system.
It is important that the budget is developed in line with this classification
structure, otherwise those within the entity will be unable to identify any budget
variances by comparing actuals against budget.
Explain the link between strategic planning and budgeting
Strategic planning focusses on a longer time horizon (perhaps three to five
years), and relates to the direction of the entity. It is carried out by senior
management, and generates strategic plans for the entity that further influence
shorter term aspects of the planning process. Budgeting focusses on a shorter
time horizon (commonly 12 months), and results in the
production of budgets that set the financial framework for the
year ahead.

Explain the importance of measuring the performance of entities and


the aspects of entities that are measured:
Measuring the performance of entities helps to ascertain the achievement of the
entitys objectives. The performance measurement system also helps to
communicate the organisations goals and focus the efforts of employees. The
performance of individuals, teams, divisions and the whole of the organisation
can be measured.
Appraise and apply the balanced scorecard framework:
The balanced scorecard provides a framework to measure performance from four
perspectives: financial, customer, internal operation, and innovation and
improvement. The framework encourages the use of a wide range of measures
including financial, non-financial, short-term, long-term and qualitative
measures. Environmental and social performance can also be incorporated into
the balanced scorecard framework.
Outline common organisational structures, responsibility centres and
reasons for divisional performance evaluation and generate divisional
performance reports:
Common organisational structures include functional, geographical ad
enterprise-based groups. Responsibility centres include cost centres, revenue

centres, profit centres and investment centres. The preparation of divisional


performance reports is designed to help evaluate the divisions performance, to
provide a guide for the pricing of products and services, and to evaluate the level
of investment of each division.
Control is exercised by measuring and monitoring performance- by measuring
how well a business unit manager is doing
with their job or adding a firm value, we can
make sure they are doing the job are asked
with.

Discuss the components of GRI reporting framework


The GRI reporting framework contains principles and standard disclosures
required, technical protocols and information relevant to different sectors. The
standard sustainability report should contain the strategy and profile of the
entity, the management approach and the entitys economic, social and
environmental performance indicators.
Examine the three dimensions of the triple bottom line:
The three dimensions of the triple bottom line are economic, social and
environmental.
Explain the concept of corporate governance:
Corporate governance refers to the direction, control and management of the
entity. The board of the directors is given the authority through the company
constitution and the Corporations Act 2001 to act on behalf of shareholders.
Outline corporate governance guidelines and practices:
Corporate governance guidelines help to foster improved corporate governance
practices. An example is put forward by the ASX Corporate Governance Council.
The guidelines foster awareness of directors responsibilities, and help
communicate societys expectations to the business community. Such guidelines
generally include items such as board structure, financial reporting, ethics,
stakeholders, remuneration and disclosure.
Describe sustainability and outline its key drivers and principles:
Business sustainability considers the use of the worlds resources in a way that
does not compromise the ability of future generations to meet their needs. Key
drivers include the competition for resources, climate change, economic
globalisation and connectivity and communication. Principles include ethics,
governance, transparency, business relationships, financial return, community
involvement/ economic development, value of products and services,
employment practices and protection of the environment. By necessity, decision
making in business incorporates certain level of ethical contemplation. Business
decision makers influence the use of the worlds resources and can affect the
lives of many people. Ethics is central to the study of humankind, and so should
be explored in a business context.

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