Key Words M Page

2020 Global business ethics survey 1.18 73

Accountant & knowledge sharing 3.9 222
Accountant & organisation action on carbon-constrained economic environment 4.8 294
Accountant as strategic adviser 1.2 7
Accountant in microfinance 2.19 150
Accountant in People Management 3.14 234
Accountant in People Management - Asset & Knowledge 3.14 235
Accountant in People Management - Cost 3.14 234
Accountant in People Management - Relationship 3.14 235
Accountant Role - Social Media 5.7 390
Accountant Role Concepts in People Management 3.15 235
Accountant Role Concepts in People Management - Communication 3.15 237
Accountant Role Concepts in People Management - Decision making & issue resolution 3.15 238
Accountant Role Concepts in People Management - Employee Engagement 3.15 237
Accountant Role Concepts in People Management - Evaluate impact of hard-to-measure initiatives 3.15 238
Accountant Role Concepts in People Management - Providing Advice 3.15 237
Accountant's input to the business plan 1.6 27
Adaptive mindset 1.11 42
Age diversity 3.4 193
Agile approach 1.9 35
Aligning strategic advice to client behaviour 1.3 17
Attracting quality workforce 3.3 179
Automation 3.8 215
Balancing stakeholder interest 5.4 352
Biodiversity 4.4 271
Biodiversity - Responses to depletion 4.4 276
Biodiversity issues 4.4 271
Business challenge from IA 3.8 219
Business Communication 5.5 361
Business Communication - Assessing results 5.6 375
Business Communication - Audience segmentation 5.6 373
Business Communication - Communication planning 5.6 370
Business Communication - Effective communication planning 5.6 369
Business Communication - Encoding message for target audience 5.6 371
Business communication - Ethical, Regulatory, Legal Issues 5.6 376
Business Communication - External 5.5 363
Business Communication - Internal 5.5 361
Business communication - Risks 5.6 376
Business Communication - Sending message 5.6 374
Business enterprises to be affected by carbon-constrained economic environment 4.8 294
Business Exit 3.5 202
Business models 2.1 90
Business planning 1.6 26
Business system innovations 2.2 92
Carbon economy - Regulatory position of government 4.7 288
Change leadership 1.20 80
Charismatic leadership 1.17 67
Choosing right source of funding 2.10 123
Climate change 4.6 286
Cloud computing 2.2 102
Cobots 3.8 218
Collaboration 1.14 56
Key Words M Page
Communicating with clients & colleagues 1.13 51
Communication 1.13 48
Communication technologies 1.13 52
Communities of Practice 3.10 224
Contigent workforce 3.6 204
Contigent workforce management 3.6 207
Contractors, Freelancers, Gig work 2.2 104
Corporate culture 3.2 172
Corporate governance 5.1 342
Corporate governance theories 5.3 346
Corporate governance theories - Agency theory 5.3 346
Corporate governance theories - Contigency theory 5.3 350
Corporate governance theories - Contracting theory 5.3 346
Corporate governance theories - Institutional theory 5.3 348
Corporate governance theories - Legitimacy theory 5.3 348
Corporate governance theories - Stakeholder theory 5.3 351
Corporate social capital 3.2 171
Corporate social responsibility 5.2 343
Creating ethical culture 1.18 71
Cross-cultural communication 1.13 54
Cross-cultural diversity 3.4 195
Crowdsourcing 2.2 100
Culture & change 3.2 176
Customer experience innovations 2.4 108
Customer experience technologies 5.8 391
Customer focus 1.5 25
Debt or equity or mixture of both 2.9 119
Developing & retaining talent 3.3 186
Developing future leaders / succession planning / business exit 3.5 201
Developing leadership potential 3.5 201
Developing sustainable social venture 2.13 135
Developing the skills of an adviser 1.2 9
Drivers of Change 1.1 4
Drivers of Change Stakeholder Engagement 5.13 415
Drivers of Change Stakeholder Engagement - Communication, Connectivity, Hypertransparency 5.13 415
Drivers of Change Stakeholder Engagement - Demographic shift & automation of work 5.13 416
Drivers of Change Stakeholder Engagement - Individual empowerment & rise of middle class 5.13 416
Drivers of Change Stakeholder Engagement - Primacy of climate change & water resources 5.13 416
Drivers of Change Stakeholder Engagement - Supply chain pversight ramps up 5.13 416
Dynamic pricing 2.3 107
Effective engagement & Deep engagement 5.14 419-420
Efficient products 4.5 282
Employee value proposition 3.3 182
Energy 4.1 249
Energy resources 4.1 250
Environmental costs & revenues 4.10 306
Environmental measures - Balanced Scorecard Approach 4.11 308
ESG reporting 4.12 317
Ethical conduct 1.15 60
Ethical dilemmas 1.15 61
Ethical leadership 1.17 71
Fair treatment 3.4 197
Key Words M Page
FIFO 3.7 215
Financial inclusion uses of blockchain 2.20 151
Financing entrepreneurial ventures 2.9 119
Food 4.2 258
Food - Effect on organisations & Accountant 4.2 265
Food - Government, Market, Natural Forces 4.2 261
Free & Freemium 2.3 105
Full-range leadership 1.17 67
Function of HRM 3.1 167
Funding social venture 2.13 136
Future finance function 1.4 20
Future focus 1.11 42
Future HRM 3.3 187
Future of natural resource management 1.1 6
Future-focused company accountant's skills 1.4 21
Gender diversity 3.4 190
Global workforce 3.7 211
Government assistance for entrepreneurs & innovation 2.11 128
HR in Strategic Management 3.3 179
HRM concept 3.1 164
Human capital 3.2 170
Human sigma 3.2 172
Hybrid working 3.7 213
Ideas - Problem solving and decision making 1.12 46
Implementing environmental accounting system 4.10 306
Information - Problem solving and decision making 1.12 44
Innovation business finance 2.9 121
Innovation leadership 1.17 69
Innovative business & financing models 1.1 4
Integrated report 1.7 30
Integrated reporting 4.13 322
Integrated reporting - Content 4.13 325
Integrated reporting - Guiding Principles 4.13 324
Integrated reporting framework 4.13 322
Integrated strategic approach to stakeholder engagement 5.14 417
Intellectual capital 3.2 170
International perspectives & development 5.4 358
Knowledge sharing - how business use? 3.11 227
Knowledge sharing - measuring benefits 3.13 231
Knowledge sharing & cultural issues 3.12 229
Knowledge sharing challenges 3.12 229
Knowlege sharing processes & technologies 3.10 222
Knowlege sharing used by business 3.9 221
Leadership & powerment 1.19 79
Leadership approaches 1.17 66
Leadership concepts 1.16 64
Leadership traits & behaviours 1.16 65
Leading team 1.19 79
Live streaming 5.8 391
Making business sense of people management issues 3.2 169
Management accounting & environment 4.10 303
Managing diversity 3.4 189
Key Words M Page
Managing environmental costs 4.10 306
Managing relationship 1.14 57
Marketplace lending 2.10 128
Measuring social venture value 2.14 138
Microfinance 2.15 142
Microfinance - Developed world 2.17 146
Microfinance - Developing world 2.16 145
Microfinance - Maturing industry 2.18 148
Microfinance services 2.15 143
Mobile apps 5.8 391
Model for understanding communication 1.13 48
Model for understanding stakeholder trust - CGMA Business Model Framework / CIVIC 5.9 399
Models of change leadership 1.20 80
Monetary environmental management accounting 4.10 304
New era of employment engagement 3.3 185
Non-Financial Reporting Framework 4.12 309
Offshoring 2.2 95
Offsite workforce 3.7 208
On-demand & gig economy 2.4 108
Online marketplace 2.4 108
Organisational fit 1.2 8
Other business skills: Leveraging technology 1.10 36
Other business skills: Risk management 1.10 37
Other business skills: Sustainable business development 1.10 39
Outsourcing 2.2 92
Performance measurement 1.7 30
Physical Accounting 4.9 300
Physical environmental management accounting 4.10 303
Platform economy 2.4 109
Power & Influence 1.16 65
Problem solving and decision making 1.12 43
Product & service innovations 2.3 105
Project management 1.9 33
Project management tools 1.9 36
Project methodologies 1.9 34
Providing & implementing advice 1.2 10
Recycling 4.5 281
Reducing Pollutants 4.5 278
Reducing Waste 4.5 279
Reflective mindset 1.11 43
Regulatory environment 1.8 31
Reputation - Role of ethics 5.9 402
Reputation management 5.9 395
Reputation management & Sustainability 5.10 403
Reputation management & Sustainability - Reporting issues 5.10 406
Reputation management & Sustainability - Stakeholder influence 5.10 405
Reputation management - Online 5.11 409
Reputation management concepts 5.9 395
Reputation management in a crisis & rebuild reputation after a scandal 5.12 412
Reputational risks 5.9 402
Reusing 4.5 280
Sensemaking 3.2 177
Key Words M Page
Shared leadership 1.17 69
Sharing economy 2.5 111
Sharing economy - Consumption & production consequences 2.7 113
Sharing economy - Definition 2.5 111
Sharing economy - Hurdles and deficiencies 2.6 113
Sharing economy - Social Outcomes 2.8 116
Sharing economy as a business model 2.6 112
Social enterprise marketing 2.13 137
Social entrepreneurship 2.12 133
Social media 5.7 379
Social media - Business Benefits 5.7 382
Social media - Measuring Benefits 5.7 388
Social media - Policies & legislation 5.7 388
Social media - Risks & challenges 5.7 386
Social media - Stakeholder interaction 5.7 382
Social media effect (Reputation) 5.11 410
Social media strategy 5.7 385
Social media technologies 5.7 379
Solutions - Problem solving and decision making 1.12 47
Sources of funding - Earthly growth stage 2.10 127
Sources of funding - Established stage 2.10 128
Sources of funding - Seed stage 2.10 123
Stakeholder management 1.1 7
Stakeholder management as a compromise 5.4 353
Strategy implementation 3.3 179
Subscription 2.3 106
Sucession planning 3.5 201
Supporting entrepreneurial activity 1.3 18
Sustainability innovation 4.5 278
Sustainability leadership 1.17 71
Sustainability marketing 4.5 281
Sustainability reporting 4.12 310
Talent management 3.3 184
Teamwork 1.14 56
Technologies for engaging with stakeholders 5.8 390
Teleworking 3.7 208
Tools/Technologies for Remote Working 3.7 214
Traditional business finance 2.9 120
Transactional &Transformational leadership 1.17 67
Transforming client relationship 1.3 13
Transforming workforce 1.1 6
Turning advice into results 1.3 19
Unethical conduct 1.15 60
Verification & assurance 4.14 328
Virtual enterprise 2.2 104
Virtual team 3.7 212
Water 4.3 266
Water - Action by organisations & accountants 4.3 269
Water - Solutions for water sustainability 4.3 268
Water - Sources, Uses, Contemporary issues 4.3 266
Websites 5.8 391
Key Words M Page Example/Table
5 key measures - improve the company’s environmental performance - ‘Smarter Green’ 4 307-308 Ex 4.34
5Rs approach to water management 4 270 Ex 4.15
6 countries - strong economic growth / reducing CO2 emissions (Sweden, US, UK, Germany, France, Denmark) 4 289 Fig 4.9
Accommodation-sharing business - Issues 2 117-118 Ex 2.23
Accountant role concepts 3 237 Fig 3.13
Accountants Advising on Human Resources 3 238 Ex 2.34
Accountants and Social Media: Practice Paradox, Twitter, Facebook, LinkedIn 5 383 Ex 5.15
Accounting and finance services by offshore providers 2 99 Table 2.1
Acquiring cultural competence 3 197 Fig 3.10
Adani Mining 4 309 Ex 4.35
Additional services SMEs really want - according to SMEs and accountants 1 4 Fig 1.1
Adjust services to focus their services more directly on clients’ needs 1 13 Ex 1.2
Advice provided by professional accountants 1 10 Table 1.2
Agency Theory - Overview shareholder–manager relationship 5 347 Fig 5.2
Agricultural Water Management - Water Supply & Demand 4 266 Ex 4.10
Ag-Tech Not Keeping Up With Biodiversity Loss 4 276 Ex 4.17
Airtasker (gig economy) 3 205 Ex 3.15
Airtasker (Venture Capital) 2 127 Ex 2.27
Alternative funding under different financing models 2 122 Table 2.5
Amazon’s Work Practices 5 356-357 Ex 5.5
AngelList (or LinkedIn) - pitch an entrepreneurial idea to potential investors 5 384-385 Ex 5.18
Anglo African 4 326 Ex 4.40
Anglo African - Inputs & Value Creation 4 326 Ex 4.40
Anti-discrimination laws in Australia 3 199
Assessing materiality consideration 4 318 Fig 4.15
Astroturfing 5 408 Ex 5.26
Attitude and Behaviour - Different Things -> CSR Practice - positive influence on customer perceptions and 5 344-345 Ex 5.1
behaviours when they were closely aligned with the business’s core offering and the customer’s direct
experience in engaging with the business.

Australia’s Banks - Royal Commission 5 403 Ex 5.23

Australian Carbon Pricing Scheme 4 290-291 Ex 4.28
Australian government entrepreneur’s programme 2 129 Fig 2.8
Australian incubator support initiative projects (new and existing) 2 124 Table 2.6
Australian State assistance programs for SMEs 2 131 Fig 2.10
Automotive Industry 2 114 Ex 2.19
Back to the Office? 3 210 Ex 3.18
Balance stakeholder interests - Shell 5 353-354 Ex 5.4
Bee - the decline of bees -> potentially devastating effect on various food crops 4 271 Ex 4.16
Benefits of ESG reporting, XRB 4 320 Fig 4.17
Beyond HRM 3 170 Ex 3.5
BHP’s shareholder communication model for ESG issues 5 365 Fig 5.6
Big Hairy Audacious Goals 1 70 Ex 1.25
Biodiversity - Key Fact 4 272 Fig 4.6
Biodiversity effects of various sectors 4 272 Table 4.3
Blockchain and Social Ventures 2 135 Ex 2.30
Blockchain Chickens / GoGo Chickens 4 281-282 Ex 4.24
Blockchain transaction 2 149 Fig 2.12
Blue Planet - an episode on the effect of waste plastic on marine life 4 278 Ex 4.18
Box model - Reducing Waste 4 279 Ex 4.20
Bulbs - Innovation and Change Help Address Dwindling Resources 4 282-284 Ex 4.25
Captive offshoring 2 96 Ex 2.7
Carbon Prices as at April 2022 4 293 Fig 4.11
Carbon Taxes & ETS - Global Implementation 4 292 Fig 4.10
Categorisation of the world’s financial centres 2 98 Fig 2.5
Central components - Business plan 1 27 Fig 1.9
Challenges about future economics of coal - Australia 4 254-255 Ex 4.4
Changing profession 1 5 Fig 1.3
Characteristics of different-sized organisations 1 8-9 Table 1.1
China’s ETS 4 290 Ex 4.27
CIVIC principles 5 400 Fig 5.16
Cloud Accounting Examples 2 103-104 Ex 2.12
Coal Seam Gas (CSG) 4 260-261 Ex 4.7
Colour-coded visualisation of KPIs 1 51 Fig 1.14
Commonwealth anti-discrimination legislation 3 198 Table 3.5
Key Words M Page Example/Table
Communication plan 5 370-371 Table 5.2
Community of Practice Situation and Challenges - Confectionery Company 3 232 Ex 3.23
Components of the business model and how it integrates with the capitals 4 324 Fig 4.18
ConsenSys (implementation of blockchain technology for social purposes) 2 152 Ex 2.39
Continuum of communication modes (Formal to Informal) 1 53 Fig 1.15
Corporate Action Plans - Water 4 269 Ex 4.13
Corporate cultural deficiencies in the Australian banking sector 3 175 Ex 3.6
Corporate governance principles (NZ) 4 320 Fig 4.16
Corporate governance theories 5 352 Table 5.1
Corporate social responsibility 5 344 Fig 5.1
Credibility of company information by source 5 401 Table 5.6
Crowdsourced Renewable Energy 2 101 Ex 2.9
CSR and Business Ethics 1 76-77 Ex 1.28
CSR’s strategy for communicating with shareholders. 5 364 Ex 5.9
Cultural dimensions 3 195-196 Table 3.4
Cultural Diversity 3 197 Ex 3.12
Customer service interaction for a training organisation 5 367 Fig 5.7
Daigou 4 259 Ex 4.6
Daiken Energy Audit 4 250 Ex 4.1
Desalination plants 4 268 Ex 4.12
Digital Cooperatives 2 101-102 Ex 2.10
Diversity Training 3 190 Ex 3.10
Doesn’t Know any Better - sexual harassment complaint 3 199 Ex 3.14
Domino’s Pizza chain - how social media tools are managed 5 386 Ex 5.20
EC Action Plan - European Commission announced the Action Plan: Financing Sustainable Growth 2 140 Ex 2.33
e-commerce platform (Alibaba) 2 108 Ex 2.15
Economics of FIFO 3 215 Ex 3.19
Effective engagement and Deep engagement 5 419-420 Fig 5.18
Elon Musk - some of the complications around emotional intelligence 1 58-59 Ex 1.23
Emerging skill sets: A. Relative importance of different skill groups & B. Top 15 skills for 2025 1 59 Fig 1.16
Emissions in some of the world’s largest economies(tCO2/person) 4 286 Fig 4.7
Emojis 1 49 Ex 1.20
Enabled Employment - job portal funded by an angel investor 2 126 Ex 2.26
Energy Audit 4 250 Ex 4.1 & 4.2
Energy Strategies at the Organisational Level 4 252 Ex 4.3
Entertainment, Media and Communications 2 115-116 Ex 2.22
Environment Accounting - Environment Costs & Benefits (Toshiba) 4 304 Ex 4.33
Environmental accounting system - Implementation Steps 4 307 Fig 4.14
Equity and Debt financing (Advantages & Disadvantages) 2 119-120 Table 2.3
Ethical Capability-Building Program 1 72-73 Ex 1.26
Evoware - innovation in response to plastics by developing a range of food packaging that can be eaten 4 279 Ex 4.19
Existing jobs at potential risk of automation 3 216 Fig 3.11
Experience of a small accounting firm that moved to cloud computing 2 102-103 Ex 2.11
Factors driving the uptake of integrated reporting 4 330 Ex 4.41
Finance Inclusion - Key Figures 2 144 Fig 2.11
Finance strategy, linked to company’s purpose and ambition 1 22-23 Ex 1.7 & Fig 1.8
FlowHive - crowdfunding campaign 2 125 Ex 2.24
Food Delivery Service 2 108-109 Ex 2.16
Food price index 4 258 Fig 4.4
Fraud 1 61 Ex 1.24
Free (Dropbox) & Freemium (Spotify) Business Models 2 105-106 Ex 2.13 & 2.14
Freiburg Cup - Reusing 4 280 Ex 4.22
Functions of organisational culture 3 173 Table 3.1
Future-Focused Accounting Firm 2 91 Ex 2.3
Gender Equality in Accounting 3 192-193 Ex 3.11
Global social media use as at January 2022 5 389 Fig 5.12
Google the Best Place to Work (For Some) 3 166-167 Ex 3.2
Grameen Bank (Microfinance) 2 142 Ex 2.34
Herzberg’s motivation-hygiene theory 3 165 Fig 3.1
Hikurangi Cannabis Company 2 125 Ex 2.25
Hospitality 2 115 Ex 2.21
Hot Desking 3 165 Ex 3.1
How Much Faster? 3 217 Ex 3.20
How wrong projects can go - Cost Blowouts for Queensland Projects 1 33 Ex 1.13
Impact Investing 4 330 Ex 4.41
Key Words M Page Example/Table
Incremental Innovation - Payment System 2 88 Ex 2.1
Indian Pharma 1 32-33 Ex 1.12
Innovation in business 2 88 Fig 2.1
Instant Collaboration / Instant Distraction 1 53 Ex 1.22
Insurance Partnership 2 146 Ex 2.36
Integrated Reporting 1 31 Ex 1.10
Internships 3 181-182 Ex 3.7
Japan's Corporate Governance Code 5 359 Ex 5.6
Key benefits of social media 5 382 Fig 5.11
Key business issues in the Asia–Pacific region 1 14-16 Table 1.3
Key drivers of the offshore outsourcing of finance activities 2 95-96 Ex 2.6
Key stakeholder contributions and value derived from partnerships 4 262-263 Table 4.1
Kiva (crowdfunding) 2 145 Ex 2.35
Klick 3 168 Ex 3.3
Knowledge Management Systems 1 44 Ex 1.16
Knowledge sharing — key questions and related processes and practices 3 227-228 Table 3.7
Knowledge Sharing at the Reserve Bank of New Zealand 1 45-46 Ex 1.17
Knowledge-sharing processes and technologies 3 223-224 Table 3.6
Knowledge-sharing toolkit model 3 228 Fig 3.12
Land Management & principles of the mitigation hierarchy (Natural Capital) 4 316 Ex 4.39
Leadership grid 1 66 Fig 1.19
Leadership grid of transactional and transformative leadership behaviours 1 68 Fig 1.20
Levels of analysis in studying organisational culture 3 173 Fig 3.4
Live Streaming - Shareholder Meetings 5 391 Ex 5.21
Machine Recruiters 3 168-169 Ex 3.4
Major global suppliers in offshoring of finance and accounting 2 97 Fig 2.4
Making ethical decisions when confronting an ethical dilemma - Checklist (7steps) 1 62 Fig 1.17
Management Accountants and Sustainability 4 303 Ex 4.32
Management of Supply Chain Issues - Apple 5 345 Ex 5.2
Mandatory Sustainability Reporting - Australia (Corporations Act 2001, National Greenhouse and Energy Reporting 4 310 Ex 4.36
Act 2007, ASX - Listing Rule 4.10.3)
Mandatory Sustainability Reporting - Canada (Annual Information Form, Canadian Environmental Protection Act 4 310 Ex 4.36
1999)
Mandatory Sustainability Reporting - China (Environmental Information Disclosure Act 2008) 4 311 Ex 4.36
Mandatory Sustainability Reporting - Denmark (Danish Act) 4 310 Ex 4.36
Mandatory Sustainability Reporting - Indonesia (Indonesia Financial Services Authority) 4 311 Ex 4.36
Mandatory Sustainability Reporting - Norway (Corporate social responsibility) 4 311 Ex 4.36
Mandatory Sustainability Reporting - US (US Environmental Protection Agency proposed a mandatory GHG 4 311 Ex 4.36
reporting rule, SEC)
Marketing campaign metrics 5 376 Fig 5.9
Maslow’s hierarchy of needs 3 183 Fig 3.6
Meadow Mushrooms 4 250 Ex 4.2
Model of the communication process 1 48 Fig 1.13
Model of the communication process - Application 1 50 Ex 1.21
Network diagram of social capital 3 171 Fig 3.3
No Interest Loans Scheme (NILS®) Program 2 147 Ex 2.37
Odd Bunch - Reducing Food Waste 4 280 Ex 4.21
Offshore outsourcing program implementation (11 steps) 2 97 Fig 2.3
Oil Price Volatility 4 252 Ex 4.3 & Fig 4.3
Open Salary Approach 5 362 Ex 5.8
Organisational stakeholders 5 351 Fig 5.4
Origin Energy 5 373-374 Ex 5.14
Other debt financing sources 2 120 Table 2.4
Outland Denim 2 133-134 Ex 2.28
Outsourcing Tax Compliance 2 93 Ex 2.5
Pay and Perks - Compensation - Talent Management 3 184-185 Ex 3.9
PayPal 2 109 Ex 2.17
People and Planet Positive - Buy-Back and Recycling (IKEA) 1 40 Ex 1.15
People issues faced by contemporary business leaders (People Dimension & Business Dimension) 3 235-236 Table 3.8
People management concepts 3 169 Fig 3.2
Poor approach to addressing a crisis 5 412 Ex 5.29
Power sources 1 65 Fig 1.18
Problem of fake reviews on Amazon marketplace -> introduced a filtering system based on AI algorithms 5 411 Ex 5.28
Problem-solving process 1 43 Fig 1.12
Project Caesar 5 408 Ex 5.26
Key Words M Page Example/Table
Provision of strategic advice - Client behaviour & Potential approach 1 17 Table 1.4
Putting a ‘personal’ face to an organisation and its leadership 5 384 Ex 5.17
Questionable ethics in the e-trading industry 1 77-78 Ex 1.29
Race Together Campaign - Starbucks 5 369 Ex 5.12
Radical Innovation - Content Production 2 89 Ex 2.2
Rebuild corporate trust 5 398 Ex 5.22
Rebuild its reputation following the scandal - Volkswagen 5 413-414 Ex 5.30
Rebuilding Uber 2 153-154 Ex 2.40
REDcycle - Recycling 4 281 Ex 4.23
Reef - one asset to Australia’s economy (Natural Capital) 4 315 Ex 4.38
Rehabilitation certification 4 316 Ex 4.39
Reliability of sustainability reports - some companies adopt a two-sided culture — a culture of reporting that 5 407 Ex 5.25
focuses on values and goals that match external stakeholders’ ideals and a culture of practice that
focuses on short-term profitability and cost minimisation.

Remuneration Strategy 5 347-348 Ex 5.3

Renewables (Hydroelectricity & Wind power) - New Zealand 4 256 Ex 4.5
Reputation domains 5 396 Fig 5.14
Retail 2 114-115 Ex 2.20
Rezchain process of verifying of hotel reservation data 5 368 Fig 5.8
Risk considerations - supply chain risk 1 38 Fig 1.11
Rivers Run Dry - when different usage needs are not balanced and managed 4 267 Ex 4.11
Robot Colleagues (Cobot) 3 218-219 Ex 3.22
Robot Tax 3 217 Ex 3.21
SDG focus issues for accountants (SDG:sustainable development goals) 5 358 Fig 5.5
Service teams versus Traditional client service 1 14 Fig 1.5
Sham contracting 3 207 Ex 3.16
Sharing economy uptake between industries 2 112 Table 2.2
Skunk Works 1 47 Ex 1.19
Small Accounting Firms - Strategies 2 99-100 Ex 2.8
Small and Large Social Ventures 2 134 Ex 2.29
Smart Contracts 5 367 Ex 5.11
Social Accounting 2 139 Ex 2.32
Social licence to operate 5 349 Fig 5.3
Social media national status (early 2022) 5 381-382 Table 5.4
Social media platforms in business (Australia/International) 5 381 Fig 5.10
Social media technologies and their applications 5 380 Table 5.3
Social Media: Building an Online Community for Small Business 5 383 Ex 5.16
Social Shift Program - Staff as Brand Advocates 5 385 Ex 5.19
Sources of funding by development stage and risk level 2 123 Fig 2.7
Specific planning needs of New businesses 1 29 Ex 1.9
Spoke-and-wheel & Systems thinking 5 419 Fig 5.17
Stakeholder Engagement and CSR 5 417-418 Ex 5.31
Stakeholder interests in corporate sustainability 5 406 Table 5.7
Stakeholder management recommendations 5 418 Ex 5.31
State-Buying Programs, Subsidies and Rationing Systems (Thailand & Venezuela) 4 264 Ex 4.9
Staying in the Question (Mykel Dixon) 1 46 Ex 1.18
STEM (science, technology, engineering and maths education) 5 373 Ex 5.14
Stimulate business investment in innovations - Recommendations 2 129 Fig 2.9
Story collecting’ initiative - Experian’s Internal Communications 5 362 Ex 5.7
Subscription model 2 92 Ex 2.4
Subsidy Outcomes / Distortions 4 263-264 Table 4.2
Supporting Growth While Instilling Financial Discipline - accountant w a very broad range of responsibilities 1 18 Ex 1.5

Sustainable Development Goals mapping 4 326 Table 4.9

Sustainable Investing 4 329 Ex 4.41
Sustainable Supply Chain Management - Global Reporting Initiative (GRI) Standards 4 301 Ex 4.31
Switzerland’s carbon tax 4 290 Ex 4.26
Task Force on Climate-Related Financial Disclosures (TCFD) 4 295-298 Ex 4.29
Technologies likely to be adopted by 2025, by share of companies surveyed, selected sectors 1 5 Fig 1.2
Through the Glassdoor 3 183 Ex 3.8
Toshiba’s environment website 5 392 Fig 5.13
Traditional project management process 1 35 Fig 1.10
Traditional roles and domain of the professional accountant in business 1 21 Fig 1.7
Trust dashboard 5 400-401 Table 5.5
Key Words M Page Example/Table
Trust Falling Despite Increasing Transparency 5 397-398 Ex 5.22
Trust Index - average per cent trust in NGOs, business, government and media 5 399 Fig 5.15
Turn advice into results in the area of cash flow collection 1 19-20 Ex 1.6
Twitter - repercussions of a data breach on a social media platform 5 409-410 Ex 5.27
Types and sources of assistance in Australia 2 130 Table 2.7
Uber - affected by differing regulatory environment in differene countries -> changes in the regulations in 1 32 Ex 1.11
some markets.

Uber Eats 3 207-208 Ex 3.17

Uber’s business model 2 90 Fig 2.2
Understanding Risk in a Complex Environment 1 38 Ex 1.14
Understanding SME Issues and Focus 1 14-16 Ex 1.3
Unilever - Reducing Water Use Across the Value Chain 4 269-270 Ex 4.14
Unilever - Sustainable Supply Chain 4 300-301 Ex 4.30
Unilever - Sustainable Supply Chains (CDP) 4 313 Ex 4.37
US trends: the ethics landscape (2000–20) 1 74 Fig 1.21
Value-Based Billing 1 16-17 Ex 1.4
Value-based leaders 1 77 Ex 1.28
Venture capital funding in Australia - compared to other countries and the OECD average 2 121 Fig 2.6
Virgin Flair - age discrimination 3 198 Ex 3.13
Vision for the future of finance 1 20 Fig 1.6
Voice of the People - to manage the public perception of its climate change conference 5 404 Ex 5.24
Water use (worldwide) 4 266 Fig 4.5
Web-Based Newsletter / cloud-based internal hub 5 372 Ex 5.13
WEF's New Vision for Agriculture (NVA) 4 262-263 Ex 4.8
Weick sensemaking model 3 178 Fig 3.5
Whistleblowing 1 75-76 Ex 1.27
Women employed in legal and accounting activities (2019) 3 193 Table 3.3
Women in leadership by region 3 192 Table 3.2
Women in leadership, Australia 3 192 Fig 3.9
Women in the workforce, globally, 2021 3 191 Fig 3.8
Woolworths’ customer loyalty program Rewards 5 365-366 Ex 5.10
Workforce participation by gender 3 191 Fig 3.7
World GHG emissions by sector 4 287 Fig 4.8
Key Words Page Accountant Roles
adding value 1.3 17 An accountant can add value by evaluating the financial consequences and strategic outcomes of
capital investments. An accountant who can recommend new products and services and can help to
support marketing efforts based on external economic analysis will be more useful than one who can
only provide the estimated cost structure and basic revenue forecasts.

adviser 1.2 9 understand the size, type, purpose and vision of an organisation. Without a clear understanding of its
structure and style, it is unlikely that an adviser will be able to identify all of the relevant issues and
provide appropriately tailored advice.
age diversity 3.4 194 Accountants must consider the organisation’s age profile to plan for knowledge retention, skill
development and leadership.
agency relationship 5.3 347 + Accounting plays a large role in monitoring and bonding mechanisms.
+ Accounting information is used to design the contracts to bond agents’ behaviour & to monitor
performance against those contracts.
authenticity divide 5.9 407 prevent discrepancy between what is said and what is actually done
biodiversity 4.4 277 accountants are essential in helping to gather information about the effect of the loss of biodiversity
and how it affects the organisation. Furthermore, accountants must become & remain well informed
in order to advise organisations on how best to adapt their operations to the constraint of dwindling
worldwide resources.

business models 2.1 91 accountant develops a sound understanding of business model innovations so they can help clients
understand and make decisions about their business model, and so they fulfil their accounting function
in relation to unconventional business models.
business owners 1.2 7 • become a long-term partner in the strategic management of the business
seeking accountants • understand that the purpose of looking at the past & present is to predict and shape the future
• communicate clearly
• can access expertise from a network of contacts
• respond in real time.

business plan 1.6 27-28 + Financial Projections: Basic Assumptions and Information, Financial Forecasts, Analysis of Financial
Forecasts.
+ Beyond The Financial Projections: business goals, operation plan, etc.
business successions 3.5 202 + providing technical information on the business’s current performance and projections for the
and exits future, as well as advice on taxation and business structures.
+ accountant also needs to have behavioural skills to recognise these emotional links and inter-
relationships, to ensure that communications are sensitive to the situation when gaining the
stakeholders’ acceptance of the accountant’s recommendations.

Capital and 1.2 10 Table 1.2

organisational
structures
carbon-constrained 4.8 295 + aware of current and potential initiatives in place in the countries in which the entity has operations.
economic environment + develop models and forecasts of the carbon price based on their current and expected short- and
long-term carbon footprint. This analysis may involve examining the impact of electricity and gas on
business overheads, the level of processing required in the country (e.g. in Australia), and also
transportation.
+ In parallel, must consider pricing issues of the carbon price on the goods and services provided and
any compensation that may be applied for.
+ must also examine the potential for investment in low emissions technologies, consider risks and
opportunities (e.g. in long-term supply contracts), budgeting, purchasing and surrendering of permits,
supply chain management, measurement of emissions, disclosure, assurance of emissions data,
financial reporting, taxation, and general business issues related to staffing and responsibilities for
compliance.

challenges for 2 ensure they add value to any organisation they work for or with. Roles that help businesses perform
accountants in better — that contribute to better business decisions — are immensely valuable. Such roles are broad
changing business in responsibility and deeply rewarding.
environment
Key Words Page Accountant Roles
collaboration 1.14 56 accountants should use the most appropriate interpersonal communications technologies available to
them, depending on the situation and the environment.
Adopting modern communication technologies can improve the speed and accuracy of work and
potentially reduce costs. This is important for accountants working with each other and with others in
the workplace. When working with others, it is important that communication is as easy as possible;
therefore, accountants should adopt the tools already in use by the people in any organisation they
need to work with.
Accountants can benefit from the use of collaborative tools — either to work with their colleagues or
to engage more closely with people that need financial information and advice.

communication 5.6 369 Communication of information, both financial and non-financial to a range of stakeholders &
audiences.
Much of the information accountants need to communicate is of great importance to the decision
making of internal and external stakeholders -> it is critically important to ensure that messages are
interpreted as intended and, where appropriate, acted on in a timely manner.

communication - 5.6 375 Accountants may need to consider assessing the effectiveness of their own communications; they may
assess results also be called upon to assess the cost effectiveness of other communication campaigns.

communication - 5.6 371 + Technical terms are removed, if this can be done without changing the message, or explained where
encode message for they are critical to the message.
target audience + Need to ‘cut through’ the background noise and day-to-day business of the audiences.
For high level executives: key elements must be able to be read and understood within a few seconds.

communication - reach 5.6 371 for accountants to communicate effectively to people outside their field of expertise, the information
target audience must be presented in a way that will attract their attention.

communication - risk 5.6 376 Accountants need to consider these security issues as the distribution of organisational financial
information is often restricted both by commercial considerations and by government regulation.

communication 5.6 370 + Large organisation: professional communications person or team will be involved.
exercise - formal + Smaller organistions: assistance may be limited.
communication with 1.13 51 you will not merely dispense advice and information; you will collaborate with your clients, seek
clients & colleagues feedback, nurture interaction and respond to questions. You will need to have the right information
and advice, and you will need to be able to communicate it so it is readily understood by the receiver
of the information, who commonly will not be an accountant.

communication with 1.13 51 Company accountants wanting to play an expanded role in their organisation also need to be able to
clients & colleagues communicate effectively with colleagues and leaders
Communications and 1.2 10 Table 1.2
information
technology
decision making - 4.14 329 There is a growing role for accountants in helping businesses deal with the direct effects of legislation
considering and with broader sustainability issues.
sustainability When making capital investment decisions, accountants are now being forced to consider
sustainability issues in addition to the financial factors.
Accountants are becoming more aware of sustainability issues and their potential impact on capital
investment decisions. They are taking sustainability issues into account because of the risk that these
issues could affect a particular investment, the business’s name and its reputation if investments have
negative sustainability effects.

energy consumption 4.1 249 • help the business identify, measure and analyse current energy consumption
• analyse and communicate the financial and non-financial costs associated with energy consumption
• analyse and communicate potential future developments and risks in financial and non-financial
energy costs
• analyse how changing energy consumption may affect other aspects of the business.
Key Words Page Accountant Roles
entrepreneurial 1.3 19 Access to funding - difficult process.
activity Business plan documentation, revenue and cost forecasting, scenario analysis, risk management, and
identification and management of intangible assets are all essential components of entrepreneurship.
Ability to balance both compliance and performance roles.
Provide an objective evaluation of performance, governance, structures and systems, while still
encouraging innovation.

entrepreneurship 1.3 18 less focus on control and more focus on the successful implementation of new ideas and change.

environmental 4.10 303 Accountants are aiming to improve outcomes for all stakeholders, and the focus should be to obtain
management and exploit competitive advantages in an ethical manner.
accounting Integrating environmental analysis into management accounting helps to achieve this.
ethical challenges 1.15 60 • Conflicts of interest.
faced by accountants • Use of confidential or inside information to profit, or failure to adequately protect confidential
information.
• Pressure from clients or organisation superiors to manipulate the figures to present a false report.
• Pressure to not disclose relevant information. Similar to manipulating the figures, the failure to
disclose relevant information.

ethical corporate 5.4 357 Accountants have a responsibility to act as ethical stewards, contributing to an ethical corporate
culture for culture.
sustainability Accountants need to identify, measure, analyse and report sustainability information to support
stakeholder decision making.
Management accountant’s role involves communicating how organisations create value.
Accountant helps transition the company from a focus on shareholder value only to a broader
perspective of shared value for a range of stakeholders.

external 5.5 366 Accountants may be responsible for providing advice in this channel where issues of pricing are
communications - involved and on the financial aspects of specific marketing campaigns.
market & customer There is also an opportunity for marketing and accounting to work more closely together in:
• determining the success of a marketing campaign by measuring and comparing the costs of the
campaign and the change in sales that resulted.
• developing cost-effective long-term marketing strategies and metrics for their performance.
• tracking costs and estimating costs of planned campaigns.
• analysing ratios between costs and sales to inform decision makers.

Accounting firms also engage in communications with their own customers. Much of this
happens during the provision of services, but as part of marketing the firm, other communication
efforts should occur.

external 5.5 369 will vary depending on the type of public communications the company is undertaking.
communications -
public
external 5.5 368 A key area where accountants will have input to external communication is in the production of
communications - financial
regulator & & related reports for publication.
government

external 5.5 364 Accountants will often play a central role in preparing at least the financial aspects of shareholder
communications - communications.
shareholder
external 5.5 366 Accountants may be engaged in this channel in financial negotiations of supply.
communications -
supply chain
Financial management 1.2 10 Table 1.2

food 4.2 260 Accountants should consider food security and distribution issues, as well as the pressures for
agricultural land and resources (e.g. water), from several perspectives.
Key Words Page Accountant Roles
food shortage 4.2 265 It is important for private sector accountants to be aware of the broader ramifications of their
decisions. When a company creates policies that have an impact in these areas, it is important to
include non-financial issues in the analysis.
2 main considerations:
1. It is important for strategists to consider the effect of food shortages, changing food prices,
changing diets and related issues. For example, as food prices rise, individuals spend more of their
disposable income on food, leaving less for other products. This can significantly alter spending and
savings patterns, affecting a large range of industries, from telecommunications to banking. Therefore,
even if your organisation is not directly involved in food-related industries, it may still be affected, and
planning and analysis of these effects is recommended.
2. As accountants, we are used to providing detailed financial analysis to support decision-making.
However, it is also important that we discuss the political, social and environmental impact that our
organisation’s decisions may have. For example, due to social and environmental concerns, a lending
institution may decide not to finance a biofuel producer. This type of decision typically involves an
organisation’s interaction with its industry. However, other food-related business decisions may
include actions within the organisation. For example, a simple place to start might be ensuring that
food waste is minimised in corporate functions and office kitchens.

funding methods 2.9 119 give entrepreneurs accurate advice about decisions
future focus accountant must also have a broader understanding of the business’s vision and strategic
goals. Crucially the accountant must understand how they contribute to the business’s overall strategy
and appreciate that this will constantly change, due to external factors, internal factors and the
decisions of the accountant themselves. A future-focused accountant will always reflect on the value
they add to their clients or employer and seek opportunities to enhance that value.

future-focused 3.8 218 needs a plan to ensure their ongoing value in a highly automated business environment
accountant
future-focused 2 a strategic business adviser.
accountant This requires the development of a portfolio of business, behavioural and leadership skills alongside
the accountant’s technical skills.

7 able to provide strategic advice to help the business understand its circumstances and grow.

future-focused 1.10 36 General knowledge of many business areas is encouraged, with the accountant then focusing on
accountant's skills particular skills that best match their role and that facilitate the future roles they aspire to. Additional
business skills worthy of special mention are technology, risk management and sustainable business
development.

gender diversity 3.4 193 Provide a view that bridges the gap between financial, HR and wider social concerns.
In Australia, the Workplace Gender Equality Agency (WGEA) provides a number of tools & resources
that may be useful to accountants offering advice and assistance to organisations.
HR - performance 3.3 179 Performance management also needs to support the organisational structure. HR needs to decide
management what the relevant job standards are and how to evaluate performance. Accountants can often provide
assistance in this regard.
HRM 164 Accountants may therefore find themselves involved in HRM as managers, leaders or co-workers. They
may be called upon to contribute information and advice to support strategic HR decisions, and of
course, they will be personally subject to HRM decisions and policies.
human sigma 3.2 172 Human sigma enables accountants to produce data and therefore measures of employee–
customer encounters.
Accountants can help to analyse and interpret financial information from data about these
interactions. They can also observe trends and conduct analyses to measure performance and identify
opportunities for improvement in the employee–customer experience. These data will assist the
accountant in providing authoritative advice and assist management in making informed decisions that
will affect customer-facing employees
Key Words Page Accountant Roles
incorporation of 4.14 330 Accountants have a central role in the increasing incorporation of sustainable practices into business.
sustainable practices + First, accountants understand how businesses work and so are well situated to identify how to most
into business. efficiently use resources and to analyse alternative approaches designed to use resources sustainably.
+ Second, accountants can analyse and communicate the consequences of decisions around
sustainability.
+ Third, accountants are trusted professionals and decision makers will put weight on the information
and analysis they provide.

intellectual capital 3.2 170 accountant will benefit from recognising the broader notion of value to be derived from
understanding the situation of the business within its external environment, and by incorporating the
capabilities provided by its people and its configuration.
knowledge sharing 3.9 222
leadership 81 • The accountant can be a formal or informal leader in the organisation.
• As accountants increasingly engage across the entire business and take on a more strategic role,
they will increasingly need to perform informal leadership roles.
• In leadership roles, accountants can adopt a sustainable leadership approach.

leverage technology 1.10 37 While most accountants are unlikely to choose to learn to code or design data structures, they will
need to collaborate with the people who do undertake those tasks.
+ For process automation to work properly, accounting processes must be described in exacting detail.
+ For artificial intelligence to function, it must learn the structure, nature, context and meaning of the
data used in the business.
Accountants are the experts in this area who will be responsible for communicating the deep
knowledge of the business that will be translated into artificial intelligence systems.

M4 332 The accountant has an important strategic role to play in providing information, analysis and decision
support to help business move to sustainable operations to ensure future generations can also meet
their needs and enjoy a high quality of life.
M4 - Part A Summary 285 it is important for accountants to take a leading role by collecting and analysing relevant information,
assessing alternative ways of performing organisational activities, providing recommendations for
improvement and guiding the implementation of those changes.
M4 - Part C Summary 331 While their role with financial information is understood, accountants also have a significant role to
play in ensuring that the increasing demands from society for relevant and reliable non-financial
information are met.
Accountants are well-placed to identify and analyse relevant information, assess alternatives for
greater sustainability and report and recommend paths of action to stakeholders to achieve a shift to
sustainable business practices.

M5 - Part A Summary 360 accountant has an important role in providing objective information, analysis and advice to support
managerial decisions and in reporting to external stakeholders to provide information to support their
decisions about the company.

M5 - Part B Summary 377 accountants have a role to play in producing some communications i.e. reports to shareholders,
while in other communications they may take on analytical or advisory roles i.e. helping the marketing
department or client’s budget for a campaign and later assess the return on their efforts.
Knowledge of the legal, ethical and regulatory parts of data use and analysis is important for
accountants, particularly those in analytical and advisory roles.

M5 - Part D Summary 414 The accountant can contribute to effective reputation management by:
• ensuring that reputation risk is included in organisational risk analysis and is considered as part of the
internal audit’s scope
• influencing the alignment and transparency of remuneration policy
• ensuring that appropriate non-financial impacts are considered when financial information is used
for
internal decisions
• remembering that financial performance and governance are core drivers of reputation.
Key Words Page Accountant Roles
microfinance 2.19 150- focus on evaluating social outcomes.
151 + External reporting obligations
+ Transparency for stakeholders
+ Listing & managing listed MFI
+ Tax obligations
+ Financial accounting obligations
+ Investment evaluation
+ Risk management

monetary 4.10 304 Once we identify the key drivers and causes of these environmental costs, we can start devoting
environmental attention to making improvements.
management MEMA: focuses on costs incurred and costs that may be avoided.
accounting

natural resource 300 + Accountants, as strategic business advisers, need to be able to help to capture, explain,
communicate, report and act on the impacts on the whole of the business, including monetary,
physical and social impacts.
+ Accountants spend a significant amount of time designing and implementing performance
measurement systems. Although these systems often focus on the efficient and effective use of
resources, they may not be broad enough to capture all relevant information, especially throughout
the supply chain.
+ Accountants need to consider whether they should be recording and reporting the cost
of externalities. Accountants need to be prepared for the likelihood that some of externalities will
become internal costs (e.g. carbon costs).
+ Frameworks, such as the Global Reporting Initiative guidelines for sustainability reporting, as well as
attempts to produce triple bottom line and integrated reports, help accountants perform their role in
this area. Integrated reporting captures financial and nonfinancial elements of business performance
and aims to provide a more holistic and future-oriented view of the organisation.

outsourcing initiatives 2.2 93 accountant has an important role to play in assessing, implementing and monitoring any outsourcing
initiative. It is critical the accountant understand the processes, business models, drivers, advantages,
disadvantages and options for implementation.
people management 3.14 - 234- Providing advice
3.15 239 Communication
Employee engagement
Decision making & issue resolution
Evaluating initiatives

People management 1.2 10 Table 1.2

physical accounting 4.9 300 involves recording and reporting on the use of different types of physical materials and the volumes
used, consumed or transformed. This includes considerations of waste, commercial and
environmental sustainability, continuity of supply chains, and the effective use of resources. The social
and ethical outcomes of the use of physical resources must also be considered. Major items that will
be included in any analysis will be water, energy and non-renewable resources.

physical environmental 4.10 303 the use of tools to record material, energy and water flows, as well as incorporating physical amounts
management into budgets, forecasts and capital investment evaluations. Performance evaluation in regard to
accounting environmental criteria, developing systems that minimise pollution and waste and improve recycling.

present information 1.13 54 Accountants have long been report writers. Increasing computing power has enabled new forms of
presentation, including sophisticated interactive visualisations. Accountants should harness the power
of these to maximise the effectiveness of their communications — making sure their audience properly
understands what they are saying.

Productivity and 1.2 10 Table 1.2

operations
professional 1.2 10 • make the right decisions about the services that they perform
accountant • deliver services with professional competence and due care.
project management 1.9 33 as valuable project enablers rather than gatekeepers.
project methodologies 1.9 34 accountant should also audit each segment of the project to ensure the relevant business controls and
- traditional project rules are implemented at each stage.
management accountant can assess the performance of the risk management measures and reflect on their
performance as a project enabler.
Key Words Page Accountant Roles
provide strategic 1.2 9 accountants need a range of business, behavioural and leadership skills, including business acumen,
advice the ability to communicate, influence and negotiate, and the ability to help shape organisational
culture.
regulatory 1.8 32 provide advice on a number of areas, including, record-keeping requirements, tax rules & reporting
environment/ requirements.
regulatory changes
Accountants can participate further in the regulatory regime by making submissions to exposure
drafts and public consultation processes.

renewable source 4.1 256 The accountant needs to be able to analyse the costs and benefits of accessing power generated from
renewable sources, and to identify and analyse the consequences of a possible broad transition of the
economy to renewable energy sources.
reputation ensuring information and analysis provided to decision makers in the company is accurate and
management supports good decisions.
responsible for the financial information provided to external stakeholders, including shareholders and
regulators. can play a broader role in reducing reputational risks: ensuring actions proposed within the
organisation are properly funded.
contribute to effective reputation management:
• ensuring that reputation risk is included in organisational risk analysis and is considered as part of the
internal audit’s scope
• influencing the alignment and transparency of remuneration policy
• ensuring that appropriate non-financial impacts are considered when financial information is used
for internal decisions
• remembering that financial performance and governance are core drivers of reputation.

Risk and internal 1.2 10 Table 1.2

controls
risk managememt 1.10 37 Accountants play a leading role in risk management. Strategic risk management is among the primary
capabilities organisations will demand of their finance departments or advisers in future.

SDG focus issues 5.4 358 Figure 5.5

+ Governance
+ Partnership
+ Climate action
+ Supporting innovation and infrastructure.
+ Financial reporting

SMEs 3 accountants were SMEs’ key adviser during the pandemic, but there was little evidence of widespread
leverage of that as an opportunity to advise clients on how to improve their business position for
future success.
accountants understand how the components of a business combine to serve the organisation’s
strategic vision. As technology increasingly takes over the number-crunching and employers and
clients seek more value from their resources, accountants have an opportunity and a need to create
value by focusing more on analysis, communication and strategy, and by serving as strategic advisers
and decision partners.

social media 5.7 390 + Accountants need to be aware of the potential benefits of the effective use of social media to their
own communication inside and outside their organisation, as well as of the wider benefits for the
organisation.
+ Accountants in private practice can gain benefits from social media as both a marketing tool and a
customer engagement tool.
+ Accountants must also be aware of potential financial benefits and risks that an organisation may be
exposing itself to and the methods for managing these.
+ When preparing financial calculations for social media, such as return on investment, the accountant
must not just assess the real costs and tangible benefits, but also assist the organisation in determining
suitable methods of quantifying intangible benefits.
Key Words Page Accountant Roles
stakeholder 5.4 355 + Internal accounting information (management accounting) provides a significant part of the
management information on which company operations will be decided.
+ Accounting information and strategic advice provided to managers for decisions that affect
stakeholders will also involve a component of risk management.
+ Accounting also provides the means for outsiders to monitor the corporation and to assess how well
those responsible for managing the corporation have performed

supply chain 5.4 357 + Accountants also have a role to play in the analysis and management of a company’s supply chain to
management ensure supply chain partners operate in accordance with the business’s own values and those of its
stakeholders.
+ Accountants should work with relevant business functions to develop performance measures and
establish reporting systems addressing human rights within the supply chain.
+ Accountants can also provide resilience against corruption in the supply chain by identifying potential
risks, ensuring due diligence is performed on proposed contracts and monitoring & reporting on
ongoing risk management.

Sustainability 1.2 10 Table 1.2

sustainability 4.5 278 Accountants are best-placed to provide information and analysis, and ultimately to have significant
innovation decision input into sustainability decisions.
making
sustainability of critical 4 249 Accountants are well placed to gather, analyse and report financial & non-financial information related
resources to contemporary pressures that are changing the relative costs and benefits of different resource uses.
As such, accountants can play a key role in how the business sector responds to dwindling availability
of natural resources and pressures to operate sustainably.

teleworking - define 3.6 209 Accountants play a valuable role in creating structures that help to demonstrate trust. This includes
trust switching the focus away from supervising workers and towards focusing on establishing goals and
measuring performance against targets.
teleworking - 3.6 211 It is equally important for accountants to understand the importance of teleworking for other staff
evaluation within the organisation.
Accountants must be able to evaluate teleworking and virtual working initiatives appropriately, taking
into account the full picture of the benefits gained from them, as well as any costs involved. The focus
should be much broader than focusing on inputs (i.e. hours worked), with there being a greater focus
on outputs and outcomes.

transforming client 1.3 13 understand their clients’ changing needs and respond accordingly.
relationship accountant or firm needs to build up their client base — through sales and marketing. To expand the
service offering, accountants need to be able to communicate the new services that they are able to
provide, explain why these services are useful to the client, and demonstrate that the pricing is
appropriate. Marketing skills and non-billable time building client relationships become essential, and
these skills need to be developed and refined.

turn advice into results 1.3 19 Example 1.6: creating not only a set of financial results but systematically improving profits, cash flows
and business efficiency.
water 4.3 269 + Water accounting.
+ Accountants need to be able to help organisations contribute to solutions for water sustainability.
+ By helping others effectively understand the real cost of water & its importance, accountants can
help improve sustainability efforts.

Weick model / 3.2 177 accountant can use sensemaking as a practical tool for addressing complex problems, for
sensemaking understanding how others may deal (or fail to deal) with complexity & ultimately, to help others with
their own sensemaking. This adds an important dimension and understanding to the tools that an
accountant has available, particularly as behavioural skills become a more valued part of an
accountant’s competencies.
Understanding the process of sensemaking provides an accountant with a powerful tool for
understanding a business problem and a stronger base from which to make decisions and offer
support and advice.
 Questions Answer
1.1 Role of accountants is Change in the accounting profession is being driven by the coming together of opportunity and need.
evolving in a changing Drivers of change in accounting relate to those that enable innovations within accounting and those that
business environment. are customer driven.
Briefly discuss the drivers 1. Innovative business and finance models
of change having an + A business model describes how a business defines, creates and delivers value.
impact on the accounting + Creating & maintaining a competitive advantage requires a business to constantly revisit, refine and sometimes
profession. reinvent its business model.
+ Dominant business model innovations include outsourcing, the virtual enterprise, the cloud, and platform and
sharing economies.
+ Social entrepreneurship represents a different type of business model, with the focus on delivering social outcomes
such as the alleviation of poverty. New financing models include crowdfunding and microfinance.
2. A transforming workforce
+ One of the biggest changes in accounting, which is already emerging and will gain pace in the coming years, is the
use of automation and artificial intelligence.
+ A broader human resource management issue: how work is increasingly structured in the ‘gig economy’, with
workers joining an organisation for specific work and then moving on. This changes the nature of
organisational culture and provides challenges for traditional workplace relationships and traditional
career development paths. It also enables small firms to access other professional expertise to provide a more
comprehensive and integrated service than the firm could deliver by itself.
3. The future of natural resource management
+ Accelerated consumption exacerbated by an increasing world population intensifies the issue of sustainability & as
public concern grows about the exploitation of natural resources, regulators and businesses have responded by
incorporating accounting for natural resources, environmental impacts and social impacts into their reports.

4. Stakeholder management.
+ In an increasingly connected world, businesses must pay unprecedented attention to managing their interactions
with stakeholders that host and support them.
+ Stakeholders have competing, sometimes conflicting, interests and businesses must find acceptable balances
between those interests.

1.2 ‘The business advisory In periods of change and hardship, many organisations realise that they cannot continue operating as they
industry thrives during have done previously. Business models that worked in the good times may not be relevant when times are
periods of business tougher. Many organisations find that, in difficult times, there are additional pressures from:
change and hardship’. • shareholders — to continue generating sufficient returns
Explain why this may be • employees — to provide tolerable working conditions and guarantee security of work
the case. • suppliers — to increase/maintain orders and margins
• customers — who are buying less, and on reduced margins.
• regulatory changes (e.g. new licensing regimes or new taxes) and changes in community expectations (e.g. relating
to the environment) can have a significant impact on organisations.
Organisations may not have sufficient resources or expertise to solve the underlying issues, or make
the required changes, and so typically they request assistance from external sources. By obtaining that
expertise externally, both the adviser and the organisation should benefit.

1.4 Outline why professional • Accountants provide a professional approach, such as having a service ideal, honesty, integrity & not acting in their
accountants are well own self-interest.
placed to provide • The technical abilities of accountants are based on a systematic body of theory and knowledge. They have gone
strategic advisory through rigorous education and training, which provides a base level of knowledge that leads to competence in
services (outside delivery of services.
the traditional areas of • Many technical skills are transferable — for example, the technical requirements of an audit (including setting the
cost accounting, financial scope, determining the approach to sampling, and obtaining and reviewing data) are often similar, despite the
accounting and taxation) reviewed data being of a different nature (i.e. physical measures instead of financial measures).
to organisations. • Accountants are often exposed to the whole of an organisation — finance, sales, marketing, human resources, IT,
legal, production, logistics and after-sales services. This knowledge is invaluable when assessing the impact of
potential decisions across different parts of an organisation, as well as its industry supply chain.
• Accountants are often exposed to several industries & similar problems that arise in different
organisations. The ability to transfer their knowledge of how similar problems have been resolved
elsewhere provides a valuable resource to clients who may have never experienced such problems.

1.5 What types of assistance + Data capture: Of both physical & monetary flows, to enable an accurate view of current operations
or advice could a + Analysis: Of both financial and non-financial information, to enable identification of activity drivers
professional accountant + Performance measurement: Includes establishing benchmarks and measuring progress towards goals & targets.
provide to improve + Process redesign: By applying process improvement tools to identify inefficiencies and bottlenecks,
productivity and reconfiguring activities.
for an organisation? + Resource control: Through budgeting and forecasting, as well as by designing and implementing
internal controls.
 Questions Answer
1.7 Outline the changing role + Management accountants provide a huge range of advisory roles, from creating strategy to costing analysis &
of the management restructuring, and from new product development to pricing and revenue models for mature products. Future-
accountant. focused accountants cannot remain in this model.
+ Modern finance professionals do more than perform financial analysis and managerial operations. They have direct
interaction with clients and provide decision making and strategy development. In addition to financial literacy,
accountants need interpersonal, business management, marketing and data visualisation skills to excel.
+ Finance professionals who can combine subject matter expertise with the right abilities, skills and
attitude to think more broadly and effectively challenge the existing strategies of business units to perform better are
likely to be nurtured and rewarded. Analytics, mathematics and technical skills will become commonplace, so that
finance specialists can also serve as data scientists or developers of the digital ecosystem.

Examples of the changing role of accountants include:

• connecting the dots as entrepreneurs — for example, by designing and implementing initiatives from a
comprehensive company perspective.
• serving as a guardian for stakeholders — for example, by safeguarding assets, providing transparency & ensuring
compliance.
• providing specialist expertise — for example, in accounting and taxation.
• owning processes and systems end to end — for example, by leveraging technology & automation.

1.8 (a) Outline four types of • Customer profitability analysis. Using activity-based analysis to determine the full cost of each
strategic advice that a customer (including cost of goods sold, sales time, customer service, delivery, logistics and aftersales
professional accountant service). This can determine the real profit that is generated by each customer, which can allow
could give to an customers to be segmented into groups according to profitability, and on how demanding they are on organisational
enterprise in relation to resources (e.g. sales personnel and after-sales service). The least-profitable customers can then be highlighted and
its customers. strategies for dealing with them can be created. These strategies may include educating the customer on the costs
incurred to service them and charging them for the services provided (menu-based pricing).
• Customer performance ratings and satisfaction. Developing reporting systems that capture important
measurements (such as delivery in full and on-time statistics), which should help to influence customer satisfaction
levels. Where ratings are not satisfactory strategies may be implemented to make improvements.
• Customer pricing analysis. Advice may be provided based on analysis from tools such as cost volume- profit analysis
and sales-mix analysis, which may be used to identify the most suitable
pricing structures and profitable mix of sales offering.
• Customer needs analysis. Advice on providing products and services that customers actually need
or desire. This may involve survey generation, the use of focus groups, or the use of social media
to canvass customer feedback. It also links into other customer-related areas of satisfaction and
pricing analysis, such that product/service features can be reviewed and priced appropriately to
satisfy customers and so generate maximum value for the organisation.

(b) Explain how that

advice might differ
depending on whether
an accountant was
advising a small,
medium or large
enterprise.

+ A smaller organisation may not have the computer systems, records or personnel to conduct a detailed customer
profitability analysis, performance measurement or scenario testing using pricing and sales-mix tools. The advice may
include support in setting up the systems and putting processes into place to conduct this type of work.
+ Medium to larger sized organisations are more likely to have accounting staff and systems in place so efforts may
be more focused on fine-tuning systems, advising on current best practice, and providing an independent review and
verification of current methods.
 Questions Answer
1.9 Outline four ways that • Working with their clients to create a service plan and revise the plan at least annually -> helps identify what the
accountants can build an client needs and prompts you to reflect on your strengths and weaknesses in providing that service.
understanding of their • Meeting clients regularly to discuss what services or products the client wants changed, improved,
clients’ needs and removed or added.
embed • Setting up a formal feedback mechanism to measure client satisfaction, thereby building a relationship with clients
that focus into the that enables them to tell you what they need. Asking clients how likely they are to recommend you to a friend, family
culture and actions of member or colleague on a scale of 1 to 10 is a useful technique to gauge satisfaction. Asking them to provide
their work. explanations of their response provides insights into the relationship from the client perspective.
• Continuing to develop your skills and network with other professionals to enable you to collaborate with experts
and specialists outside the profession.

1.10 Organisations perform + Operations involve ongoing, relatively routine work, such as preparing tax returns or helping a client establish
through operations & accounts.
projects. Differentiate + Projects are one-off efforts to achieve specific goals, such as moving a business’s accounting platform from company
operations & projects, servers to a cloud-based provider, achieving compliance with new regulations, applying a new technology, or
providing examples of undertaking a business acquisition.
each.

1.11 Suggest what the most + Sustainability is about meeting today’s needs without compromising the ability of future generations to meet their
important driver of own needs.
sustainability would be + For business to be sustainable over time it needs to be profitable, maintain customer satisfaction, maintain
and explain your product/service quality, maintain a good relationship with suppliers and have sustained responsibility for its actions
rationale for that have an impact on the environment and community.
its selection. -> Key drivers: competition for resources, climate change, economic globalisation, connectivity and communication.

1.12 Critical and creative (a) Critical thinking involves evaluating information -> develop an argument -> reach a conclusion or solve a problem.
thinking are required to It is essential when dealing with information that involves evaluating which information is relevant, questioning
properly understand and information where required, interpreting information and formulating recommendations or decisions based on logic.
respond to business It requires you to put aside bias and rely on objectivity.
challenges. An example of a decision that requires critical thinking skills is working through an ethical dilemma
Provide an example of a and considering the implications of alternative courses of actions.
decision that requires (a) (b) Creative thinking requires generating new ideas, thinking about something from a new perspective and making
critical thinking and (b) new connections between ideas. It is crucial to problem solving and
creative thinking. innovation.
An example of a decision that requires creative thinking is identifying innovative ways to
improve the manufacturing process thereby reducing costs of production.

1.13 (a) How might the use of Technology has made communicating across teams easier, as teams no longer need to meet face-to-
digital resources aid or face for collaboration, making it ideal for teams that are geographically dispersed. Teams can
hinder the development communicate and collaborate more efficiently as technology platforms help employees communicate, share
of team relationships? information and knowledge, and collaborate on various tasks and projects simultaneously.
While team relationships benefit from face-to-face as well as digital interaction, distributed teams are more likely to
suffer from communication breakdowns, cultural misunderstandings, and incongruent work ethics. The use of digital
resources can impact negatively on team relationships as people are often less rational when they communicate
online. They often say things they would not otherwise say or use a different tone than they would face-to-face. In
addition, effective communication is more difficult when nonverbal cues and gestures are not able to be observed as
in a face-to-face setting.
Another issue with virtual teams is that teams do not bond the same as with face-to-face meetings
due to lack of physical contact. The work environment is at risk of becoming highly disengaged
as people need interactions to stimulate their senses. This could lead to a less productive and
effective workforce.

1.13 (b) Would team While the faster flow of information provided by digital technologies helps teams to communicate more efficiently, it
relationships be is not always as effective.
improved by the faster For example, rereading emails before sending is always a good idea so that you can check your tone, fix typos and
flow of information ensure your message is clear. It is always best to leave emotion out of any email communication. With the speed of
provided by digital communication tools now available, messaging and comments are quicker, reflexive and at times sent on impulse
technologies? without considering workplace etiquette. In addition, there’s an implied pressure that you should respond
immediately, without taking the time to think it through first.
 Questions Answer
1.15 ‘Complying with the law Ethics & the law are related and are often built on the same principles, but they are not the same thing.
will always mean that + Law is about what actions are legal, but legal behaviour is not necessarily always ethical and unethical behaviour is
you are acting ethically.’ not necessarily always illegal.
Discuss this statement. + Justice may or may not be seen to be done in a court of law.
Legally, businesses are required to uphold the laws of government and are ethically responsible to act the way society
would expect. For instance, there may be no laws relating to the maximum volume of effluent discharge but a
company may choose to monitor and limit its discharge because society expects it to. It is an ethical responsibility.

1.17 To achieve long-term An important source of power is a person’s official status (position) in the organisation’s hierarchy of
leadership effectiveness, authority. 3 bases of position power are reward power, coercive power and legitimate power.
why does a person need + Reward power is the ability to offer something of value as a way of influencing the behaviour of other people.
both position power and + Coercive power is the ability to influence through punishment.
personal power? + Legitimate power is the ability to influence by virtue of organisational position or status.
Another source of power lies in the unique personal qualities a person brings to a leadership situation.
2 bases of personal power are expert power and referent power.
+ Expert power is the ability to influence through special expertise because others recognise your knowledge,
understanding and skills.
+ Referent power is the ability to influence through identification, because others admire you and want to identify
positively with you.
To achieve long-term managerial effectiveness, position power alone is often insufficient. Personal
power and the two bases of expert and referent power often make the difference between leadership success and
mediocrity. This is particularly true in the ability to influence the behaviour of peers and superiors in the organisation.

1.18 Describe the most The most important leadership traits and behaviours which are common among effective leaders include:
important leadership • drive — they have high energy, display initiative and are tenacious
traits and behaviours • self-confidence — they trust themselves and have confidence in their abilities
that are common among • creativity — they are creative and original in their thinking
effective leaders • cognitive ability — they have the intelligence to integrate and interpret information
• business knowledge — they know their industry and its technical foundations
• motivation — they enjoy influencing others to achieve shared goals
• flexibility — they adapt to fit the needs of followers and the demands of situations
• forward-looking — they have the capacity to imagine and articulate exciting future possibilities
• honesty and integrity — they are trustworthy, honest, predictable and dependable.

1.19 What distinguishes real Status quo (traditional) managers rarely make good change leaders due to their mindset that sets them apart.
leaders from status quo Traditional managers are threatened by change whereas change leaders are confident of their ability to lead change
(traditional) managers? and use more than one style of leadership.
Traditional managers are bothered by uncertainty and want to keep things under control whereas change leaders are
willing to take risks and shake things up.
Traditional managers prefer predictability and support the status quo, yet change leaders seize opportunities and
expect surprises to happen. Change leaders are willing to try a diverse range of approaches that are constantly revised
and improved.
Traditional managers wait for things to happen and drive results via budgets and quotas whereas change leaders
makes things happen by mobilising a broad base of people and getting their hands dirty.
Change leaders influence people all around them — superiors, subordinates and peers — to change. On the other
hand, traditional managers prefer to delegate tasks. Traditional managers are often motivated by personal success,
yet change leaders want to make a difference in performance within the organisation.
Change leaders promote and actively support creativity and innovation whereas traditional managers avoid and/or
discourage creativity and innovation. Even though good traditional managers may be able to learn change leadership
skills if they acquire the right mindset, few seem to do so.
 Questions Answer
2.1 Explain why business + Many successful businesses adapt various elements of existing business models and some develop entirely
models need to change new business models to respond to customer needs or changes in technology.
with changes in the + Business model innovations change the way a business creates and delivers value to customers. While such
business environment. innovations represent an opportunity for entrepreneurs and agile businesses, they are a threat for businesses residing
in their comfort zones.
+ Business models need to predict, adapt and respond to changes in order to ensure the business can achieve its
strategic goals.
+ Some of the main business model innovations currently transforming the business world are nextgeneration
outsourcing and offshoring, the freemium model, crowdsourcing, subscription models, online marketplaces, cloud
solutions, on-demand, the gig economy and the sharing economy. Each of these innovations has occurred due to
changes in the business environment.
+ Example: Microsoft Office 2013 & the online subscription of Microsoft Office 365.

2.2 Briefly outline the main + Main benefit of offshore outsourcing: lower costs - Cost savings stem from lower wages in the foreign location and
benefits & challenges of lower costs due to moving production closer to a foreign market.
offshore outsourcing. + Other benefits: allowing the business to focus on its core competencies, accessing expertise and taking advantage of
economies of scale that specialist providers achieve.
+ Main challenges of offshore outsourcing:
• International interruptions such as global pandemics or wars causing delays in key stages of business
or production.
• The risk of losing control over confidential information, intellectual property and key knowledge.
• Resistance from staff due to changes in their responsibilities or that of colleagues and the possible
reduction in the security of their jobs.
• The potential social, cultural and language differences between the client and the offshore service provider.
• Managing service required from the offshore firm.
• Understanding and managing compliance with differing regulatory, tax and legal regimes across
international borders.
• Transparency around compliance with organisation’s ethical and sustainability policies across the whole
business and supply chains, such as modern slavery policies.

2.3 Differentiate the Freemium business model:

freemium and + Refers to the practice of giving away a service at no cost to the consumer as a way of establishing the foundation for
subscription pricing future transactions -> This quickly establishes a large customer base.
business models. + By offering basic-level services for free, companies build relationships with customers, eventually offering them
advanced services, add-ons, or an ad-free user experience for an extra cost.
+ The long-term success of this model depends on converting free users to paying users.
Subscription business model:
+ Refers to paying for a regular service of product delivery.
+ There are 2 variations of subscription: First is where the subscription refers to paying for a regular service or
product - In this model the purchaser owns the product. Second is subscriber only retaining access to the product
while they continue to pay the subscription - This model resembles renting or leasing; however, you never own this
content, so if you cease your subscription you lose access to the library.

2.4 What is the defining The defining feature of the platform economy is that it uses the internet to connect people so they can
feature of the platform interact to achieve their objectives. The platform creates the connection between buyers and sellers of
economy? Provide an goods and services or of labour (outsourcing or gig economy).
example of a successful
company Example: PayPal acts as an intermediary adjudicator to overcome trust issues between online buyers and
using this approach. sellers. PayPal makes a profit by charging the seller a commission on the payments it processes. It currently
has more than 300 million active users.

2.5 Outline the defining Sharing economy involves the sharing of goods or services between private individuals facilitated by
features of the sharing an online platform. The features that distinguish it from other parts of the economy :
economy that • Connecting spare capacity with demand. Participants with excess capacity use the sharing economy
distinguishes it from platform to post details of the goods or services they have available, while those with wants and needs
other parts of use the platform to register their demand. The platform identifies compatible matches in real time and
the economy connects them in order to facilitate the transaction. It is usually cheaper and more convenient than an
equivalent non-sharing economy transaction.
• Collaborative consumption. Participants need to be more comfortable with social interaction than
transactions in the standard economy.
• Trust. Involves mechanisms to establish sufficient trust between participants; otherwise, this might be
an insurmountable hurdle to the sharing of goods and services. This includes identity verification and cultivating a
social network around the service to engender trust of the platform itself.
 Questions Answer
2.6 Explain how the sharing + The original concept of the sharing economy was to conserve and make the most efficient use of resources.
economy as a business + Sharing economy platforms are also decreasingly peer-to-peer in nature and increasingly resemble more
model has evolved since customary business-to-consumer platforms. To succeed, the sharing economy business model needs to shift
its inception. the consumer preference away from ownership towards use or experience.
+ Sharing economy business model must generally incorporate extensive social media networks as trust is built on
personal referrals. Weaknesses affecting the sharing economy include lack of clarity about liability, lack of standards
and lack of security. Providers of the service must be properly qualified and capable of providing the service, and have
adequate insurance to cover legal liability in case of problems or damage.

2.7 What impact is the Many of the global corporations in the sharing economy serve as an interface linking internet users to each
sharing economy having other and do not own the real assets that are being shared. A consequence of this shift in consumption is that buyers
on the consumption and may look at purchases as investments that can generate income via the share economy platform, rather than as real
production of real assets held for personal use.
assets? Users of the sharing economy may also shift their consumption, opting out of ownership in favour of accessing goods
and services through the sharing economy -> reduce the production of real assets as there would be less demand for
individual ownership of the assets.

2.8 What recommendations The commercialised sharing economy had numerous positive outcomes for society and its development should not be
did the Grattan Institute stifled by regulators to protect existing industry and business.
make regarding the However, it warned that several issues had to be addressed to ensure the positive outcomes are reasonably shared
sharing economy in and to guard against potential negatives. It recommended that:
terms of • government should support the growth of the commercialised sharing economy, but work to reduce
social outcomes? negative outcomes.
• particular attention should be paid to:
– work standards
– consumer safety
– local amenity for neighbours of accommodation-sharing venues
– tax consequences
• when the work arrangement between the business and its labour force is more in the character of an
employment relationship, then sharing economy businesses should be prevented from misclassifying
the arrangement as independent contracting.
• workers compensation should be put in place to protect workers in riskier parts of the sharing economy.
• tax rules must be amended to ensure overseas-based platforms pay sufficient tax in their operating markets.

2.9 Differentiate debt and Equity financing is money invested in the venture with no legal obligation for entrepreneurs to repay the
equity models of principal or to pay interest. It can provide large amounts of capital. However, it does require sharing the
financing ownership and profits with the funding source. Since no repayment is required, equity capital can be more
entrepreneurial secure for new ventures than debt financing. Yet, the entrepreneur must consciously decide to give up part
ventures. of the ownership and potentially control of their business in return for this funding.

Debt financing involves borrowing funds according to your needs and then paying them back over time
along with a fee (called interest) for the use of the money. Debt places a burden of repayment and interest
on the entrepreneur. Loans are usually secured against an asset (e.g. a house) and failure to make the
repayments can result in the lender seizing the asset. However, it will not affect ownership of the company,
as long as the debt is repaid.

2.10 A client who wants to While each entrepreneur may have unique circumstances affecting their decisions regarding debt and
start his own app equity financing, there are some general guidelines. Questions you should ask the entrepreneur include
development business the following.
comes to you for advice • How much start-up capital is needed for the business?
on how to fund it. • How much of their own cash do they have to invest in the business?
What sources of • What is the shortfall?
financing would you Strategically, the entrepreneur should test their idea for the app in the market as cheaply as possible to
advise your client to confirm that there is market demand for their idea before investing a lot of time or money in building it.
choose? Why?
Equity funding options
Because app development requires relatively low start-up capital and is risky until the entrepreneur has
proven that the app will sell, it will not be of interest to angel investors and venture capitalists and is
certainly not suitable for an IPO.
Crowdsourced funding may be an option after the app has been developed and a market demand for it proven.
Crowdfunding can be in the form of debt, equity, donation or some right to the business’s future output and is usually
run on dedicated digital platforms.
If the client is able to find a friend or family member willing to invest in the business, you should point out to them
that:
• they will have to give up ownership of part of the business and, therefore, part of the profits
• they should have a proper contractual agreement drawn up if they choose to use this funding source
• partnerships of this type can cause problems in their relationship with the investor, and they should manage the
relationship carefully.
The cheapest source of equity funding for the entrepreneur is their own capital.
Debt funding options
Sources of debt funding available to the entrepreneur include:
• trade credit
• hire purchase
• a bank loan against assets — for example, redraw from a housing loan
• credit cards
• a business loan.
You should make the client aware:
 advise your client to confirm that there is market demand for their idea before investing a lot of time or money in building it.
choose? Why?
Equity funding options
Questions Because app development requires relatively low start-up capital and is risky until the entrepreneur has
Answer
proven that the app will sell, it will not be of interest to angel investors and venture capitalists and is
certainly not suitable for an IPO.
Crowdsourced funding may be an option after the app has been developed and a market demand for it proven.
Crowdfunding can be in the form of debt, equity, donation or some right to the business’s future output and is usually
run on dedicated digital platforms.
If the client is able to find a friend or family member willing to invest in the business, you should point out to them
that:
• they will have to give up ownership of part of the business and, therefore, part of the profits
• they should have a proper contractual agreement drawn up if they choose to use this funding source
• partnerships of this type can cause problems in their relationship with the investor, and they should manage the
relationship carefully.
The cheapest source of equity funding for the entrepreneur is their own capital.
Debt funding options
Sources of debt funding available to the entrepreneur include:
• trade credit
• hire purchase
• a bank loan against assets — for example, redraw from a housing loan
• credit cards
• a business loan.
You should make the client aware:
• their cash flow will need to be sufficient to cover repayments -> they should have done their due diligence to ensure
they can meet these.
• potential consequences of defaulting on repayments.

2.11 Governments around the In Australia, government assistance is available from the Australian government, state governments & local
world offer a variety of governments. The Australian government grants are highly competitive and often require the applicant to match the
assistance for SMEs & funds granted.
entrepreneurial ventures Australian government has 4 types of support for SMEs and entrepreneurs:
as they recognise that • accelerating commercialisation — helps small and medium businesses, entrepreneurs and researchers
innovations contribute to to commercialise novel products, services and processes
the overall prosperity of • strengthening business — provides small businesses in regions affected by the 2019–20 Black Summer
society. bushfires and 2022 flood emergencies with an independent facilitator who will recommend strategies
What government to improve business systems, operations and strategies
assistance is available in • growth services — provides businesses working within, or supporting, one of the growth sectors with
Australia for SMEs and an independent facilitator who will provide an assessment and recommendations for operational and
entrepreneurs? growth opportunities
• innovation connections — provides innovation facilitation reports using experienced innovation facilitators
who work with the business to identify knowledge gaps that are preventing growth.

Industry Innovation and Science Australia is an independent statutory board of entrepreneurs, investors,
researchers and educators who advise the Australian government on innovation, science and research
matters. It also offers a range of initiatives aimed to strengthen Australia’s ability to innovate and to
undertake science and research. Initiatives cover a range of areas, such as cyber security, data sharing,
digital marketplace, embracing the digital age and tax incentives for investors. In addition, AusIndustry
and AusTrade offer a range of assistance covering business mentoring, investment raising, research and
development, grants for prototype development, feasibility studies, expert advice and overseas market
development.

The states and territories also offer grants and other assistance for SMEs seeking growth. These range
from the Business Development Fund in Queensland, which offers grants for businesses developing or
commercialising innovative products and services, to the ACT Microcredit Loan Program, which offers
microcredit for low-income earners seeking to purchase equipment for their businesses.

Lastly, many local councils offer workshops and small grants to help local entrepreneurs establish and
develop their business ideas.
 Questions Answer
2.12 Compare and contrast Social enterprises often address social problems or needs that are not met by private markets or
the principles underlying governments, and tend to work with, not against market forces.
social enterprises and Social enterprises are based on the following principles.
traditional profit- 1. The objective is to overcome poverty, or one or more intractable problems of society (e.g. education,
maximising health, technology access and environment); the objective is not profit maximisation.
enterprises 2. It must be financially & economically sustainable through commercial activity, rather than relying on
charitable donations or public funding. However, many social enterprises rely on donations to support
their work in the early years of operation.
3. Investors receive a return on investment that does not exceed the amount of their investment (i.e. no
dividend is given).
4. When funds are repaid by the borrower, any and all of the company profit (i.e. post-loan interest) is
retained by the company for additional expansion and improvement.
5. The business must be environmentally conscious.
6. The workforce should get market wages with better working conditions.
7. It should be done with joy.

In comparison, the traditional profit maximising business’s overall objective is to make a profit to
maximise the wealth of shareholders. They do not receive donations to support their operation. Investors
receive dividends depending on the profit earned and the amount of funds reinvested in the business.
The business does not have to be environmentally conscious, but many now disclose their environmental
impact either in their annual report or as a separate environmental and sustainability report. Some investors
prefer to invest in businesses that are environmentally friendly. The workforce must be paid at least the
minimum wage, which is regulated by the Fair Work Act 2009 (Cwlth). Better working conditions and
higher wages are more likely to be provided only by those businesses that want to attract and retain high calibre
personnel.
-> There are some similarities, but the overall objectives of social enterprises and profit-maximising enterprises are
starkly different.

2.13 Outline the main sources • Fee income — derived from the sales of a commercial product or service. Income can be derived from
of funding available to member fees and outside fee-earning endeavours.
social entrepreneurs • Venture capitalists — invest large sums in start-ups and other small businesses that have potentially high
seeking capital to fund social and financial returns over the long term.
their venture. • Financial institutions — invest relatively large sums of money in social enterprises but focus on less
risky investments and place more emphasis on financial return than social outcomes.
• Investment funds — focus on financial return more than social outcomes and want steady growth over
the long term. However, some funds are considering social outcomes as more and more shareholders prefer to hold
socially responsible investments.
• Governments — often provide funding through subsidies, payments, grants and tax concessions.
• Donations — sourced from living individuals, foundations, bequests and corporations.
• Angel investors — invest small amounts in start-ups based primarily on the social mission of the venture.
The capital can be a one-time investment or ongoing support. Social return is more important than financial return.
The angel investor may be the social entrepreneur’s family or friends or established foundations.
• Venture philanthropy — provides investment funds by outside investors for philanthropic reasons. The
Oprah Winfrey Foundation is a venture philanthropic organisation famous throughout the world for supporting the
education and empowerment of women, children and families in the United States and around the world. This
foundation has provided millions of dollars to ventures around the world to improve education and healthcare.
• Crowdfunding — uses platforms that bring together small amounts of capital from a large group of individuals who
each want to support the social mission and/or business model of a social venture.
Crowdfunding efforts often use networks of friends, family and colleagues through social media.
 Questions Answer
2.14 Discuss approaches used Social accounting provides a way for social ventures to demonstrate to investors and other stakeholders their
to measure social social and other non-financial performance alongside their financial performance — referred to as double
venture value. bottom line.
One of the major challenges of measuring social venture value is determining the metrics to use for social value.
Methods used to measure social venture value include the following:
• Social Return on Investment (SROI) produces a monetised value for social impact generated per unit of
currency invested. Therefore, it calculates the blended value based on the enterprise value and the social
purpose value. Decision makers can use SROI to focus attention and resources on areas that achieve the
highest outcomes. As a quantitative outcome, it is useful for benchmarking and making comparisons
with other social ventures. However, to establish SROI requires comparison to a control group, which
can be problematic as it must share as many characteristics as possible with the group of interest and
there is a degree of subjectivity in estimating what would have happened without the social venture’s
intervention. Social outcomes are complex and may not be captured by quantitative metrics. It has been
suggested that SROI should be based on recognised accounting principles and restricted to costs and
benefits that can be clearly identified and reliably measured.
• Social value may be measured in terms of accountability, evaluation, outcomes and impacts. Accountability
considers the extent to which the venture assumes implicit or explicit social responsibility (e.g. emissions, waste
management, donations, volunteering, recycling etc). Evaluation involves the systematic study of the quality or
success of activities, which must be useful and cost-effective, and focus on the correct measurement. Outcomes refer
to the extent to which social value is created. Impacts relate to the measurement of performance with a precise scale
(such as the number of people served), via a rating scale (ratings from customers on a five-point Likert scale), or a
binary scale (yes or no answers).

2.15 Explain how Microfinance encourages financial inclusion by helping people emerge from poverty through the provision
microfinance encourages of small-scale financial services, such as savings, credit and insurance to those living in developing
financial inclusion economies and those who cannot access conventional financial systems. The finance is often used to
develop a business that can become self-sustaining.
+ Microcredit alone appears to be insufficient to achieve financial inclusion, so most microfinance products now
involve integrated services, such as mobile phone banking platforms to deliver services and conduct transactions. The
high interest rates charged on microcredit loans undermines the purpose of the loan, yet the default rate is less than
in the developed world.
+ Microsavings products often incorporate mechanisms to encourage savings and discourage withdrawals to help
people save for future expenses or investment.
+ Microinsurance helps the socioeconomically disadvantaged to manage risks, such as illness or crop failure.

2.16 How is microfinance In developing economies, the financial system is often underdeveloped and difficult to access. Microfinance
impacting on the local focuses on the establishment of small businesses that provide families with livelihoods (e.g. street stalls, livestock or
and national economy in materials).
the developing world? Many countries with limited infrastructure are using mobile telephone technology to provide microfinance and
banking services. However, as a relatively recent innovation, best practices and relevant ways to regulate it are still
being developed.
Regulators must be mindful to balance the burden on existing institutions, such as banks, and the new entrants
(MFIs). Some MFIs charge high interest rates as administrative, transaction and default costs are higher per amount
lent than for normal bank loans. Whereas, other lenders act more like donors and offer funds at very cheap or even
interestfree rates. This often distorts markets through displacing domestic commercial initiatives. Often, these
generous MFIs (usually NGOs) are not headquartered in the host country and thereby change the host country market
through their share of investments and by displacing traditional lenders who cannot afford to offer these types of
loans.
 Questions Answer
2.17 Outline the types of Member-Owned Organisations
microfinance providers + Including credit unions, savings and credit cooperatives, and hybrid institutions such as financial service
in the developed world. associations. As they tend to be small and local, they have access to personalised knowledge and offer convenience
and flexibility. Their operational costs tend to be low.
+ In Australia, there have been changes to regulatory obligations of credit unions, resulting in a significant reduction in
this type of institution. Credit unions are now required to meet mainstream banking obligations. Some member-
owned organisations do offer microfinance but this varies from organisation to organisation.
Non-Government Organisations
+ Including multi-purpose NGOs, NGOs with microfinance services separated from other services, microfinance NGOs,
and microfinance NGOs transformed into a bank or non-bank financial institution. Many NGOs have adopted
microfinance practices in developed economies, largely driven by their mission to reduce poverty and homelessness.
+ In Australia, the community sector provides personal and business credit. In the United States and United Kingdom,
community development financial institutions have been introduced to provide microfinance products.
Formal Financial Institutions
+ Including commercial banks, government-owned banks (such as agricultural banks and development banks),
microfinance banks and non-bank financial institutions. They offer a wide range of services, such as savings, transfers
and funds to invest in systems and technical skills. However, they have been reluctant to become involved in
microfinance due to the high costs of operation, lack of process flexibility and a poor understanding of low-income
earners.

2.18 Describe how new + Financial inclusion is the objective of microfinance. Business models and delivery platforms available
business models are to microfinance institutions have greatly increased due to digital information and communications
supporting financial technologies. Technology facilitates greater efficiency, lower operating costs, lower transaction costs and
inclusion. greater market reach.
+ For example, mobile technology allows the introduction of a cashless payments system using mobile phones. By
focusing on the use of technology as much as possible for transactions, staff can focus on client engagement and
problem solving.
+ An example of such an application is MFI Baobab, a leading digital financial inclusion group that focuses on serving
individuals and small businesses in Africa and China. Baobab has explored a digital credit offer which is granted
automatically based on a customer’s credit and savings history. Customers receive a text message indicating they are
eligible for a loan that can be paid immediately by a field agent. The loan is short term and designed to meet urgent
needs.
+ In addition, blockchain technology has been a key development in the microfinance sector due to its ability to track
payments, record transactions securely and cheaply, and eliminate the need for intermediaries. However, blockchain
technologies are complex and microfinance applications are expected to continue to develop as more results are
seen. Therefore, new business models incorporating technology are supporting microfinance institutions to provide
services aimed at financial inclusion across the world.

2.19 Many of the larger MFIs • External reporting obligations. MFIs and microfinance investment vehicles (MIVs) are required
have adopted a more to conform to IFRS or GAAP. This requires extensive accounting knowledge, including specific requirements for
business-focused microfinance-like products and investment funds.
approach to ensure they • Transparency. Stakeholders expect MIVs and MFIs to produce audited financial statements.
are self-sustaining. For • Listing and managing the listed MFI. The use of IPOs to raise funds entails working with more diverse
instance, regulated investors, and achieving growth and outcome targets.
financial institutions are • Tax. MFIs and MIVs often operate or invest in multiple jurisdictions with different tax rules. This complicates the
able to gain access to process of tax compliance, but also provides the opportunity to offer investors tax efficiency.
expanded • Financial accounting obligations. MFIs do not have financial accounting as a core competency as social
sources of funds. outcomes are more important. Thus, MFIs may outsource financial accounting tasks.
How has the role of the • Investment valuation. MFIs and MIVs typically work in developing markets, making it difficult to obtain
accountant been data to aid valuation and support decision making.
impacted by these • Risk management. In addition to the usual financial, operational, strategic and compliance risks, MFIs
developments? and MIVs face risks unique to their industry. This includes the risk of over-indebtedness and risks relating to a lack of
infrastructure in many of the markets in which they operate.

2.20 Outline the potential • Resistance. Disrupting an entrenched system is likely to encounter enormous resistance, particularly if
impediments to financial donor or help communities decide what is best for disadvantaged people. They may not base their efforts
inclusion uses of on correct assumptions about the needs of vulnerable populations. To overcome this issue, the intended
blockchain. beneficiaries should be involved in the design and implementation of platforms.
• Value of money. A cryptocurrency solution to improve financial inclusion assumes people with limited
access to resources value the concept of money in the same way as the developed world, even though
more importance is often placed on access to non-monetary resources, social capital and the direct
exchange of goods and services.
• Computing infrastructure. Any blockchain application relies on fast and reliable internet access as
significant processing power is required for the mining process underpinning blockchain platforms.
They are often located near cheap power supplies as the computing infrastructure uses tremendous
amounts of electricity.
 Questions Answer
3.1 Main functions of HRM • Needs identification. Correctly identifying the skills, knowledge and talent required by the organisation
to achieve its strategic goals.
• Recruitment. Seeking new people to hire with the right skills.
• Selection. Choosing the best candidate by objectively assessing each candidate’s fit in terms of skills,
attitude, aptitude, expectations and future plans. Must also comply with legal obligations during the
selection process.
• Induction. Integrating new employees into the business.
• Development. Helping employees increase their capabilities and align their efforts with the organisation’s
needs, strategy and culture. This development is crucial due to the rapidly changing business and
work environment caused by technology-enabled innovations.
• Exit. Exits need to be managed well, regardless of whether they are voluntary or involuntary, due to the
level of transparency around businesses’ treatment of employees.

3.2 Explain human capital Human capital is a component of intellectual capital and refers to the ‘skill, training and education, and
and its role in the experience and value characteristics of an organisation’s workforce’.
organisation’s overall
corporate social capital. Even though intellectual capital is closely tied to the notion of human capital, it is usually described as
a combination of human capital (human competences and know-how), relational capital (an organisation’s
external relationships) and structural capital (an organisation’s internal procedures and structures).
-> Intellectual capital has a broader scope and includes value provided by an organisation’s employees (human
capital) solving problems and using the intellectual property such as patents, trademarks, copyrights, information
systems, databases and processes (structural capital) to deliver goods and services to customers (relational capital).

Human capital consists of value provided by an organisation’s employees through solving business
problems and using its intellectual property.
On the other hand, intellectual capital includes human capital, structural capital (enables human capital to function —
includes intellectual property, such as patents, trademarks and copyrights) and relational capital (customer and
supplier relationships, licences and franchises).

3.3 Attract and retain high- + Offer value to employees, including pay, other benefits, opportunities for learning and advancement, a safe and
quality talent secure work environment and the opportunity to engage in meaningful work -> Companies with a strong employee
value proposition can attract and retain the best talent.
+ Quality of the corporate culture and the range of other factors in the workplace, such as opportunities for
recognition and professional and personal development, are more important than financial remuneration.

3.4 Benefits of diversity • Broadens your vision. Diverse teams mitigate the limitations created by building teams of likeminded
people.
• Strengthens capability. Organisations that value diversity are better able to attract and retain high
performers and improve operational performance.
• Encourages teams to evolve and grow. People with differing philosophies, perspectives and ideas, and
who engage in healthy and robust debate improve a team’s ability to innovate, challenge the status quo,
grow and evolve.
• Drives customer satisfaction. Globalisation means businesses can sell to customers virtually everywhere.
Businesses must adapt to an increasingly diverse client base and target market.
• Improves the bottom line. There is a strong connection between a team’s knowledge of their customers
and their ability to target their approach accordingly. Companies that attract and retain diverse talent
have an advantage over competitors.

3.5 Challenges of age- + Relate to all age groups — from older workers feeling threatened by younger, potentially better educated workers,
diverse workforce to younger ones who feel resentment at older workers who ‘take up’ the positions to which they aspire.
+ Age is just one aspect of diversity and often intersects with others.
For example, age and gender are often related issues for women, who may be perceived to have a lack of
commitment to work during their childbearing years (e.g. employers might fear that, having spent years training
female employees, they might leave to have children). This perception can restrict access to promotion and
opportunities.

3.6 Impact unfair treatment Unfair treatment in the workplace occurs when diversity is not dealt with appropriately.
has in the workplace (1) It involves unfair discrimination, sexual harassment or bullying.
-> Most societies have taken steps to try to eliminate these practices with regulations and laws, and organisations and
workers are expected to take steps to create inclusive workplaces free from unfair treatment.
 Questions Answer
3.6 Impact unfair treatment Unfair discrimination in the workplace refers to treating individuals or groups differently based on
has in the workplace (2) characteristics such as gender, race, ethnicity, religion, pregnancy, age, marital status, weight or sexual
preference.
Sexual harassment refers to unwanted sexual behaviour in the workplace. Victims of sexual
harassment often suffer low self-esteem, anger, stress, humiliation, disinterest in the job and a feeling
of powerlessness. HR needs to establish grievance procedures and formal sexual harassment awareness
training. Employees and organisations have a moral and legal obligation to ensure the work environment
is free from sexual harassment.
Workplace bullying includes persecuting or ganging up on an individual, making unreasonable demands or setting
impossible work targets, making restrictive and petty work rules, constant intrusive surveillance, shouting, abusive
language, public shaming, rude interruptions, hostile emails, physical assault and open or implied threats of dismissal
or demotion. Unfortunately, Australian surveys have found that more than half of the respondents reported being
bullied at work, even though many did not report the incidents.

3.6 Impact unfair treatment Workplace discrimination, sexual harassment and bullying impact on the corporate culture and prevent
has in the workplace (3) people within the organisation from having a fair and harmonious work environment. It impacts the
employer, alleged harasser and victim, resulting in reduced efficiency, productivity and profitability,
adverse publicity, an unsafe work environment, increased absenteeism, sick leave and staff turnover. In
addition, it results in costs associated with counselling, compensation claims and legal action. Companies
appear to be aware of the damaging effects that bullying accusations can have on their corporate image.
At times, financial settlements are offered in order to protect their reputation.

3.7 Why developing Leadership development is an important function of HRM due to:
leadership potential is an + It ensures the next generation of leaders is ready as the current generation retires.
important function of + Leaders need to be able to deal with rapid change and regular disruption & ensure their organisation does too.
HRM + Potential future leaders need to be identified and empowered to take on leadership roles among their peers.
+ Companies are increasingly using behavioural tests or psychometric tests to identify future leadership potential
among candidates ->These tests identify people with initiative, resilience, problem-solving abilities, strategic abilities,
communication skills, business acumen and a results-focus.
+ Future leaders will need to embrace digital innovation and have the interpersonal skills to form strategic
partnerships and influence the direction of the business.
+ HR professionals may be involved in the creation, implementation and oversight of a leadership development
strategy. This may also include measuring ROI.
+ As such, involving HRM in leadership development is an important function that ensures succession of leadership
roles is a smooth transition for the business.

3.8 Why has there been a + Driven in part by the desire of businesses to scale their workforce up and down as needed or to access skills for
trend away from specific short-term needs (especially for projects), & in part by the desire among a segment of the workforce for
permanent, full-time greater flexibility in integrating work and non-work life.
employment towards
more flexible
work arrangements over
the past few decades?

3.10 Advantages and Having a global workforce increases the complexity of the role of HRM.
disadvantages of having It provides the business with the opportunity to have a presence in any market it chooses.
a global workforce A global workforce could involve sending an employee oversees to establish an office in another country, hiring
contractors and remote workers, or using a start-up hub. Many businesses have also engaged in offshore outsourcing
to save costs via labour arbitrage, gain specialist expertise and a more scalable labour force.
 Questions Answer
3.10 Advantages and When a corporation sends employees overseas, not only are they concerned about selecting the best
disadvantages of having employee for the job, but they must also be aware of the entire family’s needs -> make international HRM
a global workforce a very costly undertaking.
On the other hand, using contractors and remote workers, rather than establishing an office in the foreign
country, does not require the investment in office space or permanent employees. Similar benefits are
available if a start-up hub is used as resources are shared. This has become even more popular as a result of
the pandemic. Employees can live and work anywhere, while collaborating with teams or other colleagues
in over locations.
Some markets can be accessed remotely using cloud technology and other software, but where human
interaction is important, it is likely the business will need to engage workers based in the overseas market
who can deal with customers and other stakeholders in person. These foreign workers will be better
equipped to function in their home culture as cultural differences can make communication difficult.
In addition, different time zones make it more difficult to operate during normal work hours. Even though
there are many technology-based solutions for communicating, such as email and videoconferencing, it is
likely that international travel will be needed from time to time as well.
When employing a global workforce, businesses need to accommodate different cultural, social and
religious practices.

3.11 Impact of AI on role of Artificial intelligence (AI) offers ways to automate time-consuming, repetitive accounting tasks that do
accountant not require judgement (or where the judgement required can be reduced to rules that can be coded into
software) -> AI should enable accountants to focus on higher value work.

The second wave of automation, which is occurring now, is affecting the rules-based aspects of the tasks
performed by accountants, mortgage brokers and so on. Accountants and auditors will need to interact
with AI systems on innovative and sophisticated tasks. AI sytems are expected to soon have the ability
to help accountants provide advice, but are not expected to replace a human accountant. AI also has the
potential to have an impact on personalised financial planning, fraud detection and anti-laundering, and
process automation. Accounting firms could implement AI technology to help manage compliance with
organisation policies and regulations. AI is expected to provide suggestions to accountants rather than
drive compliance.

New applications for robotic business automation will arise as companies gain more experience,
enabling them to refine and improve their automation algorithms. Accountants and auditors who are able
to work with data scientists to further develop cognitive systems will be in high demand.

In addition, accountants who have high emotional intelligence, problem-solving capabilities, cognitive flexibility and
creative thinking are likely to stand out from their peers. Static accounting roles will not exist in the future as these
tasks will be performed by AI. As customers are accustomed to dealing with people when discussing financial
decisions, one of the biggest obstacles to AI implementation is customer acceptance.

3.12 HRM challenges - due to Automation presents particular HRM challenges, specifically around how to effectively integrate automated
the integration of work and human work, and how to effectively manage the transition of labour from people to machines — including
automated work and reskilling and redeployment where possible. In many simpler roles, robotic process
human work automation may replace human labour entirely.
On the other hand, humans and robots (cobots) may work together to complete more complex tasks. The cobots
perform the repetitive tasks dealing with volumes of data, enabling humans to focus on the complex, judgement-
based tasks.
A challenge for HRM is transforming the organisational culture to successfully integrate intelligent automation into
the mainstream workplace - The HR department will need to train workers to take advantage of the new technology
so that they can work alongside autonomous and semi-autonomous systems.

3.13 Impact of knowledge- Accountants need to have a good understanding of knowledge-sharing techniques so they can use them
sharing process on role effectively in their own work with their peers and stakeholders, both inside and outside the organisation.
of accountant At the same time, accountants must be aware of potential financial benefits and risks of knowledge sharing
and the methods for managing them. A more effective knowledge-sharing culture and the use of effective
knowledge-sharing processes and tools allows easier access to the information needed to perform an
accountant’s duties, and better equips accountants to contribute to the organisations they work with.

When preparing financial calculations for knowledge sharing, such as return on investment, the
accountant must not just assess the real costs and tangible benefits, but also assist the organisation in
determining suitable methods of quantifying intangible benefits. Where benefits are difficult to quantify,
it is important to collect and compile qualitative measurements, such as surveys or anecdotal feedback of
real benefits and outcomes gained by the people engaged in knowledge sharing.
 Questions Answer
3.14 Why it is important to Effective knowledge sharing requires working with people and culture, not just technology.
consider a range of both For implicit knowledge to be shared, the cooperation of the people holding the knowledge is needed as technological
human and technological approaches (such as knowledge banks and document-management systems) cannot provide the culture or motivation
solutions to knowledge needed for knowledge sharing. In addition, some methods used for knowledge sharing require little or no technology
sharing at all. As such, both human and technological solutions are required.

3.15 3 aspects of CoPs - 1. The domain or area of expertise.

distinguish them from + The CoP should consist of people who share a concern or passion for something they do and learn how to do it
functional teams within better — that is, a common field of expertise.
an organisation + The CoP should also support the members in their day-to-day work role, whereas a functional team could consist of
people within a range of fields who work together to solve problems or complete tasks that require
more than one area of expertise.
+ As such, a functional team is driven by deliverables with shared goals, milestones and results.
2. The community of people.
+ Community members must feel that they share a common identity (similar set of expertise) &can trust one another.
+ Involvement and regular interaction should become an integral part of each member’s practice.
+ Communication channels should be established to instigate feelings of trust and mutual obligation. Even though a
range of technologies can be used to support the operation of the CoP, such as wikis, forums and microblogging, face-
to-face meetings are important to help establish and maintain rapport between members.
+ On the other hand, a functional team consists of people working together as a team to complete a task, rather than
a community of people with a similar set of expertise. However, both meet to share and exchange information and
experiences.
3. The practice of their field of expertise.
+ CoPs provide an alternative path for sharing knowledge outside the organisation hierarchy.
+ CoP membership can change as members take on new roles within the community as interests & needs arise.
+ However, the roles within functional teams remain constant during the project/task. In addition, a CoP can exist as
long as members believe they have something to contribute or gain. On the other hand, a functional team will be
dissolved once its task is completed.

3.16 What is usually the most asking the right questions, rather than finding the right answers.
important aspect of + The questions should cover each process and practice performed by employees within the organisation.
developing knowledge- + Asking the right questions for these processes and practices will elicit the information needed to form a complete
sharing processes and managed knowledge-sharing program for the organisation.
practices?

3.18 What elements must be Culture

in place for effective Knowledge sharing requires a culture and environment of trust and openness.
knowledge sharing to -> Creating this culture can be a challenge, particularly in the individualist culture prevailing in most Western
result? organisations.
+ To encourage knowledge sharing across an organisation, it is necessary to develop a culture where sharing, rather
than hoarding, is the norm.
+ Sharing knowledge with others is a communal act based on cultural values -> Consequently, attitudes to the
community are extremely important.
+ Sharing knowledge gives power to others in the community to make judgements about the worth of the
contribution.
+ Different cultural attitudes to knowledge sharing may also affect the type of knowledge that is shared,
and whether an organisation places an emphasis on people or technology for knowledge sharing.
+ A focus on people will tend to favour the sharing of tacit knowledge, whereas a focus on technology will favour the
sharing of explicit knowledge.
 Questions Answer
Motivation
In order to encourage knowledge sharing, knowledge contributors need to understand the importance and
value of sharing their knowledge with others within the organisation — there needs to be a clear connection
to meeting understood organisational objectives. This value should be explained to contributors in terms
that make sense to them. A clear expectation should be built that knowledge sharing is a fundamental part
of each contributor’s day-to-day job, and the business need of the audience to access this content should
be stressed.
Trust is a precondition for any knowledge exchange — motivation is based on trust. Trust is critical for
knowledge sharing and collaboration, as this relies primarily on the commitment of individual employees
to volunteer their knowledge. Trust results from the confidence generated by an environment of openness
and evidence of good faith.
The provision of a working environment where staff are given work with a defined purpose, trusted
to work autonomously and encouraged to master their work roles will create an ideal setting for more
effective knowledge sharing. Access to all knowledge-sharing processes and tools should be made as easy
as possible to ensure there are no barriers to sharing. Wherever possible, knowledge sharing should be
built into standard business processes. This will require strong management endorsement and support, as
discussed below

Structure and Power

Many organisations are structured as hierarchies or ‘top-down’, where power is unequally distributed. In
these organisations, it can be more challenging to create an effective knowledge-sharing culture as the
inappropriate use of power can discourage trust and openness. Changes in the business environment over
recent years have led to the need to change this traditional ‘command-and-control’ model of leadership.
Changes are taking place in communication and information flows within organisations, and research
shows that new processes need to be more dynamic, sophisticated and conversational.

Security
An inherent risk in knowledge sharing is that knowledge may be shared in the wrong place, risking
information leaks or loss of intellectual property (IP). However, this risk is unrelated to the medium —
whether it is a knowledge-sharing technology, Twitter or by telephone.
The security of any knowledge-sharing or collaboration technology used inside an organisation should
be managed using the same processes as any other ICT and will be the responsibility of the relevant
staff. The management of the security of cloud-based systems and systems that include stakeholders
outside the organisation may require different processes. Different systems may need different levels of
security controls.
However, if all the correct elements required for effective knowledge sharing are in place — trust,
openness, motivation and an understanding of how the knowledge relates to corporate goals and
strategy — then the people concerned will also better understand the nature and importance of the
knowledge they are sharing. In this case, the risk of leakage will be far lower than in organisations where
this culture is absent.

3.19 Why is it challenging to Explicit knowledge can be measured using quantitative methods, whereas implicit knowledge is best measured using
accurately measure the qualitative approaches. Apart from the direct financial return, consideration should be given to key factors relating to
value of knowledge engaging with people, such as employee satisfaction, team relationships, building an informed workforce or work
sharing? output from collaborative teams.
Knowledge-sharing processes such as CoPs develop and extend the expertise of staff, thereby improving
the overall performance of the organisation. Some measures may be indirect, such as increased
sales resulting from more effective sharing of product knowledge to sales staff. The cost side of the equation
can be variable; for example, some knowledge-sharing systems require significant investment, whereas,
conversational knowledge-sharing processes only require an investment of people’s time. Cloud-based
systems may also incur lower costs than purchasing and operating an internal infrastructure.
Therefore, given the often intangible nature of knowledge, accurately measuring the value of knowledge sharing can
be challenging.
 Questions Answer
3.20 Why the professional There is a mutual dependence between the management of an organisation’s HR and its business profitability, which
accountant should be justifies the interest of the professional accountant - cost, assets and knowledge, and relationships.
interested in people Cost:
management + People represent a large proportion of an organisation’s costs, which can be fixed (employees on longterm
contracts) or variable (employees on short-term contracts or casual positions).
-> Accountants need to combine financial calculations with stakeholder analysis to ensure that strategies in this area
are carefully designed and implemented.
+ Hiring new staff and training them to become productive is another cost. Initiatives focused on employee retention
should be developed.
-> Accountants should develop reporting tools that record employee turnover to highlight this cost to the
organisations, rather than letting it be hidden in salary and overheads.
Assets and Knowledge:
Even though people are a significant cost to the organisation, they are also an immense organisational
asset. Well-trained and highly skilled employees improve an organisation’s productivity well beyond that
of its competitors -> providing a significant advantage in the competitive business environment.
Organisations with a corporate culture that engages, unifies and motivates its employees to achieve
corporate goals are more likely to be profitable.
Relationships:
As employees constantly interact with other people, developing these relationships between organisational
areas and with customers, suppliers, lenders and owners is an essential component of building and growing
a successful organisation. The quality and strength of these relationships have been shown to have a marked
effect on business performance and productivity.

3.21 Discuss 5 avenues by Accountants can become aware of people management issues in their organisation through:
which accountants can • provision of advice
become proactive • communication
towards people • employee engagement
management issues in • decision making and issue resolution
their organisation. • evaluation of the impact of hard-to-measure initiatives.

Providing Advice
+ In addition to providing advice on financial issues, professional accountants should be able to offer
advice on additional issues, such as people management issues, which could influence the situation being considered.
+ Accountants cannot assume that someone else will provide this additional advice, particularly
if its absence constitutes a risk.
+ If there is organisational resistance to accountants providing this kind of additional advice, it should be channelled
through a conduit, such as an HR manager, the CFO, a close colleague with operational responsibility for an affected
area, or even a staff suggestions scheme.

Communication
Ensuring good communication is another role for the accountant in people management.
In this role, the accountant operates as an individual employee as well as in their professional capacity.
+ As an employee, the accountant will interact with and hear stories from other employees who indicate that there
are unresolved people management issues within the organisation.
+ The accountant is in the privileged position of understanding the financial and business impacts of such issues ->
appreciate the importance of initiating processes for their discovery and resolution. This moves the accountant into
their professional capacity and might involve confidential and tactful discussions with an appropriate HR manager or
business leader.
+ Alternatively, it might involve initiating management action to employ specialists who use approaches, such as
narrative techniques, to engage the workforce and uncover issues that might not be identified by traditional internal
attempts.

Employee Engagement
+ The professional accountant’s understanding of the links between employee engagement and business
profitability provides an important opportunity to contribute positively to employee engagement. This
might occur through the use of sense-making, or through similar techniques that ensure business strategies
resonate and become embedded in employee behaviour.
+ Alternatively, employee engagement might come about through using the accountant’s professional network to
increase enthusiasm for initiatives that will boost business profitability. The accountant has the advantage of access to
information about the benefits of an initiative that help to make it real for those in the business who might otherwise
see a policy or initiative as a disconnected managerial whim.
Questions Answer
Decision Making and Issue Resolution
+ Direct involvement in decision making and resolving issues that affect profitability has been a traditional
strength of the contribution that accountants make to an organisation.
+ Because the accountant has the flexibility to initiate action and allocate resources, this mode of adding value can
pay the greatest dividends to the organisation through being deliberate, targeted and informed.
+ It requires accountantsto exhibit courage, initiative and judgement, to be realistic in their plans, and to set and
manage expectations.
+ Accountants who make decisions and solve issues can provide additional value that will enhance profitability for the
entire organisation.

Evaluating the Impact of Hard-to-Measure Initiatives

+ A key challenge in contemporary business is trying to determine the return on investment for initiatives
promising intangible benefits that are difficult to measure.
+ Such projects are often dropped because there may be no easy way to justify the measurement of expenditure. A
tool such as the ‘Most significant change technique’ can be readily used to validate decision makers’ determination to
take a chance on a hard-tomeasure initiative.
 Questions Answer
4.1 How might peak oil In a peak oil environment, an accountant would be expected to analyse the financial, operational and
affect an accountant in environmental impacts on the business and proactively work to ensure the sustainable future of the
business? business.
For example, peak oil is of concern to an accountant in preparing forecasts of fuel expenditures for staff
cars, raw material input costs, production and manufacturing costs, and for distribution of the organisation’s
products. If the organisation’s products or services rely on oil, and supplies become limited, this could
severely restrict the ability of the organisation to operate. With limited supply, the price of oil would be
expected to rise, potentially causing the organisation to become unprofitable.

In addition to forecasting, the accountant’s role would be to help prepare and position the organisation
to continue as a sustainable operation. This may include analysis and recommendations on new energy efficient
investments, alternative energy sources or even the development of new product/service lines.

4.2 Differentiate renewable These two sources of energy are differentiated by whether the production of energy consumers the energy
and non-renewable resource.
sources of energy. For example, non-renewable sources of energy are consumed to produce energy and the resources
are finite. Non-renewable energy sources consist of fossil fuels such as coal, oil and gas which were formed
naturally over millions of years from organic materials.
On the other hand, renewable energy sources do not consume the energy resource. Renewable energy sources
include hydropower, solar, wind, geothermal, tidal, biofuels and biomass.

4.3 Do you think it is ethical From a purely commercial point of view there does not seem to be an ethical dilemma involved in
for countries to outsourcing food production. Some countries have very little land available for agriculture, or their climate
outsource food does not support efficient production. The ability to outsource food production to low-cost nations that have
production? In your greater areas of arable land appears sensible.
answer, consider how However, it is important to consider how negotiations are conducted, and who they are conducted
the property rights of between. In many instances, governments negotiate directly with each other. Some governments are very
minority interest groups powerful and are willing to exert this power to extract deals that are very beneficial to themselves and can
should be dealt with. be quite detrimental to the other party. Corruption also creates a significant risk. Governments have been
known to sell or lease land that was held by minority groups without any consultation. This may also lead
to forced relocation or forced labour without compensation. Companies that are aware of these issues need
to acknowledge the ethical implications of their decisions with regards to the effect on local communities,
as well as the commercial side of the decision.

4.4 Water is an important • Reduce water usage. This can be achieved through governments imposing restrictions (such as for
scarce resource. Outline washing cars or watering gardens), promoting more efficient irrigation systems and domestic appliances
how water can be used (e.g. front-load washing machines), planting more drought-resistant plants and requiring licences or
more effectively and permits to draw water from public sources (such as farmers taking water from the Murray River system).
efficiently to improve the • Specialise in water quality. Match the quality of water to its required use, for example, higher quality,
long-term sustainability pure, potable water can be kept for drinking and lower-quality, non-potable water, grey water (recycled
of water as a resource. from sinks and washing machines) can be used for irrigation.
• Capture and recycle. Tanks can be used to capture rainwater and grey water. In some countries drinking
water supplies are being supplemented with recycled treated water.
• Meeting demand. Desalination plants, dams and pipelines are an expensive option to meeting demand
but pose other environmental impacts such as use of power, industrial waste and damage to ecosystems.
• Reorganising global trade by outsourcing food production. Foods requiring high water usage are
produced in those nations with the most suitable weather and agricultural locations. In addition, global
water usage may be reduced if food is produced in more efficient countries where there is more specialised
technology or better agricultural methods.

4.5 How is biodiversity Historically, the financial services sector has been seen as having a ‘low environmental impact’ given that
relevant to the financial it has little direct environmental impact — primarily, energy, water and paper for office workers. As such,
services sector, in understanding the relevance of biodiversity, what it is and how it can affect the sector, is often difficult.
particular accounting However, indirectly, biodiversity is often of real relevance to the transactions or investments that the
firms, law firms, financial sector is offering or advising on. Lenders, investment managers, insurers and advisory services must
planning firms and understand biodiversity-related risks that might increase project costs and liabilities as well as affect ability
insurance firms? Outline to secure a licence to operate in the future. Over the last decade or so, many of these advisory services
the possible impacts. have included using scientific specialists as part of the service team or joint venture arrangements to
access the appropriate experts. These experts undertake an evaluation of the transaction/investment and
highlight compliance, reputation and environmental risks. They then quantify these impacts financially
and include them in the transaction (the figures are generally not entirely accurate, as many impacts can
only be estimated).
This analysis reveals the relevance and complexity of biodiversity issues within the financial sector —
whether for a bank directly funding a project, a superannuation fund investing in the company undertaking
the project or a legal firm advising on the transaction. Immediate ecological impacts need to be considered,
as well as community perceptions and possible future political and regulatory changes.
 Questions Answer
4.6 Outline sustainability • Reducing pollutants. Plastics, once formed, do not decompose. Various product and process innovations
innovation practices have been developed in response to reducing plastics in the environment. For example, the ban of
aimed at reducing waste. single-use plastic bags in Australia and the development of biodegradable and recyclable packaging for
food items.
• Reducing waste. Developing viable alternatives to fossil fuels (but in the meantime using fossil fuels as
efficiently as possible); using water in a sustainable way; and reducing food waste (e.g. Woolworths’
The Odd Bunch food brand which consists of seconds such as oddly shaped fruit and vegetables).
• Reusing products either for the same purpose for a new purpose. For example, a wheelbarrow or a
bathtub can be repurposed and used to pot plants.
• Recycling. Reprocessing waste to create a new product. For example, reprocessing old tyres to produce
oil, carbon and steel. Old tyres are also used in manufacturing playground mats and road construction.

4.7 What impact has human Human activity has had a negative impact on the Earth’s climate. This impact is often referred to as climate
activity had on the change. Climate change is linked with the increased risk of extreme weather events, increased global
Earth’s climate? temperatures, melting of snow and ice and higher sea levels -> a primary environmental focus throughout the world.
There are many causes for these changes including:
• greenhouse gas emissions from burning fossil fuels (carbon dioxide) — for example, from burning coal
for electricity generation
• deforestation and other land use changes.

4.9 What would be some of Most firms will have an initial transition cost to operate in a carbon-constrained business environment.
the likely effects on However, where an ETS or carbon tax is in place, costs are often offset by bottom-line savings related to
business enterprises reducing GHG emissions, with the major savings being from a drop in energy consumption. The savings
transitioning to and will likely be compounded by rising energy prices. Hence, carbon-constrained economy measures are
operating in likely to lower waste and increase operational efficiency, raising long-term economic growth.
a carbon-constrained
economy? Proactive businesses that implement GHG-emissions measures early will gain a competitive advantage through
product differentiation, thereby increasing market share, reducing operating costs and increasing profit margins. It is
estimated that by 2050, markets for low-carbon technologies could be worth at least USD500 billion. Hence, a carbon-
constrained economic environment may provide an opportunity for innovative firms.
It is important to acknowledge that measures will certainly have a disproportionate effect on certain individuals, firms
and industries. For example, a carbon tax imposes a tariff at a fixed rate independent of
income. This would mean that low-income earners (firms or individuals) are taxed at the same rate as highincome
earners. A carbon tax may also be excessive for some social groups, particularly rural residents
and the elderly. Environmental and social campaigners argue that whatever type of method is applied, it
must have regard for:
• equity considerations
• individual and household welfare
• the transition of labour from high- to low-emissions industries
• the guarantee of energy security.

Substantial government funding is needed to sustain research, growth and the economic exploitation of
carbon-reducing technology, plant and equipment.
All firms will be exposed to increased supply chain pressure for low-emissions products and services,
which initially could be more costly. There is likely to be a substantial increase in business input costs (e.g. electricity,
water, gas, diesel, transport, waste services, packaging). There is also likely to be consumer
pressure for low-emission goods and services, resulting in disparity between supply and demand. There
will be a need to incorporate carbon accounting into business planning and operational process.

4.10 ‘A business cannot The underlying suggestions in the question are:

achieve sustainability • being sustainable incurs costs that reduce profitability
and maximise • a profit focus prevents attention from being given to matters outside cost minimisation and profit maximisation
profitability at the same • at best, by pursuing both goals they will cancel each other out to deliver what is called a zero-sum game
time — one must result — no improved profit and no improved sustainability.
always be sacrificed for However, this is not necessarily the case. For example, sustainable actions can grow profits, especially
the other.’ Do you agree as externalities become internal (e.g. carbon prices and Environment Protection Agency (EPA) controls).
or disagree? Explain your Competitive advantage can be gained. Some customers only want to buy from ethical/sustainable
answer. organisations and are often prepared to pay more for what they see as a superior or ethical product.
Similarly, some suppliers only want to deal with sustainable/ethical purchasers, and some investors only
want to invest with organisations that they perceive as being more ethical, with the consequent possibility
for reducing the costs of capital.
 Questions Answer
4.11 Differentiate physical Physical environmental management accounting (PEMA) provides an approach to account for resources in
and monetary non-monetary terms (i.e. physical units such as kilograms). It includes the use of tools to record material,
environmental energy and water flows, as well as incorporating physical amounts into budgets, forecasts and capital
management accounting investment evaluations. Developing systems that minimise pollution and waste and improve recycling are
practices and discuss linked to PEMA. Rather than entering invoices for utilities into the accounting system, PEMA involves following
how they relate to actions:
environmental • capturing the total energy usage for the period and comparing it to the budget
management accounting • identifying the usage between peak and off-peak times and maximising off-peak usage
(EMA). • assessing the emissions from the energy used and identifying ways to reduce emissions
• retrofitting high-use machinery with meters to assess energy usage and to look for efficiencies.
On the other hand, monetary environmental management accounting (MEMA) focusses on costs
incurred and costs that may be avoided. It includes tracking the costs of energy and materials used or
wasted, including costs relating to waste handling for recycling, treatment or disposal, insurance and
possible contamination liability and regulatory costs. These costs need to be adequately tracked and
estimated so that they can be managed or reduced, rather than simply bundling them into overheads. Tools
useful for MEMA include activity-based costing and life cycle costing.
Environmental management accounting (EMA) enables the costs and benefits of natural resources use
to be quantified and compared. Ideally, EMA internally accounts for and reports environmental benefits in
both physical amounts (PEMA) and monetary amounts (MEMA). Thereby, EMA provides the information
required to operate a business sustainably.

4.12 In the past, many As society has placed more value on protecting the natural environment and regulators have placed more
environmental costs of the burden on businesses, some of these costs will no longer be transferred outside the business.
associated with a
business’s activities were The costs imposed by some governments on greenhouse gas emissions are an example of transferring the
transferred from environmental cost of pollution back to become an internal cost to the organisation.
the organisation to
society. Such developments are expected to motivate companies to become more efficient, and to focus on minimising
Outline the impact environmental costs throughout the supply chain.
regulatory changes have However, regulatory developments may also make some industries unprofitable or may shift the competitive
had on businesses due to advantage between operators in different countries where different regulations apply.
the burden of some
environmental costs
being transferred back to
the business.

4.13 Outline two methods The balanced scorecard is a method of measuring business performance from financial and nonfinancial
organisations are using perspectives. The scorecard serves as a summary of performance against targets in those areas most
to integrate crucially relevant to achieving the business’s strategic goals. For example, commonly four perspectives
environmental measures would be included: financial, customer, internal processes and learning.
into the Many organisations using the balanced scorecard are now attempting to integrate environmental
balanced scorecard. issues into the balanced scorecard. One approach is to integrate measures throughout the existing four
perspectives of the scorecard. An alternative approach is to incorporate environmental aspects to create a
separate perspective or an area for environmental results, thus extending the scorecard from four to five
perspectives.
The benefit of a separately reported area for environmental performance is that it demonstrates the
importance and attention being devoted to this area. However, there is a potential downside. By separating
out environmental action and results, it can be perceived to be an add-on and tokenistic component to
the organisation — rather than being seen as integrated throughout all aspects of the business. Another
problem is that it tends to focus on outputs or results, but not on the drivers, causes or inputs. This limits
the identification of opportunities for change and improvement.

4.14 How could higher It is argued that a business’s credibility on sustainability issues increases its ability to win and retain
credibility on customers. In addition to any direct effect of marketing a business’s green performance, it is possible
sustainability issues that a focus on sustainability could help a business increase its competitive advantage through better
affect a business’s risk identification and by recognising opportunities associated with innovation and new environmentally
relations with staff friendly products. Although such product development could be costly, increasing sales is also likely to
and customers? increase profits. In turn, increasing profits could help the business borrow at cheaper rates. It is also possible
that the business’s efforts to improve its sustainability performance will help it to attract, motivate and
retain staff. Assessing risks and opportunities associated with sustainability issues could further lead to
better cost control through operational efficiencies and by avoiding waste, travel and regulatory costs.
 Questions Answer
4.15 a) What is a supply (a) A supply chain extends from a natural resource, through its extraction and activities of all suppliers,
chain? various phases of production and combination (including assembly) and through storage in various
(b) Why would a geographical locations. It ends when the product or service is in the hands of the consumer.
company be interested
in environmental (b) Supply chains naturally connect different organisations that are involved at different phases of the
information for other journey from raw material to consumer. The different organisations are connected through the supply
parties in its chain, but all are seeking to maximise their own performance and not expose themselves to unnecessary
supply chain? risks. Organisations at the various phases of the supply chain place demands upon one another and,
therefore, seek information about each other’s performance as it affects the relevant supply chain.
If one organisation has the potential to expose another organisation to environmental risks, the first
organisation will seek information about the other’s environmental performance. For example, if a
miner is involved in the extraction of the raw material used by a processor, the processor will be
concerned about any disruption to supply caused by changing legislation, environmental protests or
variable weather conditions. The processor could seek information about the miner’s compliance with
relevant legislation covering waste, for example. Further along the supply chain, a retailer could be
concerned about environmental information about food production.

4.16 Water reporting entities The water accounting framework focuses on the needs of water accounting report users. The water
are required to issue accounting conceptual framework identifies a broad range of water accounting report users. The main
water reports. Who will categories are:
use these water reports • water users — environmental, agricultural, urban, industrial and commercial
and for what types of • investors in water-dependent organisations and related parties such as lenders, creditors, suppliers,
decisions? insurers and water traders and water brokers
• government representatives and their advisers including water-related economic, environmental and
social policy makers
• water industry regulators
• water managers, including environmental water managers and water service providers, who may be
interested in not just the water entities they manage but water entities they depend on or compare to
• groups and associations with water-related interests
• water industry consultants
• academics
• interested citizens.
Users’ needs vary depending on their circumstances and the types of decisions they are considering.
However, water reporting entities would need to provide information about:
• the availability, commitment and quality of water resources and associated trends
• whether management objectives for water resource management are being met and, if not, why not
• the development and review of water resource policy
• the comparison (both over time for a particular water report entity and between similar water report
entities) of:
– annual water allocations, extractions, returns and of particular in-situ water levels and flows
– the extent of water entitlement and annual water allocation trading and associated trends.

4.17 Outline how natural Most businesses rely heavily on natural capital (the world’s stocks of natural assets including air, water,
capital is captured in land, soil, geology and biodiversity) for their operations and continued existence. However, it is a finite
financial reporting. resource, and escalating demands are being placed on an already overstretched resource. Most companies
do not understand the complexities of natural capital, nor do they have the approaches or tools for
accounting for the natural capital that their business draws upon.
Despite the importance of natural capital to human wellbeing and economic prosperity, it has only
recently become more commonly included in current financial reporting. However, there are some
disclosure requirements relevant to natural capital that organisations listed on the Australian Securities
Exchange (ASX) must meet. Most of these are recent, reflecting the increased desire for greater disclosure
of the risks related to natural capital. For example, note the following.
 Questions Answer
• Under the Corporations Act, if the entity’s operations are subject to any particular and significant environmental
regulation under a law of the Commonwealth or of a State or Territory, the entity must
provide details of the entity’s performance in relation to environmental regulations in the directors’
report. However, corporations are not required to disclose the financial impacts of non-compliance with
environmental regulations. Also, normally contained in the directors’ report, the operating and financial
review (OFR) requires a discussion of environmental and other sustainability risks where those risks
could affect the entity’s achievement of its financial performance or outcomes disclosed, taking into
account the nature and business of the entity and its business strategy.
• Under the ASX Corporate Governance Council Principles and Recommendations, entities are urged to
disclose any material exposure to environmental or social risks and, if applicable, how it manages or
intends to manage those risks. The inclusion of this recommendation reflects a growing recognition of
the importance of sustainability risks to investors’ medium- and long-term decisions.
• Within sustainability reports that are being produced — the major reporting framework is the Global
Reporting Initiative (GRI), which covers aspects of natural capital for which both quantitative and
qualitative reporting are commonly included in sustainability reports.
• Within integrated reporting — natural capital is one of the six capitals that are required to be reported
if material to the organisation. Where material, the associated risks and opportunities and the increased
emphasis to report on these (either by producing an integrated report, a sustainability report or other
reporting mechanisms such as Carbon Disclosure Project (CDP) or water accounting) means that it is
necessary to have a natural capital reporting system in place.

4.18 Describe how the Disclosures in the integrated report show the flow and transformation of capitals through the organisation.
disclosures in an Every organisation requires one or more of the capitals as inputs to its business model. These capitals are
integrated report show then consumed or transformed by activities that produce a range of outputs. Whether these outputs create
the flow and or destroy value depends upon the outcomes they generate. For instance, manufacturing a product that
transformation of appeals to customers will create demand and generate revenue; whether that demand is profitable depends
capitals on the market price that the product can command and the cost structure in the entire supply chain. In the longer
through the term, factors such as customer satisfaction, innovation, organisational reputation, ethical business
organisation. activities and environmental impact are all likely to affect aspects such as brand loyalty and the valuecreating
proposition of the organisation.

4.19 What is the difference The difference between sustainability reports and integrated reports is their scope. An integrated report
between a sustainability attempts to link an organisation’s sustainability report with its financial report and, therefore, has a greater
report and an integrated scope than a sustainability report.
report? Some organisations publish only financial reports (as required by the relevant regulations in their
jurisdiction), while others publish a financial report plus a sustainability report. Sustainability reports show
an organisation’s economic, environmental and social impacts.
Sustainability reports can be prepared by organisations according to any set of principles because there
are no mandated standards such as those that govern financial reporting. However, sustainability reports
based on the GRI reporting framework (the most commonly used reporting framework for sustainability
reports) disclose outcomes and results according to a set of principles governing the content of the report.
A third way of reporting adopted by some organisations is to integrate both the financial and sustainability reports
through the organisation’s business strategy and model. This helps organisations more fully explain the risks and
opportunities they face and how they are planning to deal with those risks and opportunities. The IIRC’s <IR>
framework provides details on some of the pathways that an organisation can use to prepare integrated reports.
 Questions Answer
4.20 The development of According to the GRI, the benefits of having sustainability reports assured include the following.
standards covering the • Increased recognition, trust and credibility. Stakeholders have a greater sense of confidence in disclosures
assurance of that have been assured.
sustainability reports has • Reduced risk and increased value. Assurance can increase the quality of data and reduce the risk that
lagged behind the data will have to be restated at a later date.
those for financial • Improved board and CEO level engagement. Sustainability data is being used at higher levels in
reports. Outline why organisations, and this is more likely when the data is assured.
having sustainability • Strengthened international reporting and management systems. External assurance reviews internal
reports assured is systems and helps them improve through auditors’ recommendations.
beneficial to • Improved stakeholder communication. Reporting and assurance can be part of ongoing dialogue with
stakeholders and briefly stakeholders.
discuss some of the Standards covering the assurance of sustainability reports include the following.
standards that have been • ASAE 3410 Assurance Engagements on Greenhouse Gas Statements. Covers the assurance practitioner’s
issued to provide responsibilities when providing reasonable or limited assurance on a greenhouse gas statement issued
assurance in accordance with NGER Act.
practitioners with • ASAE 3610 / AWAS 2 Assurance Engagements on General Purpose Water Accounting Reports. Covers
guidance when the assurance practitioner’s responsibilities when providing reasonable or limited assurance on a general
undertaking an purpose water accounting report.
assurance engagement • ASAE 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information.
on sustainability reports. Provides guidance for auditors undertaking an assurance engagement on sustainability reports.
• AccountAbility AA1000 Assurance Standard. Requires auditors to consider the organisation’s sustainability
performance and recommend improvements rather than to certify or provide an opinion on the
appropriateness of the data and reports as required by other standards.
 Questions Answer
5.1 Corporate governance While the term ‘corporate governance’ is often linked to large public corporations, all businesses need good
relates only to large public governance.
enterprises and is Governance is about the distribution of authority within an organisation to make decisions relating to its resources
therefore irrelevant for and the use of policies and procedures to ensure proper control and decision making for the effective and efficient
small business entities. accomplishment of aims, goals and strategies.
Discuss this statement. Therefore, governance is just as relevant for a small business as it is for a large public corporation.

5.2 Outline the possible If an entity breaches its social contract, the community may revoke the contract.
consequences for an entity Without a social licence to operate, the entity will experience efforts by stakeholders to oppose the business.
that breaches its ‘social For example, community-based environmental groups may campaign against the business, object to its development
contract’. and licence applications, and encourage other stakeholders, such as customers and investors, to boycott the business.
+ Customers might seek alternative sources of products or services (thereby reducing demand for products or
services)
+ Workers may choose other organisations to provide their labour services to (as such, the entity
may find it difficult to attract and retain competent staff and employees)
+ Entities may find it more difficult to attract sources of either debt or equity capital, impacting on the financial
viability of the entity.
+ Regulators may impose rules and restrictions on businesses operating in ways not aligned to
broader stakeholder concerns.

5.3 Discuss the relevance of The basic tenant of this theory suggests that entities, to remain legitimate, must operate within the bounds
legitimacy theory to and norms of society.
corporations. In other words, society allows the entity to operate (pursue their objectives and rewards) so long as the entity agrees
to act in a socially acceptable manner. Proponents of legitimacy theory call this the ‘social contract’. The ‘social
contract’ represents the explicit and implicit expectations that society has about how the organisation should conduct
its operations. An organisation must be responsive to these expectations as they change over time.

5.4 According to stakeholder Stakeholders are any group or individual who can affect or is affected by the achievements of an organisation’s
theory, which groups are objectives. Typically, this includes groups such as employees, customers, suppliers, financiers, trade unions,
organisational government bodies, community groups and communities more generally, and interest groups, such as environmental
stakeholders and what is campaigners.
the basis for their Stakeholder theory maintains that legitimate stakeholders are owed an obligation by the organisation
legitimacy? and its leaders. That is, they have a legal, contractual, moral or financial claim against the organisation.
Even though competitors can affect or be affected by an organisation’s achievements, the organisation and
its managers have no obligation, moral or otherwise, to consider their well-being. Similarly, the natural
environment is not a legitimate stakeholder, but an organisation may choose to care for the environment
because its legitimate stakeholders may care deeply about it.

5.5 Explain why organisations Balancing stakeholder interests is an important part of managing stakeholders to ensure the business has a
need to balance the needs social licence to operate and does not face constant opposition and disruption from unsatisfied stakeholders.
of diverse stakeholders Sometimes, stakeholder interests are compatible and many believe that balancing stakeholder interests is
over time. a path to competitive advantage and long-term prosperity. However, stakeholder interests can also be in
conflict, requiring compromises and trade-offs as the business seeks a position that is acceptable to all
stakeholders or at least sufficiently acceptable that the business can continue its activities.

5.6 What modes of The modes of communication used for internal communications will vary, depending on the size of the organisation,
communication are from face-to-face or paper-based methods to cloud-based methods or electronic and social media. The geographic
commonly used for spread of the organisation (e.g. a single office, multiple office, global) will also determine the mode used. Where staff
internal communications are travelling frequently or working remotely (e.g. field service, sales staff, hybrid work), mobile and cloud-based or
between management digital media will be used. The widespread adoption of cloud computing has facilitated the ability for staff to work
and employees? outside the central offices and from a variety of locations.

Another consideration for internal communication is the use of direct or cascaded information.
+ In direct communication, a common message is broadcast equally to all staff or to large groups. This has the benefit
of consistency but will tend to suffer from a lack of detail and relevance to different parts of the organisation.
+ Cascaded communication, which is passed down through the layers of management, allows the message to be
tailored to the needs of different parts of the organisation, but the consistency of the message may suffer through
modification or misinterpretation as it is retransmitted. It is also crucial not to skip a layer, creating confusion in
middle management.
 Questions Answer
5.7 Summarise the external • Shareholder communications. Formal channels are used to communicate with shareholders, such as:
communication channels – information released to the market — i.e. through ASX releases
that organisations use to – information provided directly to shareholders — i.e. email newsletters, annual reports & investor briefings
communicate with – information provided at shareholder meetings.
diverse stakeholder • Market and customer communications. Channel includes marketing, sales & customer support communications,
groups. including branding and advertising:
– market research and customer surveys
– organic distributed processes — consumer behaviour
– customer interactions such as through the provision of services
– email and social media.
• Supply chain communications. One to one or procedural, regarding the sourcing of appropriate suppliers
for products, services or raw materials and negotiating prices and delivery. Following negotiations, many
of the procedural aspects of the supply chain are automated using AI, automation, cloud computing or
smart contract technologies. Less process-driven aspects of supply chain activities benefit from open,
ongoing communication that facilitates suppliers giving early warning of problems and suggesting improvements in
procurement.

• Regular and government communications. Includes mandatory reporting requirements with regulators
and securities exchanges for publicly listed corporations. In the public sector, there is a channel for
ministerial reporting. Government communication has various forms of reporting that are mandated, and specific
requests for communication need to be responded to. In many organisations, these communications are handled by
the company secretary or a regulatory or government relations department. These communications are highly
standardised.
• Public communications. Includes general promotion of the organisation and may be combined or closely
aligned with market and customer communications. These communications are predominantly one-way
broadcasts. However, social media and other online platforms have transformed organisations’ public
communications into two-way exchanges. A public relations department may take on a major role in managing the
organisation’s reputation, including through news media and general public promotions, and by highlighting CSR
activities.

5.9 Evaluate strategies used Communication initiatives should be evaluated to assess whether they achieved their intended outcomes.
for assessing the results of This allows future efforts to be refined or remedial action taken where necessary.
communication with The most obvious way to evaluate the effectiveness of a communications initiative is to measure changes
diverse stakeholders. in the behaviour the communication was intended to affect. For instance, if an internal communication exercise is
informing staff of a need to lower overhead costs, monitoring changes in expenditure will help to indicate the
effectiveness of the communication. In the case of external communication, the effectiveness of a marketing program
may be assessed by looking for an increase in sales. These measures can also provide the return on investment of a
communications budget by assessing the result against the expenditure on the communications. However, care must
be taken to isolate the effect of the communications from other factors that may also be affecting the measured
result.
Not all communications programs are directly linked to the production of revenue or cost savings (e.g. general public
relations or brand-building campaigns) and may provide less tangible benefits, such as affecting company reputation,
that need to be measured in other ways.
Direct measurements of communication initiatives can also be attempted. For example, basic quantitative
measurement could examine the number of clicks on a website. However, such measures will not necessarily indicate
much about the effectiveness of the message.
Qualitative measures may be made by directly eliciting feedback from the target audience through surveys,
questionnaires, interviews and focus groups. Careful design of the questions is important to ensure the answers will
be useful. Focus groups have the benefit of allowing participants to discuss the issues with each other, allowing
questions to be clarified and often prompting a broader range of responses than a one-to-one technique. Qualitative
measures yield more information and reveal more detail about how the message is being received than do
quantitative measures. However, these measures require more time and resources to collect, and more time and
effort to analyse.
 Questions Answer
5.10 Effective communication Because meaning is negotiated between the creator and the consumer, rather than merely transmitted from
achieves its intended one party to another, there is always the risk that the communication effort will not have the intended meaning or
outcomes, but ineffective produce the intended effect. As such, ineffective communication can have negative impacts on an organisation’s
communication can have reputation and long-term value.
unexpected negative For example, ineffective internal communication has many potential negative impacts on an organisation’s
effects. Outline the reputation and long-term value. Poor communication due to lack of information or ineffective communication tools
potential impacts that provided for management and employees to collaborate and communicate:
ineffective internal • lowers morale, which impacts on both co-workers and customers as employees become disengaged, take
communication can have unnecessary sick leave and render poor customer service
on an organisation’s • reduces efficiency and productivity — employees may waste time looking for relevant information that
reputation and long-term should be readily available, roles and priorities may not be clear and projects may not be completed on time
value. • supresses innovation as collaboration is inhibited
• increases employee complaints as they are not sure of their role or processes and procedures to follow
• increases occupational health and safety accidents and stress-related illnesses as safety precautions may
not be taken
• increases employee turnover as employees feel left out, and have no or low job satisfaction.
The above instances of ineffective internal communication impact on the organisation’s reputation and long-term
survival as the negative impact on employees and management transfers onto interactions with external
stakeholders. For example, disengaged employees result in ineffective customer interaction, which limits the
organisation’s ability to build a loyal customer base, thereby impacting on the organisation’s bottom line. In addition,
disgruntled employees may take to social media platforms to air their complaints about their employers, damaging
the organisation’s reputation.

5.12 Assess the potential + Social media enables businesses to have personal direct contact with customers and other stakeholders, and also
impacts that the use of provides those stakeholders with a direct line to the company. It often puts more employees in customer-facing
social media may have on positions and so the company needs to train them to ensure they manage communications appropriately to prevent
an organisation’s any negative impacts on the organisation’s reputation.
reputation. + As social media provides more open and personal communications, the consumers of these tools have come to
expect creators to be open and honest — not only in what they say, but how they present themselves.
+ Many organisations have been successful in social media where they have engaged well with customers,
but suffered when they have been unresponsive. Any behaviour by organisations on social media that is
perceived to be covert, dishonest or negative can result in damage to their business reputation.
+ People engaging in social media on behalf of an organisation need to ensure that they always behave appropriately.
They need to remember that they are acting as spokespeople for their organisation and be aware that what they
present can affect the organisation’s public image. They should avoid inappropriate critical commentary that may be
seen as bullying, defamatory or impinging on privacy rights. Many organisations have social media policies and
contractual clauses in place for employees for this reason.
+ With social media, employees, customers and other stakeholders can become equal partners in a conversation,
rather than just passive consumers of information. This requires a culture of openness where people are free to
express themselves. As such, social media can also be seen as a risk mitigation tool as major issues that may affect
reputation will usually have been on social media for some time before making it to the traditional media.
 Questions Answer
5.13 Evaluate communication Different communication technologies are suitable to varying degrees for communication with investors,
technologies, other than employees, community groups, regulators, shareholders and other stakeholders. In addition to social media,
social media, that live-streaming, mobile apps, websites and other customer experience technologies enable the business and
organisations may use to stakeholders to engage in real time and on a more personalised level than older technologies allowed.
engage with stakeholders. • Live streaming. Allows users to access a live web-based audio and video broadcast. It may be combined
with a platform where questions can be typed, sent and answered in real time. It is often used for shareholder
meetings and allows shareholders who could not attend the live stream to watch later at their leisure.
• Mobile apps. Run on smartphones and newer device software such as Microsoft Office enabled laptops and tablets,
and are widely used by businesses to engage with customers and employees. These apps support rapid customer
purchases by providing access to services from almost anywhere, while employee apps enable workers to easily
access HR functions, such as shared calendars, leave forms and contacts when not based in their office.
• Websites. Used to promote an organisation’s brand and image, and products and services to enhance public
perception of a business. Websites are often clearly segmented into different areas for different stakeholders, so
investors, customers, suppliers and others such as community groups will each access a part of the website dedicated
to their interests.
• Customer experience technologies. Rely on big data, analytics and AI technology such as chat bots. While
businesses are using big data and analytics to understand their customers, they need to be mindful of their ethical
obligations to protect the confidentiality of customer data and only use it for legitimate and consented purposes.
• Chat bots. Software robots capable of mimicking human conversation that can provide a sophisticated level of
interaction with stakeholders, without the costs associated with human stakeholder engagement staff, are becoming
more important in providing customer support. They are available 24/7 and can interact with the business’s database
to quickly find information relevant to the enquiry that would otherwise be beyond human capabilities. As such, they
represent a threat to call centre jobs.

5.14 Evaluate strategies + Managing or building reputation is a long-term strategy that revolves around transparency, trust, efficient
organisations use to communication and solid long-term relationships with internal and external stakeholders of the organisation.
communicate with diverse + A range of diverse stakeholders, such as consumers, clients and shareholders, expect increased openness
stakeholders that and transparency from all organisations. This trend may be challenging for many traditional organisations,
establishes their trust and where openness may be perceived as threatening. But, when transparency is evident in a business’s
supports their communications, shareholders, investors and other stakeholders will develop trust in the organisation. Trust
organisation’s reputati is fundamental to survival — and supports the reputation of individuals, social groups and organisations.
+ Companies can build trust by consistently recognising and balancing the interests of different stakeholders.
Trust may have an emotional element, but it is also based on the consistent display of predictable behaviour and the
exchange of information. If a solid basis of trust can be built up within an organisation, then more open and honest
communication will result, enabling effective risk management and supporting the creation of improved business
value. It usually takes time and effort to develop and maintain trust in any relationship, yet trust can be rapidly eroded
or destroyed where one party in a relationship violates this trust.

5.15 Discuss the impact Businesses are increasingly incorporating sustainability practices into the themes they use in reputation
sustainability practices management. This may be in response to various combinations of ethical obligations, alignment with societal goals,
may have on an regulatory obligations and profit motives. Sustainable practices can contribute to different bottom line measures,
organisation’s reputation. including financial, social and environmental goals. To maintain a strong reputation and public trust, it is critical that
companies embed a sustainability focus into their business practices and communicate this effectively.
In addition, customers consider the sustainability characteristics of businesses and products when making choices
about what to consume. Likewise, responsible investors are more likely to invest in corporations with a reputation for
being environmentally-friendly. Businesses are increasingly seeking to leverage sustainability efforts or projects into
competitive advantage. However, reputation management efforts that do not accurately reflect the business’s
practices are unethical and, in some circumstances, may be illegal.
 Questions Answer
5.16 Define ‘greenwashing’ and Greenwashing refers to the use of deception to convince stakeholders that an organisation is undertaking
explain how it may impact sustainable practices when, in fact, it is not -> a type of unethical —often illegal — reputation management.
on an organisation’s An unfortunate consequence of greenwashing is that it can breed distrust and undermine consumer confidence in
reputation. genuine efforts by businesses to adopt sustainable practices. Various countries have regulated specifically to address
greenwashing, including Australia, where companies are prohibited from making misleading environmental claims,
and Canada, where environmental claims must be supportable by data.
It is a risky approach, as exposure of the deception can damage the organisation’s reputation.

Examples of greenwashing include:

• Huggies pure and natural nappies — made from organic cotton (even though the cotton may be shipped
from tens of thousands of miles away); highlights the eco-friendliness of the organic cotton but ignores the larger
environmental cost due to the huge amount of landfill required for disposal.
• Johnson Ziploc evolve sandwich bags — 25 per cent less plastic and made with wind energy, but still
plastic with landfill problems.
• motel/hotel chains claiming they are eco-friendly because guests are encouraged to reuse towels and
sheets, but lights and air conditioners run non-stop and recycling bins are not provided for guests.

5.17 Outline the reputational + With the advancement and popularity of social media, stakeholders can communicate with each other more easily->
risks involved due an news and ideas can spread quickly. This presents an extra challenge to organisations, who must monitor and manage
organisation’s online their online presence to ensure any emerging issues are dealt with. Negative stakeholder sentiment, particularly
presence. negative customer feedback, can spread broadly and quickly, leading to financial losses, customer losses, damage to
brand value, regulatory or legal burdens or penalties, and employee dissatisfaction or turnover.
+ Another important aspect of reputational risk in the digital sphere is the obligation to protect customer privacy by
ensuring customer data is held securely. The connectedness of business systems to the internet introduces
vulnerability to cyberattack. The potential loss or exposure of data to hackers is a major reputational risk.
+ Technology may be used to scan the digital sphere for fraudulent or defamatory use of the organisation’s
name, logos, brands and other intellectual property. This will ensure a bad review online can be responded
to quickly and directly to the aggrieved customer, acknowledging their input. This won’t always solve the issue, but
may help diffuse the customer’s negative sentiment and demonstrate to others that the business cares about
feedback. However, it is never a good idea to get involved in an online argument with an aggrieved customer.

5.18 Discuss how organisations Crisis communication with external stakeholders can take many forms and should be tailored to suit the audience.
often attempt to repair the Research shows that investors’ trust in the business improved if there were changes to the senior executive following
damage done to a a scandal. Because internal changes are difficult for outsiders to perceive, a highly visible change, such as the
company’s reputation replacement of the company’s CEO, serves as a sign of substantial change in the organisation. It is quite possible a
after a scandal. business will replace its CEO or other senior executives for the explicit purpose of demonstrating the company is
willing to make significant changes, even if the change in personnel is not particularly relevant to the underlying
issues.

5.19 Briefly explain five main • Communication, connectivity and hypertransparency — largely facilitated by digital communication and social
drivers of change in platforms. Local issues can be brought to global attention due to the development of enormous social networks
stakeholder engagement. where information can be shared in real time, free of filtering or intermediation. For businesses, this means activities
that fall short of expectations can be tied to much larger social and environmental movements, far beyond their local
operating environment.
• Individual empowerment and the rise of the middle class — as living standards and levels of education
are improving across many parts of the world, so too is dissatisfaction with inequality, poor social outcomes, corrupt
and dysfunctional government, and a lack of sustainability in business approaches. Moreover, this dissatisfaction is
increasingly accompanied by the ability and willingness to protest.
• The demographic shift and the automation of work — automation of jobs and the aging of the population
in many economies is likely to see a substantial shift in the role of work in an economy.
• The primacy of climate change and water resources — concern about climate change and the use of finite natural
resources have also brought pressure on businesses from a variety of stakeholders to adopt more sustainable
practices.
• Supply chain scrutiny — greater concern with the supply chains (or networks) that businesses use has expanded the
scope of scrutiny on businesses. They are now increasingly held accountable for the actions
of those in their supply chain and so must engage with suppliers to ensure they uphold the business’s standards.
 Questions Answer
5.20 Explain how a systems One way for businesses to engage more deeply with stakeholders and to better manage stakeholder relationships is
thinking approach enables to take a systems thinking approach to identifying stakeholders, recognising that stakeholders
a business to identify all its do not exist in isolation, that they communicate with each other and that there may be stakeholders
relevant a step removed from the business that are crucial.
stakeholders. A systems thinking approach involves analysing the environment in which the organisation operates to identify a
wider range of stakeholders who may affect the business. This approach benefits stakeholders in that it helps a
diverse range of stakeholders engage with the business, rather than just those who have the most resources or
‘loudest voice’. It gives attention to marginalised groups, which will vary depending on context, but may include those
facing socioeconomic disadvantage, women, youth and so on.