Accounting and Business Ethics Lecture Review

Group Dynamics and Group Membership

  • New groups require 4-6 people, same as old group
  • Importance of communication among group members
  • Notification of intent to leave the course should be relayed promptly to allow for group transitions
  • Fairness principle: treat others as you wish to be treated.
  • During breaks, group members seeking change should approach the front to form new groups for continuing assignments.

Course Structure Overview

  • Course timeline includes multiple sections
  • Upcoming focus on accounting and financial statements
  • Previous discussions included Chapter 3 and a buffer for Chapter 16, additional coverage planned
  • Remaining topics post-accounting will include technology and operations management

Importance of Ethics in Business

  • Overview of ethics and professional standards in business contexts
    • Companies require training for employees on expected behavior and standards of professional conduct
    • Corporate social responsibility (CSR) frameworks guide background expectations
  • Responsibilities of companies from both a social and ethical perspective
  • Distinctions between industries with markedly low standards versus those with established ethical guidelines like accounting, finance, law, and engineering

Corporate Social Responsibility (CSR) and Governance

  • Companies are viewed as responsible citizens; profitability isn’t the sole goal
    • Need to disclose their strategies and actions regarding environmental impact and governance
  • Overview of ESG (Environmental, Social, Governance) reports including disclosures on workforce diversity, environmental impact, and inclusivity
  • Chartwell's case study: Company in healthcare with ESG report highlighting workforce diversity, caring culture, charitable contributions, etc.

Accounting Ethics and Legal Guidelines

  • Past unethical business practices leading to regulations such as the Sarbanes-Oxley Act in the U.S.
    • Importance of auditor independence: best practices suggest changing auditors periodically to avoid influence on objectivity
  • Introduction to Canadian Bill 198, reinforcing accountability in reporting
  • Ethical standards for accountants and financial career paths should be emphasized.

Risk Management and Social Responsibility

  • Understanding risks associated with running a business
    • Types of risks: financial, credit, operational, legal, and reputational risks
    • Risk Management Strategies: Mitigation, insurance, and elimination of risks
  • Mark Carney’s role in establishing the Global Risk Institute in Toronto to advance risk management strategies
  • Addressing ethical conduct and corporate governance frameworks

Code of Ethics for Accounting and Finance Professionals

  • CPA (Chartered Professional Accountants) code of conduct and professional obligations established to protect the public and maintain standards
  • CFA (Chartered Financial Analyst) code of ethics specifying integrity and professional diligence
  • Dilemmas faced in the workplace include conflicts of interest, whistleblowing, and the balance between loyalty and truthfulness.

Importance of Whistleblowing

  • Definition and the role of whistleblowing in identifying unethical behavior within organizations
  • Frameworks for reporting unethical actions while protecting informants' identities
  • Examples: Companies like Cartier stopped sourcing materials from regions with poor labor practices and H&M focused on responsible waste distribution

Corporate Case Studies

  • Example of Johnson & Johnson's ethical statements guiding conduct across business operations
    • Highlighting responsibilities to various stakeholders from patients to employees and governments
  • Social Responsibility initiatives in major corporations, including charitable causes supported by companies like Tim Hortons and Starbucks

Course on Accounting Overview

  • Importance of knowledge regarding financial statements crucial to understanding accounting practices
    • Types of financial statements includes balance sheet, income statement, statement of changes in equity, and statement of cash flows
    • Introduction to users of financial statements: owners, creditors, government agencies, and their needs for accounting information

Structure of Financial Statements

  • Balance Sheet: Snapshot of a company's financial position;
    • Assets must equal liabilities plus equity
    • Understanding of current assets vs. long-term assets
  • Income Statement: Shows revenue, expenses, and net income over a period; net income pertains to the owners
  • Statement of Changes in Equity: Documents movement in equity over time.
  • Statement of Cash Flows: Highlights cash flow from operating, investing, and financing activities, illustrating the liquidity of the firm

Financial Ratios

  • Explanation of ratios' roles in assessing financial health of a firm
    • Focuses on sustainable operations, efficient asset management, and return expectations for stakeholders (owners, lenders, employees)
  • Key ratios to monitor: liquidity ratios, profitability ratios, and leverage ratios

Summary of Course Objectives

  • Reinforce the understanding of the accounting cycle and its relevance in business operations
  • Understanding the impacts of modern innovations such as AI in accounting functions

Transition to Next Topic

  • Announcement of break and reminder concerning group formation for assignments.
  • Acknowledgment of previous discussions, addressing the importance of internalizing ethical standards in relationships with clients and various stakeholders associated with accounting and finance.

Conclusion

  • Encouragement to stay tuned for further detailed breakdowns of each financial statement and relevant financial ratios in upcoming sessions.
  • Reiteration of ethical responsibility alongside traditional accounting skills necessary to succeed in the field.