*** P1 June 2012 Exam was … Comments and Instant Poll ***

@supermom said:

@carl29

I agree to a certain extent. I went for J also (I am a bit worried that nobody else has)
Firstly I thought Pealand was too obvious for a professional exam.
Secondly, the ETHICAL issue I thought was “bribery” (there were other risks that would need to be assessed but for the purposes of the AAA model I chose the “bribery” issue.)

The options were:
1.Pay the bribe go with Jayland
2.Don’t pay the bribe go with Jayland
3.Don’t pay the bribe go with Pealand.

Mostly aligned was “dont pay bribe go with jayland” – (developing country support, just because hayho is operating in a different country doesn’t mean that they have to lose their integrity, (integrity was obviously one of the IC challenges later on in the question)

Consequences are that Mr .popo will increase regulations on their operations, not get his bribe, support local workforce, help developing community, satisfy shareholders maximise profit objective, increase in exposure to risk( that will need to be dealt with in next question).?

Anyone do this too? I ve defo failed if nobody has???

I think with ethics questions, its about how you explore the answer, not necessarily that theres a right or wrong answer

The marking scheme for similar questions states 1 mark for each relevant point made ,if you got the aaa model in order and presented a solid arguement, i dont think you will lose that many marks

Same with many questions in the P1 paper, some ask for, say 4 examples of controls. If you put 4 down, you get the marks, that doesnt mean the answer is limited to a specific 4 answers

I think this paper is tricky, as it offers many possible answers, its showing that you have explored the theory that counts. Of course thats not all questions

I personally thought this exam was quite straight forward, and it’s my first time at a P paper!
I was surprised/glad nothing came up about Deontological/Teleological, Absolutism/Relativism, Kohlberg etc!
I answered questions 1, 2 and 4. I noticed each question generally had 2 requirements so I approached it by splitting out each requirement and answering them separately to ensure I answered what the question was asking.
Here’s what I concluded….

Q1 (a) – Risk appetite – Made up of a company’s risk capacity/risk attitude. I applied this to the question and said a risk averse co would invest in Pealand, but risk seeking would invest in Jayland etc
b) AAA Model – I concluded that Pealand was the only option. Yes it said Jayland would make higher profit (due to risk) but how long would it be before profit decreased and Hayho lost customers, shareholders and potential investors due to reputation risk. Also, the Jayland option was not only highly unethical but bribery is highly illegal, that was my conclusion. I guess if you went for Jayland you will still get the marks if you’ve given your reasons well.
c) This was asking for a summary of internal control objectives and then an application to Jayland. This could be answered using the last paragraph on page 1 and the comments the lady working for the company had observed working in Jayland.
d i) Definition of accountability was required and also a brief explanation of what the agency relationship is applying it to Hayho’s directors and their investors Quack Bank.
ii) Mendelow’s matrix – I defined the 4 scenario’s that can occur and then stated that WB were currently high interest but low power meaning they needed to be kept informed. However, I stated they could gain power from the likes of Politicians/Media etc. The second requirement was how WB’s opinion should be taken seriously – I discussed if they gained power they could affect strategy, their reputation and close links to media/Politicians etc could highly damage the reputation of Hayho, resulting in a drop in profits caused by customers not wanting to purchase from an unethical company and this then having a knock- on impact with shareholders/potential investors etc and may put the company into trouble!

Q 4) a) Firstly I discussed the differences between a family company and a listed company – eg size, difference in agency costs, large co – having to adhere to Stock Market Corp Gov codes, difference in stakeholders, differenct conflicts, Large co being propfit seeking but small family co run to satisfy customers and maintain reputation etc The second requirement was CEO assumption that family control will be lost if they were floated – I just linked this to the question.
b) 2 requirements – benefits of induction for NED’S and CPD for current execs – could use common sense for this eg – to give NED’S feel for company- culture, to help them build staff relations, so they are aware of co strategy/objectives etc
c) 2 requirements – distinguish between unitary and 2 tier board – question made it clear the difference eg unitary – made up of execs/NED’S 2 tier – Op board – control day-to-day activities, Supervisory – make decisions and may include Op Board in certain decisions. 2nd requirement – Difficulties of Lum family to accept unitary board – relate to question ie already conflict as family want to maintain values/culture and NED’S already unhappy about these and other common sense answers ie dillution of their family control etc

Q2 – I rushed this a bit due to a time constraint!!
a) 2 requirements – discussion of independance – I just waffled and talked mainly about making decisions objectively and free from any bias or influences and mainly discussed this in the context on NED’S. 2nd requirement – Can’t remember this part!!
b) 2 requirements – Role of risk commitee – straight forward enough- review int controls, risk policy, risk appetite, monitor risks, ensure communication re risk is cascaded throughout the company etc 2nd requirement – criticise snr mgrs comments – just picked out a few of his comments and criticised them, kind of ran out of time.

I’m just hoping I’ve passed, I feel like I gave it a good go, could of just done with 10 more minutes really but all in all looking at the last few P1 Papers set, I thought it was very reasonable! Good Luck!

@frankie184 said:
I personally thought this exam was quite straight forward, and it’s my first time at a P paper!
I was surprised/glad nothing came up about Deontological/Teleological, Absolutism/Relativism, Kohlberg etc!
I answered questions 1, 2 and 4. I noticed each question generally had 2 requirements so I approached it by splitting out each requirement and answering them separately to ensure I answered what the question was asking.
Here’s what I concluded….

Q1 (a) – Risk appetite – Made up of a company’s risk capacity/risk attitude. I applied this to the question and said a risk averse co would invest in Pealand, but risk seeking would invest in Jayland etc
b) AAA Model – I concluded that Pealand was the only option. Yes it said Jayland would make higher profit (due to risk) but how long would it be before profit decreased and Hayho lost customers, shareholders and potential investors due to reputation risk. Also, the Jayland option was not only highly unethical but bribery is highly illegal, that was my conclusion. I guess if you went for Jayland you will still get the marks if you’ve given your reasons well.
c) This was asking for a summary of internal control objectives and then an application to Jayland. This could be answered using the last paragraph on page 1 and the comments the lady working for the company had observed working in Jayland.
d i) Definition of accountability was required and also a brief explanation of what the agency relationship is applying it to Hayho’s directors and their investors Quack Bank.
ii) Mendelow’s matrix – I defined the 4 scenario’s that can occur and then stated that WB were currently high interest but low power meaning they needed to be kept informed. However, I stated they could gain power from the likes of Politicians/Media etc. The second requirement was how WB’s opinion should be taken seriously – I discussed if they gained power they could affect strategy, their reputation and close links to media/Politicians etc could highly damage the reputation of Hayho, resulting in a drop in profits caused by customers not wanting to purchase from an unethical company and this then having a knock- on impact with shareholders/potential investors etc and may put the company into trouble!

Q 4) a) Firstly I discussed the differences between a family company and a listed company – eg size, difference in agency costs, large co – having to adhere to Stock Market Corp Gov codes, difference in stakeholders, differenct conflicts, Large co being propfit seeking but small family co run to satisfy customers and maintain reputation etc The second requirement was CEO assumption that family control will be lost if they were floated – I just linked this to the question.
b) 2 requirements – benefits of induction for NED’S and CPD for current execs – could use common sense for this eg – to give NED’S feel for company- culture, to help them build staff relations, so they are aware of co strategy/objectives etc
c) 2 requirements – distinguish between unitary and 2 tier board – question made it clear the difference eg unitary – made up of execs/NED’S 2 tier – Op board – control day-to-day activities, Supervisory – make decisions and may include Op Board in certain decisions. 2nd requirement – Difficulties of Lum family to accept unitary board – relate to question ie already conflict as family want to maintain values/culture and NED’S already unhappy about these and other common sense answers ie dillution of their family control etc

Q2 – I rushed this a bit due to a time constraint!!
a) 2 requirements – discussion of independance – I just waffled and talked mainly about making decisions objectively and free from any bias or influences and mainly discussed this in the context on NED’S. 2nd requirement – Can’t remember this part!!
b) 2 requirements – Role of risk commitee – straight forward enough- review int controls, risk policy, risk appetite, monitor risks, ensure communication re risk is cascaded throughout the company etc 2nd requirement – criticise snr mgrs comments – just picked out a few of his comments and criticised them, kind of ran out of time.

I’m just hoping I’ve passed, I feel like I gave it a good go, could of just done with 10 more minutes really but all in all looking at the last few P1 Papers set, I thought it was very reasonable! Good Luck!

Having carefully read your answers I am sure you would obtain a pass mark.
Some of my answers were similar to yours, though must admit some questions I waffled on a bit and maybe got a bit out of track, like risk committee, corporate governance family/outsiders etc.
My disappointment was time – I left Q1 the briefing notes till the end and ran out of time, although I only had time to do the heading, and explain the first part on accountability and a bit about Mendelow framework… but ran out of time when I came to explain the 4 scenarios. Shame because I knew the answer and same like Agency relationship….. but time was crucial to me.
Hope for a marginal pass. Good luck to all.

https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/p1/exampapers/P1/P1_2012_jun_q.pdf

@rhymenoceros said:
Hey just a quick query about question 2 c…risk mitigation in larger and smaller companies. what angle did people go with on this one? I cant find any notes on it anywhere.

I went with the angle that it’s important in both but it can be more important in larger companies due to more of a headcount, complexity of transactions…that sort of thing. Does this make sense or am I completely off the mark?

I went with the same but stated it’s more important with large companies as the transaction amounts are higher, affect of transaction are bigger, etc.

What you wrote sounds write. You’re not completely off the mark.