kaplan lecturer questions acca-p7-exam standard questions

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Factors to be taken into account in deciding whether to accept the assignment (i) The fact that I have considerable experience in this area is a good reason to accept the assignment – my skills and experience and my qualification may be valuable to the company. (ii) However, I have a continuing duty of confidentiality to my previous employer and I must not disclose any information relating to my previous employer to my sister. (iii) The fact that I am related to the company’s owners will mean that my view may not be sufficiently independent or objective, even though there may be no formal requirement for me to be independent. I may be influenced by my sister and there are some disagreements among family members. (iv) It will be important for all of the family involved in the management of the company to agree to my taking on this assignment if it is to be effective. (v) I also need to consider my existing client commitments, I may be too busy to perform this assignment effectively. I need to consider on what basis I will charge the company for my services. (b) Risks and actions to deal with them (i) External risks 1. The main business risk facing the company is competition from new entrants – the company’s market share is declining. This share may decline further if the company does not have an Internet presence and does not extend its marketing activities. Dealing with the risk Marketing is essential to any retail business and even if the company’s products are high quality, it will not be possible to sell them if they are not properly marketed. The company should, for example, seek advice on setting up a web-site and should consider employing a full-time marketing professional.

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Kaplan Lecturer Questions ACCA-P7-Exam standard Questions

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Page 1: Kaplan Lecturer Questions ACCA-P7-Exam standard Questions

Factors to be taken into account in deciding whether to accept the assignment (i) The fact that I have considerable experience in this area is a good reason to

accept the assignment – my skills and experience and my qualification may be valuable to the company.

(ii) However, I have a continuing duty of confidentiality to my previous employer and I must not disclose any information relating to my previous employer to my sister.

(iii) The fact that I am related to the company’s owners will mean that my view may not be sufficiently independent or objective, even though there may be no formal requirement for me to be independent. I may be influenced by my sister and there are some disagreements among family members.

(iv) It will be important for all of the family involved in the management of the company to agree to my taking on this assignment if it is to be effective.

(v) I also need to consider my existing client commitments, I may be too busy to perform this assignment effectively. I need to consider on what basis I will charge the company for my services.(b) Risks and actions to deal with them

(i) External risks1. The main business risk facing the company is competition from new entrants – the company’s market share is declining. This share may decline further if the company does not have an Internet presence and does not extend its marketing activities.

Dealing with the risk Marketing is essential to any retail business and even if the company’s products are high quality, it will not be possible to sell them if they are not properly marketed. The company should, for example, seek advice on setting up a web-site and should consider employing a full-time marketing professional.

2. A further risk relates to the different views of family members – the business appears to be prevented from growing because of the attitude of the managing director.

Dealing with the riskIt would be helpful if the family could be persuaded to agree on objectives and to develop a plan to achieve them. If the business is to be passed on to junior members of the family, it would be better for them to be involved in this process, including those individuals who are not currently involved in the business.

(ii) Financial risks

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The company may not be optimally funded, it is not very profitable and turnover is growing slowly. This is related to the fact that the company is a family-owned company that is structured according to family relationships.

Dealing with the risk Additional investment could be obtained from family members to expand the business, and additional bank financing could be used for the same objective. The long-term bank loan in particular might be increased. The company may wish to retain the family structure of management, however, it may be in the best interests of both the family and the company in the long term for plans to be made to pass more control to junior members of the family. This will enable them to gain appropriate experience of the responsibilities involved in running the business.

(iii)Operational risks The company does not source its supplies effectively, which has an effect on the budgeting process. It may also have an effect on the quality of products. The control and budgeting process is further hampered by the fact that the company has not employed a proper accountant and the fact that the systems are out of date and slow. Dealing with the risk The company should consider employing an accountant. This would make it easier to control and monitor costs and profitability. The company should also consider investment in new systems, which would help with receivables and payables management. All of this requires expenditure, but there appears to be scope for increased funding, as noted above.

(iv) Compliance risks The company’s financial statements are of poor quality and late. There are often penalties for the late filing of financial statements and although these may be relatively small, the costs of correcting errors may be disproportionate to the benefits. Dealing with the risk The company should consider employing a professional accountant or ensure that whoever is responsible for preparing the accounts and filing them is doing so consistently and to an acceptable standard

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