ACCA P1 Sample Study Note

8/12/2019 ACCA P1 Sample Study Note

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ACCA P1 GOVERNANCE, RISK AND ETHICS

Sample Study Note

For exams in DEC2014


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Lesco Group Limited, April 2015

All rights reserved. No part of this publication may be reproduced, stored in a

retrieval system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording or otherwise, without the prior written

permission of Lesco Group Limited.


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Sample Note Content:

MAIN STUDY NOTE CONTENT [TOTAL PAGES: 157] 4

PRODUCT SUMMARY ERROR!

BOOKMARK NOT DEFINED.

LIVE ONLINE NOTE SAMPLE PLAN ERROR!


CHAPTER2 RISK MANAGEMENT 11

SLIDE IN CLASS(RISK MANAGEMENT) 11

DETAILED NOTES: 16

Please note:

This is just the sample study note extracted from the main study note in your tuition study

[This tuition study note is consistent in basic/super/gold package]. There would be more

chapters in the main study note covering the whole ACCA syllabus.

You can also take a look at the content within the main study note below:


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Main study note content [Total Pages: 157]

CHAPTER1 CORPORATE GOVERNANCE...... ERROR! BOOKMARK NOT

DEFINED.Corporate governance definition: ..............................................................Error! Bookmark not defined.

Purpose and objectives of governance ...................................................... Error! Bookmark not defined.

Fundamental concepts behind corporate governance: .............................Error! Bookmark not defined.

Corporate governance specific theories: ...................................................Error! Bookmark not defined.

REGULATIONS: UK CORPORATE GOVERNANCE CODE OVERVIEW:

..........................................ERROR! BOOKMARK NOT DEFINED.

REGULATIONS: UK CORPORATE GOVERNANCE CODE DETAILS:ERROR!


SECTION A LEADERSHIP OF THE BOARD... ERROR! BOOKMARK NOT

DEFINED.A1: Unitary v two tier boards ..................................................................... Error! Bookmark not defined.

A2: CEO/Chairman role split ...................................................................... Error! Bookmark not defined.

A3: Chairman Role ..................................................................................... Error! Bookmark not defined.

A4: NEDs ..................................................................................................... Error! Bookmark not defined.

SECTION B: EFFECTIVENESS OF THE BOARD..... ERROR! BOOKMARK

NOT DEFINED.Effectives of board ..................................................................................... Error! Bookmark not defined.

SECTION C: ACCOUNTABILITY..ERROR! BOOKMARK NOT DEFINED.What is internal control system? General issues ....................................... Error! Bookmark not defined.

C1: Disclosure about internal controls ....................................................... Error! Bookmark not defined.

C2: Best practise: [COSO framework or Turnbull report] .......................... Error! Bookmark not defined.


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Turnbull Report(3 sessions) ....................................................................... Error! Bookmark not defined.

C3: Audit committee .................................................................................. Error! Bookmark not defined.

SECTION D: DIRECTORS REMUNERATION. ERROR! BOOKMARK NOT

DEFINED.Purpose/principles of remuneration ......................................................... Error! Bookmark not defined.

Objectives: ................................................................................................. Error! Bookmark not defined.

Components: .............................................................................................. Error! Bookmark not defined.

SECTION E: RELATIONS WITH SHAREHOLDERS. ERROR! BOOKMARK

NOT DEFINED.

Content of disclosure .................................................................................Error! Bookmark not defined.

Mandatory v voluntary disclosure ............................................................. Error! Bookmark not defined.

Shareholders dialogue ............................................................................... Error! Bookmark not defined.

GLOBAL VARIETY...................ERROR! BOOKMARK NOT DEFINED.Principles and rule based approach ...........................................................Error! Bookmark not defined.

SARBANES OXLEY ACT 2002 Key features: ................................................. Error! Bookmark not defined.

Family structure: [Normally in Asia] .......................................................... Error! Bookmark not defined.

Insider structure:(2 tier board structure, usually in Europe) ..................... Error! Bookmark not defined.

CHAPTER2 RISK MANAGEMENT ........ ERROR! BOOKMARK NOT

DEFINED.Management of risks: ................................................................................ Error! Bookmark not defined.

Role of risk manager: ................................................................................. Error! Bookmark not defined.

1. Identify risks: .......................................................................................... Error! Bookmark not defined.

2. Risk assessment: .................................................................................... Error! Bookmark not defined.

3. Risk strategy: .......................................................................................... Error! Bookmark not defined.

4. Implementation and monitoring risks: ..................................................Error! Bookmark not defined.


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Governance standards on risks: ................................................................. Error! Bookmark not defined.

CHAPTER3 ETHICS .............ERROR! BOOKMARK NOT DEFINED.

STAKEHOLDER THEORY ......ERROR! BOOKMARK NOT DEFINED.Stakeholders identification: ....................................................................... Error! Bookmark not defined.

Should company be responsible for the stakeholders? .............................Error! Bookmark not defined.

Should company be accountable for the stakeholders? ...........................Error! Bookmark not defined.

ETHICS: .............................ERROR! BOOKMARK NOT DEFINED.

WHAT IS ETHICS? ..............ERROR! BOOKMARK NOT DEFINED.Absolutism VS Relativism ........................................................................... Error! Bookmark not defined.

Deontology VS Teleology ........................................................................... Error! Bookmark not defined.

Relativism ................................................................................................... Error! Bookmark not defined.

Ethical stages: ............................................................................................ Error! Bookmark not defined.

Kohlberg model .......................................................................................... Error! Bookmark not defined.

Grey, Owen & Adams ................................................................................. Error! Bookmark not defined.

HOW CAN YOU MAKE AN ETHICAL DECISION? ..........ERROR!

BOOKMARK NOT DEFINED.Follow hierarchy ......................................................................................... Error! Bookmark not defined.

IFACs code of ethics .................................................................................. Error! Bookmark not defined.

Threats to objectivity: ................................................................................ Error! Bookmark not defined.

Ameriacan Accounting Association (AAA)7 steps ...................................... Error! Bookmark not defined.

Tuckers 5 questions .................................................................................. Error! Bookmark not defined.

BASIC REVISION SESSION:ERROR! BOOKMARK NOT DEFINED.

CORPORATE GOVERNANCE:.........ERROR! BOOKMARK NOT DEFINED.


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Product Summary


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Live online course timetable

Timetable: [Super+Gold package-additional revision would

be agreed between tutor and student]

Live Online Revision

Live revision1 Live revision2

F5 Performance management 25thOct 7:00a.m.-14:00 22ndNov 6:00a.m.-13:00

F7 Financial Reporting (INT) 2ndNov 6:00a.m.-13:00 29thNov 6:00a.m.-13:00

F8 Audit and Assurance (INT) 18thOct 7:00a.m.-14:00 19thOct 7:00a.m.-14:00

F9 Financial Management 4thOct 7:00a.m.-14:00 5thOct 7:00a.m.-14:00

P1 Governance, Risk and

Ethics1stNov 6:00a.m.-13:00 30thNov 6:00a.m.-13:00

P2 Corporate Reporting (INT) 26thOct 7:00a.m.-14:00 9thNov 6:00a.m.-13:00


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P3 Business Analysis 11thOct 7:00a.m.-14:00 12thOct 7:00a.m.-14:00

P4 Advanced Financial

Management8thNov 6:00a.m.-13:00 23rdNov 6:00a.m.-13:00

P5 Advanced Performance

management15thNov 6:00a.m.-13:00 16thNov 6:00a.m.-13:00

P7 Advanced Audit and

Assurance (INT)27thSept 7:00a.m.-14:00 28thSept 7:00a.m.-14:00

Last minute revision

Last minute revision Tutor

F5 Performance management 28thNov 12:00-14:00 Ian

F7 Financial Reporting (INT) 1st Dec 12:00-14:00 Steve

F8 Audit and Assurance (INT) 22ndNov 14:30-16:30 Alan

F9 Financial Management 22ndOct 12:00-14:00 Steve

P1 Governance, Risk and Ethics 30thNov 13:30-15:30 Alan

P2 Corporate Reporting (INT) 16thNov 14:00-18:00(4hrs) Kieran

P3 Business Analysis 18thOct 14:30-16:30 Alan

P4 Advanced Financial Management 19thNov 12:00-14:00 Steve

P5 Advanced Performance management 21st Nov 12:00-14:00 Ian Ja


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P7 Advanced Audit and Assurance (INT) 23rdNov 13:30-15:30 Alan

Chapter2 Risk management

Slide in Class(risk management)


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Detailed notes:

Management of risks:

1. Identify risks:

How:

1. Models that may be usedSWOT

PESTEL

2. Other ways:Interview

Questionnaires

Consultants

Brainstorming

Audit reports


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Different categories of risks:

Category Action

Financial Credit control procedures/Hedging /Export insurance

Environmental Environmental Scanning /Contingency planning

Business/Operational Risk Internal control procedures /Recruitment & selection

/Testing /Training /IT controls /Insurance

Reputation Risk Stakeholder analysis /inform about any

changes/Compliance checks /Training

International Risk:

Transaction risk Different hedging techniques

Economic risk Diversification of business

Translation risk Match assets with liabilities

Political risk Keep an eye on governments latest regulations


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Who manages risks?

Risk committee:

Risks can be identified and dealt with by risk committee.

In most organizations the risk committee and audit committee would be the same

but in large corporations there would be a separate risk committee dealing with

risks issues.

Risk correlation:

There would be positive or negative risk relationship.

Positive relationship means as one risk arise or decrease then another risk would

arise or decrease.

Negative relationship means as one risk arise or decrease then another risk would

decrease or arise.


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2. Risk assessment:

This means the board is going to prioritize risks and focus on really problematic

ones.

Tool: risk mapping.

Impact

Big

Small

Likelihood

Impossible Almost certain


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The prioritization of risks would be based on objective and subjective assessment.

Objective assessment:

By reference to statistics or other forecasts by different experts.

Subjective assessment:

Would be based on 3As-

Risk Authority: if its up to board of directors who are going to manage the risks

then they would have much auithority to deal with risks more properly.

Risk Appetite: this means whether company is risk aggressive or risk averse? And

risk appetite is the combination of risk attitude(willingness to accept risks) and risk

capacity(ability to accept risks, ie, do you have enough skills and resources).

Risk Awareness: this means when company is dealing with risks then it would affect

different stakeholders within the organization and hence company need to analyse

these potential negative impact on those stakeholders like customers, suppliers etc

before any prioritization of risks is taking place.


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3. Risk strategy:

Transfer

Using insurance; setting up a joint venture would be ways to transfer risks to 3 rd

parties.

Avoidance

Totally reject a project.

Reduction

You can either use proactive approach or reactive approach to reduce risks.

Proactive approachmeans we can embed risks in culture:

1. It means ensuring that staff are thinking about risk issues as an integral part of

their work.

2. Staff should know that taking unnecessary risks will not only lead to disciplinary

action, but be regarded as unacceptable by their fellow employees.

3. So Risk management should be a part of everybodys job description, to ensure

that staffs responsibilities are clearly defined.

Reactive approachmeans we can embed risks in culture in internal control

systems:

Firstly, it suggests the need for proactive investment in systems so that their

technologies are reliable and fully functional so as to deliver required results

consistently into the future.

Secondly, such system must be monitored through the development of control

systems coupled with appropriate reporting on system operation and output.


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Acceptance

Accept the risk and not taking any measures to deal with it.

Principle: ALARP

Risk strategy is really something that occurs between avoidance and acceptance of

risk. The continuum that operates between these two points sees an interplay of

reduction and transference approaches.

Where, along the line between avoidance and acceptance, strategy plays out,

depends in part on risk attitude. Greater acceptance of risk often leads to greater

rewards. Greater avoidance of risk often leads to fewer rewards.

The concept of ALARP (As Low As is Reasonably Practicable) asks the board to

consider how many activities or risks it considers acceptable, how may it will avoid

and how high or low it is willing to push the remainder through investment in risk

management. ALARP could be viewed as a tool or technique to focus the mind, it

could also be simply a statement used to govern board deliberations, providing a

sense of prevailing risk attitude.


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4. Implementation and monitoring risks:

Risk management system is a cycle and it needs to be reviewed frequently.

The frequency would depend on companys environment:

If the companys environment is quite static like charities then it would need less

review.

If the companys environment is quite dynamic like financial services industry then

it would need more review.

ACCA P1 Sample Study Note

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