Ethics, social, and environmental issues are at the heart of the ACCA Qualification. As well as understanding the need to support practising accountants, ACCA also recognises that the inclusion of sustainability and environmental issues throughout the ACCA Qualification is of vital importance for future generations of finance professionals.
In addition to the added emphasis placed by the syllabus on social and environmental responsibilities, ethics forms the core of the qualification. As well as the key Paper P1, Professional Accountant, which focuses on ethics, governance, and sustainability issues, the ACCA Qualification also includes an innovative Ethics and Professional Skills module which gives prominence to ethics and the integrity of the professional accountant. The qualification aims to develop individuals with integrity, and who will do the right thing rather than doing what is convenient or merely permissible.
Students are introduced to corporate and social responsibility (CSR) from the moment they start to study for the ACCA Qualification. Paper F1, Accountant in Business, identifies what is meant by CSR and links it to external and internal stakeholders, as well as to good governance. The paper also requires students to consider the impact of social and demographic trends and factors on business, immediately making them aware of the importance of people. Students are also encouraged to start thinking about the key environmental influences and constraints on the way in which a business operates. These initial skills are developed further in later papers.
Paper F7, Financial Reporting, enables students to understand how to account for environmental provisions and introduces them to the various types of provision needed in this area. Such provisions include those arising from factors such as contamination of land, offshore extraction of oil, and quarrying of land.
At the Professional level, compulsory Paper P2, Corporate Reporting, examines environmental issues (which have featured since 2001). Students are required to examine the accounting impact of environmental and social factors on an entity. Students also look at the impact of these factors on actual corporate reporting. The Paper P2 syllabus goes further by requiring students to consider the impact of environmental and social issues on performance measurement. As a result, it encourages students to think about key performance indicators in more than purely financial terms. Students are also asked to consider the ethical duties of the reporting accountant, specifically including their social responsibility and the increased need for transparency.
Audit and assurance
The advanced audit and assurance paper in the Professional Scheme required students to be aware of social and environmental audits, and the duties of auditors in respect of social and environmental reports produced by a company as part of its financial statements. Paper P7, Advanced Audit and Assurance, takes this level of knowledge further and has a full, detailed section on social and environmental auditing to reflect its prominence. This includes teaching students how to deal with the independent verification of an Environmental Management System. Students are also required to consider sustainability factors as part of performance measurement.
There are three papers in the syllabus dealing with different aspects of management. Compulsory Paper P3, Business Analysis, requires students to use PESTEL analysis to examine the impact of social and environmental factors (among others) on the strategy of a business. Students are expected to examine the scope of CSR in relation to the expectations of stakeholders.
Paper P4, Advanced Financial Management, is an optional paper, and includes a significant section dedicated to environmental issues. It requires students to assess the issues that may impact upon corporate objectives and corporate governance arising from sustainability and environmental risk, including consideration of the carbon trading economy and carbon emissions. The role of the environmental agency is highlighted in this paper, and, more importantly, students are required to consider fully the triple bottom line approach. Ethical considerations of actions are also pervasive in this paper.
Optional Paper P5, Advanced Performance Management, requires students to consider the impact of social and ethical obligations in pursuit of corporate performance objectives. Additionally, it teaches students about environmental management accounting. In this paper students can be asked to consider the impact of social and ethical issues in any given scenario.
Leading the way
ACCA's flagship Paper P1, Professional Accountant, is dedicated to professionalism and ethics. Syllabus topics include governance, internal control and review, the identification, assessment, and control of risk, and ethics. The corporate governance section includes corporate governance and CSR, considers how to critically assess the concept of stakeholders and stakeholding in an organisation, and how to examine the impact this can have on strategy and corporate governance. Twenty per cent of the syllabus is devoted to professional values ethics, including concepts specifically related to sustainability, and the cultural context of ethics and CSR.
The public interest role of the accountant is further developed in Paper P1. It is introduced to students on registration and is given prominence in the Ethics and Professional Skills module. However, it is in Paper P1 that they first need to apply this knowledge to scenarios in a very practical manner.
Prominence is given in this paper to social and environmental issues in the conduct of business and ethical behaviour. Students will assess the social and environmental effects that economic activity can have in terms of social and environmental 'footprints'. They will need to explain and assess the concept of sustainability and evaluate the issues concerning accounting for sustainability, including the contribution of 'full cost' accounting.
At each level of the ACCA Qualification, ethics, sustainability, and environmental issues are an integral part of the majority of the exams. The ACCA Qualification enables all new members to be fully conversant with current issues in sustainability and environmental reporting.
A booklet, Sustainability and the ACCA Qualification, summarising the syllabus and ACCA's sustainability policy, is available to download.