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mock exam

Thank you for visiting our website today. Our team of Expert Professional Educators has put together the following  mock examination questions with suggested solutions for the May 2018 examination.

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MA – 2018 MOCK






FM- MOCK 2018


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Join our revision session for ICAG May 2018 Examination.

Thank you for visiting our website today. Our team of Expert Professional Educators has put together the following documents, analysis and revision time table for the May 2018 examination.

Our revision session comes in three segment; Revision classes, Mock examination and Mock discussion.

Check them out and share with other colleagues to increase their chances of passing as well.

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Download all your notes here


MODULE 1 – Conceptual Framework






PSAF – Solution

PSAF – Questions


PEH – Level one (MAY 2018)

MODULE 7 – Public fund

MODULE 4 – Envirnmental Analysis

MODULE 3 – Regulatory Framework


We wish you the very best as you write your Examination.



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Performance Evaluation Drawn on Brick Wall.


It is very important to assess the performance of an organization. Performance evaluation helps stakeholders to make decisions. But the question we ask ourselves is; “……how can we assess the performance of an organization?” The assessment of the organization can be done from two major angles or perspectives. These are: FINANCIAL PERFORMANCE AND NON-FINANCIAL PERFORMANCE.

In an attempt to answer the above question, we will use two models or frameworks to assess the performance of an entity. These are:


This is a strategic planning and management system that is extensively used by entities to align business activities to the vision and strategy of the organization, improve internal and external communication, monitor organization performance against strategic goals. It was originated by Dr. Robert Kaplan (Harvard Business School) and David Norton as PERFORMANCE MEASUREMENT framework that added strategic metrics to give managers and executives a more “balanced” view of organizational performance.

There are four indicators of measuring the performance of management from the view point of Kaplan & Norton. These are:

  1. THE FINANCIAL PERSPECTIVE: This measures the financial performance of the entity. It is the traditional evaluation of the entire business base on the financial statements. Examples include financial ratios such as return on assets, return on equity, liquidity ratios, and return on investment. This answers the question: “HOW DO WE LOOK TO SHAREHOLDERS”.
  2. THE CUSTOMER PERSPECTIVE: Customer measures of performance relate to customer attraction, satisfaction, and retention. These measures provide insight to the key question “How do customers see us” Examples might include the number of new customers and the percentage of repeat customers. Recent management philosophy has shown an increasing realization of the importance of customer focus & customer satisfaction in any business.
  3. INTERNAL BUSINESS PROCESS: Internal business process measures of performance relate to organizational efficiency. These measures help to answer the key question “What must we excel at”. Examples include the time it takes to manufacture the organization’s good or deliver a service. The time it takes to create a new produce and bring it to the market is another example of this type of measure. This allows management to know how well their business is running, and whether its products and services conform to customers’ requirement (the mission) in terms of cost, quality, reliability, etc.
  4. ORGANISATIONAL CAPACITY/ LEARNING & GROWTH: This relates to the future. Such measures provide insight to tell the organization, “Can we continue to improve and create value”. This includes:
  • Employee training and corporate cultural attitude related to both individual and corporate self-improvement
  • Ability to adapt and utilize advancements/changes in technological tools.


C:\Users\user\Pictures\Pictures\Screenshots\wp_ss_20151017_0001.png2. MEASURING PERFORMANCE USING THE TRIPLE BOTTOM LINE: Ralph Waldo Emerson once noted, “Doing well is the result of doing well. That’s what capitalism is all about.” While the balanced scorecard provides a popular framework to help executives understand an organization’s performance. Other frameworks highlight areas such as social responsibility. One such framework, the triple bottom line, emphasizes the THREE Ps of PEOPLE (making sure that the actions of the organization are socially responsible), the PLANET (making sure organizations act in a way that promotes environmental sustainability), and traditional organization PROFIT.

This notion was introduced in the early 1980s but did not attract much attention until the late 1990s.

Read also: This blog, Balance Scorecard Institute, Indiana Business Review

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Stakeholder Value creation is an integral lesson of understanding how value is added to the investment of owners or shareholders who have contributed to the capital of the business.

One often reads in the literature that firms must be “managed” not only “for shareholders” but, more generally, “for stakeholders” (Freeman 2008; 2007; Harrison et al., 2010); or that they must “create value for all stakeholders” (Post, Preston, and Sachs, 2002); or even that they must “create the greatest possible value for all stakeholders” (or for some category of stakeholders, such as employees or consumers). What does this mean? What “value” are we talking about?

Economic Value Creation

In neoclassical theory, economic value is created when the price that consumers pay for goods and services is greater than the cost of producing them. The cost of producing goods and services is the opportunity cost of the resources (i.e., the gain that could be obtained from the best alternative use of the resources), and it is assumed that it is neither necessary nor possible to pay any more or less for the resources, given the competition in the goods and factor markets. The only resource that does not receive a market price is capital, i.e., ownership of the firm, which instead receives the residual value or profit.

In the neoclassical model, the economic value generated is the sum of the consumer surplus and the producer surplus. The consumer surplus is defined as the difference between the highest price that consumers would be willing to pay for a good or service and the price they actually pay, while the producer surplus is the difference between the price at which sellers actually sell and the cost of the resources employed. The question of value maximization boils down to that of the consumer surplus and the producer surplus or residual value, attributed to the owner.

This is not to say that other stakeholders do not also receive a surplus, merely that the task of determining the amount of the surplus and distributing it is transferred to the resource markets (labour, finance, commodities, etc.).

If a product is able to satisfy consumers’ present needs better without losing any of its capacity to satisfy future needs, then more value will be created because buyers will be willing to pay a higher price for the product.

And if a producer uses better technology, combines resources more efficiently or pays lower prices for them, again more economic value will be created. In the neoclassical model, therefore, the problem of value creation is separate from that of value distribution. If the stated conditions are met, consumers receive their surplus, the providers of resources receive their opportunity cost, and the company’s owners appropriate the producer surplus or profit, which is an incentive for them to make decisions that maximize profit and, also therefore, present and future efficiency.

As a consequence of all the above, an economic optimum – in terms of the maximization of “social value” (Jensen, 2001) for the economy as a whole – is attained. If consumers maximize their utility and companies maximize profit for their owners (i.e., the expected present value of the shares, assuming a long-term, stochastic view) (Mossin, 1977), the social (economic) value created will be maximal (Williamson, 1984).

For that to happen, however, certain conditions must be met: perfect competition (or sufficient competition, cf. Stigler, 1957) in all markets; markets for all goods and services, present and future (i.e., there can be no goods without a price); free entry to and exit from all markets; availability, to all concerned, of sufficient information on the prices, characteristics and availability of the goods and services for all to be able to make optimal decisions; non-existence of public goods; absence of positive or negative externalities (i.e., nobody bears the costs, risks or benefits of actions performed by other agents with which he does not have a market relationship), and so on.

In a stakeholder model, therefore, the theory of value creation implies that:

  1. all those who create or capture value, or who in their relationship with the firm assume risks, either inside the firm (owners, managers, employees) or outside the firm (consumers, suppliers), or who suffer the impact of the firm’s externalities or misinformation (local community, environment, future generations, society at large), must be considered stakeholders – at least for the purpose of value distribution, which is what concerns us here;
  2. maximizing value for consumers and resource providers is not enough to guarantee a social optimum, as there are other relevant stakeholders to be considered, and 3) in relations between stakeholders and the company, there are other variables to be taken into account besides the exchange of goods or services for a price, such as whether there are alternatives (alternatives that limit market power), whether information is provided (including the means to process it and use it rationally), whether protection is available against negative externalities (whether those affected have the means to defend themselves against externalities), and so on.
What is “Value” for a Stakeholder?

What do we mean when we say that a company creates, or should create, “value” for its stakeholders? So far we have been referring to economic value, but there are other ways of understanding what that “value” actually consists of.

What can a stakeholder be seeking when he starts an occasional transaction or a lasting relationship with a company?

Let’s take the example of an employee.

  1. An employee may be seeking an “extrinsic” result, which the company will provide as a consequence of the relationship and which may be an economic good or service, or something non-economic. He may be seeking remuneration, or he may be seeking intangible results, such as career promotion (which will also have economic consequences), recognition (Frey and Neckermann, 2009), and so on.
  2. An employee may be seeking “intrinsic” results, which are not provided by the company but which arise within the employee himself, and which may be psychological (satisfaction with the job or with the results achieved) or operational (operational learning, i.e., acquisition of knowledge, capabilities, etc.).
  3. An employee may be seeking results in other people (satisfaction of customers and suppliers, success of other employees and managers, etc.), which will give rise to “evaluative” learning in the employee himself, i.e., learning about how to take the interests of others (and his own interests) into account.
Based on this classification of the results of an action, we can identify six types of “value”:

1. Economic extrinsic value (economic value). This is created through collaboration among employees and may be appropriated by either side, as we explained earlier.

2.Intangible extrinsic value, which is provided by the company, e.g., recognition, some kinds of training, etc. This is not part of the economic value created by a company, although it may be a form of participation in intangible value (e.g., the personal status that comes from working for a highly regarded company).

3. Psychological intrinsic value, such as satisfaction with the work done. This is generated in the agent himself. It is not part of the economic rent creation process and cannot be appropriated by the company or other stakeholders, although they may help to create or destroy it. In an employee, it may be a (partial) substitute for extrinsic value (besides the satisfaction of working for the company, employees will need a minimum of remuneration).

4.Intrinsic value that takes the form of operational learning (acquisition of knowledge and capabilities). This is created in the agent, not in the company, but probably with the cooperation of other stakeholders. It is not part of the economic value created by the company, although it may contribute to the creation of economic value in the future. It may also be a (partial) substitute for economic value.

5.Transcendent value, which consists of evaluative learning (acquisition of virtues or vices). This is generated in the agent himself as a consequence of his own decisions. It alters the agent’s ability to assess the consequences of those decisions for himself and for other agents

6. Value that consists of positive or negative externalities, i.e., value that is felt by agents other than those with whom the relationship or transaction is conducted.

“Maximizing value for all stakeholders,” which was an impossible task so long as we limited ourselves to economic value, is now possible. And “appropriating value” now also means something different, as some types of value cannot be appropriated. All the different types of value are generated cooperatively, at least insofar as producing goods and services is a social activity.

Finally, “managing the firm so as to serve all stakeholders” is now possible because the challenge is not to share a scarce resource but to generate non-exclusive value which everybody needs. And that is a challenge which, though entrusted to managers, must be addressed by all.

Introducing value creation for all stakeholders broadens the framework of management, bringing it closer to a more realistic economic optimum, generating new cooperative value creation capabilities, and overcoming some conflicts. So long as the focus remains on economic value, however, any solutions adopted will be insufficient, because the processes of capturing that value will always be liable to conflicts of all kinds.

Credit: Antonio Argandoña –

RGB GLOBAL, emerandinsight, university of Virginia, this blog

Shareholder Value creation is very important for the Business Leader

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Stakeholder mapping is a collaborative process of research, debate, and discussion that draws from multiple perspectives to determine a key list of stakeholders across the entire stakeholder spectrum.

Mapping can be broken down into four phases:

1. Identifying: listing relevant groups, organizations, and people

2. Analyzing: understanding stakeholder perspectives and interests

3. Mapping: visualizing relationships to objectives and other stakeholders

4. Prioritizing: ranking stakeholder relevance and identifying issues.

The process of stakeholder mapping is as important as the result, and the quality of the process depends heavily on the knowledge of the people participating.

Action: Gather a cross -functional group of internal participants to engage in this process.

Identify sources external to the company who may have important knowledge about or perspective on the issues, and reach out to these sources for input and participation.

Finally, identify a resource who can facilitate the work through the following activities.

Capture all the work in writing to help with future steps


The first step in the mapping process is to understand that there is no magic list of stakeholders.

The final list will depend on the business, its impacts, and the current engagement objectives—as a result it should not remain static. This list will change as the environment around the business evolves and as stakeholders themselves make decisions or change their opinions.

Action: Brainstorm a list of stakeholders without screening, including everyone who has an interest in your objectives today and who may have one tomorrow.

Where possible, identify individuals. Use the following list to help you brainstorm:

  • Owners (e.g. investors, shareholders, agents, analysts, and ratings agencies)
  • Customers (e.g. direct customers, indirect customers, and advocates)
  • Employees (e.g. current employees, potential employees, retirees, representatives, and dependents)
  • Industry (e.g. suppliers, competitors, industry associations, industry opinion leaders, and media)
  • Community (e.g. residents near company facilities, chambers of commerce, resident associations, schools, community organizations, and special interest groups)
  • Environment (e.g. nature, nonhuman species, future generations, scientists, ecologists, spiritual communities, advocates, and NGOs)
  • Government (e.g. public authorities, and local policymakers; regulators; and opinion leaders)
  • Civil society organizations (e.g. NGOs, faith -based organizations, and labour unions)


Once the organisation has identified a list of stakeholders, it is useful to do further analysis to better understand their relevance and the perspective they offer, to understand their relationship to the issue(s) and each other, and to prioritize based on their relative usefulness for this engagement.

BSR (Business for Social Responsibility) has developed a list of criteria to help an organisation analyse each identified stakeholder:

•Contribution (value): Does the stakeholder have information, counsel, or expertise on the issue that could be helpful to the company?

•Legitimacy: How legitimate is the stakeholder’s claim for engagement?

•Willingness to engage: How willing is the stakeholder to engage?

•Influence: How much influence does the stakeholder have? (You will need to clarify “who” they influence, e.g., other companies, NGOs, consumers, investors, etc.)

•Necessity of involvement: Is this someone who could derail or delegitimize the process if they were not included in the engagement?


The company can use these five criteria to create and populate a chart with short descriptions of how stakeholders fulfil them. Assign values (low, medium, or high) to these stakeholders. This first data set will help you decide which stakeholders to engage.


Mapping stakeholders is a visual exercise and analysis tool that the company can use to further determine which stakeholders are most useful to engage with. Mapping allows management to see where stakeholders stand when evaluated by the same key criteria and compared to each other and helps you visualize the often complex interplay of issues and relationships.

Action: Draw a mapping as follows to identify key stakeholders.

1. Draw a quadrant using two axes labelled “Low” to “High.”

2. Add “Expertise,” “Willingness,” and “Value”

3. Assign “Expertise” to the Y-axis and “Willingness” to the X-axis

4. Discuss and debate where each stakeholder falls

5. Plot the stakeholders on the grid.

6. Use small, medium, and large circle sizes to denote their “Value.”

7. To illustrate relationships, use arrows to depict “Influence.”

Consider quadrants, circle size, and influence arrows when prioritizing.


It is not practical and usually not necessary to engage with all stakeholder groups with the same level of intensity all of the time.

Being strategic and clear about whom the company is engaging with and why, before jumping in, can help save both time and money.


The company should look closely at stakeholder issues and decide whether they are material to the company’s engagement objectives, asking yourself the following questions:

What are the issues for these priority stakeholders?

  • Which issues do all stakeholders most frequently express?
  • Are the real issues apparent and relevant to our engagement objectives?

Credit: Business for Social Responsibility

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Environmental analysis is a strategic tool. It is a process to identify all the external and internal factors (elements), which can affect the organisation’s performance. The analysis also entails assessing the level of threats or opportunity the factors might present.

Are you ready? Let’s get into details!!!!!!!!!!!


An entity’s environment is anything that is not a part of the entity itself. The term “macro-environment” is used to mean general factors in the business organization; the environment includes customers, potential customers, markets, competitors, suppliers, and government and potential sources of new employment. It also includes the social, political and economic environment in which the entity exists and operates.

Environmental influences on an organization vary with the size of the organization, and the industry and the countries in which it operates.

The importance of environmental factors for strategic management arises because:

  • Organizations operate within their environment and interact with it
  • Changes in the environment can be large and significant- and continually happening
  • Future changes can be very difficult to predict.

The purpose of environmental analysis:

  • To understand the factors in the environment that have significant effect on the entity and what it does.
  • To understand the key drivers of change: these are the factors in the environment that will have the greatest effect on the entity, and force the entity to change its strategies in order to survive and succeed
  • To understand the difference in the impact that key drivers of change in the environment will have on different industries or different markets, or how changes in the environment might affect one particular entity more or less than other entities.

Two models for environment analysis:

In your examination, you may be required to carry out an environmental analysis. You might be required to use any ‘model’ of your choice. Alternatively you might be asked specifically to use PESTEL analysis or Porter’s Five Forces.

  • The PESTEL model is used to analyse reasons why entities in particular environment of an entity.
  • Porter’s Five Forces is use to analyse the competitive industry


It describes a framework of macro- environmental factors used in the environmental scanning component of strategic management. It is an overview of the different macro-environmental factors that the company has to take into consideration. These factors have great influence on every organization and must be taken into consideration in deciding on every strategic plan to be taken by management. They include:

Political Environment:

This consists of political factors that can have a strong influence on business entities and other organization.

Investment decisions by companies will be influenced by factors such as:

  • The stability of the political system particular countries
  • The threat of government action to nationalize the industry and seize ownership from private business
  • Wars and civil unrest
  • The threat of terrorist activity.

Political considerations are particularly important for business entities operating in countries with an unstable political regime, or a dictatorship.

Economic Environment:

This consists of the economic influences on an entity and the effect of possible changes in economic factors on future business prospects. Factors in the economic environment include:

  • The rate of growth in the economy
  • The rate of inflation
  • The level of interest rates, and whether interest rates may go up or fall
  • Foreign exchange rates, whether particular currencies are likely to get weaker or stronger
  • Unemployment levels and the availability of skilled and unskilled workers
  • Government tax rates and governance subsidiaries to industries
  • The existence and non-existence of free trade between countries, and whether trade barriers may be removed

Economic factors could affect a decision by a company about where to invest.

Social and cultural Environment:

An entity is affected by social and cultural influences in the countries or regions in which it operates, by social customs and attitudes. Some influences are more significant than others.

Factors in the social and cultural environment include the following:

  • The values, attitudes and beliefs of customers, employees and the general public.
  • Patterns of work and leisure, such as the length of the working week and the popular views about what to do during leisure time.
  • The ethnic structure of society
  • The relative proportions of different age group in society.

Technological environment:

This consists of science and technology available to an organization (and its competitors), and changes and development in science and technology.

Environmental / Ecological Influence:

For business entities in some industries, environmental factors have an important influence on the strategic planning and decision- making. They are particularly important for industries that are:

  • Subject to strict environmental legislation, or the risk of stricter legislation in the future(for examples, legislation to cut levels of atmospheric pollution)
  • Faced with the risk that their sources of raw materials will be used up
  • At the leading edge of technological research, such as producers of genetically modified foods.

Legal environment:

This consists of the laws and regulations affecting an entity, and the possibility of major new laws or regulations in the future. These may include:

  • Employment legislation
  • Environmental legislation or health and safety legislation
  • Tax systems
  • Company Laws and Ghana Stock Exchange Laws or regulations.

Limitations of PESTLE analysis:

  • It is difficult to identify the environmental influence that will have the biggest influence in the future
  • It does not provide an assessment of the environmental influences.


It describes a framework that attempts to analyse the level of competition within an industry and business strategy development. It draws upon industrial organization economics to derive five forces that determine the competitive intensity and therefore attractiveness of an industry. Attractiveness in this context refers to the overall industry profitability.

The framework was written by Professor Michael Eugene Porter of the Harvard Business School.

These five forces include:

Threats from potential entrants: One of the Five Forces is the threats that new competitors will enter the market and add to the competition. New entrants might be attracted by the high profits. One way these new entrants gain market share is to compete on price and charge lower prices than existing competitors. The significant of this threat depends on how easy or how difficult it would be for new competitors to enter the market.

Barriers to entry:

  • Economic of scale
  • Capital investment requirements
  • Access to distribution channels
  • Technical know-how
  • Government regulations
  • Switching costs

Threats from substitute product or services: There is a threat from substitute products when customers can switch fairly easily to buying alternative products (substitute products). Example may include the TRANSPOT INDUSTRY, COMMUNICATION INDUSTRY, etc.

The bargaining power of suppliers: Porter wrote “Suppliers can exert bargaining power over participants in the industry by threatening to raise prices or reduce the quality of purchased goods or services. Powerful suppliers can thereby squeeze profitability out of an industry unable to recover cost increases in its own prices.”

The bargaining power of customers: Buyers can reduce the profitability when they have considerable buying power. Powerful buyers are able to demand lower prices or improved product specifications. Porter suggested that buyers might be particularly powerful in the following ways:

  • When the volume of their purchases is high relative to the size of the supplier
  • When the products of rival suppliers are largely the same
  • When the buyer has full information about suppliers and prices.
  • When the profit of the buyer are low.

Competitive rivalry within the industry or market: Competition within an industry is obviously also determined by the rivalry between the competitors.




The value chain describes those activities of the organization that add value to purchased inputs. These activities are divided into two broad categories:

    1. Primary activities: These involved in the production of goods and services. They include (Service [installing products, repairing them, among other], Marketing & Sales, Outbound Logistics [this involves storing the product and distributing to customers: packaging, testing, delivery and so on], Operations [converting resource inputs into a final product] and Inbound Logistics [This involves receiving, handling and storing inputs to the production system: warehousing, transport, inventory control and so on].
    2. Supporting Activities: These activities provide purchased inputs, human resources, technology and infrastructural functions to support the primary activities.


NOTE: The value network joins the organization’s value chain to those of its suppliers and customers.

After analysing the external environment and its factors concerning how they affect the performance of the entity as well the in the strategic planning and decision-making in the organization, the next thing to consider are the factors within the organization that can help it to gain competitive advantage in the industry to survive and succeed.

There are two models that can be used in the assessment of the internal environment. These are:



This model combines the results of the environmental analysis and the internal appraisal into one framework for assessing the firm’s current and future strategic fit, or lack of it, within the environment. It summarizes the key issues from the business environment and the strategic capacity of an organization that are most likely to impact on strategy development. It also involves specifying the objectives of the business and identifying the internal and external factors that are favourable and unfavourable to achieve these goals.

Some Authors credit SWOT to Albert Humprey, who led a convention at the Straford Research Institute in the 1960s and 1970s using data from Fortune 500 companies.

  • STRENGTH: These refer to the characteristics of the business that give it an advantage over others. The strength of the organization can be from its infrastructure facilities, people, skills, technical know-how, reputation, brands, and processes, among other.
  • WEAKNESS: These are characteristics that place the business at a disadvantage relative to others.
  • OPPORTUNITIES: These are the elements that the business could exploit to its advantage. These may include factors relating to markets, sectors, competition, politics, trends, culture, and technology, among others.
  • THREATS: These are the elements in the environment that could cause trouble for the business.


  • To identify strengths, weakness, opportunities and threats to the entity.
  • To identify strengths to take advantage of opportunities available.
  • To modify weakness into strengths
  • To modify threats into opportunities.



The TOWS matrix is a variant of the SWOT analysis, which is another popular strategic planning method often used when devising marketing plans. Both of these techniques require marketers/management to first identify a company or product’s strengths, weaknesses, opportunities and threats.

However, while a SWOT analysis aims to use strengths and weakness to reduce threats and maximize opportunity, the TOWS matrix identifies external opportunities and threats and compares them to the company’s internal strengths and weaknesses.

This tool aims to answer the following four questions:

  • Strengths and Opportunities (SO): How can your current strengths help you to capitalize on your opportunities?
  • Strengths and Threats (ST): How can your current strengths help you identify and avoid current and potential threats?
  • Weaknesses and Opportunities (WO): How can you overcome your current weaknesses by using your opportunities?
  • Weaknesses and Threats (WT): How can you best diminish your weakness and avoid current and potential threats.

In answering these questions, Weirich proposed four strategic options that each organization can use in achieving the corporate objectives or mission.

These are summarized in the table below:

Objectives of Weirich’s TOWS matrix

  1. It provides a clear set of steps to move from SWOT analysis to formulate strategic options.
  2. It makes management aware of the need for defensive strategies (WT) in addition to strategies to grasp opportunities.
  3. It therefore helps the organization to adopt an inherently positioning approach to strategy.
  4. It enables management to identify external opportunities and threats and compares them to a company’s internal strengths and weaknesses.

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The role of business ethics cannot be over – emphasized. This is because, business ethics an important topic to the success of a business and gaining competitive advantage.

You can relate very well to this because of the continuous news release of businesses engaging in several non – ethical behavior as well as the impacts of this on the businesses.

In today’s post, we will spend time to discuss in details the role of business ethics.


So what is Business ethics?

Business ethics (corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to conduct of individuals and entire organizations.


Business ethics are govern by certain rules. Rules are a collective idea of what is right and wrong for the good of a group of people the breach of which results into punishment.

Ethics are a set of moral principles to guide human behavior.

Sources of Rules

  • The law: This is the highest source of rule from which all other rules must originate or conform. Any rule that is not conform to the law, which is the constitution of a country, then it, means such rules are illegal and cannot be enforced on any individual.


  • Non- legal rules and regulation: These are rules issued by some specific bodies to regulate the behavior of its members. These may not necessarily be conforming to the laws of a certain jurisdiction due to how complex and global some of them are. These may include; International Financial Reporting Standards (IFRSs), International Accounting Standards (IASs), International Standards on Auditing (ISAs), Ghana Stock Exchange regulations, among others.
  • Ethics: Ethical behavior is seen as the highest level of behavior that society expects.

Business Ethics – Corporate Governance Concepts

  • Fairness: This means directors must have systems and values that take into account everyone who has a legitimate interest in the company, and respecting their rights and views. An example of directors’ fairness can be how they relate to ordinary and preference shareholders and how they treat other stakeholders.
  • Openness or transparency: This means open and clear disclosure of relevant information to all stakeholders and not concealing information when it may affect decisions.  Disclosures include; financial statements, narrative notes (directors’ report, the operating and financial review).

 Main Reasons / Importance of Openness

  • To solve the agency problem
  • To confirm the level or strength of internal controls for reliability
  • Market prices of shares

 Circumstances for Concealment

  • The future strategy of the company
  • Confidential issues relating to individuals.

NOTE: To ensure this, there has to be independent non-executive directors.


  • Probity /honesty: This means telling the truth and not misleading shareholders and other stakeholders. Management must be honest with preparing and preparation of financial statement and other operations of the organization.
  • Responsibility: This means management accepting the credit or blame for governance decisions.


The South Africa King Report stressed that; there must be a system that allows for corrective action and prevailing mismanagement to ensure to ensure responsibility.


NOTE: There is always a battle or contention as to the responsibility of manager’s towards each stakeholder.


  • Accountability: This refers to whether organizations (and its directors) are answerable in some way for the consequences of their actions.

NOTE: The UK Cudbury report stressed that making the accountability work is the responsibility of both parties (directors and stakeholders).


  • Reputation: This means how an organization fulfills other principles of corporate governance. It is often a very valuable asset of the organization.


  • Judgement: This means that the board making decisions that enhances the prosperity of the organization. This is ensured by directors having multiple conceptual skills to management that aim to maximize long-term returns.


  • Integrity: This means management being straightforward in dealing and completeness. It means, adhering to principles of professionalism and probity. The Cudbury report stressed on the need for personal honesty and integrity of preparers of accounts. This is one of International Federation of Accountants (IFAC) codes of ethic.


Fiduciary responsibility: This means managers have a duty of faithful service in respect of stakeholders and their behavior must always reflect it.

The boundaries of management Discretion:

The stakeholder view of company objectives:

 Each stakeholder has an objective and managers must ensure to balance off all these through their actions and discretion.

The consensus theory of Company objectives

This theory was developed by Cyert and March. They simply argued that, objectives are always not selected or controlled by management but differing views of stakeholders. It means management takes into consideration the objectives of stakeholders.


Ethics and morality are about rights and wrong behavior. Western thought about ethics is based on two ideas; Duty & Consequences. Ethics is also influenced by the concepts of virtue and rights.

Organizations always have complexity in dealing with the political and social environment.

Whiles the political environment consists of laws, regulations and government agencies, the social environment consists of the customs, attitudes, beliefs and level of education of citizens.


This approach judges actions by reference to their outcomes or consequences.

Utilitarianism :

This refers to choosing the action that is likely to result in the greatest good for the greatest number of people. It was propounded by Jeremy Bentham.


It states that an act is ethically justified if decision makers freely decide to pursue their own short-term desires or their long-term interest.


It is mostly by shorter-mists. That’s long-term goals are sacrifice for short-term goals.


This concept states that ‘different views may exist on morality. It means there are considerations of different range of perspectives or viewpoint in order to establish a course of action.



This refers to the view that a wide variety of acceptable ethical beliefs and practices exists. The ethics that are most appropriate in a given situation will depend on the conditions at that time.



  • It highlights our cognitive bias in observing with our senses(we see only what we know and understand)
  • It highlights differences in cultural belief.
  • It resolves moral conflicts between different cultures. The philosopher Bernard Crick states that, each culture has an absolute.
  • More flexibility and greater success for multinational companies.



  • There is always a fundamental contradiction between different cultures.
  • It leads to a philosophy of ‘anything goes by religious leaders.
  • It contradicts with natural laws; this view was by the atheist scientist Richard Dawkins.


This is the view that, there is an unchanging set of ethical principles that will apply in all situations, at all times and in all societies. 


  • Absolutists: believe that certain actions are always wrong – no ‘ifs’ or ‘buts’.
  • Relativists/pluralists: believe that that nothing is objectively right or wrong and that ‘right’ or ‘wrong’ depend on the prevailing view of a particular individual, culture, or historical period.
  • Consequentialism: whether something is right or wrong depends on the consequences, or outcome, of the act.
  • Utilitarianism: this is a branch of consequentialism that states that the ethically right choice in a given situation is the one that produces the most happiness and the least unhappiness for the largest number of people.
  • De-ontological: this is a duty-based approach to ethics and is concerned with what people do, not with the consequences of their actions. People have a duty to do the right thing because it is the right thing to do.


Managers have a duty (in most enterprises) to aim for profit. At the same time, modern ethical standards impose a duty to guard, preserve and enhance the value of the enterprise for the good of all touched by it, including the general public.

There are basically two issues; conflict of interest among stakeholders and the payments made by the companies to government or municipal officials.


In his book ‘The Ethics of Corporate Conduct’, Clarence Walton refers to the fine distinctions which exist in the area of payments organizations have to make;

  • Extortion: Some officials may threaten to seize or bring closure of a company’s business if some amount of money is paid.
  • Bribery: This refers to payments for services to which a company is not legally entitled.
  • Grease money: These are payments made to right people in a country to oil the machinery of bureaucracy. This may happen due to the inability of the company enjoying the services for which it is legally entitled to have.
  • Gifts: In some cultures such as Japan, gifts are regarded as essential part of civilized negotiation and companies may adopt this in such cultures even though it may appear dubious by other cultures.



Lynne Paine of Harvard Business Review suggests that there are two approaches to the management of ethics in organizations:

Compliance-based approach:

This is primarily designed to ensure that company acts within the letter of the law, and that violations are prevented, detected, and punished. Organizations may take the following step:

  • Compliance procedures to detect misconduct
  • Audit of contracts
  • Systems for employees to report criminal misconduct without fear of retribution
  • Disciplinary procedures to deal with transgressions.

Integrity – based approach:

This approach combines a concern for the law with an emphasis of managerial responsibility for ethical behavior.


As a Professional Accountant, your values and attitudes flow through everything you do professionally. They contribute to the trust the wider community puts in the profession and the perception it has of it.

A code of ethics for accountants

Fundamental principles of the IFAC Code of Ethics and Conduct (ICAG):

  • Integrity: be straightforward and honest in all professional work. Stand up for what you believe to be right. Do not ‘turn a blind eye’.
  • Objectivity: do not allow bias, self-interest or conflicts of interest to influence professional judgements and conclusions.
  • Professional competence and due care: carry out work to proper standards; don’t skimp; keep up to date with changes in legislation, methodology and regulations.
  • Confidentiality: do not disclose information received through professional work without permission or if there is a legal duty or right to disclose it.
  • Professional behavior: comply with laws and regulations and do not act in a way that brings ICAG or the wider accountancy profession into disrepute.



Personal quality Details
Reliability When taking on work, you must ensure it gets done and meet professional standards
Responsibility In the workplace you should take ‘ownership’ of you work
timeliness Clients and work colleagues rely on you to be on time and produce work within a specific time frame
Courtesy You should conduct yourself with courtesy and consideration towards clients and colleagues
Respect As an accountant, you should respect others by developing constructive relationships and recognizing the values and rights of others.





Professional quality Details
Independence You must be able to complete your work without bias or prejudice and you must also be seen to be independent
Skepticism You should question information given to you so that you form your own opinion regarding its quality and reliability
Accountability You should recognize that you are accountable for you own judgements and decisions
Social responsibility Accountants have a public duty as well as a duty to their employer or client. Audit work, accountancy work and investment decisions may all affect the public in some way.



Threats to professional ethics arise from

  • Self-interest
  • Self-review
  • Advocacy
  • Familiarity

Self-interest threats

 Self-interest threats are the following:

  • Financial: For example if an auditor own shares in the client, the auditor could be accused of wanting the client’s profits to look good, so that the share price rises thereby enriching the auditor.
  • Close business relationships are also threats. For example, if a partner retired from an audit partnership and then immediately went to work for a client, they could be accused for having lined themselves up for a job and to do that they perhaps did not do their audit rigorously. A period of at least two years should pass before an ex-partner takes up an appointment with a client. Having a partner on the client board is also unacceptable.
  • Close family and personal relationships between the auditor and owners or directors of the company they are auditing lay the auditor open to suggestions that the audit has been neither objective nor independent, and that the auditor did not show the proper degree of integrity.
  • Loans and guarantees from the client to the auditor should be looked at carefully. If the audit client is a bank and it makes a loan on a normal business terms to a member of the audit staff, for example a mortgage, this would normally be regarded as acceptable. If however the bank (the audit client) makes a large loan into the partnership then this again could leave the audit firm open to accusations of having being treated faithfully by the bank. Certainly no loans or financial relationships should exist between a client and an auditor if it is not normal business for the client to make loans.                                                                                       
  • Overdue fees put the auditor at some risk as there is a possibility that client will never pay those fees. This could lead to accusations that the auditor has not qualified the audit report to reduce the likelihood that a worried creditor triggers the company’s liquidation. If there are overdue fees the auditor should not make the situation worse.

Self-review threats

Self-review threats arise when an auditor does work for a client and that work may then be subject to self-checking during the subsequent audit. For example, if the auditor prepares the financial statements, and then has to audit them or the auditor performs internal audit services and then has to check that the system of internal control is operating properly.

Auditors could obviously be reluctant to criticize the work which their own firms have earlier undertaken, and this could interfere with independence and objectivity.

Advocacy threats

Advocacy is where the assurance or audit firm promotes a point of view or opinion to the extent the subsequent objectivity is compromised. An example would be where the audit firm promotes the shares in a listed company or supports the company in some sort of dispute. Advocacy can interfere with professional skepticism.

Familiarity threats

Familiarity threats arise because of the close relationship between members of the assurance or audit firm and the client. The close relationship can arise by friendship, family or through business connections. There is no general definition of what’s meant by close relationships, but if you were an auditor and your brother was the Finance Director of a client firm then there probably is a close relationship! If however the finance director was a remote cousin of yours, there might not be a close relationship.


The final groups of threats are intimidation threats. These can deter the assurance team from acting properly.

Examples could be threatened litigation, blackmail, or there might even be physical intimidation, though it is to be hoped that that is rare. Blackmail could be more subtly applied and might relate back, for example, to a period where the auditor was not acting in accordance with the required ethical standards.


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Business Management and Information SystemsCorporate ReportingManagement Accounting




Good Information refers to data that has been processed in such a way as to be meaningful to the person using it.


The accountant’s work is involved with collection of data and processing it into information to be used by various stakeholders.

Data refers to the raw material for data processing. That is, the raw facts, events or transactions that are processed into information.


Information refers to data that has been processed in such a way as to be meaningful to the person using it.

Information may be classified as financial or non-financial. It can also be classified as quantitative or qualitative.


Qualities of Good Information


Good management information must have the following qualities so as to make it useful:

  1. Relevance: Information that is relevant meets the needs and aspirations of management. Irrelevant information does not serve management needs.
  2. Accuracy: Good information should be free of material errors. However there is no need to go into unnecessary detail for pointless accuracy.
  3. Clarity (Understandability): Information must be clear to understand by the user.
  4. Completeness: Information users should have all the facts needed to make a particular decision.
  5. Confidence: Good information must inspire confidence so as to be trusted by users. Where there is uncertainty, the assumptions underlying the information should be stated.
  6. Volume: Good information must be brief and concise. Where possible, the exception principle must be used.
  7. Timeliness (Speed): Information must be prompt for any decision. That is, information which is too late is as bad as too early.
  8. Communication: Information is classified as good when communicated to the right person.
  9. Cost (Economy): The benefit derived from any good information should be greater than the cost of acquiring it.
  10. Channel of communication: Good information must be communicated using the right channel or medium. For example using memos, professional magazines, journals, electronic mail, word-of-mouth, etc

Planning, Controlling and Decision Making

The three main functions of management are planning, decision making and control.

  1. Planning refers to the establishment of business objectives and devising strategies or means to achieve those objectives. The three levels of planning are


Strategic planning (long term planning)

Tactical planning (management control)

Operational planning (operational control or short term planning)

2. Decision making refers to making a choice between alternative courses of action. The three levels of decision making are

  1. Strategic decision
  2. Tactical decision (management decision)
  • Operational decision


  1. Control refers to the setting of standards, measurement of actual results and comparison with the standard set so as to take corrective action where there are deviations or variances.


It must be noted that the three management activities above are interdependent. That is, all three are inseparable in practice. For example, there cannot be effective control without planning and planning without control is practically impossible.


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