http://freeaccastudymaterial.blogspot.com/ co m/ ot sp og bl ial ter dy ma ca stu Practice & Revision Kit Look inside ac Paper P1 Governance, Risk and Ethics Practice & Revision Kit for exams up to June 2015 Free access to our Exam Success site htt p:/ June 2014 £18.00 ACCA Approved /fr ee BPP House 142-144 Uxbridge Road London W12 8AA United Kingdom T 0845 075 1100 (UK) T +44 (0)20 8740 2211 (Overseas) E Learningmedia@bpp.com bpp.com/learningmedia • Banks of questions on every syllabus area • Answers with detailed guidance on approaching questions • Three mock exams with full answers and guidance For exams up to June 2015 Contact us One of a suite of products supporting Paper P1 Governance, Risk and Ethics, for use independently or as part of a package, this Kit is targeted at ACCA’s exams up to June 2015 and contains: Practice & Revision Kit Paper P1 Governance, Risk and Ethics This Kit provides material specifically for the practice and revision stage of your studies for Paper P1 Governance, Risk and Ethics that has been comprehensively reviewed by the ACCA examining team This unique review ensures that the questions, solutions and guidance provide the best and most effective resource for practising and revising for the exam Governance, Risk and Ethics BPP Learning Media is dedicated to supporting aspiring business professionals with top-quality learning material as they study for demanding professional exams, often whilst working full time BPP Learning Media’s commitment to student success is shown by our record of quality, innovation and market leadership in paper-based and e-learning materials BPP Learning Media’s study materials are written by professionally qualified specialists who know from personal experience the importance of top-quality materials for exam success ACCA P1 ACCA approved content provider ACCA APPROVED CONTENT PROVIDER http://freeaccastudymaterial.blogspot.com/ ACP1RK14.indd 1-3 30/05/2014 16:15 co m/ http://freeaccastudymaterial.blogspot.com/ log sp o t ym ate ria GOVERNANCE, RISK AND ETHICS l.b PAPER P1 tud BPP Learning Media is an ACCA Approved Learning Partner – content for the ACCA qualification This means we work closely with ACCA to ensure our products fully prepare you for your ACCA exams as In this Practice and Revision Kit, which has been reviewed by the ACCA examination team, we: Discuss the best strategies for revising and taking your ACCA exams Ensure you are well prepared for your exam Provide you with lots of great guidance on tackling questions Provide you with three mock exams ea cc P R A C T I C E Provide the ACCA exam answers as well as our own for selected questions htt p:/ /fr e Our Passcard and i-pass products also support this paper FOR EXAMS UP TO JUNE 2015 http://freeaccastudymaterial.blogspot.com/ & R E V I S I O N K I T log sp o t co m/ http://freeaccastudymaterial.blogspot.com/ l.b First edition 2007 Eighth edition June 2014 ISBN 9781 4727 1107 ria (previous ISBN 9781 4453 8000 1) ate e-ISBN 9781 4727 1171 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 BPP Learning Media Ltd ym British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library BPP Learning Media Ltd BPP House, Aldine Place London W12 8AA as www.bpp.com/learningmedia tud Published by We are grateful to the Association of Chartered Certified Accountants for permission to reproduce past examination questions The suggested solutions in the practice answer bank have been prepared by BPP Learning Media Ltd, except where otherwise stated © BPP Learning Media Ltd 2014 /fr e ea Ricoh UK Limited Unit Wells Place Merstham RH1 3LG cc Printed in the United Kingdom by htt p:/ Your learning materials, published by BPP Learning Media Ltd, are printed on paper obtained from traceable, sustainable sources ii http://freeaccastudymaterial.blogspot.com/ Contents co m/ http://freeaccastudymaterial.blogspot.com/ Page Finding questions log sp o t Question index v Topic index vii Helping you with your revision x Revising P1 l.b Topics to revise xi Reading articles xi Question practice xi Passing the P1 exam xii Exam information xix Useful websites xxviii Questions and answers ria Questions Answers 71 ate Exam practice ym Mock exam Questions 307 Plan of attack .313 Answers .315 tud Mock exam Questions 333 Plan of attack .339 Answers .341 as Mock exam (December 2013) Questions 357 Plan of attack .365 Answers .367 htt p:/ /fr e ea Review form cc ACCA's exam answers June 2013 383 December 2013 393 iii http://freeaccastudymaterial.blogspot.com/ http://freeaccastudymaterial.blogspot.com/ co m/ A note about copyright Dear Customer What does the little © mean and why does it matter? log sp o t Your market-leading BPP books, course materials and e-learning materials not write and update themselves People write them: on their own behalf or as employees of an organisation that invests in this activity Copyright law protects their livelihoods It does so by creating rights over the use of the content Breach of copyright is a form of theft – as well as being a criminal offence in some jurisdictions, it is potentially a serious breach of professional ethics With current technology, things might seem a bit hazy but, basically, without the express permission of BPP Learning Media: Photocopying our materials is a breach of copyright Scanning, ripcasting or conversion of our digital materials into different file formats, uploading them to facebook or emailing them to your friends is a breach of copyright ria l.b ate You can, of course, sell your books, in the form in which you have bought them – once you have finished with them (Is this fair to your fellow students? We update for a reason.) Please note the e-products are sold on a single user licence basis: we not supply 'unlock' codes to people who have bought them second-hand htt p:/ /fr e ea cc as tud ym And what about outside the UK? BPP Learning Media strives to make our materials available at prices students can afford by local printing arrangements, pricing policies and partnerships which are clearly listed on our website A tiny minority ignore this and indulge in criminal activity by illegally photocopying our material or supporting organisations that If they act illegally and unethically in one area, can you really trust them? iv http://freeaccastudymaterial.blogspot.com/ http://freeaccastudymaterial.blogspot.com/ co m/ Question index The headings in this checklist/index indicate the main topics of questions, but questions are expected to cover several different topics Time Page number Ins Marks allocation Question Answer Mins Taraton Area Council 25 MegaMart 25 PKG High School 25 LL 25 Sentosa House (Examiner question) 25 Frank Finn (Pilot paper) 25 Seamus O'Brien (12/07) 25 West vs Leroi (6/08) 25 TQ (6/09) 25 25 11 Tomato Bank (6/10) 25 71 45 73 45 76 45 79 45 81 45 84 45 87 45 91 45 93 45 97 10 100 45 11 103 25 45 12 106 25 45 13 109 25 45 13 112 25 45 14 115 25 45 15 118 25 45 16 121 25 45 17 124 25 45 17 126 25 45 18 129 25 45 19 131 25 45 19 133 24 Southern Continents (12/07 amended) 25 45 20 136 25 H & Z (6/09) 25 45 21 139 25 45 21 143 25 45 22 146 25 45 23 149 25 45 23 152 30 Franks & Fisher (Examiner question) 25 45 24 155 31 Gluck and Goodman (12/08) 25 45 25 158 32 Saltoc (12/09) 25 45 26 161 33 COSO (6/10) 25 45 26 164 34 Yaya (12/12) 25 45 27 166 35 Blup (6/13) 25 45 28 169 ria 45 25 ate 10 Sam Mesentery (12/09) 45 l.b log sp o t Part A: Governance and responsibility 12 KK (12/10) 13 HHO (6/11) 14 Geeland (12/11) 15 Dale Gas (12/11) 16 Lum (6/12) 17 Oland (12/12) Part B: Internal control and risk tud 19 Gogone 20 Doctors' practice 21 Ceedee 27 Zogs (6/12) htt p:/ /fr e 29 PNY ea 28 Dubland (6/13) cc 26 YGT (6/11) as 22 Cerberus 23 B Bank ym 18 Boom (6/13) v http://freeaccastudymaterial.blogspot.com/ http://freeaccastudymaterial.blogspot.com/ Time Ins Page number allocation Mins Question Answer 36 Crawley Gossop 25 45 29 172 37 Environmental and social issues 25 45 29 38 Edted 25 45 30 39 CDC 25 45 30 179 40 Practice question: David Hunter 25 45 31 182 41 Penrice 25 45 32 184 42 JH Graphics (Examiner question) 25 45 32 186 43 Football club (12/07) 25 45 33 189 44 Anne Hayes (6/08) 25 45 34 192 45 Hogg Products (12/08) 25 45 35 195 46 Policy speech (6/09) 25 45 35 199 47 John Wang (12/09) 25 45 48 Happy and healthy (6/10) 25 49 JGP (12/10) 25 50 Ann Koo (6/11) 25 52 Jojo (6/12) Section A questions 55 Integrated Broadcasting Organisation 56 Chemco (Pilot paper) 58 Rowlands and Medeleev (6/08) 59 Swan Hill (12/08) 60 Global-bank (6/09) 63 ZPT (12/10) 64 Bobo (6/11) 65 Coastal Oil (12/11) 66 Hayho (6/12) ea 67 P & J (12/12) cc 62 Hesket Nuclear (6/10) as 61 Mary Jane (12/09) tud 57 Worldwide Minerals (12/07) ym 54 Wilberforce Humphries 68 Hoppo (6/13) 201 37 204 45 37 207 l.b 36 45 45 38 209 45 39 212 25 45 40 215 25 45 40 218 50 90 42 221 50 90 44 225 50 90 45 230 50 90 46 236 50 90 48 242 50 90 49 247 50 90 50 253 50 90 52 258 50 90 54 263 50 90 56 268 50 90 58 274 50 90 60 279 50 90 62 286 50 90 64 291 90 66 296 ate 53 RDC (12/12) 177 25 ria 51 Biggo (12/11) 174 log sp o t Part C: Professional values and ethics co m/ Marks 50 /fr e Mock exam Mock exam htt p:/ Mock exam (December 2013) vi http://freeaccastudymaterial.blogspot.com/ http://freeaccastudymaterial.blogspot.com/ co m/ Topic index Listed below are the key Paper P1 syllabus topics and the numbers of the questions in this Kit covering those topics If you need to concentrate your practice and revision on certain topics or if you want to attempt all available questions that refer to a particular subject, you will find this index useful Question numbers Absolutist approach 44(c), 63(b) Accountability 1(c), 7(b), 17(c), 59(d), 66(d) Accountancy as a profession Mock Q2(c) Agency 2, 3(d), 5(a), 60(c), 62(c), 66(d), Mock Q2(a), Mock Q2(b) ALARP 19(b), 21(b), 65(c) American Accounting Association model 40(a), 61(a), 66(b) Audit committee 1(a), 13(c), 31(c), 35(b), Mock Q4(b) Board of directors 2, 3, 4(c), 7, 10(b), 16, 17(c), 22, 55(b), 56, 61, 67(d), Mock Q4, Mock Q4(b) Bribery and corruption 39 Chairman 7, 9, 10(c), 14(b) Charities 13 Chief executive 7, 9(a), 14(b), 15(a), 60(e), 64(d) ate ria l.b log sp o t Syllabus topic Conflicts of interest 6, 12(a), 54(a) 58(d), 59, 61(a) Continuing professional development Control environment 16(b) ym Confidentiality Mock Q1(a) 38(a), 54(c) Corporate ethical codes Corporate governance Corporate governance codes Deontological approach cc Directors' remuneration as Corporate governance concepts tud Corporate citizen 42, 45, 55(d), 65(a) 1-18, 22, 48(a), 55-57, 63, Mock Q1, Mock Q4, Mock Q1, Mock Q2 5(d), 7(c), 18(a) 17(c), 54(b) 45(c), 55(c), 68(d), Mock Q3(c) 2, 6, 9(c), 11, 15(a), 18(b), 23(a), 24(c), Mock Q1(d), Mock Q1(c) 9(a), Mock Q4(a) Diversity 54(e), Mock Q3(b) ea Directors' vacation of office 44, Mock Q2(c) Entrepreneurial risk 25(c) Environmental auditing 41(b), 49(b) Environmental issues 36-39, 41, 49, 56(e), 58(d), 62(d), 65, Mock Q1, Mock Q1 Environmental management systems 36(a), 38(b) htt p:/ /fr e Employee responsibilities vii http://freeaccastudymaterial.blogspot.com/ http://freeaccastudymaterial.blogspot.com/ Question numbers Environmental reporting 36, 37, 39(c), 41(a), 56(e), 65(b), 68(b), Mock Q1(c) Ethics 11(c), 36-53, 55-57, 59-61, 63-66, 68(d), Mock Q1, Mock Q2, Mock Q1(d), Mock Q3, Mock Q4(c) Ethical theories 38, 42, 44(c), 45(c), 54(d), 55(c), Mock Q3 External auditors 32(c), 41(b) Fiduciary duty 28(b), 43(c) Financial risks 23(b), 28(c), 63(c),Mock Q4(a) Full cost accounting 41(a) General meetings 64(c) Gray, Owen, Adams approaches on social responsibility 43(b), 46(c), 51, 59(c), 64(d), Mock Q1(b) Independence 27(a), 30, 44 Induction programme 10(a), 16(b) Information provision 3(b), 22(b), 34(c), 37(c), 61(d) Insider dealing 50(c) Insider-dominated businesses 48(a) Institutional investors 5(b), 63(a) Integrated reporting 36(c), 37(d) Integrity 47(a), 68(d), Mock Q3(b) ate ria l.b log sp o t co m/ Syllabus topic Internal audit 20(c), 29-31, 33(c), 35, 54(b), Mock Q1(d) 3(c),8, 22, 29, 31, 33-35, 39(b), 57(d), 58(e), 60(b), 61, 63-68, Mock Q2, Mock Q4, Mock Q1(d), Mock Q2(b) ym Internal control Kohlberg's theories 42(b), 55(c), 57(b), 60(a), 64(b) 15(b), 31(c) tud Market risk Nomination committee Objectivity Operational risks cc Principles-based approach as Non-executive directors Mock Q2(b), Mock Q3(a) 2, 6, 12, 16(b), 18(c), 27(a), 56(d), 57(c), 61(c), Mock Q3(c) 30(d) 49(c), 54(a), 59(b), 67(d), Mock Q1(c) 5(d), 8(a), 14, 17(b), 33(a), Mock Q1(b), Mock Q2(a) Mock Q3 Professional responsibilities 44, 47, 48, 50, 67(c), Mock Q2(c) Proxy voting 15(c) ea Professional ethics codes /fr e Public interest 36(b), 46, 50(b), Mock Q4(c) 1,3 Relativist approach 44(c), 63(b) Remuneration committee 6(a), 11(a) Reporting 4, 8, 12(c), 14(c), 36, 37, 39(c), 41(a), 59(d), 63(c), 65(b), Mock Q4(c) htt p:/ Public sector viii http://freeaccastudymaterial.blogspot.com/ http://freeaccastudymaterial.blogspot.com/ Question numbers Reputation risk 19(a), Mock Q2(b) Retirement by rotation Mock Q2(c) Risk appetite 20(b), 23(c), 66(a) Risk assessment 19-28, 55, 56(b), 58, 62(d), 65(c), 67(d), Mock Q2(b), Mock Q3, Mock Q1(b) Risk audit 32(c) Risk committee 5(c), 27, Mock Q3 Risk correlation 26(c), 68(a) Risk culture 24(b), 26(d), 32, Mock Q4 Risk management 15(b),19-29, 54(a), 65(c), 67(b), Mock Q3, Mock Q4, Mock Q1(b) Risk manager 25(a) Risk monitoring Mock Q4 Risk perception 21(c), 65(c) Rules-based approaches 8(a), 14(a), 17(b), 33(a), Mock Q2 Sarbanes-Oxley 4(a), 8(a), Mock Q2 Social issues 37, 62(d), 67(a) Social responsibility 37, 51, 54(c), 59(c), Mock Q1, Mock Q4(d), Mock Q3(c) Stakeholders 1(a), 37(c), 42, 43, 53, 58-60, 62(a), 66(d), Mock Q1(a) log sp o t l.b ria ate Strategic risks 49(c), 54(a), 55(a), 59(b), 67(d), Mock Q1(c) 49(a), 58(d), Mock Q1(c), Mock Q1(a) ym Sustainability Technological risk Mock Q4(b) Teleological approach 45(c), 68(d), Mock Q3(c) tud Trade unions Transaction cost theory Transparency 62(b) 41(c) 13(b), 57(a), 59(c), 68(d) 40(b), 53(a), 59(a) 54(d), 55(c) htt p:/ /fr e ea cc as Tucker's question model Utilitarianism co m/ Syllabus topic ix http://freeaccastudymaterial.blogspot.com/ htt p:/ /fr e ea cc as tud ym ate ria l.b log sp o t co m/ http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ htt p:/ /fr e ea cc as tud ym ate ria l.b log sp o t co m/ http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ htt p:/ /fr e ea cc as tud ym ate ria l.b log sp o t co m/ http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ htt p:/ /fr e ea cc as tud ym ate ria l.b log sp o t co m/ http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ htt p:/ /fr e ea cc as tud ym ate ria l.b log sp o t co m/ http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ htt p:/ /fr e ea cc as tud ym ate ria l.b log sp o t co m/ http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ htt p:/ /fr e ea cc as tud ym ate ria l.b log sp o t co m/ http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ htt p:/ /fr e ea cc as tud ym ate ria l.b log sp o t co m/ http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ htt p:/ /fr e ea cc as tud ym ate ria l.b log sp o t co m/ http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ htt p:/ /fr e ea cc as tud ym ate ria l.b log sp o t co m/ http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ htt p:/ /fr e ea cc as tud ym ate ria l.b log sp o t co m/ http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ htt p:/ /fr e ea cc as tud ym ate ria l.b log sp o t co m/ http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ htt p:/ /fr e ea cc as tud ym ate ria l.b log sp o t co m/ http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ http://freeaccastudymaterial.blogspot.com/ Name: co m/ Review Form – Paper P1 Governance, Risk and Ethics (06/14) Address: During the past six months you recall seeing/receiving any of the following? (Tick as many boxes as are relevant) log sp o t How have you used this Kit? (Tick one box only) Home study (book only) On a course: college Our advertisement in Student Accountant With 'correspondence' package Our advertisement in Pass Other Our advertisement in PQ Our brochure with a letter through the post Why did you decide to purchase this Kit? (Tick one box only) Our website www.bpp.com Which (if any) aspects of our advertising you find useful? (Tick as many boxes as are relevant) Have used the complementary Study text Have used other BPP products in the past l.b Recommendation by friend/colleague Prices and publication dates of new editions Information on product content Saw advertising Facility to order books off-the-page Other None of the above Which BPP products have you used? Text Passcards Kit i-Pass ate ria Recommendation by a lecturer at college Home Study Package ym Your ratings, comments and suggestions would be appreciated on the following areas Passing P1 Top Tips etc in answers Content and structure of answers Overall opinion of this Kit as Mock exam answers tud Questions Excellent Useful Not useful Good Adequate Poor Yes No cc Do you intend to continue using BPP products? Very useful The BPP author of this edition can be emailed at: helenajones@bpp.com htt p:/ /fr e ea Please return this form to: Pippa Riley, ACCA Range Manager, BPP Learning Media Ltd, FREEPOST, London, W12 8AA http://freeaccastudymaterial.blogspot.com/ http://freeaccastudymaterial.blogspot.com/ co m/ Review Form (continued) TELL US WHAT YOU THINK htt p:/ /fr e ea cc as tud ym ate ria l.b log sp o t Please note any further comments and suggestions/errors below http://freeaccastudymaterial.blogspot.com/ ... coverage, the BPP Learning Media Practice and Revision Kit provides excellent, ACCA- approved support for your revision We look at the dos and don'ts of revising for, and taking, ACCA exams We... 2013 paper x Using your BPP Learning Media Practice and Revision Kit http://freeaccastudymaterial.blogspot.com/ http://freeaccastudymaterial.blogspot.com/ co m/ Revising P1 Topics to revise log... http://freeaccastudymaterial.blogspot.com/ co m/ http://freeaccastudymaterial.blogspot.com/ Helping you with your revision BPP Learning Media – Approved Learning Partner – content Tackling revision