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I have covered 95% of syllabus, so it is pretty easy for me. I chose the question 1, 2 and question 4.
Question 1: a) risk appetite and how does that affect the company’s strategy?
b) Use AAA Ethical Model to analyse which investment option should Haygo company to adopt
Option 1: Invest in J country with potential risk: bribe issue,political risk ( unstable country) and less corporate governance requirement;
Option 2: stable country and government encourage outwards investment and comply with corporate governance;General purpose of internal control and assess the difficulty to have sound control system in J country.
General purpose of internal control is :
– -to safeguard the company’s assets and shareholders’ investments
– – to ensure the completeness and accurateness of accounting records in place;
— to prevent and detect of fraud
— to effective running of the business
— to ensure internal policies are carried out by the companyThe difficulties to have a sound internal control in J country because of the following reasons:
— cultures in J country does not support sound control system based on the scenrio;
– quality issues
– less skilled people especially people has less knowledge about accounting, thus it is difficult to produce the complete and accurate accounting records and it is difficult to meet the international accounting records;
— Also it mentioned on the scario that it is difficult to safeguard assetsc) It is about the brief notes regarding meaning of accountability and agency relationship between the board of H and only one single investor of Quack Bank; and how the demands of WB (International pressure group) which concerns Human Right issue can affect the company’s strategy? On the scenario, it says, WB can get a support using media, such as newpapers and TV and also get strong support from politician and trade organisation from all over the world. Therefore, WB is on High power / high interest category, based on Mendelow’s Map, Management of Haygo has to take WB views into consideration due to WB’s powerful position. Otherwise, it will adversely affect company’s performance, it can cause potential reputation risk; erode the shareholders’ confidence, and major shareholder (Quack Bank) may withdraw the investment and reduce the share price down; In addition, it will make the company to find diffculty to raise funds.
Q2. a) Meaning of independence and evaluate the Independence issue of NEDS
b) Role of Risk committee and critise the senior manager comments about the risk. In the case, senior manager says risk is useless and risk does not stop the risk etc. My main point is risk management system reduces the risk but does not eliminate the risk; risk management system helps the management to identify the risk and response the risk according and take action to monitor the risk;C) why the largest organisation needs the risk management system than the small company? The similar question as Gluck and Goodman (Dec 08 ) part b. Factors affecting the need for internal audit and controls.
Q4. a) Compare general corporate arrangement between family memebers company and listed company? Why CEO in family business thinks the family control over time is being lost?
b) What are the benefits of induction programme to new NEDs and how CPD helps executive directors in Lumy family after family business floated on the stock market?
C) the distinguish between 2 tier board and unitary board, and some difficulties for Lumy family member to be fit in a unitary board?Deontology:
Definition: – it is non-consequentialist theory; in this respect, the principle or motivation is the most important in the decision making. An action can only be deemed right or wrong when the morals for taking that action are known.
An action is deemed right if it satisfied 3 tests:
1. Consistency: An action is right if everyone can follow the same underlying principle; such as lying is not deemed right, if it is right, there is no universal concept of truth.
2. Human dignity: remember all the needs and expectations of the others; such as animal testing is wrong, because animal has the right to be alive;
3. Universality: an action is deemed as right when viewed by others not by the person who is undertaking the task;Hope the above explanation helps.
Good luck for your exam.
