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.