Deck 9: Extended Systems of Accountingthe Incorporation of Social and Environmental Factors Within External Reporting

Question 1

The Business Council of Australia views the stakeholders of a business as those parties which:

A) Can affect the operations of a business
B) Are affected by the operations of a business
C) Both can affect, and are affected by, the operations of a business
D) None of the given options are correct

Answer 1

A

Question 2

'Sustainable cost' is the amount an organisation must spend to:

A) Maintain its current level of social and environmental performance
B) Return the biosphere to the state it was in at the beginning of the accounting period
C) Sustain its current level of profitability, given increasing societal expectations for improved social and environmental performance
D) Adequately report its financial, social and environmental performance in accordance with the ethical formulation of stakeholder theory

Answer 2

B

Question 3

The main problem for triple bottom line accounting is that social and environmental information is not:

A) Comparable
B) Relevant
C) Reliable
D) Understandable

Answer 3

A

Question 4

A 'social audit' is when an organisation:

A) Obtains independent verification on its social disclosures
B) Obtains independent verification on its social and environmental disclosures
C) Assesses its performance in relation to stakeholder expectations of social performance
D) Assesses its performance in relation to stakeholder expectations of social and environmental performance

Question 5

The 'shareholder primacy' view of corporate reporting implies that:

A) Regulators should mandate greater social and environmental reporting
B) Reporting should primarily meet the needs of those with a financial stake in the organisation
C) Organisations will voluntarily adopt greater social and environmental reporting
D) All of the given options are correct

Question 6

A company reporting on its social and environmental performance could be explained by:

A) Legitimacy Theory, if management believed that the report would enhance the company's licence to operate
B) Managerial Stakeholder Theory, if management believed that reporting would influence the perceptions of powerful stakeholders
C) Institutional Theory, if management believed that by reporting they would gain approval from powerful stakeholders
D) All of the given options are correct

Question 7

The main contribution of frameworks such as the Global Reporting Initiative is that they enable:

A) Comparison of social and environmental performance between companies
B) Aggregation of social and environmental performance to a single 'sustainability' number
C) Improved social and environmental performance
D) None of the given options is correct

Question 8

The drivers towards greater corporate social responsibility identified by the Business Council of Australia did not include improved:

A) Employee recruitment and motivation
B) Competitiveness and market positioning
C) Social and environmental performance
D) Operational efficiency

Question 9

The prevalence of social and environmental reporting is

A) Declining
B) Increasing
C) Stable
D) None of the given options is correct

Question 10

It is commonly asserted that businesses should be sustainable because:

A) The interests of business, society and the environment are aligned in the medium term
B) The interests of business, society and the environment are aligned in the long term
C) The interests of business, society and the environment are aligned in the short term
D) All of the given options are correct

Question 11

The Global Reporting Initiative Guidelines are:

A) A mandatory framework containing a list of organisational financial, social and environmental performance indicators
B) A mandatory framework containing a list of governmental financial, social and environmental performance indicators
C) A voluntary framework containing a list of organisational financial, social and environmental performance indicators
D) A voluntary framework containing a list of governmental financial, social and environmental performance indicators

Question 12

Which of the following is false?

A) Many companies believe that social and environmental objectives can be achieved without sacrificing profitability
B) Many companies believe that social and environmental issues are becoming more important to their customers
C) Many companies believe that consideration of social and environmental issues is necessary for profitable growth
D) None of the given options are correct

Question 13

'Enlightened self-interest' means that businesses:

A) Will sacrifice financial returns in order to improve social and environmental performance
B) Will not sacrifice financial returns in order to improve social and environmental performance
C) Do not believe there is a conflict between financial returns and social and environmental performance
D) None of the given options is correct

Question 14

Problems with the concept of the 'triple bottom line' do not include :

A) It suggests that the social, environmental and economic aspects of an organisation are not interconnected
B) The term is not widely used or understood
C) It is not possible to reduce social, environmental and economic aspects of an organisation to a 'common currency'
D) The concept of maximisation is difficult to apply to social and environmental aspects of corporate performance

Question 15

Reasons that traditional financial accounting may be unable to reflect the social and environmental impact of organisations do not include:

A) The social and environmental impact of an organisation cannot be verified
B) The social and environmental impact of an organisation is often considered immaterial
C) Traditional financial accounting ignores the diminution of assets which are not controlled by the entity
D) Traditional financial accounting may categorise items such as pollution permits as assets

Question 16

Including all affected stakeholders in a dialogue with the corporation may be difficult because:

A) There may be multiple stakeholder groups in diverse geographic regions
B) Stakeholders may be reluctant to express their honest views to the company for fear of reprisal
C) The stakeholders may not be aware of the corporation's activities
D) All of the given options are correct

Question 17

The Brundtland Report defined 'sustainable development' in terms of:

A) Intergenerational equity
B) Intragenerational equity
C) Both inter- and intra-generational equity
D) None of the given options is correct

Question 18

Researchers have concluded that there is a demand for environmental and social disclosures based on:

A) Surveys of stakeholders
B) Examining the impacts on share prices of company disclosures
C) Examining the impacts on share prices by independent rating agencies
D) All of the given options are correct

Question 19

A 'social audit' may assist an organisation to:

A) Identify areas where stakeholders believe it is deficient
B) Avoid losing its 'licence to operate'
C) Enhance its reputation
D) All of the given options are correct

Question 20

Reasons that traditional financial accounting may be unable to reflect the social and environmental impact of organisations do not include:

A) Externalities are difficult to measure
B) Traditional financial accounting typically discounts future liabilities to present value
C) Accountants are unable to understand the social and environmental impacts of an organisation
D) Traditional financial accounting adopts the 'entity assumption'

Question 21

Which of the following statements is correct,regarding the concept of environmental accounting?

A) It is a method of incorporating the costs of depleting the company's assets into the financial statements of the company
B) It has been used to show the profits of a company
C) It does not apply to government organisations
D) It is a part of the ASX Listing Rules

Question 22

The 'triple bottom line' framework refers to three key areas,which are:

A) Economic/financial, cultural and ethical
B) Ethical, economic/financial and environmental
C) Economic/financial, leadership and social
D) Economic/financial, social and environmental

Question 23

Which of the following statements is incorrect?

A) Codes of conduct incorporating ethical standards are generally reactive, whereas laws are often proactive
B) Disqualification of directors from managing corporations is one way in which the law deals with conduct which is unethical
C) Accepting a secret commission is unethical behaviour
D) Offering a secret commission to an agent is unethical behaviour

Question 24

The view taken by Milton Friedman in relation to the role of companies is best described as:

A) Companies are an integral part of society, and as such should adopt the highest ethical principles
B) Companies as part of society should act in the interests of harmonisation of society and the environment
C) Companies should detach themselves from the environment and focus on maximizing the benefits to society
D) Companies should distance themselves from the community in which they operate and focus solely on maximizing the returns to shareholders