ACCA P1 - Governance, Risk And Ethics
BPP House142-144 Uxbridge RoadLondon W12 8AAUnited KingdomT 0845 075 1100 (UK)T 44 (0)20 8740 2211 (Overseas)E Learningmedia@bpp.combpp.com/learningmedia A user-friendly format for easy navigation Exam focus points describing what the examiningteam will want you to do Regular Fast Forward summaries emphasising thekey points in each chapter Questions and quick quizzes to test yourunderstanding A practice question bank containing examstandard questions with answers A full index All you need in one bookFor exams up to June 2015Contact usIn addition to ACCA examining team reviewedmaterial you get:Study TextPaper P1Governance, Risk and EthicsThis ACCA Study Text for Paper P1 Governance, Riskand Ethics has been comprehensively reviewed bythe ACCA examining team. This review guaranteesappropriate depth and breadth of content andcomprehensive syllabus coverage.Governance, Risk and EthicsBPP Learning Media is dedicated to supporting aspiring business professionalswith top-quality learning material as they study for demanding professionalexams, often whilst working full time. BPP Learning Media’s commitmentto student success is shown by our record of quality, innovation and marketleadership in paper-based and e-learning materials. BPP Learning Media’s studymaterials are written by professionally qualified specialists who know frompersonal experience the importance of top-quality materials for exam success.ACCA P1ACCA approved content providerACCA APPROVED CONTENT PROVIDERACCA ApprovedStudy TextPaper P1Governance, Risk and EthicsStudy Text for examsup to June 2015Free accessto our ExamSuccess siteLook insideJune 2014 32.00ACP1ST14 (HO).indd 1-327/05/2014 17:45
STUDYPAPER P1GOVERNANCE, RISK AND ETHICSBPP Learning Media is an ACCA Approved Learning Partner – content. This means wework closely with ACCA to ensure this Study Text contains the information you need topass your exam.In this Study Text, which has been reviewed by the ACCA examination team, we: Highlight the most important elements in the syllabus and the key skills you need Signpost how each chapter links to the syllabus and the study guide Provide lots of exam focus points demonstrating what is expected of you in the exam Emphasise key points in regular fast forward summaries Test your knowledge in quick quizzes Examine your understanding in our practice question bank Reference all the important topics in our full indexBPP's Practice & Revision Kit and i-Pass products also support this paper.FOR EXAMS IN DECEMBER 2014 AND JUNE 2015TEXT
First edition 2007Seventh edition June 2014ISBN 9781 4727 1085 7(Previous ISBN 9781 4453 9653 8)e-ISBN 9781 4453 6740 8British Library Cataloguing-in-Publication DataA catalogue record for this bookis available from the British LibraryAll rights reserved. No part of this publication may bereproduced, stored in a retrieval system or transmitted, inany form or by any means, electronic, mechanical,photocopying, recording or otherwise, without the priorwritten permission of BPP Learning Media Ltd.We are grateful to the Association of Chartered CertifiedAccountants for permission to reproduce pastexamination questions. The suggested solutions in thepractice answer bank have been prepared by BPPLearning Media Ltd, unless otherwise stated.Published byBPP Learning Media LtdBPP House, Aldine PlaceLondon W12 8AAwww.bpp.com/learningmediaPrinted in the United Kingdom byPolestar WheatonsHennock RoadMarsh BartonExeterEX2 8RPYour learning materials, published by BPP LearningMedia Ltd, are printed on paper obtained fromtraceable sustainable sources. BPP Learning Media Ltd2014ii
ContentsPageIntroductionHelping you to pass . vStudying P1 . viiSyllabus and study guide. xivThe exam paper.xxviiPart A Governance and responsibility123Scope of corporate governance . 3Approaches to corporate governance. 47Corporate governance practice and reporting . 77Part B Internal control and risk45678Internal control systems . 137Risk attitudes and internal environment. 157Risks . 189Risk assessment and response. 215Information, communication and monitoring. 251Part C Professional values and ethics91011Personal ethics . 289Professional ethics . 319Corporate social responsibility . 359Practice question bank.407Practice answer bank .415Index .445Review formContentsiii
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Helping you to passBPP Learning Media – Approved Learning Partner - contentAs ACCA's Approved Learning Partner – content, BPP Learning Media gives you the opportunity to usestudy materials reviewed by the ACCA examination team. By incorporating the examination team’scomments and suggestions regarding the depth and breadth of syllabus coverage, the BPP LearningMedia Study Text provides excellent, ACCA-approved support for your studies.The PER alertBefore you can qualify as an ACCA member, you not only have to pass all your exams but also fulfil a threeyear practical experience requirement (PER). To help you to recognise areas of the syllabus that youmight be able to apply in the workplace to achieve different performance objectives, we have introducedthe ‘PER alert’ feature. You will find this feature throughout the Study Text to remind you that what youare learning to pass your ACCA exams is equally useful to the fulfilment of the PER requirement.Your achievement of the PER should now be recorded in your on-line My Experience record.Tackling studyingStudying can be a daunting prospect, particularly when you have lots of other commitments. The differentfeatures of the text, the purposes of which are explained fully on the Chapter features page, will help youwhilst studying and improve your chances of exam success.Developing exam awarenessOur Texts are completely focused on helping you pass your exam.Our advice on Studying P1 outlines the content of the paper, the necessary skills you are expected to beable to demonstrate and any brought forward knowledge you are expected to have.Exam focus points are included within the chapters to highlight when and how specific topics wereexamined, or how they might be examined in the future.Using the Syllabus and Study GuideYou can find the syllabus and Study Guide on pages xiv – xxvi of this Study TextTesting what you can doTesting yourself helps you develop the skills you need to pass the exam and also confirms that you canrecall what you have learnt.We include Questions – lots of them - both within chapters and in the Practice Question Bank, as well asQuick Quizzes at the end of each chapter to test your knowledge of the chapter content.Introductionv
Chapter featuresEach chapter contains a number of helpful features to guide you through each topic.Topic listTopic listSyllabus referenceWhat you will be studying in this chapter and the relevantsection numbers, together with ACCA syllabus references.IntroductionPuts the chapter content in the context of the syllabus asa whole.Study GuideLinks the chapter content with ACCA guidance.Exam GuideHighlights how examinable the chapter content is likely tobe and the ways in which it could be examined.Knowledge brought forward from earlier studiesWhat you are assumed to know from previousstudies/exams.Summarises the content of main chapter headings,allowing you to preview and review each section easily.ExamplesDemonstrate how to apply key knowledge andtechniques.Key termsDefinitions of important concepts that can often earn youeasy marks in exams.Exam focus pointsWhen and how specific topics were examined, or howthey may be examined in the future.Formula to learnFormulae that are not given in the exam but which have tobe learnt.Gives you a useful indication of syllabus areas thatclosely relate to performance objectives in your PracticalExperience Requirement (PER).IntroductionGives you essential practice of techniques covered in thechapter.Case StudyReal world examples of theories and techniques.Chapter RoundupA full list of the Fast Forwards included in the chapter,providing an easy source of review.Quick QuizA quick test of your knowledge of the main topics in thechapter.Practice Question BankFound at the back of the Study Text with morecomprehensive chapter questions. Cross referenced foreasy navigation.viQuestion
Studying P1The P1 Governance, Risk and Ethics syllabus has been written with a different focus from the exams thatyou have sat so far. The exam is not about learning law, accounting standards or complicated calculationtechniques. Instead it seeks to promote the underlying themes of professionalism and accountability.You cannot be professional in one area and unprofessional in another.1 What P1 is about1.1 Underlying themesThe syllabus shows how accounting is underpinned by governance and ethics, and the need foraccountants to repay the trust that society puts in them. A key element of governance is the concept ofaccountability, particularly of directors and auditors. There is an emphasis on the agency relationshipbetween stakeholders and business managers, including directors and accountants. Governance is itselfsupported by sound internal control systems, internal audit and rigorous risk management. Judgement,underpinned by professional competence and ethics, is also a key theme. Lastly students are expected toconsider carefully the concept of professionalism, and to discuss how the accountant should contributeto society.The paper's main themes should be seen as interconnected: "Every right implies a responsibility; for eachopportunity there is an obligation and all rewards carry related risks."1.2 Governance and responsibilityChapter 1 demonstrates the importance of the underlying themes of the syllabus. Corporate governance isa central part of the syllabus. Instead of going straight into the detailed requirements of the corporategovernance reports, it discusses in detail the concepts that underpin good corporate governance, theagency relationship, the constituencies (shareholders and other stakeholders) that corporate governanceis designed to serve and the extent of responsibilities towards different stakeholders.Chapter 2 deals with the basis of corporate governance legislation and codes, whether they are based onprinciples or a detailed rulebook and how governance codes incorporate wider ideas of socialresponsibility. Chapter 3 covers governance best practice, drawing on examples from different codes fromall over the world.1.3 Internal control and riskWe consider Sections B to D of the syllabus together in Section B of this book. The syllabus highlights theissues of: Internal controlThe identification and assessment of riskControlling and mitigating riskas they have proved to be problematic in recent corporate failures. These issues also play a crucial part inan accountant’s responsibility to act in the public interest and the interests of shareholders:'Sound systems of internal analysis, control and audit underpin all effective corporate governancesystems. Effective management at the strategic level rests on the assumption that internal controlactivities can be controlled, verified and reported on internally. If management loses control of internalsystems and procedures, any claim of sound governance is lost The same is true of risk. Being aware ofall possible risks, understanding their potential impact, as well as the probability of occurrence, areimportant safeguards for investors and other shareholders.'In Chapter 4 therefore we examine the objectives of control and risk management systems. We also lookat systems that have been developed internationally, including the COSO enterprise risk managementmodel.Introductionvii
Chapters 5 to 8 are organised around the stages identified in the COSO enterprise risk managementmodel. Chapter 5 deals with the underlying factors that affect how a business is controlled and how risk ismanaged. These include how much appetite the business has for risk, and how environmental factorswithin the business affect control and risk management. We also look at the importance of settingbusiness objectives that are consistent with the risk that directors, shareholders and other stakeholderswish the business to bear.Chapters 6 and 7 deal with the various stages of risk assessment and management, including internalcontrol procedures that act to reduce risk.Chapter 8 brings out two other elements that are vital in control systems. These are a two-way flow ofappropriate information between the board and managers and staff. This should enable the board andmanagers to carry out effective monitoring of operations, and provide feedback so that systems andcontrols can be improved. The results of business monitoring will also form the basis for externalreporting about the company’s systems.1.4 Professional values and ethicsThis section of the syllabus requires you to think carefully about the ethical assumptions that guideindividual behaviour and underpin the role of accountants. Chapter 9 is a very important chapter in this text,dealing with the ethical stances of individuals and also the factors that determine the ethical decisionsindividuals take. In the exam you may have to argue from a specific ethical position, even if you don’t agreewith the position.In Chapter 10 you need to look critically at the ethical codes accountants follow as well as the codes thatbusinesses operate. It is true that you need to have a good knowledge of what the accountancyprofession’s codes say on ethical threats and conflicts and to be able to use that knowledge inrecommending solutions to ethical dilemmas. However you are also expected to question how much helpthe codes actually are in resolving dilemmas and whether the ethical frameworks are in the best interestsof society and the accountancy profession. The exam may ask you to question the role of the accountantin protecting shareholder wealth and focusing on the performance of capital investment. Does this meanthat accountancy is a servant of capital and makes the implicit assumptions about morality that capitalismdoes?Chapter 11 looks at corporate social responsibility, concentrating on what organisations have done toaddress issues such as sustainability and the implications for accounting, disclosure, control systemsand audit.viiiIntroduction
2 Skills you have to demonstrate2.1 Knowledge and applicationEven with exams you’ve previously taken, you'll remember that passing didn't only mean reproducingknowledge. You also had to apply what you knew. At Professional level, the balance is tilted much moretowards application. You will need a sound basis of technical knowledge. The exams will detect whetheryou have the necessary knowledge. However you won't pass if you just spend your time acquiringknowledge. Developing application skills is vital.2.2 Application skillsWhat application skills do you need? Many P1 questions will include detail in a scenario about a specificorganisation. The following skills are particularly important when you're dealing with question scenarios.(a)(b)(c)(d)(e)Identifying the most important features of the organisation and the organisation's environment.Clues to these will be scattered throughout the scenario. The technical knowledge that you haveshould help you do this, but you will also need business awareness and imagination. There will bea main theme running through most scenarios that you'll need to identify.Using analysis techniques that will give you more insight into the data that you're given.Selecting real-life examples that are relevant to the scenario. You should look at contemporarybusiness stories and try to identify P1 issues, for example directors’ remuneration.Making informed judgements that follow from your analysis about what the organisation is doingand should be doing.Communicating clearly and concisely your analysis and recommendations. Perhaps you will bereporting to a specific individual. If so, you should take into account the needs of this individual.3 How to pass3.1 Study the whole syllabusYou need to be
ACCA Approved Learning Partner – content. This means we work closely with ACCA to ensure this Study Text contains the information you need to pass your exam. In this Study Text, which has been reviewed by the . ACCA examination team, we: Highlight the most important elements in the syllabus and the key skills you need
ACCA F9 –Financial Management PROFESSIONAL (5 papers in total) Essentials ACCA P1 –Governance, Risk and Ethics ACCA P2 –Corporate Reporting ACCA P3 –Business Analysis Options (two to be completed) ACCA P4 –Advanced Financial Management ACCA P5 –Advanced Performance Management ACCA P6 –Advan
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ACCA ADVANCED DIPLOMA IN ACCOUNTING AND BUSINESS ETHICS AND PROFESSIONAL SKILLS MODULE Research and Analysis Project and Key Skills Statement ACCA DIPLOMA IN ACCOUNTING AND BUSINESS (RQF LEVEL 4) ACCA DIPLOMA IN ACCOUNTING AND BUSINESS (RQF LEVEL 4) ACCA GOVERNANCE ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer .
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Only on OpenTuition you can find: Free ACCA notes Free ACCA lectures Free ACCA tests Free ACCA tutor support The largest ACCA community Accountant in Business (AB) ORGANISATIONS AND THEIR ENVIRONMENT 1. The nature and structure of organisations 3 2. An organisation
