ACCAP1-P3模拟题及解析(4)12651.pdf

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1、 财经网络教育领导品牌 _ 高顿网校 All Rights Reserved 版权所有 复制必究 1 ACCA P1-P3 模拟题及解析（4）1.Hayho is a large international company with direct investments in 65 countries.It is a manufacturer of high technology products,with each Hayho factory typically employing over 3,000 people.Hayho factories also support local su

2、pply chains employing many more people so each Hayho plant is considered a vital part of the regional economy in which it is located.Several years ago,Hayho was widely criticised for its operations in Arrland,a developing country with an oppressive and undemocratic government.Investigative journalis

3、ts produced material showing the poor conditions of workers,and pollution around the Hayho factories in Arrland.They also showed evidence suggesting that Hayho had paid bribes to the Arrland government so that local opposition to the Hayho operation could be forcefully stopped.After this episode,the

4、 company became very sensitive to criticism of its operations in developing countries.A press statement at the time said that Hayho,in future,would always uphold the highest standards of integrity,human rights and environmental protection whilst at the same time responsibly supporting developing cou

5、ntries by providing jobs and opportunities to enable greatersocial and economic development.The board of Hayho is now deciding between two possible large new investments,both directly employing about 3,000 people.Both options have a number of advantages and disadvantages and Mr Woo,Hayhos finance di

6、rector,has recently made clear that only one can be chosen at this stage.The two options are of similar investment value and are referred to as the Jayland option and the Pealand option.The Jayland option is to build a new large factory in Jayland and to recruit a completely new local workforce to w

7、ork in it.Jayland is a developing country with few environmental and labour regulations.It has a poorly developed education and training system,and is generally considered to be undemocratic.Its president,Mr Popo,has been in office since he seized power in a military coup 30 years ago.Human rights o

8、rganisations say that he maintains order by abusing the rights of the people and cruelly suppressing any dissent against him.In early exploratory talks between Hayho and the Jayland government,Hayho was given assurances that it could pursue its activities with little regulation from the government a

9、s long as the Jayland president,Mr Popo,received a personal annual royalty(effectively a bribe)for allowing Hayho to operate in his country.Finance director Mr Woo said that some stakeholders would probably criticise Hayho,perhaps in the international media,for investing in Jayland.Hayho may be accu

10、sed of supporting the dictatorship of Mr Popo in that country,especially if the royalty was ever discovered.Mr Woo calculated that the NPV(net present value)of projected pretax returns of the Jayland option over a ten-year period was$2 billion but that there was also a risk of potential political in

11、stability in Jayland during the lifetime of the investment.The Pealand option is to buy an existing plant in Pealand which would then be refurbished to facilitate the manufacture of Hayho products.This would involve inheriting the workforce of the previous owners.Pealand is a new democracy,and a tra

12、nsitional economy,having gained its independence ten years ago.In an attempt to purge the corrupt business practices associated with its past,the Pealand government has become very thorough in ensuring that all inward investments,including Hayhos factory purchase,meet exacting and demanding standard

13、s of 财经网络教育领导品牌 _ 高顿网校 All Rights Reserved 版权所有 复制必究 2 environmental protection and work conditions.Mr Woo,the finance director,said that the NPV of projected pre-tax returns over a ten-year period was$1 billion for the Pealand option but that the risk of political instability in Pealand was negligi

14、ble.Both of the returns,the forecast$2 billion for Jayland and the$1 billion for Pealand,were considered to be acceptable in principle.Mr Woo also said that there were issues with the two options relating to the effectiveness of necessary internal controls.Whichever option was chosen(Jayland or Peal

15、and),it would be necessary to establish internal controls to enable accurate and timely reporting of production and cost data back to head office.So a number of systems would need to be put in place to support the production itself.One staff member,Emily Baa,who had previously worked in Jayland for

16、another company,gave her opinion to the board about some of the issues that Hayho might encounter if it chose the Jayland option.She said that Jayland was very under developed until relatively recently and explained how the national culture was unfamiliar with modern business practice and behaviour.

17、She said that property security may be a problem and that there was a potential risk to assets there.She also said that,in her opinion,there was a lack of some key job skills among the potential workforce in Jayland such as quality control and accounting skills.She explained that quality control ski

18、lls would be necessary to ensure product specifications were met and that accounting skills would be necessary for the provision of internal and external reporting.As a manufacturer of very technologically advanced products,a number of stringent international product standards applied to Hayho produ

19、cts wherever in the world they were produced.Meanwhile,news that Hayho was considering a large investment in Jayland leaked out to the press.In response,Hayho s chief executive,Helen Duomo received two letters.The first was from a prominent international human rights lobbying organisation called Wat

20、ching Business(WB).In the letter,the lobby group said that because of its terrible track record in Arrland and elsewhere,Hayho was being carefully monitored for its unethical business practices.WB said its interest in Hayhos activities had been rekindled since it had received intelligence about the

21、possible investment in Jayland and warned Mrs Duomo not to make the investment because it would provide credibility for the brutal dictatorship of Mr Popo.Whilst Mrs Duomo,known for her forthright manner,would normally dismiss threats from groups of this type,she knew that WB had a lot of support am

22、ong senior politicians and legislators in many parts of the world.She believed that WB could achieve some power through mobilising public opinion through effective use of mass media,such as newspapers and television.WB was also respected as a research organisation and its advice was often sought by

23、politicians and trade organisations.Mrs Duomo said she was frustrated whenever anybody got in the way of her accountability to the Hayho shareholders,but that some interests could not be ignored because of their potential to influence.WB fell into this category.The second letter she received was fro

24、m the head of Quark Investments,Hayhos single biggest institutional shareholder.The letter sought to remind Mrs Duomo that the Hayho board was employed by its shareholders and that Mrs Duomo should be determined and resolute in maximising shareholder returns.The letter encouraged the board not to be

25、 diverted by well meaning but misinformed outsiders concerned with things that were actually none of their business.Aware that she had to manage two competing demands placed on her,Mrs Duomo sought advice from Emily Baa,who had experience of life in Jayland.So she asked Emily Baa to prepare some not

26、es for the next board meeting to clarify whom the board of Hayho was actually accountable to and 财经网络教育领导品牌 _ 高顿网校 All Rights Reserved 版权所有 复制必究 3 how it might respond to the letter from WB.Required:(a)Explain risk appetite and demonstrate how different risk appetites might affect the selection of i

27、nvestments between Jayland and Pealand.(6 marks)(b)Use the AAA(American Accounting Association)seven-step model to examine the ethical decision whether to select the Jayland option or the Pealand option.(14 marks)(c)Describe the general purposes of an internal control system and,based on Emily Baas

28、views,assess the main internal control challenges that Hayho might encounter if it chose the Jayland option.(12 marks)(d)Prepare briefing notes from Emily Baa to prepare chief executive of Hayho,Helen Duomo,for the board meeting as requested in the case.The notes should cover the following:(i)A disc

29、ussion of the meaning of accountability at Hayho and of how the Mendelow framework can be used to predict the influence of the Watching Business pressure group;(7 marks)(ii)A brief explanation of the agency relationship between the board of Hayho and Quark Investments,and advice on why the demands f

30、rom Watching Business should be carefully considered.(7 marks)Professional marks will be awarded in part(d)for the clarity,flow,persuasiveness and structure of the briefing notes.(4 marks)(50 marks)3 P.T.O.Section B TWO questions ONLY to be attempted 2 John Louse,the recently retired chief executive

31、 of Zogs Company,a major listed company,was giving a speech reflecting on his career and some of the aspects of governance he supported and others of which he was critical.In particular,he believed that board committees were mainly ineffective.A lot of the ineffectiveness,he said,was due to the lack

32、 of independence of many non-executive directors(NEDs).He believed that it was not enough just to have the required number of non-executive directors;they must also be truly independent of the executive board.It was his opinion that it was not enough to have no material financial connection with a c

33、ompany for independence:he believed that in order to be truly independent,NEDs should come from outside the industry and have no previous contact with any of the current executive directors.In relation to risk committees,he said that in his experience,the companys risk committee had never stopped an

34、y risk affecting the company and because of this,he questioned its value.He said that the risk committee was always asking for more information,which was inconvenient and had such a gloomy and pessimistic approach to its task.He asked,why cant risk committees just get on with stopping risk,and also

35、stop making inconvenient demands on company management?Do they think middle managers have nothing else to do?He viewed all material risks as external risks and so the risk committee should be looking 财经网络教育领导品牌 _ 高顿网校 All Rights Reserved 版权所有 复制必究 4 outwards and not inwards.Since retiring from Zogs,

36、Mr Louse had taken up a non-executive directorship of SmallCo,a smaller private company in his town.In a meeting with Alan Ng,the new chief executive of Zogs,Mr Ng said that whilst risk management systems were vital in large companies like Zogs,fewer risk controls were needed in smaller companies li

37、ke SmallCo.Required:(a)Define independence in the context of corporate governance and critically evaluate Mr Louses comment that greater independence of non-executive directors is important in increasing the effectiveness of board committees.(8 marks)(b)Describe the roles of a risk committee and cri

38、ticise Mr Louses understanding of the risk committee in Zogs Company.(9 marks)(c)Assess whether risk committees and risk mitigation systems are more important in larger companies,like Zogs,than in smaller companies like SmallCo.(8 marks)(25 marks)3 Jojo Auditors is an audit practice with five partne

39、rs.The five partners have worked together for several years and,as well as being work colleagues,are personal friends with each other.At Jojo it is customary for the performance of all student accountants to be appraised after their first year of a training contract using a range of criteria includi

40、ng examination success,technical ability and professionalism.Three levels of outcome are possible:1.Good,allowing students to continue with no issues;2.Some concerns,meaning students are counselled and then allowed to continue;and,3.Poor,where students are dismissed from the audit practice.The appra

41、isal committee is comprised of three people:managing partner Jack Hu,the training manager(both of whom are professional accountants)and the person responsible for human resources.The committee receives confidential reports on each student and makes decisions based on the views of relevant engagement

42、 partners and also exam results.It is normally the training manager who makes the recommendation and in most cases his appraisal is agreed and then acted upon accordingly.Because the appraisals are confidential between the student and the firm,the list of students and their appraisal categories are

43、not publicised within the firm.When the 2010 intake was being appraised last year,one student was appraised by the training manager as poorbut was not dismissed.Polly Shah was unpopular among other students because she was considered lazy and technically weak.She also failed a number of her exams.Ot

44、her students who were appraised as poor were dismissed,but Polly received a brief counselling session from Jack Hu and then returned to her duties.Polly stayed for another year and then,having failed more exams,left Jojo to pursue other career interests outside accounting.Pollys departure triggered

45、some discussion amongst Jojos partners as to why she had been retained when other poor performers had not.It later emerged that Jack Hu was a close friend of Pollys parents and had enjoyed free holidays in the Shah familys villa for several years.Because he was the managing partner,Mr Hu was able to

46、 insist on retaining Polly,despite the objections of the training manager and the human resources representative,although the training manager was reported to be furious at the decision to retain Polly.Required:(a)Define conflict of interest and assess the consequences of Jack Hus behaviour after 财经

47、网络教育领导品牌 _ 高顿网校 All Rights Reserved 版权所有 复制必究 5 Polly Shahs appraisal.(10 marks)(b)Describe four ethical safeguards that could be used in Jojo to prevent a recurrence of the events like those described in the case.(8 marks)(c)The case raises issues of the importance of senior management performance

48、measurement.In a public company,this refers to directors,and in a privately-owned partnership like Jojo,it refers to partners.The managing partner(Mr Hus position)is equivalent to the role of chief executive.Required:Explain the typical criteria used in the performance measurement of individual dire

49、ctors and discuss the reasons why individual performance measurement of partners may be difficult to implement at Jojo.(7 marks)(25 marks)4 Lum Co is a family business that has been wholly-owned and controlled by the Lum family since 1920.The current chief executive,Mr Gustav Lum,is the great grands

50、on of the companys founder and has himself been in post as CEO since 1998.Because the Lum family wanted to maintain a high degree of control,they operated a two-tier board structure:four members of the Lum family comprised the supervisory board and the other eight non-family directors comprised the