ACCA SBL key terms

A framework explaining the relationship where principals (such as shareholders) delegate work to agents (such as directors) and must design incentives and monitoring to align the agents' interests with their own.

The system of rules, practices and processes by which an organisation is directed and controlled, balancing the interests of shareholders, management, employees, customers and wider society.

A view of management holding that directors and managers are trustworthy custodians who will act in the owners' long-term interest without heavy monitoring, contrasting with the self-interest assumption of agency theory.

The proposition that an organisation should be managed in the interests of all parties affected by it, not only shareholders, because long-term success depends on maintaining their support and legitimacy.

A technique that plots stakeholders by their power to influence and their interest in the organisation, so that engagement effort can be targeted appropriately.

A grid classifying stakeholders into four groups by power and interest, prompting different strategies: keep informed, keep satisfied, manage closely, or monitor with minimum effort.

The body elected by shareholders to oversee the organisation, appoint senior executives, approve strategy and financial statements, and hold management to account.

A sub-committee of non-executive directors responsible for overseeing financial reporting, internal controls and the relationship with external and internal auditors, thereby strengthening independence.

The signals sent by senior leaders through their behaviour, priorities and communications, which shape whether an ethical culture and effective controls are taken seriously throughout the organisation.

A formal statement of the values and behavioural standards expected of an organisation's people, used to guide decisions and to signal acceptable conduct to stakeholders.

A situation where an individual's personal, financial or other interests could improperly influence the judgement they exercise in their professional role.

The state of being free from relationships or pressures that could compromise objectivity, particularly for auditors, non-executive directors and other assurance providers.

The policies, procedures and systems an organisation uses to safeguard assets, ensure reliable reporting, operate efficiently and comply with laws and regulations.

A widely used model describing internal control as five interrelated components: control environment, risk assessment, control activities, information and communication, and monitoring activities.

An independent, objective assurance and consulting function that evaluates the adequacy and effectiveness of risk management, control and governance processes within an organisation.

The amount and type of risk an organisation is willing to accept in pursuit of its objectives, expressed in qualitative or quantitative terms to guide decision-making.

A structured record listing identified risks, their likelihood and impact, owners, and the controls or responses planned or in place.

The coordinated process of identifying, assessing, treating and monitoring the uncertainties that could affect an organisation's objectives.

A model explaining fraud as arising where three conditions coincide: pressure or incentive, opportunity, and rationalisation by the person committing it.

The overall long-term direction of a whole organisation, defining which businesses and markets it will operate in and how value is added across them.

The way a business unit seeks to achieve advantage over rivals within a chosen market, for example through cost leadership or differentiation.

A framework assessing industry attractiveness through rivalry among existing firms, threat of new entrants, threat of substitutes, and bargaining power of buyers and suppliers.

Breaking an organisation's activities into primary and support activities to identify where cost is incurred and where customer value is created or could be enhanced.

A tool combining products and markets to describe four growth options: market penetration, market development, product development and diversification, each with differing risk.

A structured summary of an organisation's internal strengths and weaknesses and its external opportunities and threats, used to inform strategy formulation.

A framework for scanning the macro-environment through Political, Economic, Social, Technological, Environmental and Legal factors that may affect an organisation.

Statements describing, respectively, the organisation's purpose and core reason for existing, and the desired future state it aspires to reach.

A performance measurement system viewing the organisation from financial, customer, internal process, and learning and growth perspectives to link measures to strategy.

A measure selected because it gives a clear signal of progress towards a critical objective, usually with a target and a defined reporting frequency.

The ongoing process of setting targets, measuring results, comparing them with expectations and taking corrective action to improve organisational performance.

Comparing actual results with budgeted or standard figures to identify and explain differences in revenue, cost or profit so that action can be taken.

The process of preparing quantified financial plans for a future period, used for planning, coordination, authorisation and subsequent control of performance.

A budgeting approach where each activity's spending must be justified afresh from a nil base rather than being rolled forward from the previous period.

A future, incremental cash flow that differs between the alternatives being considered, and which should therefore influence a decision.

Money already spent that cannot be recovered by any future decision, and which should therefore be ignored when evaluating alternatives.

A technique comparing the total expected costs and benefits of an option, often over several years and sometimes discounted, to judge whether it is worthwhile.

The evaluation of proposed capital projects using techniques such as payback, accounting rate of return, net present value and internal rate of return.

A method valuing future cash flows by reducing them to present value using a discount rate that reflects the time value of money and risk.

The return an organisation must earn on its investments to satisfy providers of debt and equity, reflecting their required returns and the financing mix.

Very large, fast-moving and varied datasets that require specialist tools and techniques to capture, store and analyse for insight.

The systematic examination of data to discover patterns, test hypotheses and support decisions, ranging from descriptive reporting to predictive modelling.

Using historical data and statistical models to forecast future outcomes or likely behaviour, such as demand, default risk or customer churn.

The delivery of computing services such as storage, processing and software over the internet, offering scalability and flexibility while raising data security and dependency issues.

The measures and controls used to protect systems, networks and data from unauthorised access, damage or disruption, including technical, procedural and human safeguards.

Replacing or supporting human tasks with technology so that processes run with less manual intervention, changing job roles, controls and workforce requirements.

A fundamental change in how an organisation operates and delivers value through the adoption of digital technology, affecting strategy, processes, culture and skills.

An attitude of questioning, alertness to possible misstatement or misconduct, and a willingness to challenge evidence rather than accepting it at face value.

A structured approach to choosing between options when values conflict, weighing consequences, duties, fairness and the interests of affected parties.

A reporting approach presenting how an organisation's strategy, governance, performance and prospects create value over time across financial, manufactured, intellectual, human, social and natural capitals.

Reporting and evaluating performance against three dimensions: profit, people and planet, reflecting economic, social and environmental outcomes rather than financial results alone.

Disclosure of an organisation's environmental, social and governance impacts and targets, used to inform stakeholders and demonstrate accountability.

The ability to convey information clearly and appropriately for the audience, choosing structure, tone, channel and level of detail to achieve the intended purpose.