acca p3 important questions

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8- Alpha Software: Gemma Murphy has recently been appointed as the CEO of Alpha Software plc. The company develops specialist software for use by accountancy professionals. The specialist software market is particularly dynamic and fast changing. It is common for competitors to drop out of the market place. The most successful companies have been particularly focused on enhancing their offering to customers through creating innovative products and investing heavily in training and development for their employees. Turbulent times Alpha has been through a turbulent time over the last three years. During this time there have been significant senior management changes which resulted in confusion among shareholders and employees as to the strategic direction of the company. One investor complained that the annual accounts made it hard to know where the company was headed. The last CEO introduced an aggressive cost-cutting programme aimed at improving profitability. At the beginning of the financial year the annual staff training and development budget was significantly reduced and has not been reviewed since the change in management. Future direction In response to the confusion surrounding the company’s strategic direction, Gemma and the board published a new mission, the primary focus of which centers on making Alpha the market leader of specialist accountancy software. Gemma was appointed as the CEO having undertaken a similar role at a competitor. The boards were keen on her appointment as she is renowned in the industry for her creativity and willingness to introduce ‘fresh ideas’. In her previous role Gemma oversaw the introduction of an integrated approach to reporting performance. This is something she is particularly keen to introduce at Alpha. During the company's last board meeting, Gemma was dismayed by the finance director’s reaction when she proposed introducing integrated reporting at Alpha Software. The finance director made it clear that he was not convinced of the need for such a change, arguing that 'all this talk of integrated reporting in the business press is just a fad, requiring a lot more work, simply to report on things people do not care about. Shareholders are only interested in the bottom line'. Required

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ACCA P3 Important Question for June 2015 Exam

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8- Alpha Software:

Gemma Murphy has recently been appointed as the CEO of Alpha Software plc. The company develops specialist software for use by accountancy professionals. The specialist software market is particularly dynamic and fast changing. It is common for competitors to drop out of the market place. The most successful companies have been particularly focused on enhancing their offering to customers through creating innovative products and investing heavily in training and development for their employees.Turbulent timesAlpha has been through a turbulent time over the last three years. During this time there have been significant senior management changes which resulted in confusion among shareholders and employees as to the strategic direction of the company. One investor complained that the annual accounts made it hard to know where the company was headed.

The last CEO introduced an aggressive cost-cutting programme aimed at improving profitability. At the beginning of the financial year the annual staff training and development budget was significantly reduced and has not been reviewed since the change in management.

Future direction

In response to the confusion surrounding the companys strategic direction, Gemma and the board published a new mission, the primary focus of which centers on making Alpha the market leader of specialist accountancy software.

Gemma was appointed as the CEO having undertaken a similar role at a competitor. The boards were keen on her appointment as she is renowned in the industry for her creativity and willingness to introduce fresh ideas. In her previous role Gemma oversaw the introduction of an integrated approach to reporting performance. This is something she is particularly keen to introduce at Alpha.

During the company's last board meeting, Gemma was dismayed by the finance directors reaction when she proposed introducing integrated reporting at Alpha Software. The finance director made it clear that he was not convinced of the need for such a change, arguing that 'all this talk of integrated reporting in the business press is just a fad, requiring a lot more work, simply to report on things people do not care about. Shareholders are only interested in the bottom line'.

Required

(a) Discuss what is meant by 'integrated reporting', highlighting how it differs from traditional performance reporting. (10 marks)

(b) How may integrated reporting help Alpha Software to communicate its strategy and improve the companys strategic performance? Your answer should make reference to the concerns raised by the finance director. (10 marks)

(c) Advise on the likely implications of introducing integrated reporting which Alpha should consider before deciding to proceed with its adoption. (5 marks) (Total = 25 marks)16 Beau Co Beau Co is a medium sized manufacturer of specialist computer components. The market has become particularly competitive in recent years, with competitors vying to sell products to large blue chip organisations. Beau Cos operations are heavily dependent on IT. Production materials are purchased through the companys state of the art online procurement and inventory management systems, and all sales are made via the companys website. A backup of all information stored across BeauCos IT systems is taken every three months.

Component parts department

Beau Co pays engineers working in the component parts department a generous salary. This is due to the specialist nature of the work undertaken and long hours worked. Frequently engineers are required to work overtime in order to meet customer orders. During the companys most recent board meeting, Beau Cos managing director Thomas Gethings revealed a fraud that had been uncovered by the assistant head of human resources.

Fraud

The fraud was carried out by two employees. Alice Perkin, the payroll officer, had recently been left in charge of the payroll department as the payroll supervisor was on maternity leave. The payroll supervisor always reviewed and signed off the payroll data produced by Alice prior to finance releasing payments. Due to the supervisors absence, Alice had taken over both roles. Adam Thomas, operations manager of the component parts department was responsible for producing and authorising the overtime worked by the engineers each month. He would send Alice the approved monthly overtime figures to enter onto the payroll system. BeauCos human resources department maintains standing data on all employees. The standing data is updated when an employee joins or leaves the organisation. This data contains each employees personal bank details used by the finance department in paying the monthly staff salaries. The assistant head of human resources was designated to update the standing data stored on her computer. Late one evening, Alice was able to access the data where she added three fictitious engineers with the same bank account details. The human resources department had disabled the required security settings on all computers as many in the department regarded the need to

continually update their passwords to be too cumbersome.

In a bid to improve security on site all internal doors leading to areas containing confidential information, including finance and human resources, had been fitted with a pass code entry system. To gain access, authorised staff were required to enter a four digit code to unlock the doors. Due to early glitches with the system, all internal entrances had been left unlocked.

Adam submitted false overtime claims to the payroll department in respect of the fictitious employees. Using the companys payroll processing system Alice was able to put through significant monthly payments per rogue employee.

Initially, a member of the finance department queried the sudden rise in overtime payments with Adam, who downplayed the concern, exclaiming that the overtime had been needed to meet a shortage of staff. No further action was taken. Company policy requires that significant deviations in staff costs should be taken up with the head of production prior to payments being made. As a result Alice and Adam were able to amass a significant amount of additional pay, which was received into a new bank account operated by both fraudsters. The fraud was uncovered five months later when the assistant head of HR conducted a review of the standing data and noticed the three fictitious employees entered all had the same bank account details.

IT review

In response, Thomas Gethings ordered a full review of the companys IT and information systems to ensure that a similar event does not occur again. To support the board an external IT consultancy firm has been approached to recommend improvements to help safeguard BeauCos IT systems and processes. During one meeting with the BeauCo board one consultant made reference to the importance of continuity planning and disaster recovery.

Required

(a) Analyse the adequacy of BeauCos internal control processes. (You should give particular consideration to the IT controls and payroll processes in place at the company and suggest practical recommendations on how these could be improved.) (16 marks)

(b) The board of BeauCo would like to gain a better understanding of the terms continuity planning and disaster recovery. Acting as an IT consultant advise the board why both continuity planning and disaster recovery activities are likely to be significant to BeauCo. (9 marks)17 Finch Co

The company

Finch Co is a national grocery retailer, consisting of 230 stores throughout the country. The company has a strong reputation for selling quality food and drink products, supported by excellent standards of customer service. The company is regarded as a relatively small player in the market. Finch Co has a loyal customer and staff base, and many employees have worked for the company for a number of years.

Historically, the company has limited its use of IT in its operations. The company does have a small IT team based at head office. The current information system allows for weekly sales reports to be generated per store. All inventory ordering for stores is done manually at head office. Six years ago Finch Co developed its first website. The site offered basic information such as opening times and store locations.Trading conditionsIn recent years Finch Co has suffered from a drop in profits and seen its market share fall. The CEO, Andrew Finch, identified rising store costs and technological developments by competitors as being the two main causes behind the company's dip in performance. In response, two years ago he established a project to generate proposals to address the company's declining performance. The project was overseen by a project committee consisting of the CEO, Operations Director, and the Customer Service Director none of whom had been involved in any similar projects in the past.

Project proposals

The project committee agreed to the implementation of two new systems without delay.

New checkout system

The first new system saw Finch Co scrap its staffed checkouts in all of its stores and introduce a 'state of the art' scanner system. As a result, a significant number of the companys checkout operators have been made

redundant. The scanner system works by allowing shoppers to scan product barcodes using a hand-held scanning device as they pass around the store. Once scanned these items can then be placed in the shoppers trolley. At the checkout, the customer then attaches the device to a small docking port which downloads the scanned items, removing the need to physically move items from the trolley to conveyor belt. The customer then pays for their items using a self-service payment function. To reduce the scope for product theft, where items are put in a trolley without being scanned, the retained checkout operators have been assigned to assisting customers download their scanned items at the checkouts. Andrew Finch believes this should help deter customers from leaving the store without paying for all of the items in the trolley as staff should be able to clearly identify such disparities between the downloaded data and the physical items in the trolley or basket.

The project committee were particularly attracted by the hardware suppliers promise that the new system would on average cut the amount of time customers spend queuing at the checkout from 5 minutes to 2 minutes. Andrew Finch decided to limit amount of training all store staff would receive regarding the usage of the scanner system before the it went live, insisting that staff learn best by simply getting stuck in and learning as they go. The new system can generate real time sales reports per store and has been integrated into the companys inventory ordering system to remove the need for manual ordering.

Click and collect

The second development introduced was based upon systems which are already used by Finch Cos competitors. A click and collect feature was added to Finch Cos existing website. The system allowed shoppers to order goods online to be collected from their nearest store arranged at a time to suit. All stores have been fitted with a new customer service counter where customers collect their orders at the designated time slot. Prior to the implementation of the service, the Operations Director anticipated online orders to be in the region of 3,000 orders each month per store.

Unveiling the developments to Finch Cos store staff, Andrew Finch stated that the new systems represent a bold move for our company. For too long we have believed that the key to our success was only selling good quality products. The world has moved on and we need to evolve if we are to remain a competitive player. Customers now expect more from us, convenience is what people want. If we dont adapt, our customers will shop with our rivals. I hope you will all get behind these changes and support each other through this time.

Post-implementation

Since the introduction of the new systems, things have not gone smoothly. Finch Co has seen a dramatic increase in the number of customer complaints it receives.

A significant number of customers have complained about not understanding how the in-store scanner system

operates. This has caused delays at the checkouts, with many customers queuing up the aisles to pay for their

goods. Store managers have complained that some loyal shoppers have started to walk out of the store when

noticing the growing queues. One comment left on an online shopping forum claimed that customers were

struggling to connect the scanners to the checkout. When I asked a member of staff for help he just looked at me blankly and said Im not too sure, I only had 10 minutes training this morning.

Actual orders through the click and collect service have been much higher than anticipated. On average 8,000

orders each month per store have been received since the system went live. This has resulted in numerous cases of online orders not being ready when due for collection. One shop worker complained that 'no one knows what they are doing. I not sure if I am supposed to be stocking items on the shop floor or preparing click and collect orders for collection or helping customers with the scanners. Its a mess.'

Required

(a) In support of the CEO's comments that Finch Co needs to evolve and adapt to remain competitive, evaluate

why the new systems are necessary in helping Finch Co to address the issue of strategic alignment.(7 marks)

(b) Using the four views model as a framework, evaluate the extent to which these four views led to the failure

of the new systems. (18 marks) (Total = 25 marks)

interpret relevant legal requirements. Fortunately, their interpretation was correct and the new centre was deemed, by an

independent assessor, to meet accessibility requirements.

Unfortunately, the new centre was not as successful as had been predicted, with income in the first year well below

expectations. The project sponsor began to be increasingly critical of the builders of the centre and questioned the

whole value of the project. She was openly sceptical of the project to her fellow local authority employees. She

suggested that the project to build a cost-effective centre had failed and called for an inquiry into the performance

of the project manager of the construction company who was responsible for building the centre. We need him to

explain to us why the centre is not delivering the benefits we expected, she explained.

Required

(a) The local authority has commissioned the independent Project Audit Agency (PAA) to look into how the

project had been commissioned and managed. The PAA believes that a formal terms of reference or

project initiation document would have resolved or clarified some of the problems and issues encountered

in the project. It also feels that there are important lessons to be learnt by both the local authority and the

construction company. Analyse how a formal terms of reference (project initiation document) would have helped address problems encountered in the project to construct the community centre and lead to improved project management in

future projects. (13 marks)

(b) The PAA also believes that the four sets of benefits identified in the original business case (rental savings,

energy savings, increased income and better staff morale) should have been justified more explicitly.

Draft an analysis for the PAA that formally categorises and critically evaluates each of the four sets of

proposed benefits defined in the original business case. (12 marks)

26 HomeDeliver (12/11)

HomeDeliver is a nationwide company that sells small household goods to consumers. It produces an attractive,

comprehensive catalogue which it distributes to staff known as catalogue supervisors. There are 150 of these

supervisors in the country. Each supervisor has approximately 30 part-time home based agents, who then deliver

the catalogue to consumers in their homes. Agents subsequently collect the catalogue and any completed order

forms and forward these forms to their supplier. Payment is also taken when the order is collected. Payment is by

cash or cheque ant these payments are also forwarded to the supervisor by the agent. At the end of the week the

supervisor returns completed order forms (and payments) to HomeDeliver. Order details are then entered into a

computer system by order entry admissions at HomeDeliver and this starts an order fulfilment process that ends

with goods being delivered directly to the customer. The supervisors and the agents are all self-employed.

HomeDeliver rewards supervisors on the basis of how many agents they manage. Agents reward packages are

based on how many catalogues they deliver and a commission based on orders received from the homes they have

collected orders from.

In August 2010 HomeDeliver decided to replace the physical ordering system with a new electronic ordering

system. Agents would be provided with software which would allow them to enter customer orders directly into the

computer system using their home personal computer at the end of each day. Payments would also be paid directly

into a HomeDeliver bank account by agents at the end of each day.

The software to support the new ordering system was developed in-house to requirements provided by the current order

entry administrators at HomeDeliver and managers concerned with order fulfilment and invoicing. The software was

tested internally and by the order entry administrators. At first, both the specification of requirements and initial software

testing progressed very slowly because order administrators were continuing with their normal operational duties.

However, as project delays became more significant, selected order administrators were seconded to the project full-time.

As a result the software was fully acceptance tested by the end of July 2011, two months behind schedule.

In August 2011 the software was rolled out to all supervisors and agents. The software was claimed to be easy to use, so

no formal training was given. A large comprehensive manual with colour screenshots was attached as a PDF to an email

sent to all supervisors and agents. This gave detailed instructions on how to set up and use the software.

Unfortunately, problems began to appear as soon as the agents tried to load and use the software. It was found to

be incompatible with one particular browser, and agents whose computers used that browser were advised to use

an alternative browser or computer. Agents also criticised the functionality of the software because it did not allow

for the amendment of orders once the had been submitted. It emerged that customers often contacted agents and

supervisors to amend their order prior to it being sent to HomeDeliver. This was no longer possible with the new

system. Many agents also claimed that it was not possible to enter multiple orders for one household. However,

HomeDeliver confirmed that entering multiple orders was possible; it was just not clear from the software, or from

the instructions provided, how this could be achieved.

Most of the agents were reluctant to print off the manual (preferring to read it on screen) and a significant number

claimed that they did not receive the email with the manual attachment. Agents also found quite a number of

spelling and functionality errors in the manual. At certain points the software did not perform in the way the manual

stated that it would. Internal standards at HomeDeliver require both a post-project and a post-implementation review.

Required

(a) Explain the purpose of each of the following: a post-project review, a post implementation review and a

benefits realisation review. (6 marks)

(b) Evaluate the problems and the lessons that should be learned from a post-project review and a postimplementation

review of the electronic ordering system at HomeDeliver. (12 marks)

(c) Home Deliver does not have a benefits management process and so a benefits realisation review is inappropriate. However, it does feel that it would be useful to retrospectively define the benefits to Home Deliver of the new electronic ordering system. Identify and discuss the potential benefits to HomeDeliver of the new electronic ordering system. (7 marks)(Total = 25 marks