CONGRATULATIONS : F8 PRIZE WINNER in JUNE 2009 EXAMS

Heartiest Congratulations to my student, Mr (Jack)Jian Hua Chew for scoring the highest marks for F8 in Malaysia. He beats thousands of other candidates. I am proud to admit he is hardworking, full class attendance and focused on exam techniques paid off.

If he can do it, so can all of you students. I always share the same passion to support and assist EVERYONE of YOU to pass. The fact that F8 has the LOWEST pass rate (shocking 19% only) in Malaysia pose an opportunity for you. The marking standard becomes relatively low compared to international standard. It means (unfortunately) that the majority of F8 candidates don't have a clue on how to manage and tackle the exam paper. But you have attended my classes, with lots and lots of exam techniques, put you all in better advantage.

To Jack, if you are reading this, though I am happy over your achievement, but this is only a battle you won. To win the War ie pass ACCA, you need to continue be strong, determined and

----- as Winston Churchill say, "Never, never, never give up! I say once again 'Never'." -----




PIC 01: Britain's Prime Minister during World War II




PIC02: PROGRESS IS ALWAYS ACTION - MOVING FORWARD!!





The context of Churchill's admonition was the Germans were 7 years ahead in re-arming their military over Britain who was busy tackling a recession in the 1930's by "DIS-arming". When Germans attacked and goose step over to Poland in 1939, war with France and Britain was inevitable! As we know in history, Never Give Up mentality gave Britain an eventual victory.

TO Jack and all my students,

SO CAN YOU!

I BELIEVE IN YOU!

I KNOW YOU CAN!

P3 Target Practice for December 2009 Exam

Pic 01: Are you ready to meet your opponent? Which are you in the picture?



Are you ready for the exams? Really? Confident? Well, try out the questions below and see how much you can generate as many points (ideally 100 points for a 100% exam) in 3 hours and 15 minutes.

Best wishes
Marcus


Question 1 Case study :
• Accounting firm travels frequently to clients’ office for audit, follow ups and deliver reports
• Problems of
 Late deliveries
 Poor communication with client on audit changes
 Outdated software and incompatibility with clients system
 High labour turnover.
 Loss of confidential documents.
Required :
a) Assess the internal weaknesses and external threats that Marks Accounting face. Note: Your answers need NOT include strengths and opportunities. [10 marks]
b) You are approach to evaluate the possibility to merge and Spencer Accounting firm. Write a report to Board evaluating the proposals risks and benefits. [12 marks include 2 professional marks]
c) Business Process Reengineering is radical, fundamental, dramatic and changes process. Your Director is keen to apply the concepts to solve the above mentioned problems. Use appropriate models to recommend improvement process strategy.
[15 marks include 2 professional marks]
d) Based on Harmon process strategy matrix, evaluate the context of Marks Accounting firm processes. [8 marks]
e) Why QMS and attaining ISO 9000 series will bring competitive advantages? [5 marks]
f) Provide four methods and its implications of financing the new project. [10 marks]

Question 2 Case study :
Bucks Rogers Airline company wish to integrate its booking systems online with rivals. To increase its market reach
Required:
a) Explain the usefulness of V Model and SSADM in the airline context. [10 marks]
b) What are the implications of OUTSOURCING software development? Should company consider purchasing off the shelve software. [10 marks]
c) Outline an appropriate job design for IT employees for the above tasks. [5 marks]

Question 3 Case study :
Seminars Training Centre provide management and accounting courses.

Required:
a) Why consider e-commerce strategy? Any good in adopting CRM? [10 marks]
b) Why appropriate leadership is critical to implementation strategy?[5 marks]
c) What are the advantages and disadvantages of adopting a rational programmed strategy process for firm. [10 marks]

Question 4 Case study :
New shopping mall construction in progress. Discover that building materials are toxic if over exposed. Use substitutes materials, will quickly result in losses for project.

Required:
a) What is the ethical stance that company should adopt? [10 marks]
b) Stakeholders may object to your recommendations. Outline a solution to propose to Board. [10 marks]
c) Explain the usefulness of performance management tool in managing the project. [5marks]

P1 (ACCA) December 2009 Exam Tips

Pic 01: How to balance internal controls, risk management, best practice without neglecting business objectives? Hello? Anybody out there?






ACCA P1: PROFESSIONAL ACCOUNTANT
Lecturer : Marcus Ong




Dear Students,

Take note of David Campbell recent article on internal and external actors. His has tendency to emphasise on ethics and internal 'governance'. Peruse and analyse the questions we have done and not to miss out the past years questions. Certainly useful for getting into P1 Jargon.

Best wishes.

Marcus

Question 1 Case Study:
Utility Services Firm is constructing a new power plant supply located near to forest reserves. Issues are:
 Potential destruction of Flora and Fauna due to construction. Consultants submitted a report on the extensiveness of the damage to government.
 Relocation of nearby villagers
 Government is concerned over political negativity of project
 Investors-clients threaten to pull out if the power plant is not completed in time for the proposed manufacturing plants use
 Media ‘sensationalise’ the environment issue.
 Consultants Project Head is running for political office. Utility firm is invited to a fund raising campaign.

Required :
a) Outline the impact internal and external actors i.e. stakeholders and advise the Board as to how to prioritise the their demands. Include in your comments the CSR approach towards managing stakeholders.
(10 marks)
b) Advise the Board on the usefulness of hiring external auditors to conduct a social and environment audit. (12 marks)
c) On the Consultants involvement in the project:
i. What role does transparency principle play with regard to the dilemma of releasing the Consultants Report? (6 marks)
ii. What professional ethics issues are involve. (4 marks)
iii. Advise Utility Service Firm on how to manage the identified conflicts.
(4 marks)
iv. Evaluate the usefulness of involving NEDs and iNEDs with regard to the consultants’ report. (4 marks)
d) Explain to the Board on setting up an effective internal control system. (6 marks)
e) Professional marks for concise, incisive and organised arguments. (4 marks)

Question 2 Case Study:
Firm is in Furnishing and Design Industry for homes. Board is keen to:
 Enhance employees’ pensions value by using it to buy back company’s share
 Set up special committee to oversee the investment value of Pension Fund. The chairman will head the committee.
 Board opine that Executive Directors’ pay need not be disclosed in Annual Report based on Voluntary codes. A point to note is CEO, CFO pay packages have 65% variable rewards tied to Firm’s share price performance.
Required:
a) From deontological and egoism ethical perspectives, evaluate the implications of using pension fund to support company’s share prices. (7marks)
b) What are the COSO’s based risks you foresee in connection to the fund management?
(8 marks)
c) Recommend an effective Corporate Governance to oversee the fund. (6 marks)
d) What is the implication of adopting the SOX based governance? (4 marks)

Question 3 Case Study:
Poultry industry was recently listed on London Stock Exchange. 85% equity were fully subscribed. Board is grappling and puzzled over the many listing requirements despote being told that Cadbury Report emphasises voluntarism approach.

Required:
a) What are the implications of adopting a Principled based approach in a outside-dominated company? (please see BPP Manual Chapter 2 : Outsider Systems, page 42) (8 marks)
b) Explain a proper Risk Management process relating closely to the industry. (8 Marks)
c) With the recent bird flu scare, advise Board on how to improve internal control systems.
(7 marks)
Question 4 Case Study:
Optical retail chain in England is considering switching spectacle frame supplier to China which offers much lower cost of inputs.
a) Explain the environmental footprint impact and how the firm can report to its stockholders.
(8 marks)
b) Based on AAA model, evaluate the decision to change suppliers. (6 marks)
c) Explain Kohlberg’s moral perspective on the suppliers’ switch. (4 marks)
d) Based on Turnbull’s Report, advise Board on how to set up effective communication system especially with its employees. (7 marks)

FINAL WORD to Students: Need “applications” to reinforce the importance that you do the same! Bear in mind, your opinions from P1 perspectives are tested here, nothing else.

DOs:
 Provide rich varieties of points
 Provide jargons for p1
 Provide sub-headings, short paragraphs
 Provide organised report style format (if required)

DON’Ts:
 Avoid generic statements!
 Avoid blabbering
 Avoid lengthy sentences

Do your utmost best, that is what anyone including yourself could demand from you.

DISCLAIMER OF LIABILITY: while it is good to focus on Hot Topics but to rely on them exclusively is both detrimental to your mental health & performance in exam.

F8 Audit and Assurance December 2009 Exam Tips

I WILL SUCCEED!



F8 : Audit and Assurance

Lecturer : Marcus Ong

Disclaimer of liabilities: While its advantageous to focus on high risk questions i.e. its likelihood that its examined in the coming exam, but a total reliance on them is detrimental to users' mental and emotional health. Discretion is required!

To my students of F8,

We came a long way, with many tutorials, questions and exam techniques discusse. Remember, you have to know the concepts and understand what part of the systems (namely sales/ purchases/ stocks/ cash/ wages) are being tested.

The following target questions are for your further practice and focus on likely exam questions. It prepares you mentally with a ‘draft answer’. In that at least 50% of the exam answer is prepared while you focus on using case study facts to integrate in your answer.

The target questions are actually covered in my questions bank, lecture notes, revision kit with you. Discuss with your class mates if you must.

Do Your Best,
Marcus



TARGET QUESTIONS
Question 1
a) Explain the substantive tests on assets existence and valuation and state the reasons for the audit procedures. (12 marks)
b) The control weaknesses and how the audit procedures be done to ascertain the purchases processes. Recommend improvements to the management. (8 marks)
c) What are the advantages of an audit planning? You may refer to ISA 315 as a guide. (6 marks)
d) How can audit sampling be selected? State 3 methods. (4 marks)

Question 2
a) What are the main changes in ISA330 - The Auditor’s Responses to Assessed Risks. (4 marks)
b) How can analytical procedures be used to enhance audit interpretations in purchases system? (3 marks)
c) What actions incoming auditors can take when to protect their integrity in face of Board’s intention to appoint and replace the outgoing auditors? (3 marks)

Question 3
a) On risk assessment, explain the unusual changes in the Income statement. (6 marks) [refer to June 2008 Question 3 (a)]
b) What are the main duties of internal audit and audit committee roles pertaining to risk assessments? (6 marks)
c) Explain the procedures for debtors circularisation. (4 marks)
d) Discuss the effectiveness of internal control procedures in a small business entity. (4 marks)

Question 4
a) Explain what factors to consider to justify the outsourcing of internal audit department. (6 marks)
b) Evaluate and recommend improvements on current Corporate Governance system. (5 Marks)
c) What are the necessary steps to confirm the valuation of Non Current Assets? (5 marks)
d) Identify and explain the weaknesses perpetual inventory controls system. (4 marks)

Question 5
a) Adjusting and non-adjusting events (6 marks)
b) Auditors responsibilities and audit work needed following the post audit events (5 Marks)
c) Different types of Auditors’ Report and its effectiveness toward shareholders-members modified report (5 marks)
d) What assurances work be done to determine if company is a going concern status? (4 marks)

Other critical topics
 Going concern – audit procedures that involves the future prospects of company
 Audit sampling
 Cut off tests for revenues and purchasing recognition
 Analytical procedures embedded in Substantive tests
 Fraud and negligence – External Auditors’ responsibilities
 Not for profit organizations – completeness, accuracy, cut-off tests on income/donations -and expenditures.
 Adequacy of internal controls
 Small businesses – poor internal controls highlighted

P3 PRACTICE QUESTION

P3: Practice Question


Pictures : Investing in Your Future




Massachusetts University is an old and run down private institution. Though famous for its Business studies program, many students find the place not conducive for studies. The Dean, Alfred, has pushed for an extension annex building with view to increase class capacity. The Board of Directors, was skeptical over the ability to complete on time and if there is sufficient fund. However, with the proposed construction site, nearby villagers object to it since it means in future increased traffic flow through their already congested roads. Investors are keen only if they are convinced that the project is translated to higher tuition fees, hence better returns on investment.

The business program at Massachusetts does not simply focus on the basic skills a student will need to succeed in business, but also shapes the student's character as a whole. One of Massachusetts’s goals is to develop students into responsible and knowledgeable "global citizens" and the business school takes this aim to heart. Not only are business students required to take necessary courses in accounting, finance, management, etc. but also have to take courses in business writing, speaking, and ethics. The business school also encourages students to meet the challenges and opportunities created by globalization head-on by fostering study-abroad opportunities and travel courses. In addition to the business school's specific requirements, each Massachusetts student receives a liberal arts education covering many subject areas. I really believe that the strength of the business school's curriculum combined with the broad education I received in other areas of study has given me a more well-rounded perspective of the world and the problems I will face in business and in life.

Jack Escrow, senior lecturer, argued that hardware (buildings) should be complemented with software literally. A campus wireless network facility would be just fine and a revamp of administration software to better track students data, compilation of research objective and general accounting administrative purpose.

Required:
A) Focus and advise Massachusetts University Board on implementing the new construction project. [15]
B) Why should the Board be concerned with the objections of stakeholders? Identify them and explain their impact on the project. [10]
C) evaluate the implication that Massachusetts University should consider purchasing a standard software package. [10]
D) justify to management that Massachusetts University need to have its own customized software. Propose an action plan as to how to proceed with it. [15]

PETRONAS' Corporate Governance

Pic 01: The twins that made Malaysia famous


Pic 02: The cash cow for gas station owners



Pic 03: Hassan Merican, Chartered Accountant, the CEO of Malaysia's largest and most globalised company



Pic 04: Ladies, a useful fact for you? Oil & gas industry has smartest,fit-test and good looking engineers than any industry. I know, because my younger brother in ONE! haha!


P1 (ACCA): OPEN BOOK TEST
- Strictly for exam practice in P1 (Professional Accountant). The case study is “sensationalise” to allow scope of corporate governance recommendations.

A DECADE after opening, the Petronas Twin Towers in Kuala Lumpur are no longer the world’s tallest. But Petroliam Nasional, the company that built them, continues to grow. It exports lots of liquefied natural gas (LNG) to booming Asian neighbours and owns the world’s largest fleet of LNG tankers. It is also expanding abroad: last year operations outside Malaysia brought in 42% of its M$264 billion ($77 billion) revenue, up from 35% in 2005. Foreign oil giants are keen to team up with it in risky places like Iraq. In short, Petronas is a successful example of a national oil company, the government-owned entities that collectively hold some three-quarters of the world’s proven reserves but are prone to waste and mismanagement. Yet it still faces a peculiar set of problems tied to its state-owned status.

Like oilmen everywhere, Hassan Marican, Petronas’s boss, is busy trying to pare costs in a global slump. From his perch on the 80th floor of Tower 1, he sees little sign of a sustained recovery in demand. He has asked contractors to cut costs by 30% after profits fell by 14% last year, the first drop in seven years. “Everyone knows how much we’re being squeezed,” he says.
But the squeeze comes not just from falling oil prices. Malaysia’s federal government is a needy owner: last year Petronas paid out 45% of its revenues in dividends, royalties and taxes. A yawning budget deficit this year will require further generosity. The firm also sells cheap gas to local industries and manages to keep petrol prices in Malaysia affordable.

Mr Hassan insists that this is not a drag on investment. Petronas plans capital expenditure of around US$12 billion this year, mostly on exploration and development—a similar level to last year. Investors seem happy to stump up. In August they snapped up US$4.5 billion in Petronas bonds, its first issuance since 2002. Moody’s, a rating agency, considers them more secure than Malaysia’s sovereign debt. However, there was an admittance from certain management quarters, that the there was an underestimation of gas reserves, misaligning the exploration investment which was biased toward oil extraction. The budget figure was allocating 70% of investment in oil and 30% on gas reserves, but as it turns out, this is an underestimation of gas reserves. It should have an additional US$3.6 billion exploration and development. A clear shortfalls in cash call, and Pertronas may have to make another debenture issue. This is unpopular as with the rising interest rates, prove expensive and squeezing the profits further. Media has criticise the management for misleading the public as evidence of weak internal controls especially on reporting to the public.

Mr Hassan says state ownership does Petronas no harm abroad, and its experience as a regulator is a selling point. He describes the firm as a “nationally owned international oil company”. Roughly a fifth of its 39,000 employees are non-Malaysians. As domestic output tapers off, this ratio is bound to rise. But Petronas cannot match the salaries dangled by rivals, since it sticks to Malaysian pay scales.

In part, that is a political decision. Petronas’s sole shareholder is the office of the prime minister, and the firm, says Mr Hassan, is “aligned to nation-building”. Critics say this leads to spending on prestige projects popular with politicians, like the towers, which were slow to fill up, and Putrajaya, Malaysia’s flashy new capital. But Mr Hassan points out that the towers are now fully rented. All investments, he says, are judged on their commercial merits.

Petronas’s board has not even one independent director to bear him out. Mr Hassan, already chief executive, became the acting chairman in 2004 after his predecessor died. His contract expires in February, 2010. That will give the prime minister, Najib Razak, an opportunity to make an appointment that proves that the firm really is run on a completely commercial basis. Dr Merichan a member of Parliament remarked, “I want risk awareness and cost consciousness embedded in Petronas culture, as we should tighten our belts and aggressively seek business expansion to alleviate assist Malaysian economy from the doldrums.”

Required:
(a) Define ‘transparency’ and evaluate its importance as an underlying principle in corporate governance and in relevant and reliable financial reporting. Your answer should refer to the case as appropriate. (10 marks)

(b) Evaluate the relative advantages and disadvantages of strategic risk management committee being non-executive rather than executive in nature. (7 marks)

(c) Explain the meaning of Dr. Merichan comment: “I want risk awareness and cost consciousness embedded in Petronas culture, as we should tighten our belts and aggressively seek business expansion to alleviate Malaysian economy from the doldrums.” (5 marks)

(d) Critically discuss FOUR principal roles of non-executive directors and explain the potential tensions between these roles that Petronas’ non-executive directors may experience in advising on the disclosure of the underestimation of the oil reserve. (12 marks)

(e) Draft a letter for Hassan to send to Malaysian government to include the following:
(i) why you believe robust internal controls to be important; and
(ii) proposals on how internal systems might be improved in the light of the underestimation of oil.

Note: four professional marks are available within the marks allocated to requirement (e) for the structure,content, style and layout of the letter.
(16 marks)


PS: answers will be provided in the Revision Class.

Accountant's Job Prospects

I see everyone of you ACCA candidates as a SUCCESSFUL GRADUATE. I decided to enlighten or share with you on the prospects of being an accountant and related fields that require your [future] expertise.

I am pleased to link up with a useful site called http://www.accountantkey.com/. The creator is my talented friend, Mr Bill Low. I certainly hope you all can get good information on
- what is audit work like?
- what is happening to the audit tax industry?
- useful tips and the going on pertaining to Big 5 Audit firm.
- imagine, an AUDIT Partner charged with fraud. After the fall of Arthur Anderson, anything can happen!!

Please also enjoy and read up on all Business related articles links on the side bar, so crucial to P1, P3 and P5.

Work very hard today for a better tomorrow!!

Enjoy and best wishes.