Category: Accountability

Essence and Critical Analysis of Financial Accountability

Introduction

Q. What is financial accountability?

Financial accountability is a concept about respective accountability with in a financial process. This helps to maintain a string effective and efficient divisional financial control environment. This helps to understand the aspects of financial management and control within an organisation. Bifurcation and classification of roles and responsibilities and liabilities among organisational departments and divisions is one of the key aspect of financial accountability. With the help of financial accountability concept managers and employees become ensure each position and important role in financial process. Desired and eligible persons are appropriated and allocated financial position and roles for effective and better performance.

Financial accountability provides relevant information and data subject to better financial control and management. It reduces the level of errors and control in respect of effective management and operation. Financial process helps to maintain strong effective departmental financial control and environment. Moreover, it prevents misappropriation and fraud in business departmental financial process. Financial process of organisation would be able to produce appropriate and accurate information in order to attain financial expertises and control. A well designed and perfect financial accountability structure serves the foundation for building effective financial process with in organisation and business.

(1) Net income statement after tax

Net income after taxes (NIAT) is a bookkeeping term regularly found in an organization’s yearly report, and used to demonstrate the organization’s complete ‘primary concern’ for the bookkeeping time frame. At the end of the day, it demonstrates what the organization earned after the entirety of its costs, charge-offs, deterioration, and expenses have been subtracted. This figuring is typically appeared both an all-out dollar sum and a for every offer count.

Net income after taxes (NIAT) is basically the net gain of a business less all charges. It is the whole of all incomes less all costs, including cost of merchandise sold, deterioration, intrigue, and duties. While it is equivalent to total compensation, generally, it is utilized in budget reports to separate between salary before expense and pay after duty. Since it is the keep going line on an organization’s pay explanation, NIAT is additionally alluded to as the primary concern.

NIAT is a standout amongst the most examined figures on an organization’s budget report. The sum recorded gives a sign of the productivity of an organization which decides if the firm can remunerate its financial specialists and investors. An expansion in benefits over different periods commonly prompts an increment in the business’ stock cost. An organization with an overall gain that is negative or beneath normal might be a start-up firm, a forcefully developing firm, or a firm encountering a decrease in deals or poor cost the board.

To more readily look at organizations or businesses utilizing NIAT, it is increasingly successful to utilize the figure as a level of another. For instance, the net revenue is NIAT as a level of all out offers of an organization. The overall revenue apportions the amount of each dollar of offers an organization keeps in income. A 20% net revenue, for instance, implies that for every dollar of offers produced, an organization keeps $0.20 in benefits. The ordinarily utilized value income (P/E) proportion likewise utilizes the overall gain number to decide how much financial specialists are paying for every dollar of benefit the organization can produce.

Net income after taxes isn’t the all out money earned by an organization over a given period, since non-money costs, for example, devaluation and amortization are subtracted from income to get the NIAT. Rather, the income proclamation is the reference to how a lot of money an organization produces over a period.

While the net income after taxes calculation is a standout amongst the strongest proportions of an organization’s act, various bookkeeping embarrassments as of late have turned out to be under 100% dependable. Speculators assessing an organization’s main concern need to evaluate it for genuine and future costs that bookkeeping rules grant an organization to avoid from their current NIAT estimation.

Budgeted Income statement of OLA Plc for the year ended 2018

Particular

Amount (€)

Projected Sales

1,125,000

Projected Sales Revenues

45,000,000

Per Unit Information:

Sales Price

45000000

Variable Costs:

Direct Material

-4500000

Direct Labour (Variable)

-10125000

Variable Production Overhead

-3375000

-18000000

Contribution

27000000

Selling Expenses

Per unit information:

1. Sales price €45000000
2. Direct material = (projected sales-1125000 )*(direct material cost per unit-4)= 4500000
3. Direct labour = (projected sales-1125000 )*(direct labour cost per unit-9)= 10125000
4. Variable production overhead = (projected sales-1125000)*(variable production cost per unit-3)= 3375000
5. Gross profit = (sales price 45000000) – (direct material-4500000 + Direct labour 10125000+Variable production overhead 3375000) = 27000000
6. Net profit before tax = (gross profit 27000000) – ( manufacturing OH 2000000 + Administrative expenses 7050000 + selling expenses 10000000 + variable production overhead 33750000 ) = 4575000
7. Net profit after tax = (net profit before tax 4575000) – (tax 571875)=4003125

(2) Breakeven points in units

Break-even analysis is a technique widely used by production management and management accountants. It depends on ordering creation costs between those which are ‘variable’ (costs that change when the generation yield changes) and those that are ‘fixed’ (costs not legitimately identified with the volume of creation). All out factor and fixed expenses are contrasted with deals income all together with decide the dimension of offers volume, deals esteem or creation at which the business makes neither a benefit nor a misfortune (the ‘break-even point’)

Fixed Costs

Fixed expenses are those business costs that are not legitimately identified with the dimension of creation or yield. As such, regardless of whether the business has a zero yield or high yield, the dimension of fixed costs will remain comprehensively the equivalent. In the long haul fixed expenses can adjust – maybe because of interest underway limit (for example including another manufacturing plant unit) or through the development in overheads required to help a bigger, progressively complex business.

Variable Costs

Variable expenses are those costs which change straightforwardly with the dimension of yield. They speak to instalment yield related sources of info, for example, crude materials, direct work, fuel and income related costs, for example, commission.

A qualification is frequently made between ‘Direct’ factor costs and ‘Circuitous’ variable expenses.

Direct factor costs are those which can be straightforwardly inferable from the creation of a specific item or administration and allotted to a specific cost focus. Crude materials and the wages those taking a shot at the generation line are genuine models.

Aberrant variable expenses can’t be straightforwardly inferable from creation however they do shift with yield. These incorporate devaluation (where it is determined identified with yield – for example machine hours), support and certain work costs.

Breakeven point = (fixed cost 19050000) / (selling price 40 – variable cost 19) = 907142.85

(3) Breakeven points in monetary value

Profit volume ratio: profit volume ration defines the connection between the commitment and deals cost. There is a rate determined among commitment and deals for deciding benefit volume proportion. Deducting level of variable expense is another strategy to assess benefit volume proportion. With the assistance of benefit volume proportion records and administrators become qualified to bifurcate the variable cost edge for figuring commitment. Benefit volume proportion assumes indispensable job in regard of figuring earn back the original investment deals in money related esteem. This is likewise determined by estimating change in benefit and change in deals volume proportion (Green, 2011). This fundamentally remain related with minimal expense for better computation of commitment. There is one corresponding relationship found between deals edge and commitment which is on the off chance that the deal cost increment all the more similarly peripheral cost, at that point commitment rates goes higher. Same according to on the off chance that deal value decline, at that point commitment rate get decline.

Breakeven point of in monetary value = Total Fixed Cost 19050000 / (Selling price per unit 40 – Variable cost per unit 19 / Selling price per unit 40)= €36285714

(4) A calculation of target volume in units in order to generate profit before tax of €6000000

Desired sales: this is calculated on the basis of fixed cost and considering desired profit. Organisation calculated desired amount of production for getting targeted or projected profit for a particular period. This is also a part of break-even analysis (Costa, Ramus and Andreaus, 2011). This helps to analyse the cost of operation and analysis of evaluation of optimum quantity of sales.

With the help of fixed cost desired sales units are calculated in given scenario. Fixed cost for is €19050000 for the year 2018. As per above business problem OLA plc desired sales is calculated as follows:

Formula = (Fixed cost + Desired or targeted profit) / contribution per unit

= (€19050000 + €6000000) / 21 = 1192857.143 units

as per above analysis of break-even sale if organisation wants to earn €6000000 for the year 2018 then it has to produce 1192857 units for the year 2018.

(5) A calculation of target in monetary value in order to generate profit before tax of €6000000

Calculation of sales monetary value on the basis of €6000000 profit are as

Target volume in units = Total Fixed Cost 19050000+ Target Profit Amount 6000000 / (Selling price per unit 40 – Variable cost per unit 19/ Selling price per unit 40)= 47714286

(6) A calculation of the margin of safety % assuming that the annual sale of 1125000 units are achieved

Margin of safety = (Projected sales 1125000 – Breakeven point 907142.85 / Projected sales1125000) * 100 = 19.36%

This shows that the margin of safety of Ola Plc is 19.36% after assuming the annual sale of 1125000 units.

(7) A calculation of how many units must be sold to earn profit after tax €5000000

Target units to be sold = Total Fixed Cost 19050000+ Target Profit Amount 5000000 / Selling price per unit 40 – Variable cost per unit 19 = 1145238

To achieve profit €5000000 OLA plc have to sell at least 1145238 units.

(8) Based on changes, calculation of breakeven points in units and revenue for 2019

According to report, the selling price of Ola Plc will be increasing by 10%, the variable costs will be increasing by 205 and the fixed costs will increase by around €2,500,000.

As per the report for 2019, Selling price per unit will be € 44,Variable cost per unit will be € 22.8,Total fixed costs will be € 21,550,000.

Breakeven point = (fixed cost 21550000) / (selling price 44 – variable cost 22.8) = 1016509 units

Breakeven point of in monetary value (revenue) = Fixed Cost 21550000 / (Selling price per unit 44 – Variable cost per unit 22.8 / Selling price per unit 44)= €44726415

Conclusion

This report is prepared to analyse financial accountability for subject to presenting financial performance. Financial accountability is measured by analysing profit subject to adjustment of variable and fixed expenditure. Concept of accountability is elaborated in respect of Ola Plc which is largest manufacturer of an oil based products. Profit is evaluated on the basis of accounting techniques. Break even analysis and margin of safety also defined in this context. How financial accountability helps to maintain finance management and better control of financial resources also defined in this context.

References

1. Drury, C. (2008) Management and cost accounting. London: South-Western Cengage Learning.
2. BSCI (2015) What is the Balanced Scorecard? Available at: http://balancedscorecard.org/Resources/About-the- Balanced-Scorecar
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4. DeJarnatt, S. L., 2013. Keep following the money: Financial accountability and governance of cyber charter schools. The urban lawyer. pp.915-951.
5. Ngwakwe, C. C., 2012. Public sector financial accountability and service delivery. Journal of Public Administration. 47(Special issue 1). pp.311-329.
6. Saxton, G. D. and Guo, C., 2011. Accountability online: Understanding the web-based accountability practices of nonprofit organizations. Nonprofit and Voluntary Sector Quarterly. 40(2). pp.270-295.
7. Ball, A., Grubnic, S. and Birchall, J., 2014. 11 Sustainability accounting and accountability in the public sector. Sustainability accounting and accountability. p.176.
8. Shaoul, J., Stafford, A. and Stapleton, P., 2012. Accountability and corporate governance of public private partnerships. Critical Perspectives on Accounting. 23(3). pp.213-229.
9. Bagnoli, L. and Megali, C., 2011. Measuring performance in social enterprises. Nonprofit and Voluntary Sector Quarterly. 40(1). pp.149-165.
10. Costa, E., Ramus, T. and Andreaus, M., 2011. Accountability as a managerial tool in non-profit organizations: Evidence from Italian CSVs. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 22(3), pp.470-493.
11. McDowell, E. A., Li, W. and Smith, P. C., 2013. An experimental examination of us individual donors’ information needs and use. Financial Accountability & Management. 29(3). pp.327-347.
12. Green, J., 2011. Education, professionalism and the quest for accountability: Hitting the target but missing the point (Vol. 26). Routledge.
13. Zietlow, J. and et. al., 2018. Financial management for nonprofit organizations: Policies and practices. John Wiley & Sons.

Prudential Investigation at the Commonwealth Bank of Australia

The prudential inquiry into Commonwealth Bank of Australia which delivered its final report in April 2018 identified three types of problems, they are as follows.

Governance

The first type of problem mentioned in the report is governance. Governance can be defined as the way in which decisions are made. This means how the financial objectives, values and strategic priorities undertaken by a firm impacts on the decision-making and risk-management and how such decisions which are made are implemented. Since governance involves decision-making, the Panel described the decision-making in CBA as overly complexed and bureaucratic. This had favoured collaboration over timely as well as the effective outcomes which slowed the process of detection of risk failings. Problems also arise when a firm is reactive rather proactive. The proactive approach focuses on taking actions before they appear and thus making a firm well prepared in order to deal with the problem when they arise. CBA however was reactive while dealing with their risks. It is always beneficial to have to plan before the risk appears rather than tackling and coming up with measures after they appear. Operational risk in CBA received attention only after they had emerged clearly. This also had an impact on their reputation. The solution to this risk may not always be timely and effective.

According to the Panel report on CBA, at all their levels, the degree of attention and priority given to the governance and management of non-financial risks was not up to the standard, considering the Commonwealth Bank of Australia being a domestic systemically bank. In terms of risk-management, the board along with their other committees, suffered from shortcomings in the governance of non-financial risks. The Board did not have the right balance of summarised and detailed reporting in the risk areas nor did they strive to make any improvements. While at the executive committee level, there was a lack of accountability for the non-financial risk management and lax remuneration practices. This ultimately led to inevitable weakness in relation to their emerging risks and customer related issues. The serious non-financial risk issues were also not identified and addressed in its early stage. The Panel observed an imbalance between the ‘voice of finance’ when it was compared to the ‘voice of risk’ and ‘customer voice’ collectively. The trade-off decisions were given a priority over the customers’ voice decisions even though treatment of their customers is very important for their reputation and public standing.

In order to deal complexity and to organise their risk governance, it has become a norm for the banks to implement the ‘Three Lines of Defence Model’. The first line of defence is the business, the second line is the independent risk management and compliance function and the third line is the independent audit function of both external and internal audits. However, CBA had failed to implement this model efficiently despite their number of attempts over the years.

Accountability

Accountability is one of the five of CBA’s core values and is the second type of problem mentioned in the Panel. It can be defined as a process in which the staff of CBA collectively and individually fulfil their responsibilities. It provides a better clarity on personal accountability for risk management through detailed mapping of accountability to roles. Training on softer skill development and mindsets helps to build a culture of active identification and mitigation of risks.

The staff also has to suffer the consequences of failing to do so. Remuneration outcomes is defined as one of the best methods to hold the staffs accountable for their mistakes. CBA’s application of remuneration policies to support the accountability and effective risk management hardly helped. The Board did not hold the senior authorities to account for the risk and outcomes which happened on their watch.

There are a number of reasons behind CBA’s struggle with accountability, like the trust, over consulting and the federated organisational structure. CBA suffered the consequences of having a federated organisational structure. The executives were empowered about their respective business units but still was confused about the accountability for risks and issues in such business units. There was also a lack of consent and vision at the executive committee level. Accountability also failed in AML-CFT compliance. There was a lack of awareness of the roles and responsibilities of Line 1 and Line 2. An example of such confusion is mentioned in the Panel. The project to achieve compliance was run by Line 2: group operational risk and therefore the accountability for achieving compliance was with that team. However, they failed to achieve the compliance where Line 1 was mentioned as the owner of such risk.

Limited appetite to apply consequence management is also another struggle. The first example under this topic, talks on how complexity is used as an excuse for spreading accountability. The second example mentions how the senior authorities at the higher levels were not held responsible for resolving unclear roles and responsibilities at the lower levels and the third talks on how the accountability of Line 1 was not applied consistently.

There was also a lack of accountability for risk systems such as the collateral management system which records collateral. The credit risk limit system monitors and manages the credit exposures relating to derivatives while the country risk management systems which is required Line 2 to sponsor the project to improve CBA’s ability to manage its overseas exposures effectively in the absence of Line 1.

Culture

The third type of problem is culture and leadership. Culture is the norms of behaviour for both individuals and groups within CBA, which determines their collective ability to identify, understand, discuss, escalate and action taken on the current and future challenges and risks which are faced by them.

Under culture too, the Panel mentioned the staff being reactive. The senior level has a reactive approach to the operational risks. The staff have been good at reacting, flagging and tackling the issues once the rise, however they are lacking in the follow through issue resolution. There has also been a slow and reactive approach to regulatory interaction.

The risk function had an uneven, inconsistent and weak influence across the CBA. The risk function is said to have faced more obstacles than the business units while carrying out its mandate. Credibility, authority and respect of the risk function has been inconsistent and weak across CBA.

The CBA staffs also failed to learn and reflect from their past mistakes. The meetings held tend to focus on speed and intellectual debate rather than on reflecting their mistakes.

The working environment in the CBA is said to have a high level of trust among the various staffs at different levels. According to the Panel, this strength was exaggerated and has somewhat led to over-confidence and over-collaboration in abilities.

CBA also strived to balance empowerment with challenge which was in the end not executed well. The objective to empower Group Executives and encourage challenge was well intended but it was not put into practice.

The CBA sees itself to have a strong customer orientation, however it is still incomplete. They did not pay enough attention on identification of systemic issues their customer complaints. The small percentage of the customers complaints was not addressed efficiently and CBA failed to devote a sufficient attention in identifying the systematic issues or applying a long-term mindset.

Impact of These Problems on Financial Intermediaries and Their Customers

These problems have a negative impact on the financial intermediaries itself and therefore leads to a negative impact on their customers too. Lack of accountability for non-financial risk management and lax remuneration practices at the executive committee level led to an inevitable attitudinal weakness in relation to emerging risks and customer issues. There has been too much focus on the short-term aggregate customer satisfaction and a lack of focus on resolving poor experiences from customers. The identification of customers complaints has been weak. The board did not receive any analysis on the customer complaints nor was there evidence on the review of any systematic risks that such customer complaints might highlight. The board materials did not include any discussion related to their customer complaints or any risk arising from individual complaints.

The customer complaints of CBA have found their way into the public domain and this has therefore casted CBA into a poor light. This can therefore lead to unsatisfied customers and can damage the firm’s reputation in the market in the long run. Financial intermediaries who want to have a good reputation among their customers and in the market need to train their staff to on how to identify, handle and solve such problems.

Role of Regulation in Addressing Governance, Culture and Accountability Issues in Financial Intermediaries

On the 28th of August 2017, the Australian Prudential Regulation Authority announced that it would establish a prudential inquiry within the CBA group. The main reason for this is to identify the shortcomings in the frameworks and practices in the area of the problems and to find a solution on how to address such shortcomings.

Regulation under governance can be done with the APRA’s Standards. The board needs to undertake the annual assessment of its performance and that of its directors in response to the requirements under the Prudential Standard CPS 510 Governance. This handles the over-confidence in operations of the Board Audit Committee (BAC) and Board Risk Committee (BRC) and lack of benchmarking in the financial intermediaries. The board is also required to form a view on risk culture under the Prudential Standard CPS Risk Management.

The regulation of culture and leadership is also done under the APRA’s standard. In order to ensure that CBA has a healthy risk culture, CBA will have to take a complete approach which includes the targeted steps to solve their cultural and leadership weakness. These steps which are undertaken must be aligned with the requirements of the Board and management to form a view on risk culture under the Prudential Standard CPS 220 Risk Management.

Regulation of accountability is done under the Banking Executive Accountability Regime (BEAR) which strengthens APRA’s power in assessing the transparency and accountability of decision-making processes withing the authorised deposit taking institutions (ADIs). In the year 2009, the Financial Stability Board (FSB) released its Principle for Sound Compensation Practices and accompanying Implementation Standards, which was designed to achieve a clearer alignment between the remuneration practices and prudent risk-taking. In the year 2009/2010 APRA then gave effect to these FSB’s principles through amendments to its prudential standards on governance and introduced the Prudential Practice Guide PPG 511 Remuneration. This established the minimum requirements and better practice expectations in relation to the design, the governance and to the implementation of remuneration policies.

The ‘Three Lines of Defence’ model too was also applied by various financial intermediaries in order to solve these three problems. We can therefore say that regulation plays an important role in financial intermediaries in helping them to address these problems.

Actions of Financial Firms to Identify and Rectify These Problems

The financial firms have to not only be prepared physically but also be prepared mentally in order to identify and rectify the problems faced. The Panel mentions how one should change their mentality from ‘can we do it’ to ‘should we do it’. To solve the problem of governance, CBA has applied the risk management framework, which helps in identifying, measuring, evaluating, monitoring, reporting and in controlling the internal and external sources of risk. CBA’s risk management framework for identifying and managing risk related to operational and compliance involved certain processes. The ‘Risk in Change’ is one of the process and was strengthened by CBA. This process is used in order to identify and manage risks. The BRC oversees the implementation and operation of this framework while the BAC provides an objective review of the effectiveness of the reporting and the risk management framework. The Board Remuneration Committee too plays a role in overseeing the bank’s remuneration framework and assists the Board to ensure that the remuneration objectives and the structure of its remuneration arrangements are appropriate.

Under accountability, the effective accountability mechanisms undertaken by firms can help in identifying and in escalating the new and emerging risk issues. CBA makes it clear to the staff regarding their responsibilities. In order to rectify the problem of accountability, CBA makes it clear to their staff that everyone understands and deliver what is expected of them. It also expects its staff to acknowledge their mistakes, to escalate and learn from them. The team leaders too have the responsibility of setting clear expectations of each person and the team. CBA identified that further investment is required in order to improve the understanding of accountability across groups. This involved training of staff and remediating the work on the ‘Three Lines of Defence’ model. Risk management program was also used to rectify and to address the problem of accountability. Accountability principles are used by CBA to make sure that their executives who demonstrate accountability ensures an effective supervision in delegated activities. They enable appropriate funding, resourcing and proactively responded to the material risk issues to ensure that they do not persist without effective resolution. CBA has committed to adopt all the recommendations from the ‘Sedgwick Report’ on sales commissions and product-based payments in the retail focused businesses.

Possible Ethical Issues in Project Management

The project management is “the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements” (Project Management Institute [PMI], 2004, p. 23). According to the definition, we can find that the objective of project management is to realize the value of a project, which is to meet the project requirements. The value of project management includes two dimensions. On the one hand, project management turns resources into the project outputs, thereby realizing the value of a project. On the other hand, value of project management also comprises the sum of incremental values for all of the stakeholders, including cost saving, performance improvement, and other interests through the process of value realization of the project.

Ethics can be defined as a way of thinking and making decisions based on what is right for people we relate to in a project while ensuring maintenance of our own organizational mission and vision. This essay will however discuss three ethical issues which are inter-related to the organizational code, professional code and personal values.

The three ethical issues that I can already identify in the K2m cocoa project: accountability; conflicts of interest; health and safety concerns at workplace.

Stakeholder Engagement

The project stakeholders are the National Department of National Planning, Asian Development Bank, 5 villages in Central Bougainville and their various communities which consists of landowners, farmers, local authorities, NGO’s, CEPA, TPA, DAL, Prov. Govt etc. Some of these stakeholders will favor the project while others might cause concern for the project.

Firstly, in order to properly manage all the stakeholder concerns I would ensure professionals are hired to manage stakeholder engagement process. I would expect the experts to conduct Stakeholder Identification to identify all Project Stakeholders and then Stakeholder Mapping to map out different stakeholders according to their support for the project and what their concerns might be and then prepare a Stakeholder Engagement Management Plan to engage with each of the stakeholder groups to present to them information they might require of the project and address any issues of concerns they might have. A grievances management process will also be established to manage any project related grievances. Ethics will be applied in addressing some of these grievances.

Freeman (1984) developed the original concept. He considered the stakeholders as any group or individual who can affect, or is affected by, the achievement of the firm’s objectives and who may be either primary or secondary.

Different types of stakeholders are involved in a project. Leung, Chong, Ng, and Cheung (2004) pointed out that not all project participants would have agreed upon goals in terms of time, cost, and quality, and conflicts between stakeholders may arise in some circumstances. Therefore, the value of a project has multiple dimensions, which are coordinated and integrated among the value demands of multi stakeholders

At the same time, some potential stakeholders may find that their benefits could be affected, and therefore claim their expectations toward the project. The project manager will then have to balance more value demands as the project progresses.

Accountability

Accountability can be defined as being responsible for what one does and being able to give justification for actions one takes in managing project related decisions. With the case of this project, I as the project manager have to be accountable to all the concerned project stakeholder parties. From an organization code perspective, the organization needs to have project management plans that consist of instruments for accountability to project stakeholders. The various instruments could include stakeholder engagement plans, communication plans and a grievances management system. The organization will also need to have professional standards in hiring professionals to manage the stakeholder engagement process, in disseminating targeted information to its various stakeholders and it must also have professional grievances management personnel in managing grievances. Personal values can be applied through face-to-face consultations to provide information to stakeholders and to address any issues of concern by stakeholders.

Accountability to project stakeholders should be scheduled throughout the project through various stakeholder engagement briefings to address any issues of concern from the various stakeholder groups.

Conflict of Interest

I, as a project manager understand at the enterprise level, this project will involve a large number of people and sometimes several of them will be outside sourced vendors or suppliers. There will be a situation whereby the stakeholders might want to suggest or give inappropriate preference to certain teams or companies. As the project manager, I will ensure to make awareness to concern parties/stakeholders involved in the project to understand the company’s standards and that any biding and tender evaluation will be screened and go through a stringent selection process and criteria’s for (accountability purposes) that is for exercising organizational codes, to ensure the project has policy and standards write ups in place for bidding and tender selection for accountability purposes. This is to ensure and to have a proactive approach and clear directives to address any potential concerns so the definition of conflict of interest is clear and understood to by everyone (all concern stakeholders).

A clear example as stated by Dr. Randell (2009) in UNIFEM/UNDP Consultants Report on gender equality and democratic governance regarding lack of coordination among stakeholders in PNG: “There is no visible coordinating committee in NCD at national, district or ward level to facilitate coordination among all the key stakeholders. CBOs, NGOs, faith-based organizations (FBOs), politicians and businesses all have different committees and programs related to gender issues. Many of these organizations are not registered with the city, and their proliferation leads to competition, duplication and overlapping in some areas while other areas are neglected” (Randalls, 2009, pg.25).

Similarly, to avoid any conflict of interest, Joint Advisory Committees will be set to include concern stakeholder representatives together to make aware the tender bid processes and criteria for accountability to avoid any upcoming grievances.

Health and Safety Concerns

As project manager, ensure the organizational code of health and safety are highly valued. Ensure there are occupational health and safety policies, standards, procedures and management plans are in place. Ensure professional personnel are engaged to manage health and safety concerns in the project. Stakeholders must also be made aware of the project health and safety standards and management processes.

Conclusion

A good person is someone who contributes to the welfare of the whole group. Good acts are those which benefit the whole group, bad acts are those which degrade the whole group. To understand this traditional value system and ethical laws one must remember that they point to one thing and that one thing stands for ‘life’, the absolute value. The only absolute value is what we call in Tok Pisin term ‘Gutpela Sindaun’. Community in PNG over thousands of years was experienced as the only safe way to ‘’Gutpela Sindaun’. Community is the key to ‘Gutpela Sindaun’. Community is a powerful entity, when community says or make a decision, it is always final. And community in PNG always strive for ‘Gutpela Sindaun’ for peace and harmony in the community. Hence, every society in PNG has ethical laws that guide them to live a peaceful and harmonious life. These laws are the guiding pillars that guide the existence of the community. These are not introduced laws like the Ten Commandments of God introduced by Christianity. These are original laws that exist and followed by our ancestors from time immemorial. PNG societies have an ordered in placed already even before the introduction of Christianity and western influences.

References

1. Baccarini,D.(1999).The logical framework method for defining project success. Project Management Journal, 30(4), 25–32.
2. Freeman,R.E.(1984). Strategic management—A stakeholder approach. Marshfield, MA: Pitman Pub
3. Leung,M.Y.,Chong,A.,Ng,S.T.,& Cheung,M.C.K.(2004). Demystifying stakeholders’ commitment and its impacts on construction projects. Construction Management and Economics,22, 701–715. lishing.
4. Mitchell,R.K.,Bradley,R.A.,& Wood, D.J.(1997). Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy of Management Review,22, 853–886.
5. Olander,S.(2007). Stakeholder impact analysis in construction project management. Construction Management and Economics,25, 277–287.

Patisserie Valerie Scandal

Patisserie Valerie, founded in 1926, is a food processing company which owned and operated a chain of cafes specializing in handmade cakes. The company’s headquarters are situated in Birmingham UK, and as of March 2019 had a revenue of $86.8M and 2,500 employees. Patisserie Valerie is owned by Luke Oliver and Steve Francis was the CEO after Paul May stepped down.

The Collapse of Patisserie Valerie

According to the Guardian, Patisserie Valerie has fallen into administration when the company was refused funding by debtors which would have been a potential lifeline since they were aware the company was under critical financial stress since October 2018 (Butler and Wood 2019).

In October 2018, the company had come to realization that there was a major cash shortfall and accounting irregularities, due to possible fraudulent activities. Patisserie Valerie also had a number of issues with paying suppliers. They had a deal in place with the suppliers to pay any credit outstanding within 60 days, however this failed to be met and often stretched to double the timeline resulting in some suppliers resorting to pursuing legal actions. Patisserie Valerie was later rescued by Luke Johnson by investing cash to pull the company out of trouble (Eley 2019).

In May, the company had declared its net cash position at £28.8 million and Johnson had claimed the company had a strong balance sheet. However, when the company directors had come to realization of the accounting irregularities, the firm had suspended Mr. Marsh the finance director. The company had also suspended trading of shares and launched an investigation (Herbert 2019).

October 2018, Luke Johnson was informed by the CEO, Paul May, that their understanding of £28.8m of cash was incorrect and this in fact consisted of a debt of £10m and £9.7m deposited into two bank overdrafts which was unknown to the management and as a result, all accounts was put on hold (Irvine 2019).

Accountancy age had interviewed Simon Bonney, partners and insolvency expert at Quantuma. Bonney had commented on the fraud, quoting: “Was it a fraud of a successful business where money was removed from the accounts of the company or was it a fraud which caused an unsuccessful business to appear successful. I don’t think that question has yet been answered” (Practice et al. 2019). The statement Bonney had made clearly states that the fraud which had taken place was a well -organized plan, it also states (Practice et al. 2019) the directors was asked to inject more funds to keep the firm running. If they had failed to do so the company could’ve collapsed. This course of events took place two months prior to going into administration. This shows a clear indication that company management was not aware of the fraud taking place (Practice et al. 2019).

According to a recent journal, KPMG had made it public that there has been a total of £94m accounting black hole, this is more than what was originally anticipated. The journal also states a further five arrests have been made (Wood 2019).

The accounting irregularities were only uncovered by HMRC when they had created a petition for an unpaid tax bill of £1.14m, and this resulted in an immediate investigation and it was later discovered that instead of a £28m profit, the company was in fact in debt of £10m. (Halstead 2019). The recent collapse of Patisserie Valerie has created a substantial impact by the closure of 70 out of 200 stores being closed down and over 900 jobs lost (Partington 2019).

The Extent of Patisserie Valerie’s Compliance with the UK Code

There are five main code compliances with corporate governance: leadership, effectiveness, accountability, remuneration and relations with shareholders.

Leadership

Leadership within a corporation or any organization is vital, this ensures the operation to run smoothly and efficiently. Responsibilities should be clearly divided between the chairman and chief executive, and neither individuals should carry out the same job role nor should they be given any power to do so individually. Patisserie Valerie was known to have followed this compliantly however they were not as effective as expected. The role of the board is to manage risk and identify any possible fraudulent activities earlier to prevent possible bankruptcy. Patisserie Valerie made a delayed discovery of the ‘black hole’, and this is a clear indication of poor and possibly a corrupt leadership. Given the fact that the chief executive had stepped down when the accounting irregularities was discovered also concludes the possible involvement (Rach 2019).

Non-executive members of the board are expected to criticize the managements performance, this allows a non-biased view on the firm and controls that the goals of the company are met. Non-executive members have the power to appoint and if necessary, remove executives to allow smooth operation. Patisserie Valarie had a well-structured board however they had failed to monitor any risks (The UK Corporate Governance Code 2016).

Effectiveness

Patisserie Valerie had an effective team of board members and each member consisted of different specialties in order to aid the businesses success, as they had a strong portfolio of previous successes. The company has a mixture of executive and non-executive members on the board. However, although each member had their own specialty and previous experiences, they had failed to comply with risk management (Disclaimer – Patisserie Valerie 2019).

The chairman and head of finance had previously worked together on a business venture which was a great success, and this could be a possible reason why the financial reports were not being questioned in depth (Irvine 2019). The compliant procedure of hiring members of a board should be done via a nomination committee, this enables a fair evaluation of the individuals background and ability to assess any skills sets. However, the board members believed that due to the size of the board, there will be no need for a nomination committee and any decisions that takes place will be made through the board itself.

Accountability

Accountability is a crucial part of governance within any company, it enables directors to monitor one another and ensure all board members are compliant and have the same interest for the company (The UK Corporate Governance Code 2016).

Patisserie Valerie has clearly failed to have any fraud prevention/detection methods in place and a as result the board failed to identify accounting irregularities and rectify them accordingly. If the directors within the firm had a strategy to monitor any risks, this would have possibly enabled the identification of two overdraft accounts being authorized by a single member of the board which also indicates a clear lack of communication (Parrish 2019). Directors are expected to monitor yearly reports and assess any potential risks that may occur to the company, this could affect any future performances or may have risks of liquidity.

Patisserie Valerie had a basic risk management strategy where they had only concentrated on risk of liquidation. The board should have implemented a fraud detection process and serious consequences policy. The initial fraud taken place was by signing off an overdraft, Patisserie Valarie should have had made sure that any borrowing or lending needs to be foreseen by two or more members of the board, if this strategy was in place for risk management the company could have prevented numerous accounting irregularities (Christopher 2019).

Due to the lack of communication and information provided between each other within Patisserie Valerie, the shareholders were not aware of the crisis they were in when the fraud was uncovered. There has also been a period off statement missing which could have put the shareholders at ease but the whereabouts of this is unknown. If the directors had communicated all issues with the shareholders from the start, there could have been a possible chance in saving the company from going to administration. (Butler 2019)

Another example of failure within accountability is where the CFO of the company had overstated the accounts to make the company’s performance look positive which provides false information to investors and influences the stock market incorrectly where the accounts were overstated by £94M (Croft 2019). Tesco had a similar incident. Overstating accounts for companies are a common fraudulent activity which occurs within companies whether or not it is intentional for example, Tesco had overstated their accounts by approximately £250M (Oakley and Felsted 2019).

Remuneration

Remuneration committee should consist of two non-executive separate to the board members. Patisserie Valerie has their own remuneration committee with two non-executive members, Lee Ginsberg and James Horler, however, the committee is chaired by the company chairman (Disclaimer – Patisserie Valerie 2019). Directors should not be involved in the decision making of their own remuneration, having the company chairman being the chair of the committee could possibly affect any decisions made for himself or may even affect any decisions made on other directors of the board. The chair of the committee should be an independent non-executive director and they are required to attend yearly meetings with shareholders to answer any concerns they may have. Having the chairman play the same role as the chair of committee may cause conflict of interest which may affect the decisions made along with any remuneration to other directors (Nomination and Remuneration Committee – Terms of Reference 2019).

The directors of Patisserie Valerie were paid through short term employment benefits and share based payments. Paying directors through shares make them more involved within the company; the more shares they have the more they’ll be getting paid.

Relations with Shareholders

The mutual understanding is between board members and the shareholders is creating long term value for shareholders and putting in place tactical methods to efficiently manage and achieve objectives. This has been successfully achieved as the 191 premises has been open within 11 years with an increased revenue of £109m (Disclaimer – Patisserie Valerie 2019). Although the directors and shareholders have mutual understanding, shareholders were not informed or even consulted to when the CFO and CEO were awarded million pounds of share bonuses and this goes against other principles of governance such as accountability, remuneration and leadership (Cocco and Mooney 2019).

Although Patisserie Valerie had complied with most of the code of governance, they had failed to meet all relevant provisions. If the company had a strategic leadership in place, they would have been able to identify all illegal activities being performed. It is the director’s responsibility to identify any fraudulent activities at an early stage and deal with it. There have been two directors in particular who have been working together and violating the code of governance, the CFO and CEO. The CFO manipulated the accounts to show more profitability as well as signing off two ‘secret’ bank overdrafts and they have both been paid share bonuses without other shareholders having any knowledge of this. This is clear evidence that other shareholders and board members were not managing one another, and no questions were being raised. If Patisserie Valerie had complied with all the provisions, they would have been able to monitor all activities carried out within the company and ensure everyone’s interest is the same, which is to maximize shareholders value and company value.

External Auditors

An external auditors’ duty is to analyze reports being conducted by the company accountants and ensure no officer of the company has manipulated the accounts in any way. They are required to promote accountability to the firm and suggest possible consequences to any person who does commit fraud (Keith 2019). However, Grant Thornton, the external auditors for Patisserie Valerie, claims that is not within their duties to identify any fraudulent activities (Kollewe and Butler 2019).

The core responsibility of the external auditors is to ensure the company has relevant strategies in place to identify risks and eliminate those risks. They are also responsible for reporting any irregular activities to the relevant person (Financial Reporting Council 2019). Grant Thornton has failed to compliantly audit company financial reports. They had been the worst performer in the Financial Reporting Councils (FRC) annual review for the last 5 years (Farrell 2019). It may not be grant Thornton’s duty to identify fraud within the company or predict the future, but they have a duty to identify manipulated accounts. HMRC reports indicate that the auditors have simply completed the reports without properly analyzing the company and as a result has overlooked the existence of two ‘secret’ overdraft accounts, overstating accounts and outstanding balances with creditors.

Lessons Learned from the Collapse of Patisserie Valerie

There are a number of lessons to be learnt from the collapse of Patisserie Valerie. The initial lesson is to be cautious in a rapidly growing business and before investing into any such companies, to do substantial research into previous financial reports and assess whether or not the current reports are trustworthy. If there are huge rises in its revenue, always ensure to investigate in how the company has been able to accomplish this. Management within a small business differs vastly in comparison to a large business and this consists of employment of new management or more training for existing management. Although there may be a well-known successful investor, this does not necessarily imply security for the firm. All members of the board are required to have the same best interests of the firm. Risk management is a key control for any business – small or a large. Having knowledge of all activities taking place within the business is crucial as this enables you to monitor these activities and ensure they are being performed compliantly. In order to accomplish this, regular checks and spot checks should be carried out to ensure all procedures are done correctly and any person who is not compliantly performing given tasks should face penalties and possible dismissal depending on the extent. This would create a deterrent and encourage everyone to ensure they are following the correct procedures.

By prosecuting someone who commits fraud rather than just dismissing them or letting them resign prevent the person to from committing the similar actions.

If someone who commits fraudulent activities is simply dismissed or given the option to resign then they have the chance to carry out the same activity within another company

Companies should have to carry out an internal controlling strategy as a compulsory action and this is regulated by the FRC to ensure they are following their given duties. Internal control is vital for the company to be able to run smoothly with no downfalls. Having a nomination committee for the hiring process within a company will allow thorough checks to be conducted and to ensure the interests of the individual is aligned to the company’s interest.

Patisserie Valerie collapsed as a result of internal fraud committed by two officers of the board who have carried out these fraudulent activities for their benefit, and if the company had the correct measures of internal control in place, they may have identified this misconduct. However, the company directors and non-executive directors did not question other members intensely, this could be due to the fact the CFO was a well-known acquaintance to the chairman Luke Johnson. This is also another lesson to be learnt from Patisserie Valerie – to avoid any private relationship within the board as it could affect the judgement or influence decisions made. Prior to hiring any member of the board, intense background and knowledge checks should be performed and this would be a healthier option for the firms. The key lesson learnt from the collapse of Patisserie Valerie and other similar cases is to follow the code of governance to its full capacity which will ensures a level of security for the company and enhances the experiences for shareholders and directors, possibly even future investors as they have a reassurance the company is running compliantly and efficiently It is also important that any non-compliances are picked up immediately and risk management strategies are implemented to overcome critical consequences. All board members of a company have a responsible for the effective running of the business and therefore are held responsible for any downfall.

The Importance of Accountability for Organizational Effectiveness

Accountability is an essential part of an individual’s life, such as personal life or work. It is an important factor for exploring mistakes and taking responsibility to avoid serious problems. Accountability stipulates the initiative to inquire about the employees’ performance of duties. Taking responsibility for its negligence and interpretation is the reason for negligence in carrying out the duty, and the organization or individual will be evaluated on how they behave or perform related to something for which they are responsible, accountability is very important to the accuracy and efficiency of the work that employees produce. Also, accountability of the company knows that the organization must be responsible for any defects or deviations from its declared values and goals. In general, the concept of companies is defined in accountability to include a prerequisite for the business sector in order to complete responsible, sustainable and ethical practices.

The three type that relate with the accountability is:

• Market responsibility is about the individuals who purchase from, decide to utilize or support the association. In this view the association’s supervisors and trustees are responsible to the client, managerial responsibility is worried about guidelines and guidelines that determine models against which the association’s (and people inside it) execution is estimated.
• Political responsibility is worried about more extensive ideas of municipal and fair commitment and infers thoughts of correspondence of rights and obligations.
• Required responsibility that streams from the authoritative condition: the legitimate, political and financial setting in which the association works. The individuals who request this sort of responsibility by and large have solid forces of solution for inability to conform to their requests (for instance: preclude individuals who fall underneath guidelines).
• Proactive or intentional responsibility that streams from authoritative qualities: the conviction that the association ought to in its activities and working techniques deliberately look to adjust itself to specific gatherings and interests. This is likewise called offered responsibility. Here the association decides to be responsible in light of the fact that it is esteemed fitting. Such responsibility is offered to recipients and the more extensive open for instance through gatherings or by means of a site.

The issues getup since individuals need to keep absent from terrifying values profoundly inserted inside the organization. Although supervisors and board members’ ‘espoused concept’ holds values of being in control, winning and now not terrifying individuals – their genuine conduct supports resistances that act in restriction to these. Hence senior directors in non-profit bunches and funders routinely nation that they esteem ‘feedback’, cooperation and inclusion through those they support or support. Although their ‘espoused principle’ emphasizes organization and support, their ‘theory in use’ emphasizes one-sided control, reliance, accommodation and urgently not humiliating others be that as it may be letting them keep up ‘face’. These organizational protecting administrations are, anti-learning, overprotective and self-sealing. Senior directors may comment over a concept by means of saying “It’s a totally curiously concept …”, in any case, ‘interesting’ is the word we most ordinarily utilize to unequivocal either our lack of concern or complaint, whereas acting as in spite of the fact that we got to be strong.

We have three approaches must consider and know to resolve the organizational problem. The first approach is the ‘conversation for accountability’ has the impact of conversion the emphasis faraway from what was performed incorrect to what has been executed well. The second approach is the ‘educative strategy’. It lets in to develop ways of speaking that provide organizational members higher ways of discussing the competing commitments that save them adopt commitments turning into fact. This manner moving from positions of negative critical thinking and taking obligation for issues inside the agency in preference to seeing the issues lying with others. It way developing agreements that permit all involved to point to shortcomings. By developing these one of a kind method of talking, leaders, managers and front-line personnel may even be capable of change the way wherein they method their work. And here are the thirdly approach. Mode 2 approach point to having right information, knowledgeable choice and duty to reveal the implementation of that preference. Mode 2 approach leads to action techniques where issues or problems are proposed and inquiry into and confirmation of those strategies is sought and that face-saving is minimized, the task is to exchange the mind-set of the actors in the corporation via people gaining knowledge of to be greater reflective.

The accountant is responsible for the integrity and accuracy of the financial statements, even if they do not make mistakes. Company managers may attempt to tamper with the financial statements of their companies without the accountant’s knowledge. There are clear incentives for managers to do this, as their pay is usually related to the company’s performance. This is the reason why independent external accountants should review the financial statements, and accountability forces them to exercise caution and knowledge in their audit. Public companies are also required to have an audit committee as part of their board of directors from outside individuals with accounting knowledge. Their job is to supervise the review.

In the end we know that accountability means that the person responsible for his duties assigned to the job level, then his accountability, meaning that accountability means the duty of those responsible for the jobs (whether they are elected or appointed) to submit periodic reports on their work, policy and successes in implementing them.

Impact of Government Accountability on Tax Compliance

In Kenya, the need to improve tax compliance has been necessitated by the need to increase government revenue, bridge the widening budget deficit and generate adequate revenues to pay debts. While as, taxpayers are generally aware of their obligations and need to make their contribution towards raising the government revenue, there is a growing consensus on focus to role of the state capacity in improving the efficiency of tax administration in a way that contribute to a more accountable and responsive state.

According to Olaoye, Ayeni-Agbaje, and Alaran-Ajewole (2017 p.133), defines tax compliance “as the willingness of taxpayers to act in accordance with tax laws, declare the correct and true incomes in each year and pay the right amount of taxes on time”. Tax compliance can either be voluntary or enforced by tax authorities. The Kenya Revenue Authority (KRA) is the main income tax body with the powers of collecting revenue on behalf of the government of Kenya. In the past it used enforcement as the main driving tool for tax compliance. This however had negative consequences on KRA’s image as they relied on unduly punitive methods of securing compliance. In the recent times, KRA has made significant strides in seeking to amend the relationship with the taxpayers by deployment of avenues that encourage better engagement and facilitation of voluntary tax compliance.

According to the Khalif (2017), reported that despite KRA’s media campaigns for taxpayers to file returns, only 2.4 million people heeded the call to file their returns. This was an indication of very low compliance because despite KRA’s database having 8.1 million registered number of taxpayers, only 2.9 million were active. Further, Khalif (2017), included a report on a study on tax evasion and tax avoidance in developing countries published by German Technical Cooperation (GTZ) in 2010 that gave reasons for low compliance. These included low tax morale, high compliance costs and weak enforcement of tax laws. On the low morale (Khalif, 2017) expounds that firstly, it was the quality of public services provided affects willingness to pay taxes. Secondly, the tax rates and the overall structure of the tax system affect the disposition to evade or avoid tax. Thirdly, low level of accountability and transparency in the use of public resources created a distrust of the tax system and government leading to the willingness to evade taxes. Fourthly, misuse of tax revenue by officials entrusted with management affects tax morale thus leading to evasion.

Background to the Study

Tax is a principle source of government revenue. The challenge of tax evasion, tax avoidance and siphoning of funds by corrupt government officials has therefore had a direct impact on government administrative and development agenda. According to Ochieng’ (2015), Kenya is estimated to loss Kshs. 639 Billion annually in tax evasion by multinational corporation, significantly hampering economic growth. Further, ‘Tax and Development: Aid Modalities for Strengthening Tax Systems’ (2013), stated that developing countries need to establish tax systems that are not only effective in mobilizing resources, but also distribute the tax burden fairly and minimize tax distortions that may deter productive investment and impair growth. This two-way interaction between taxation and governance suggests that there can be a virtuous circle in which tax reforms lead to improvements in governance which, in turn, facilitate revenue mobilization.

Effective governance ensures equal participation from all sectors. The United Nations Economic and Social Commissions for Asia and Pacific (ESCAP) list 8 major characteristics of good governance. Good governance is said to be participatory, consensus oriented, accountable, transparent, responsive, effective and efficient, equitable and inclusive and follows the rule of law. The Constitution of Kenya gives prominence to national values and principles of governance.

Article 10 (2) of the Constitution provides the national values and principles of governance as follows: 1) patriotism, national unity, sharing and devolution of power, the rule of law, democracy and participation of the people; 2) human dignity, equity, social justice, inclusiveness, equality, human rights, nondiscrimination and protection of the marginalized; 3) good governance, integrity, transparency and accountability; 4) sustainable development (KNCHR, 2016).

However, the government is still far from achieving this objectives due challenges such as rampant corruptions scandals allegations witnessed involving senior public officials and misuse of public fund among others.

Trust is a critical aspect of contractual fiscal exchange relationship between the government and its citizens. Therefore, the call to increased transparency in terms of the level of information provided cannot be ignored. This is because tax payers often seek to evaluate their benefits relative to the tax burden. In his book The Wealth of the Nations, Smith (1776) lays down four principles or cannons of taxation namely: a person’s ability to pay; certainty; convenience and should be administratively efficiently without causing economic distortion. Eragbhe and Izedonmi (2012), stresses that the rationale for the cannons of tax is to ensure voluntary compliance and timely filling of returns on the part of the taxpayer. In addition, transparency and accountability of tax revenue positively impacts the number of taxpayers willing to comply with the tax laws and by extension the tax revenue collection by the government.

Government Revenue

Government revenue refers to all income the government gets from taxes, custom duties, revenue from state-owned corporations, capital revenue and foreign grants or aid. Taxation is the main source of Kenya’s government revenue. According to ICPAK (2016), a study focused on Kenya’s annual revenue performance between the financial years 2010/2011 to 2014/2015, findings showed that Kenya’s tax contribution to the revenue portfolio averaged 96% while non-tax revenue accounted for 4%. It was also observed that the country’s total revenue significantly increased from Kshs. 651 billion in 2010/2011 to Kshs. 1.1 trillion in 2014/2015 which represented a 44% increase in revenue in 5 years. In addition, ICPAK (2016) showed that the growth is largely attributed to increase in income tax, which increased from Kshs. 272 billion in 2010/ 2011 to Kshs. 542 billion in 2015. Further analysis showed that Kenya’s revenue portfolio is heavily dependent on direct taxes with Pay As You Earn (PAYE) contributing a larger proportion to overall tax revenue (ICPAK 2016).

Tax System in Kenya

Kenya has a broad taxation system that comprises of direct taxes and indirect taxes. The main direct taxes are namely: individual income and corporate taxes, while the main indirect taxes are: Value Added Tax (VAT); Excise tax and Customs duties. Taxation is one of the ways through which redistribution of income can be achieved depending on the design of the tax system.

Personal income taxes are levies in Kenya as legislated under the Income Tax Act. This is direct tax that is imposed on individuals income derived from employment, dividends, and business among others. According to Kinuthia (2017), following the implementation of Finance Act 2017, new tax rates for PAYE came into effect from January 1st 2018. It is expected that the expansion of the tax bands coupled with the increase in personal relief will have an effect on lowering the tax burden for employees.

The rate of Corporate Income Tax (CIT) for resident companies, including subsidiary companies of foreign parent companies, is 30 % and the rate for branches of foreign companies is 37.5%. According to PWC (2018), there are special rates for certain resident and non-resident companies such as Export Processing Zone (EPZ) enterprises at Zero rate for the first ten tears and 25% for next ten years.

According to Wanjala (2006), income taxes can play a major role in redistribution of income. The widening of tax brackets, reduction of top marginal rates and increasing the levels of personal relief over time have played a big role in making the income tax more progressive and therefore more equitable. Value Added Tax (VAT) is charged by businesses at the point of sale of goods and services in Kenya. VAT is considered to be highly regressive. However, the use of exemptions and zero rating of specific commodities has made the system more progressive and thus more equitable (Wanjala, 2016). Excise Duty is tax levied on the importation or local manufacture of certain products and supply of excisable services. It is levied at high rates commodities that are considered to be luxuries like alcoholic drinks and chocolates. Wanjala (2006) argues that there is a clear policy direction of increasing reliance towards indirect taxes (mainly consumption taxes) with VAT being seen as the tax for the future.

Government Accountability

According to Finel and Lord (1999 p.316), government accountability is defined as “government transparency comprising of the legal, political, and institutional structures that make information about the internal characteristics of a government and society available to actors both inside and outside the domestic political system”. Everest-Philip and Sanfall (2009), (cited in Eragbhe & Izedonmi, 2012) argues that the public perception of government accountability can influence tax morale and tacitly, voluntary compliance. Therefore, how the government goes about in fulling these obligations should matter to the taxpayers because they provide the finance for its sustenance.

According to Mberere (2011), argues that while the duty of collecting revenue or taxes belongs to the government. This duty gives the government the obligation to account for its activities, accept its responsibility, and disclose the results in a transparent manner. In other words, the taxpayers have the right to know how the money collected in terms of taxes is being used and demand for services from the government. Further, taxpayers who believe that their interests are represented in a democracy have been found to be willing to pay taxes (Mberere, 2011). Taxation can be used as an effective bargaining tool between states and citizens in strengthening state capacity and democracy. The bargain might involve governments’ ability to raise substantial amounts of their revenue through taxation while the taxpayers pressure the governments to be accountable for the use of their money. OECD (2008) stated that taxation systems can contribute significantly to shaping accountability relationships and strengthening state capacities. However, states that are reliant on revenue from foreign aid and natural resources tend to have little incentive to be accountable, responsive or efficient. Limited dependence on taxes has shown to lead to bad governance outcomes.

Tax Compliance

According to Singh (2003) tax compliance is a person’s act of filling the Income Tax form, declaring all taxable income accurately and disbursing all payable taxes within the stipulated period without having to wait for follow-up actions from authority. Revenue raised from taxation is crucial to supporting the provision of services, the maintenance of infrastructure, employment of civil servants and running of various government functions. Compliance is therefore, a key concern for governments due to budgetary deficits as a result of tax evasion and low compliance. According to Isbell (2017), low tax compliance weakens the state’s ability to invest and develop. Ali, Fjeldstad and Sjursen (2013) have found that not understanding how taxes are used is negatively correlated with tax compliance. Isbell (2017), points out that while most Africans found taxes to be necessary for development, many citizens mistrusted the tax officials and found them to be corrupt. This appears to contribute to attitudes that could affect compliance. Other correlations between positive attitudes towards tax compliance, is their role as taxpayer to have meaningful say in politics. In a study by Musau (2015), the findings revealed that individuals who are more satisfied with public service provision; have enough tax information; trust government officials in handling their taxes; and have the perception that tax filing procedures are less complex and tax evasion was difficult are more likely to be tax compliant.

Voluntary Tax Compliance

A voluntary act is unrestricted act in the absence of a pre-exiting obligation. However, according to Manhire (2015), since taxpayers have a legal obligation to act in accordance with tax laws, just as they are obligated to comply with all rules that carry the force and effect of law then tax compliance is anything but voluntary in this sense. Manhire (2015) argues that tax authorities do not have adequate resources to assess taxes against each taxpayer directly or audit every return; they therefore rely on individual taxpayers to accurately assess their own tax liability on the annual returns and timely pay the correct amount due. According to Kosiba (2016), the primary role of a revenue authority compliance activity is to improve overall compliance with the tax laws, and in the process instill confidence in the community that the tax system and its administration are fair. However, tax audits remain a major tool for tackling non-compliance. According to Wandera (2018), while KRA has for a long time been seem as an enforcement agency in the eyes of taxpayers it has been working on cultivating better working relationship with taxpayers anchored on trust by exploring measures that promote voluntary compliance among taxpayers. Wandera, (2018) added that the KRA taxpayer education programme is founded on the need to bridge knowledge, attitude, perception and practice gaps among the taxpayers.

Green Marketing and Consumer Accountability

Nowadays green is a new evolving concept to furnish marketing with image branding and marketing spin. If we look beyond, we found how ethical or green it is (product/services). This is real/true rather than rational. After stripping, we explore the product; who made or grew- this information or using this, we can develop our ideas to connect with people. Originality of brand (branding) comes with image marketing to create sustainable brands (John Grant). This looks like a challenge for today’s generation, how they tackle the problem of consumer accountability w. r. t. green marketing. This is a huge challenge, but isn’t it giving a life a meaning? And we really don’t have plan B (perform or perish situation). In this paper, we explore the facets of green marketing with consumer accountability.

Consumer Accountability

Consumer accountability is the current state of account of happy (satisfied) consumers with organization’s product or service. Organizations should consider policies before serving consumers. CSR Corporate Social Responsibility is a combination of economic responsibility (consumer buying behavior and reasonable profit), legal responsibility (follow laws and regulations), ethical responsibility (right decision making and follow the rules) and philanthropic responsibility (voluntary participation in societal programs/activities).

Organizations should understand the importance of green practices to lessen the burden of climate change or global warming. From making till disposal each process should get revised to avoid further consequences of impact on environment. Quality plays an important role to maintain long term relationship and sustain in the cut throat competition. An affordable price with quantity (justified amount of product) can lead to faith on brand followed by loyalty. Loyalty, brand and relationship are only visible when customer is happy with what you are offering continuously without hampering quality. That bond making brings sustainable association and growth with hard core relationship with consumers and brand. Genuineness is the only key if organization wants to sustain in competition. People take time to faith on but when they got assured then they will never ever leave organization in any crisis situation. That is the beauty of transparency with public. Organizations earned the faith of public by implementing policies which are in favor of society. The bond/ association become stronger day by day and results in purchase (regular mode). After purchase if organization fails to perform (false commitment) consumers refuse to return to the same brand and search for the suitable alternative. That means the only selling and earning profit once is not the mission for organizations. The vision is to get modified or revised with societal benefit flowed by organizations growth with sustainable relationship.

This above mentioned process of consumer accountability is applicable to any business. All traditional businesses can follow all policies depending upon their capacity. That means all policies are not structured when they designed vision and mission. Their ultimate aim is to earn profit. So, if scenario is only earning the profit then who will take care of consequences on earth. Who will think about proper disposal of product and not just only disposal it has to be in less detrimental to earth. Only green businesses have those strategies to take environmental dimension on priority. So, let’s understand the concept of green marketing.

Green Marketing

It is the study of all efforts to consume, produce, distribute, promote, package and reclaim products in a manner that is sensitive or responsive to ecological concerns (Robert Dahlstrom, 2010). A firm has to make efforts to pursue green marketing and focus on sustainability as development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Firms can pursue green marketing via triple bottom line perspective focused on achieving economic, relational and ecological outcomes (Robert Dahlstrom, 2010).

Beyond the environmental benefits that can accrue from green marketing, several sectors of the global economy benefit from green marketing. Emerging economy have potential to curb hunger and poverty by engaging in green marketing. Incorporating with green marketing can result into consumer welfare and enhancement in corporate strategy. There is need for consumers and government to understand green marketing but some firms should understand green marketing to retain their environmental reputations and brand exposure like always.

Several analyst of green marketing defines the psychographic segmentation of consumers to distinguish them on the basis of consumption pattern.

• True Blues. Consumers (politically active) with strong environmental values that seek to bring about positive change and avoid products which are detrimental to environment.
• Greenback greens. Consumers (politically inactive) concerns the sustainability and more willing to purchase environmentally friendly products than average consumers.
• Sprouts. Consumers appreciate the merits of environmental causes but they are making purchase of regular products; to avoid burden on pocket (not ready to pay more for green products).
• Grousers. Consumers tend to be cynical and uneducated about ecological concerns. They prefer traditional product over green (they might thought green products are expensive and less effective).
• Apathetics. Consumers do not concern with sustainability and green marketing practices.

It is interesting to know that the preferences of Pune consumers have shifted over the time. The number of greenback and sprouts are constant while true blue shows the increase and the result of these shows that grousers and apathetics are reducing day by day. Let’s jump into the actual methodology to grab the knowledge about what consumers are up to with green products.

Objectives

1. To understand consumer awareness of green marketing;
2. To study the impact of demographic and psychographic factors on green marketing;
3. To study the market for green products;
4. To investigate the factors considerations for green products;
5. To understand the satisfaction with the quality of green product.

Research Methodology

A close and open ended questionnaire was made to explore the relationship between demographic (age, income, employment, education, gender, children) and psychographic factors (environmental consciousness, healthy, price, safety, quality, ingredient and label) with awareness of green marketing in FMCG personal care products; leads to prospective business in coming future. The consumer accountability is there but required to have more adhesive bond to get sustainable relationship and profit. All issues were discussed like price, promotion, brand, labeling, environmental concern and many more to derive the actual relationship with consumers. The respondents were selected from one of the major corporations in Pune (PMC). A questionnaire filled by 361 responses and data were collected. The duration for the data was July-Sept 2018. Questionnaire includes age, gender, education, employment status, income, gender, marital status, children to understand demographic profile of respondents. Then, the questions related to use of organic product category, green awareness level, benefits of green products towards environment, health, certifications and various brands of green products. Other than this we directly asked them about which green product they are using, cost is high compared to traditional, what characteristics should be there in green product if it launched, etc. There were many questions which gave us psychographic approach of respondents.

Results

1. Consumers are using green products in terms of cosmetics and personal care as people are aware about benefits of it.
2. As half of the population knows importance of green products for the health, environment as well as their various types and symbols to pick the green one.
3. Maximum consumers are happy with the price, quality and performance of green product so they are not lure to offers by brand.
4. Print media and electronic media plays important role to generate awareness and so that consumers can accept new brand of green product with quality and affordable price.
5. Some certifications or logo should be only for green product identification to avoid label content reading (no knowledge about contents).
6. Consumers are very sure that there is a need for awareness in India about green product (proper understanding) (avoid situation of green myopia).
7. Consumers are happy to accept the more green products but it should be healthy and with affordable price.

Conclusion

Consumers are aware (not 100%) of green products but firms should have to generate awareness among people through print and electronic media. Consumers are accepts the green product as they are health and price conscious but firm should revised their vision to get sustainable growth as if they are running green practices in long run. And lastly, people know everything about green product, even they are happy with quality so, what is bothering is firms continuous efforts to have bond with consumers by their visibility and character; comes with brand (consumer accountability in true sense).

References

1. 1. Bhatia, M. and Jain, A. (2013) Green Marketing: A Study of Consumer Perception and Preferences in India. Electronic Green Journal, 1, 1-19.
2. Bhattacharya, S. (2011) Consumer Attitude towards Green Marketing in India. The IUP Journal of Marketing Management, X, 62-70.
3. Braimah, M. and Tweneboah-Koduah, E.H. (2011) An Exploratory Study of the Impact of Green Brand Awareness on Consumer Purchase Decision in Ghana. Journal of Marketing Development and Competitiveness, 5, 11-18.
4. Carroll, A. (1991) The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders. Business Horizons, 34, 39-48. http://dx.doi.org/10.1016/0007-6813(91)90005-G
5. Chamorro, A., Rubio, S. and Miranda, F.J. (2009) Characteristics of Research on Green Marketing. Business Strategy and the Environment, 18, 223-239. http://dx.doi.org/10.1002/bse.571
6. ‘Consumer Responses to Green Marketing in Cambodia’ written by Leaksmy Chhay, Md Manik Mian, Rathny Suy, published by Open Journal of Social Sciences, Vol.3 No.10, 2015.
7. Dahlsrom,R. (2011) Green Marketing Management. South-Western Cengage Learning.
8. Grant, J. (2007) Green Marketing Manifesto. John Wiley & Sons Ltd.
9. Laroche, M., Bergeron, J. and Babaro-Forleo, G. (2001) Targeting Consumers Who Are Willing to Pay More for Environmentally Friendly Products. Journal of Consumer Marketing, 18, 503-520. http://dx.doi.org/10.1108/EUM0000000006155
10. Ottman, J.A. (1993) Green Marketing: Challenges and Opportunities. NTC Business Books, Chicago.
11. Polonsky, M.J. (1994) An Introduction to Green Marketing. Electronic Green Journal, 1, 2-3.
12. Polonsky, M.J. (2011) Transformative Green Marketing: Impediments and Opportunities. Journal of Business Research, 64, 1311-1319. http://dx.doi.org/10.1016/j.jbusres.2011.01.016

Primary Four Security Principles in Information Security

With the advanced rapid growth of technology within computer networks and multiple business organizations during the last few decades and unpredictable growth of using Internet, and the growth in security attacks of users also increased. Amount of data stored in storage devices, electronic media and cloud storage have immensely increased in past few years. The increase in usage of information technology has increased the privacy and security of business and project procedures and in personal use of data. Security principles enable primitive measures which are needed to protect data by providing building blocks of security. Security vulnerabilities regularly misuse infringement of these standards. Great security arrangements or countermeasures take after these standards. At some point few overlaps, and a few be tension between standards and policies. More for the most part, checklists are valuable for security. These standards can be connected at numerous levels, e.g., in source code of an application, between applications on a machine at OS level, at network level, inside an organization, between organizations (Fruhlinger, J., n.d.).

The fundamental goal of any business organization to protect its business data is by using security principles. Security principles provide the best way to protect the data by giving basic guidelines that should be considered to secure the system. The basic goal of any information security principle is to answer questions by determining confidentiality of information and how data can be maintained with integrity. There are many basic principles to protect data in information security. The primary principles are confidentiality, integrity, accountability, availability, least privilege, separation of privilege, and least common mechanisms. The most common security principle is CIA triad with accountability. Each principle is having its own procedure to protect data by means of anyway. The Four basic security principles are discussed below with example, respectively.

Confidentiality

Confidentiality is occasionally referred to as the principle of least privilege, which means that users ought to be given best sufficient privilege to perform their responsibilities, and no more. Some different synonyms for confidentiality you may come across consist of privateers, secrecy, and restraint. Confidentiality fashions are in general supposed to make sure that no unauthorized get right of entry to facts is permitted and that accidental disclosure of touchy records is not feasible. Common confidentiality controls are consumer IDs and passwords (Ghahrai, A.,2019). There are many examples of confidential information like personal bank account details like bank account number, account statement, credit card numbers, and personal details of bank clients. The employees in bank should be maintain confidentiality of bank customers PII personal identifiable information data. If confidentiality of bank customers compromise it might lead to complete loss to users and bank also. Because attacker can easily encrypt and stole data by using brute force attack, password cracking and dumpster diving to attack on bank account details of customers. To ensure confidentiality of data all customers must use two factor authentication and strong username and passwords.

Integrity

Integrity is also referred as trustworthiness completeness and correctness of information. As well as the proper preservation of data with only having authorized modification of information. In many ways, information security integrity is not only to integrity of information. Itself but also to maintain the origin, the source code of any data. Integrity has controls like preventive mechanism which prevent unauthorized modification do the original data. And integrity is also having other mechanism that is detective mechanism controls which detect unauthorized modification If there is any fail in preventive mechanism. Integrity ensures data correctness of data between sender and receiver and data which is on transit (Ghahrai, A.,2019). Example of integrity’s man in the middle attack which takes place in data in transit. When a sender and receiver is having the transmission of data between themselves, third person enters the transmission. To capture the data packets and replace them into the original transmission. By manipulating the actual data he then, gains access to complete transmission. This kind of attacks lead to them compromise your integrity between two entities. Data integrity is compromised in many ways like human errors unintentional data manipulation, physical compromises to the devices. The best way to have integrity is by using hashing techniques.

Availability

Availability enables the ability of the users to access any important data at any point of time. Availability make sure to predict timely and uninterrupted access to a system. Availability counter measures to protect data which gives data system availability from malicious attacks likes distributed of denial attack, natural are manmade disasters. Availability keep system data and resources available for only authorized use and makes data available during emergencies like disasters. there are challenges do availability like denial of service and because of undiscovered mistakes during implementation of process. Other challenge is lots of valuable information and sensitive information Because of natural disaster like floods, earthquakes. And any equipment failure (Ghahrai, A.,2019). The basic example of loss availability do an attacker is denial of service attack. In this denial of service attack resources become unavailable to the legitimate users find degrade the performance of the system the attack is done by hitting the same target machine with multiple requests at the same time. This makes the targeted system overload with request and then system fails not even system crashes due to overloaded request by attacker and system may not respond. This can be avoided by having extra security equipment like firewall, proxy servers against attackers.

Accountability

And other important principle of information security is accountability. Accountability refers to the possibility of praising each action and event in time do the users with systems Hard process that perform to enable reliable actions for each task. Accountability is created by logging into each event with the complete information from the user which also include date time network address and other information That could help to identify the condition Which caused an event. Events are audited with the help of network facilities which monitors every action from lowest levels. A system is not considered as secure system if it does not provide accountability for each task because it would be difficult today to mine who is responsible for specific task under system without the safeguard. In information systems reliable accountability is provided by audit trails and system logs (Roberta Bragg., 2002). The best example of accountability is at workplace in business organizations. Every employee in organization no matter what level of seniority is equally responsible in helping further success of company to achieve goals. It is important to have all employees work together to share accountability which makes more business more productive and efficient. Accountability can be increased by having biometric devices suggest fingerprints, retina scanners and having time and attendance software in workplace.

Conclusion

Thus, we recognize fundamental statistics on security concepts and standards for the sensitive information. additionally, walk through to essential elements that constitutes excellent security architectures and practices. Highlighted the significance of essential factors with their respective characteristics. Each security principle is very important to make data secure in every possible way. Systems cannot be completely dependent on both hardware and software, however, wishes to ensure each are tightly coupled with machine to safeguard sensitive information elements.

References

1. Mark S. Merkow, & Jim Breithaupt. (2014, June). Information Security: Principles and Practices. https://ptgmedia.pearsoncmg.com/images/9780789753250/samplepages/0789
2. Ghahrai, A. (2019, June 24). Confidentiality, integrity, and availability. DevQA.io – For Developers and QAs. https://devqa.io/confidentiality-integrity-availability/
3. Fruhlinger, J. (n.d.). What is information security? Definition, principles, and jobs. CSO Online. https://www.csoonline.com/article/3513899/what-is-information-security-definition-principles-and-jobs.html
4. Roberta Bragg, (2002, December) CISSP Security Management and Practices Retrieved from https://www.pearsonitcertification.com/articles/article.aspx?=30287&seqNum=2#:~:text=Figure%203.1%20Security’s%20fundamental%20principles%20are%20confidentiality%2C%20integrity%2C%20and%20availability.&text=Depending%20on%20the%20nature%20of,of%20importance%20in%20your%20environment

Accountability on Context of Health Sector

Accountability represents an under-explored terms lies at the core of any effort to improve quality, build team, and get results Accountability acknowledges the reality of situation (perceives, sees and relate to it) and accepts the responsibility for the situation, finds and implements creative solutions to problems (solves it), and exhibit the commitment and the courage needed to follow through (does it).

Equitable health care is an integral part of the health system, and the accountability in health care is directly related to the level of the safety and the quality of care a patient receives and that same quality of care is directly related to the success of a health care. In health care, improving the quality of life for a patient is the ultimate goal: no patient to treat means, no health business to run.

Accountability and Health Systems

The accountability of health systems is complex with multiple accountability relationships. Health system users, health ministers, social health insurance agencies, public and health providers, legislature, finance ministers and regulatory agencies are all connected to each other in networks of control, oversight cooperation and reporting.

For example, for countries wishing to work to strengthen their system accountability, the starting point is understanding how existing health accountability mechanism work in practise before moving to identifying problem areas and appropriate reform strategies and accountability instruments. Key policy questions for consideration are likely to include how best to:

• Increase transparency and access information to address information asymmetries;
• Establish reliable ground rules for various accountable relationships;
• Effectively monitor and control accountability requirements;
• Improve access to resources where accountability obligations are not met;
• Better articulate the needs of those to whom duties are owned.

Elements of Accountability

Accountability involves following key elements:

1. Delimitation of responsibility: defining over what, whom and how they duty holders are responsible for their action.
2. Answerability: the obligation for duty holders to inform about and explain their actions. Accountability as answerability aims at creating transparency. It relies on information dissemination and the establishment of adequate monitoring and oversight mechanisms.
3. Enforcement or the capacity to subject power to the threat of sanctions, or disciplinary actions. Legal and regulatory sanctions are at the core of enforcing accountability.

Accountability Types and Health Service Delivery

• Financial: 1) cost accounting /budgeting (personnel, operation, pharmaceuticals); definition of basic benefits packages; contract oversight.
• Performance: 1) allocation of resources needed for effective system performance; 2) quality of care; 3) service product behavior; 4) regulation by professional bodies; 5) contacting unit.
• Political/democratic: 1) service delivery; 2) transparency; 3) responsiveness to citizens; 4) service user trust; 5) dispute resolution.

Purpose of Accountability

Dominant purposes of accountability are:

• Control and assurance are dominant.
• Focus is on compliance with prescribed input and procedural standards; cost controls; resource efficiency measures; elimination of wastes; fraud and corruption.
• Assurance and improvement/learning are dominant.
• Assurance purpose emphasizes adherence to the legal, regulatory, and policy framework; professional service delivery procedures, norms and values; and quality of care standards and audits.
• Improvement/learning purpose focuses on benchmarking, standard setting quality management, operations research, monitoring and evaluation(M&E).
• Control and assurance purpose are emphasized.
• Control relates to citizen/voter satisfaction, use of taxpayer funds, addressing market failure and distribution of services (disadvantaged populations).
• Assurance focuses on principal agent dynamic for oversight; availability and dissemination of relevant information; adherence to quality standards, professional norms, and societal values.

Conclusion

To bring about accessible and better quality health care, it is important to recognize both the value and complexity of accountability interventions and operate accordingly. Accountability for the project and to the people is both desirable and essential. Ensuring this accountability is arguably one of the greatest challenges that face up to the health care sector. To reach every nook and the corner of the system, the accountability needs to take root and procedures need to be built into the system. However, the question arises that how accountability can be achieved in the days to come and who will be held responsible if desired and essential results are not achieved. To achieve the results greater transparency and resultant public scrutiny in every aspect of the project and its management are needed.

Main Principles in Professional Issues of Accountability: Analytical Essay

Introduction

This assignment, it will discuss what accountability is, why it is important within adult nursing, looking into capacity in an analytical aspect, whilst maintaining confidentiality within the assignment. Enabling the reader to get a better understanding of capacity whilst looking at it through legal, ethical, and professional accountability. Capacity is both decision and time specific. We cannot decide what is in a person’s best interests just because of their age, their looks, or how they behave. Capacity according to the NHS (2016) discusses “that capacity is the ability to use and understand information to make a decision, and communicate any decision made. A person lacks capacity if their mind is impaired or disturbed in some way and this means the person is unable to make a decision at that time”. If someone has to make a decision for a person because they cannot make it for themselves, they must decide what is in the best interests of that patient, get the patient’s family involved to understand the patient’s wishes and allow the patient to have some control in what they want and to listen to their needs. The NMC (2015) states “accountability is the principle that individuals and organizations are responsible for their actions and may be required to explain them to others.” The RCN (2016) mentions that accountability is also a part of the delegation. If you delegate a task out to a member of staff, both the registered member of staff and the member of staff being given the task must ensure that it is both appropriate and will not cause the patient any harm. Furthermore, the RCN (2016) states the importance of accountability within not just the adult field of nursing but all parts of nursing; is ensuring that we act within the best interests of our patients and about challenging our senior colleagues if they give us a task that we are not comfortable in performing confidently; ensuring that patient safety is our utmost fundament within our profession.

Confidentiality is an important aspect within health care. And throughout this assignment, it will keep anything that has happened within practice confidential. RCN (2016) states that confidentiality is what underpins the trust between patients and healthcare workers. Disclosing information about patients/clients to somebody who has no right to the material, is very serious which could lead to a breach of trust from the patient/client and is misconduct within the profession. A patient came in for orthopedic surgery, although they could give consent and were deemed to have the capacity to have their blood pressure taken with their permission. They had learning difficulties which meant as healthcare professionals we needed to do the two-stage test to ensure that they had the capacity to make the right decision to go ahead with the surgery. RCN (2016) describes stage one as looking at whether the patient has an impairment or whether their brain has an abnormal functioning; and stage two looks at whether the impairment of disturbance, disallows the patient to make a decision when they are needed to.

Legal accountability

The mental capacity act came out in 2005 which was then implemented in 2007. Social care institute for excellence (2016) states that the mental capacity act 2005 is made up of five principles. These 5 principles enable healthcare professionals to make the wisest decision when it comes to supporting a patient’s decision-making. Principle one is to presume capacity unless proven otherwise, principle two is about allowing the individuals to be supported in making their own decision, principle three in allowing people to make unwise decisions, principle four is about the person’s best interests, and principle five is about going for a less restrictive option when it comes to a person’s care. The reason the mental capacity act 2005 was brought out was that it was found that people were consenting to procedures that they did not fully understand nor have the full capacity to make a decision. Brown. R, Barber. P and Martin.D (2015) states “in stark contrast with the mental health act 1983 the mental capacity act begins by establishing five key principles to be followed whenever working within the framework of the act.” Furthermore, Brown. R, Barber. P and Martin.D (2015) go into more detail about the five key principles as:

1. “A person must be assumed to have capacity unless it is established that he or she lacks capacity
2. A person is not to be treated as unable to make a decision unless all practicable steps to help him or her to do so have been taken without success
3. A person is not to be treated as unable to make a decision merely because he or she makes an unwise decision
4. An act done, or decision made, under this Act for or on behalf of a person who lacks capacity must be done, or made, in his or her best interests
5. Before the act is done, or the decision is made, regard must be had to whether the purpose for which it is needed can be as effectively achieved in a way that is less restrictive of the person’s rights and freedom of action.”

When a healthcare professional is determining a person’s capacity, they must ensure they receive enough information to make an informed decision, not overload the person with too much information that might make them confused, and the amount of information given needs to reflect to the decision being made.

However, Dimond (2016, pg.13) enables to look at mental capacity in more detail, because it mentions that just because a person lacks the mental capacity to make a particular decision it does not mean they suffer from a mental disorder.

If a patient lacks mental capacity, is under continuous supervision, and not free to leave, then deprivation of liberty should be put in place, to ensure that a patient is receiving treatment within their best interests of them. Dimond. B (2016, pg.253) mentions that the deprivation of liberty safeguards “was enacted as a result of the decision of the European Court of Human rights (ECHR) which held, in the Bournewood case, that the liberty of those lacking the requisite mental capacity who were admitted to hospital under the common law doctrine of necessity was not protected as required Article 5 of the European Convention on Human rights.” Furthermore Dimond. B (2016, pg.254) goes on to mention that “a person can only be deprived of the liberty by the MCA if:

· The deprivation is authorized by an order of the court of protection under section 16 (2)(a) of the MCA (and P is not ineligible because he comes under the MHA as set out in Schedule 1A to the MCA); or

· The deprivation is authorized in accordance with the deprivation of liberty procedures (DOLs) set out in Schedule A1 (and P is not ineligible because he comes under the MHA as set out in Schedule 1A to the MCA); or

· The deprivation is carried out because it is necessary in order to give life-sustaining treatment, or to carry out a vital act to prevent serious deterioration in the person’s condition, while a decision as respects any relevant issue is sought from the court.”

Social care institute for excellence (2016) speaks about principle five of the mental capacity act. When a person is making a decision on behalf of someone they need to take into consideration, whether we can choose to determine or proceed in a way that would restrict a person’s rights and freedoms of action, or whether it is needed to actually decide to proceed at all. In all cases when it comes to making a decision on behalf of someone, we should always weigh up whether what we are deciding is going to help the person in any way. Trying to go for the less restrictive option for them.

When a patient has not got any family or friends that can help make them an informed decision when it comes to their treatment. An IMAC which are independent mental capacity advocate may be considered if health care professionals needed to propose a medical intervention or change a person living arrangements. For example, if they were not safe on their own and may need to go into a care home. Brown. R, Barber. P and Martin.D (2015) mention that the IMAC were a late addition to the Mental Capacity act 2005. They were not brought into the act until 2007. They have been available since April 2007 in England. Only people who have been trained to provide ‘best interests’ advocacy, should only be appointed to cases where an IMAC is required. Their role is to support and represent the person concerned, establish a person’s wishes and feelings, and to ensure that the Act’s principles and best interests’ checklists are followed.

Ethical accountability

Merriam-Webster (2019) describes ethics “as a plural in form but singular or plural in construction: the discipline dealing with that is good and bad and with moral duty and obligation.” Going on to state that both morals and ethics have some distinction in how they are used. Morals is one’s individual’s values in which they consider what is right or wrong in their eyes. Whereas ethics introduces more of moral principles.

Edward.S (2009) mentions that as a nurse we can face many more ethical problems than other members of society have to face. Whilst we are nurses, we come into contact with many different people with ethical beliefs and moral education. This means that sometimes we may need to change different ways of responding to moral problems, which could differ to our own ethical beliefs. Our nursing acts need to be direct to moral ends. Allowing to bring our states which not only do our patients value them but are of importance to them. Examples of these states are feeling well, being free from pain, feeling calm, and feeling that one has a good quality of life or quality that has improved and not deteriorated. Principles of health care ethics is narrowed down into four principles. These principles are respect for autonomy, the principle of nonmaleficence, the principle of beneficence, and the principle of justice. The principles of ethics when it approaches to healthcare is about looking at a person’s view, looking at a different view, and giving our own opinion based on what we think. Furthermore, Edward.S (2009, pg. 57) mentions “to say that a person has autonomy, or equivalently, is autonomous, is to say that they have the capacity for self-government. In other words, they are capable of making their own decisions about matters which concern their own life.” They then go onto say that sometimes as healthcare professionals we can overwhelm the patient’s with too much information, even if the information is relevant, is not respecting a patient’s autonomy. The importance of autonomy is attached to the law. Meaning if patients want to reject even life-saving treatment then they should be able to freely make that decision.

Tringle. J and Cribb. A (2014, pg.23) states “that ‘habitual ethics’ the ethical judgments that individuals make as a matter of course; the values that are built into ways of working. Any shift in the philosophy or culture of nursing which entails that normal practice and expectations are changed has an enormous impact. Practice can be enhanced (or made worse) for literally thousands of people. Generally speaking, much less rest upon prolonged agonizing about particular cases, however difficult they are.”

Ethical issues that can cause setbacks to patients when it comes to capacity is that they may not have the knowledge or the understanding to consent when it comes to procedures. Tingle. J and Cribb. A (2014) state that patients are unable to consent to something fully if they are in incomprehension of the knowledge provided to them, misleading in what they are told, or simple cannot grasp the information being mentioned to them. Sometimes as healthcare professionals we speak in medical terms that many people who do not understand medicine will acknowledge what their health professional has told them. Sometimes patients do not always ask what terms can mean and ask for them to reiterate. However, sometimes it can be harder for healthcare professionals to explain a complicated matter in terms that are both perfectly clear to the layperson and, at the same time, both accurate and complete.

Professional Accountability

Chitty. K and Black. B (2011) states that for many years a lot of people are looking into whether nursing is a profession. Some people believe that nursing is an emerging profession, whereas many others see nursing as a fully-fledged profession. The code by the NMC (2015) states “nurses, midwives, and nursing associates must act in line with the Code, whether they are providing direct care to individuals, groups or communities or bringing their professional knowledge to bear on nursing and midwifery practice in other roles, such as leadership, education, or research. The values and principles set out in the code can be applied in a range of different practice settings, but they are not negotiable or discretionary.” The code admits that the standards they have produced within the code are not just the standards they have produced, but what they have been told by members of the public, of what they expect from healthcare professionals when they are being taken care of within a health setting. Further stating that health professionals if they want to be within the profession must be committed to the professional standards, as it is of great importance and the foundation of the practice. The NMC (2015) goes onto say “they can work in diverse contexts and have different levels of autonomy and responsibility. However, all of the professions we regulate exercise professional judgment and are accountable for their work.”

Although accountability is important and as professionals, we must be responsible for any actions we implement, we must abide by the law at the same time. Cornock.M (2014) states one must be able to answer any of the judgments they make, according to the code of conduct. They are accountable to anything they do as a professional at all times, whether it is on or off duty. Liability for one’s actions is different to being accountable as what evidence they provide will be judged and, if deemed to be liable could ensure a penalty being given to the healthcare professional. As healthcare professionals, we have a degree of autonomy in the way we undertake our practice. Allowing professionals to make our own clinical decisions and commitment. He looks into whom, as healthcare professionals are, we accountable to. Saying that we have many people we are accountable to, our patients, our employers, the NMC, and society.

Chitty. K and Black. B (2011) discusses that due to nursing being so dynamic, many of the changes in nursing see many of the legal aspects in nursing care evolving to help protect not only the patients but the healthcare professionals.

Conclusion

Within this assignment, I have learned about what an independent mental capacity advocate is, and what their role is within the mental capacity act 2005. What the five principles are of the mental capacity act 2005, and how they can be applied within a practice? I understand more about the importance of accountability, what the law states, and what the NMC state. Learned more about what ethics are and how sometimes it can be challenging within the profession as sometimes people can have completely different beliefs and morals to you. That we need to not enforce our own beliefs and ethics but to help our patients to make wise decisions based on the information we give them and allow them to maintain their best interests. I understand now what liability is and what it could mean within my future career. At the moment I am a student nurse, and whilst in practice, I will discuss, understand and analytically go through anything I do whilst under the supervision of my mentor. Reflect and see if we were to go back and redo our actions, whether what we do we would it make a difference to the patient’s experience and the care they receive. As student nurses we have a great opportunity to look into different areas of practice, it can help us to understand that whilst on one ward something may work, other times it may not work on a different ward. Occasionally we have to ask other healthcare professionals whether what we think is correct, would they do the same as us? Sometimes we have to change how we act with different patients as some patients may need a little bit more help and understanding than others. As a student nurse, I am able to step back and see what fellow nurses and mentors might do in a situation and ask questions. Now that I have a theatrical background into the subject of capacity I can now try and apply this to my practice. With capacity, I now understand that just because someone lacks capacity does not mean they have mental health problems. That when we are trying to make decisions for someone with a lack of capacity, we still want to involve both the person and their family/carers to get the best interests for them. That we can use a two-stage test that will help us to make an informed decision about whether a person has the capacity or not. I would say at the start of this assignment I would have been bondy level one as my knowledge in this area was nowhere near as good as my knowledge is now. I believe that once I put this knowledge and understanding within practice my bondy level will go up to a bondy level 2. Many of the sources within this assignment was credible sources, as the NMC and RCN are very well known and respected when it comes to nursing practice. The books I used were also credible because they would not have been able to be published if they were not reliable sources. However, sometimes with books, they can be outdated.

References

1. Chitty, K. and Black, B. (2011). Professional nursing. Maryland Heights, Mo.: Saunders/Elsevier.
2. Cornock.M (2014) Legal principles of responsibility and accountability in professional healthcare [online] Available at: https://oro.open.ac.uk/49089/3/Legal%20principles%20of%20responsibility%20and%20accountability%20in%20healthcare.pdf [accessed on the 24th of March 2019]
3. Dimond, B. (2016). Legal Aspects of Mental Capacity: A Practical Guide for Health and Social C. 2nd ed. John Wiley & Sons.
4. Edwards, S. (2009). Nursing ethics. New York: Macmillan.
5. Martin, D. (n.d.). Mental capacity act 2005 – a guide for practice. 3rd ed.
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14. Tingle, J. and Cribb, A. (2013). Nursing Law and Ethics, 4th Edition. John Wiley & Sons.