CIMA BA4 flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Ethical Absolutism

The view that certain moral rules are universally valid regardless of culture, context or consequence, so an act is right or wrong in itself.

Teleological Ethics

An approach that judges the morality of an action by its outcomes or consequences, so the same act may be right in one situation and wrong in another.

Self-Interest Threat

A threat to objectivity arising where a financial or other interest of the accountant or firm improperly influences judgement, such as a contingent fee on an assurance engagement.

Self-Review Threat

A threat arising where an accountant evaluates work they previously performed, such as auditing a system they designed, making objective assessment difficult.

Advocacy Threat

A threat arising where an accountant promotes a client's position or defends it in dispute, compromising the appearance of objectivity in later assurance work.

Familiarity Threat

A threat arising from a long or close relationship with a client or colleague, where trust or sympathy leads to excessive acceptance of their work or claims.

Intimidation Threat

A threat arising where pressure, actual or perceived, from a client, employer or colleague deters the accountant from acting objectively, for example a threat of dismissal.

Confidentiality Principle

The duty not to disclose information acquired through professional relationships without authority, unless there is a legal or professional right or duty to disclose.

Agency Problem

The conflict that arises because directors (agents) control a company owned by shareholders (principals), creating scope for managers to pursue their own interests.

Comply or Explain

A governance approach where a listed company either follows code provisions or explains in its annual report why it has not, allowing flexibility.

Independent Non-Executive

A board member with no material business, financial or personal relationship with the company, able to challenge executive management objectively in board decisions.

Audit Committee Role

A board committee of independent non-executives that monitors financial reporting, internal control and risk, and recommends appointment of the external auditor.

Remuneration Committee

A committee of independent non-executive directors that sets executive pay and incentives, reducing the risk of directors determining their own remuneration.

Segregation of Duties

An internal control principle that separates authorisation, custody and recording of assets so no single person can both commit and conceal an error or fraud.

Shareholder Model

A governance view that the company's primary purpose is maximising long-term shareholder value, with other stakeholders protected mainly through contract and law.

Stakeholder Model

A governance view that the company is accountable to a range of parties including employees, customers, suppliers and lenders, not shareholders alone.

Invitation to Treat

A preliminary communication inviting offers rather than capable of acceptance, such as goods displayed in a shop or most advertisements.

Consideration

Something of value given by each party in exchange for the other's promise; it must be sufficient but need not be adequate in value.

Counter-Offer

A response that varies the terms of the original offer; it destroys that offer, so the original offeror may accept or reject the new terms.

Condition vs Warranty

A condition is a fundamental contract term whose breach permits termination and damages; a warranty is minor, so breach gives damages only.

Incorporation by Notice

An exclusion clause becomes part of the contract where reasonable notice of it was given before or at the time of contracting.

Expectation Damages

The contractual measure of damages that puts the innocent party in the position they would have occupied had the contract been properly performed.

Separate Legal Personality

The principle that a registered company is a legal person distinct from its shareholders and directors, owning assets and incurring liabilities in its own name.

Wrongful Trading

Liability of directors who continue trading when they knew or ought to have known insolvent liquidation was inevitable, without taking steps to minimise creditor loss.

Mutuality of Obligation

An employment indicator meaning the employer is obliged to provide work and the worker to accept it, distinguishing employees from casual or self-employed arrangements.

Unfair Dismissal

A statutory claim that a dismissal was unfair because the employer lacked a potentially fair reason or acted unreasonably in the procedure or response.

Wrongful Dismissal

A contractual claim that the employer dismissed the employee in breach of contract, typically by failing to give the contractual or statutory notice period.

Automatically Unfair Dismissal

A dismissal unfair regardless of reasonableness because it rests on a prohibited ground such as union activity, pregnancy, whistleblowing or asserting statutory rights.

Indirect Discrimination

Applying a neutral provision, criterion or practice that puts people with a protected characteristic at a particular disadvantage without objective justification.

Reasonable Adjustments

Steps an employer must take to remove a disadvantage a disabled employee faces, such as altered hours, equipment or workplace layout, where reasonable.

Redundancy Situation

A genuine reduction in the need for employees to do work of a particular kind, arising from business closure, workplace closure or diminished demand.

Basic Award

The statutory element of unfair dismissal compensation calculated from age, completed years of service and weekly pay, subject to statutory caps.