ACCA Strategic Professional · Advanced Financial Management · The role and responsibility of senior financial executive/advisor
A listed company's finance director is advising the board on a proposed dividend policy. Under the ACCA approach to the senior financial adviser's role, which duty most clearly reflects the ethical responsibility of the adviser towards shareholders?
The adviser should give objective, honest advice that balances shareholder wealth with wider stakeholder interests and disclose any conflicts of interest. Pursuing personal bonuses, concealing risks or deferring blindly to the chief executive would breach integrity and objectivity.
- ARecommend the policy that maximises the finance director's own performance bonus
- BGive objective advice that balances shareholder wealth with the interests of other stakeholders, disclosing any conflict of interestCorrect
- CWithhold information about risks to avoid unsettling the market
- DFollow the chief executive's preferred policy without challenge
Explanation
A senior financial adviser must act with objectivity and integrity, disclosing conflicts of interest and giving balanced advice. Maximising personal bonus or hiding risks breaches fundamental ethical principles. Simply following the CEO without challenge fails the duty of professional competence and objectivity.
Did you get it right without looking?
One question tells you little. A timed set on The role and responsibility of senior financial executive/advisor shows your real accuracy, how long you take and where you lose marks.
More The role and responsibility of senior financial executive/advisor questions
- Orion Ltd's managers are paid a bonus of 2% of reported profit. A project requires an outlay of $10m now and returns $4m at the end of each …
- Kestrel Group's board proposes a CEO bonus equal to 1% of reported profit before tax. The CEO could choose between Project A, which yields a…
- Kappa Ltd's treasurer learns in confidence that a client is about to announce a takeover bid for a listed company, and a close relative asks…
- Kappa Ltd has a bonus scheme paying executives 2% of the increase in earnings per share. The finance director proposes to reduce discretiona…
- A multinational's board asks its senior financial adviser to recommend a dividend policy for the group. Which consideration is most directly…
- A company's managers hold only salary-based contracts with a small annual bonus tied to reported profit. Shareholders suspect managers rejec…