TÀI LIỆU ACCA MỚI NHẤT 2015 BPP P1 EXAMKIT 2

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Governance, Risk and Ethics, for use independently
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Practice & Revision Kit

Paper P1
Governance, Risk and Ethics
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Paper P1 Governance, Risk and Ethics that has been

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exam.

Governance, Risk and Ethics

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ACP1RK14.indd 1-3

30/05/2014 16:15


PAPER P1
GOVERNANCE, RISK AND ETHICS

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.
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



Provide the ACCA exam answers as well as our own for selected questions

Our Passcard and i-pass products also support this paper.

FOR EXAMS UP TO JUNE 2015

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First edition 2007
Eighth edition June 2014
ISBN 9781 4727 1107 6
(previous ISBN 9781 4453 8000 1)
e-ISBN 9781 4727 1171 7
British Library Cataloguing-in-Publication Data
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ii

©
BPP Learning Media Ltd
2014


Contents
Page

Finding questions
Question index .................................................................................................................................................................. v
Topic index ..................................................................................................................................................................... vii

Helping you with your revision ...................................................................................................................... x

Revising P1
Topics to revise................................................................................................................................................................ xi
Reading articles................................................................................................................................................................ xi
Question practice ............................................................................................................................................................. xi
Passing the P1 exam....................................................................................................................................................... xii
Exam information ........................................................................................................................................................... xix
Useful websites ..........................................................................................................................................................xxviii

Questions and answers
Questions..........................................................................................................................................................................3
Answers ..........................................................................................................................................................................71

Exam practice
Mock exam 1

Questions ............................................................................................................................................................307

Plan of attack .......................................................................................................................................................313

Answers...............................................................................................................................................................315
Mock exam 2

Questions ............................................................................................................................................................333

Plan of attack .......................................................................................................................................................339

Answers...............................................................................................................................................................341
Mock exam 3 (December 2013)

Questions ............................................................................................................................................................357


Plan of attack .......................................................................................................................................................365

Answers...............................................................................................................................................................367
ACCA's exam answers

June 2013............................................................................................................................................................383

December 2013 ...................................................................................................................................................393

Review form

iii


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iv


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

Part A: Governance and responsibility
1

Taraton Area Council

25

45

3

71

2

MegaMart

25

45

4

73

3

PKG High School

25

45

5

76

4

LL

25

45

6

79

5

Sentosa House (Examiner question)

25

45

6

81

6

Frank Finn (Pilot paper)

25

45

7

84

7

Seamus O'Brien (12/07)

25

45

7

87

8

West vs Leroi (6/08)

25

45

8

91

9

TQ (6/09)

25

45

9

93

10 Sam Mesentery (12/09)

25

45

9

97

11 Tomato Bank (6/10)

25

45

10

100

12 KK (12/10)

25

45

11

103

13 HHO (6/11)

25

45

12

106

14 Geeland (12/11)

25

45

13

109

15 Dale Gas (12/11)

25

45

13

112

16 Lum (6/12)

25

45

14

115

17 Oland (12/12)

25

45

15

118

18 Boom (6/13)

25

45

16

121

19 Gogone

25

45

17

124

20 Doctors' practice

25

45

17

126

21 Ceedee

25

45

18

129

22 Cerberus

25

45

19

131

23 B Bank

25

45

19

133

24 Southern Continents (12/07 amended)

25

45

20

136

25 H & Z (6/09)

25

45

21

139

26 YGT (6/11)

25

45

21

143

27 Zogs (6/12)

25

45

22

146

28 Dubland (6/13)

25

45

23

149

29 PNY

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

Part B: Internal control and risk

v


Time

Ins

Page number

Marks

allocation
Mins

Question

Answer

36 Crawley Gossop

25

45

29

172

37 Environmental and social issues

25

45

29

174

38 Edted

25

45

30

177

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

36

201

48 Happy and healthy (6/10)

25

45

37

204

49 JGP (12/10)

25

45

37

207

50 Ann Koo (6/11)

25

45

38

209

51 Biggo (12/11)

25

45

39

212

52 Jojo (6/12)

25

45

40

215

53 RDC (12/12)

25

45

40

218

54 Wilberforce Humphries

50

90

42

221

55 Integrated Broadcasting Organisation

50

90

44

225

56 Chemco (Pilot paper)

50

90

45

230

57 Worldwide Minerals (12/07)

50

90

46

236

58 Rowlands and Medeleev (6/08)

50

90

48

242

59 Swan Hill (12/08)

50

90

49

247

60 Global-bank (6/09)

50

90

50

253

61 Mary Jane (12/09)

50

90

52

258

62 Hesket Nuclear (6/10)

50

90

54

263

63 ZPT (12/10)

50

90

56

268

64 Bobo (6/11)

50

90

58

274

65 Coastal Oil (12/11)

50

90

60

279

66 Hayho (6/12)

50

90

62

286

67 P & J (12/12)

50

90

64

291

68 Hoppo (6/13)

50

90

66

296

Part C: Professional values and ethics

Section A questions

Mock exam 1
Mock exam 2

Mock exam 3 (December 2013)

vi


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.
Syllabus topic

Question numbers

Absolutist approach

44(c), 63(b)

Accountability

1(c), 7(b), 17(c), 59(d), 66(d)

Accountancy as a profession

Mock 1 Q2(c)

Agency

2, 3(d), 5(a), 60(c), 62(c), 66(d), Mock 2 Q2(a),
Mock 3 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 1 Q4(b)

Board of directors

2, 3, 4(c), 7, 10(b), 16, 17(c), 22, 55(b), 56, 61,
67(d), Mock 1 Q4, Mock 3 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)

Conflicts of interest

6, 12(a), 54(a)

Confidentiality

58(d), 59, 61(a)

Continuing professional development

16(b)

Control environment

Mock 2 Q1(a)

Corporate citizen

38(a), 54(c)

Corporate ethical codes

42, 45, 55(d), 65(a)

Corporate governance

1-18, 22, 48(a), 55-57, 63, Mock 1 Q1, Mock 1 Q4,
Mock 2 Q1, Mock 2 Q2

Corporate governance codes

5(d), 7(c), 18(a)

Corporate governance concepts

17(c), 54(b)

Deontological approach

45(c), 55(c), 68(d), Mock 2 Q3(c)

Directors' remuneration

2, 6, 9(c), 11, 15(a), 18(b), 23(a), 24(c), Mock 1
Q1(d), Mock 3 Q1(c)

Directors' vacation of office

9(a), Mock 3 Q4(a)

Diversity

54(e), Mock 3 Q3(b)

Employee responsibilities

44, Mock 1 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 1 Q1,
Mock 3 Q1

Environmental management systems

36(a), 38(b)

vii


viii

Syllabus topic

Question numbers

Environmental reporting

36, 37, 39(c), 41(a), 56(e), 65(b), 68(b), Mock 1
Q1(c)

Ethics

11(c), 36-53, 55-57, 59-61, 63-66, 68(d), Mock 1
Q1, Mock 1 Q2, Mock 2 Q1(d), Mock 2 Q3, Mock 3
Q4(c)

Ethical theories

38, 42, 44(c), 45(c), 54(d), 55(c), Mock 2 Q3

External auditors

32(c), 41(b)

Fiduciary duty

28(b), 43(c)

Financial risks

23(b), 28(c), 63(c),Mock 2 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 1 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 2 Q3(b)

Internal audit

20(c), 29-31, 33(c), 35, 54(b), Mock 3 Q1(d)

Internal control

3(c),8, 22, 29, 31, 33-35, 39(b), 57(d), 58(e), 60(b),
61, 63-68, Mock 1 Q2, Mock 1 Q4, Mock 3 Q1(d),
Mock 3 Q2(b)

Kohlberg's theories

42(b), 55(c), 57(b), 60(a), 64(b)

Market risk

15(b), 31(c)

Nomination committee

Mock 2 Q2(b), Mock 3 Q3(a)

Non-executive directors

2, 6, 12, 16(b), 18(c), 27(a), 56(d), 57(c), 61(c),
Mock 1 Q3(c)

Objectivity

30(d)

Operational risks

49(c), 54(a), 59(b), 67(d), Mock 2 Q1(c)

Principles-based approach

5(d), 8(a), 14, 17(b), 33(a), Mock 2 Q1(b), Mock 3
Q2(a)

Professional ethics codes

Mock 2 Q3

Professional responsibilities

44, 47, 48, 50, 67(c), Mock 1 Q2(c)

Proxy voting

15(c)

Public interest

36(b), 46, 50(b), Mock 3 Q4(c)

Public sector

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 1 Q4(c)


Syllabus topic

Question numbers

Reputation risk

19(a), Mock 1 Q2(b)

Retirement by rotation

Mock 2 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 1
Q2(b), Mock 1 Q3, Mock 3 Q1(b)

Risk audit

32(c)

Risk committee

5(c), 27, Mock 1 Q3

Risk correlation

26(c), 68(a)

Risk culture

24(b), 26(d), 32, Mock 2 Q4

Risk management

15(b),19-29, 54(a), 65(c), 67(b), Mock 1 Q3, Mock 1
Q4, Mock 3 Q1(b)

Risk manager

25(a)

Risk monitoring

Mock 1 Q4

Risk perception

21(c), 65(c)

Rules-based approaches

8(a), 14(a), 17(b), 33(a), Mock 3 Q2

Sarbanes-Oxley

4(a), 8(a), Mock 3 Q2

Social issues

37, 62(d), 67(a)

Social responsibility

37, 51, 54(c), 59(c), Mock 1 Q1, Mock 2 Q4(d),
Mock 3 Q3(c)

Stakeholders

1(a), 37(c), 42, 43, 53, 58-60, 62(a), 66(d), Mock 1
Q1(a)

Strategic risks

49(c), 54(a), 55(a), 59(b), 67(d), Mock 2 Q1(c)

Sustainability

49(a), 58(d), Mock 1 Q1(c), Mock 3 Q1(a)

Technological risk

Mock 3 Q4(b)

Teleological approach

45(c), 68(d), Mock 2 Q3(c)

Trade unions

62(b)

Transaction cost theory

41(c)

Transparency

13(b), 57(a), 59(c), 68(d)

Tucker's 5 question model

40(b), 53(a), 59(a)

Utilitarianism

54(d), 55(c)

ix


Helping you with your revision
BPP Learning Media – Approved Learning Partner – content
As ACCA's Approved Learning Partner – content, BPP Learning Media gives you the opportunity to use exam team
reviewed revision materials. By incorporating the examination team's comments and suggestions regarding
syllabus coverage, the BPP Learning Media Practice and Revision Kit provides excellent, ACCA-approved support
for your revision.

Tackling revision and the exam
Using feedback obtained from the ACCA exam team review:


We look at the dos and don'ts of revising for, and taking, ACCA exams



We focus on Paper P1; we discuss revising the syllabus, what to do (and what not to do) in the exam, how
to approach different types of question and ways of obtaining easy marks

Selecting questions
We provide signposts to help you plan your revision.


A full question index



A topic index listing all the questions that cover key topics, so that you can locate the questions that provide
practice on these topics, and see the different ways in which they might be examined

Making the most of question practice
At BPP Learning Media we realise that you need more than just questions and model answers to get the most from
your question practice.


Our Top tips included for certain questions provide essential advice on tackling questions, presenting
answers and the key points that answers need to include



We show you how you can pick up Easy marks on some questions, as we know that picking up all readily
available marks often can make the difference between passing and failing



We include marking guides to show you what the examiner rewards



We include comments from the examiners to show you where students struggled or performed well in the
actual exam



We refer to the 2014 BPP Study Text (for exams up to June 2015) for detailed coverage of the topics
covered in questions



In a bank at the end of this Kit we include the official ACCA answers to the June and December 2013
papers. Used in conjunction with our answers they provide an indication of all possible points that could be
made, issues that could be covered and approaches to adopt.

Attempting mock exams
There are three mock exams that provide practice at coping with the pressures of the exam day. We strongly
recommend that you attempt them under exam conditions. Mock exams 1 and 2 reflect the question styles and
syllabus coverage of the exam; Mock exam 3 is the December 2013 paper.

x

Using your BPP Learning Media Practice and Revision Kit

Revising P1
Topics to revise
Firstly we must emphasise that you will need a good knowledge of the whole syllabus. Any part of the syllabus
could be tested within compulsory Question 1. Having to choose two out of three optional questions does not really
represent much choice if there are areas of the syllabus you are keen to avoid. Although (like all syllabuses) this
syllabus may have seemed a lot when you were studying, we actually believe that it is not as large as some of the
syllabuses you have previously studied.
That said, there are certain topics that are stressed in the syllabus and by the examiner, and therefore are core:
















Concepts underpinning corporate governance, in particular integrity, accountability and transparency
Stakeholders in organisations and in decisions
The agency problem
Features of, and arguments for and against, principles vs rules based approaches
Sarbanes-Oxley
Corporate governance best practice in relation to the board, board committees, remuneration and reporting

Elements of control environment
The main control procedures
Risk assessment framework
The main strategies for dealing with risks
The key ethical positions
Kohlberg’s framework
Methods of ethical decision-making
Gray, Owen, Adams seven positions on corporate social responsibility
Meaning of sustainability

Your knowledge of other topic areas needs to demonstrate breadth. You need to have a good idea of:






The different types of risks (not just financial) that it can face
The elements of control and risk management systems
The impact of culture
The main elements of corporate and professional codes
The main areas discussed in corporate social responsibility debates

Reading articles
The examiner has stressed the importance of reading the technical articles published in Student Accountant that
relate to P1. Articles relating to P1 are available on ACCA's website. Some of the articles are written by the examiner
and all are reviewed by him.
It’s also useful to keep reading the business pages during your revision period and not just narrowly focus on the
syllabus. Remember that the examiner has stressed that this paper is about how organisations respond to realworld issues, so the more you read, the more practical examples you will have of how organisations have tackled
real-life situations.

Question practice
You should use the Passcards and any brief notes you have to revise these topics, but you mustn't spend all your
revision time passively reading. Question practice is vital; doing as many questions as you can in full will help
develop your ability to analyse scenarios and produce relevant discussion and recommendations.
Make sure you leave enough time in your revision schedule to practise the longer Section A questions, as such
questions are compulsory in the exam. The scenarios and requirements of Section A questions are more complex
and will integrate several parts of the syllabus, therefore practice is essential. Also ensure that you attempt all three
mock exams under exam conditions.

Revising P1

xi


Passing the P1 exam
Displaying the right qualities
The examiner will expect you to display the following qualities.
Qualities required
Fulfilling the higher level question
requirements

This means that when you are asked to show higher level skills such as
assessment or evaluation, you will only score well if you demonstrate
them. Merely describing something when you are asked to evaluate it will
not earn you the marks you need.

Identifying the most important
features of the organisation and its
environment

You must use your technical knowledge and business awareness to
identify the key features of the scenario.

Sorting the information in the
scenario

You will get a lot of information, particularly in the Section A scenario,
and will be expected to evaluate how useful it is and use it to support
answers such as comparisons and discussions. Over 50% of marks in
most questions are likely to be available for direct application of
knowledge to the scenario.

Selecting relevant real-life
examples

You may gain credit for using good examples, providing you use the
examples to illustrate your understanding of the points in the scenario.

Using the governance and ethical
frameworks

Remember that the examiner has emphasised the importance of
accountants showing awareness of their responsibilities. You may be
expected to apply the frameworks to determine what the problem is (for
example which stakeholders should be considered) and to identify
appropriate solutions.

Criticising the approaches you use

You may be expected not only to apply guidance such as corporate
governance codes or principles-based ethical guidance, but also
criticise the approaches you use.

Arguing well

You may be expected to discuss both sides of a case, or present an
argument in favour or against something. You will gain marks for the
quality and logical flow of your arguments.

Making reasonable
recommendations

The measures you recommend must be appropriate for the organisation;
you may need to discuss their strengths and weaknesses, as there may
be costs of adopting them. The recommendations should clearly state
what has to be done.

Avoiding weaknesses
Our experience of, and examiner feedback from, other higher level exams enables us to predict a number of
weaknesses that are likely to occur in many students' answers. You will enhance your chances significantly if you
ensure you avoid these mistakes:

xii



Failing to provide what the question verbs require (discussion, evaluation, recommendation) or to write
about the topics specified in the question requirements



Repeating the same material in different parts of answers



Stating theories and concepts rather than applying them



Quoting chunks of detail from the question that don't add any value

Revising P1




Forcing irrelevancies into answers, for example irrelevant definitions or theories, or examples that don't
relate to the scenario



Giving long lists or writing down all that's known about a broad subject area, and not caring whether it's
relevant or not



Focusing too narrowly on one area – for example only covering financial risks when other risks are also
important



Letting your personal views prevent you from answering the question – the question may require you to
construct an argument with which you personally don't agree



Unrealistic or impractical recommendations



Vague recommendations – instead of just saying improve risk management procedures, you should
discuss precisely how you would improve them



Failing to answer sufficient questions, or all parts of a question, because of poor time management

Using the reading time
We recommend that you spend the first part of the 15 minutes reading time choosing the Section B questions you
will do, on the basis of your knowledge of the syllabus areas being tested and whether you can fulfil all the question
requirements. Remember that Section B questions can cover different parts of the syllabus, and you should be
happy with all the areas that the questions you choose cover. We suggest that you should note on the paper any
ideas that come to you about these questions.
However don't spend all the reading time going through and analysing the Section B question requirements in
detail; leave that until the three hours' writing time. Instead you should be looking to spend as much of the reading
time as possible looking at the Section A scenario, as this will be longer and more complex than the Section B
scenarios and cover more of the syllabus. You should highlight and annotate the key points of the scenario on the
question paper.

Choosing which questions to answer first
Spending most of your reading time on the compulsory Section A question will mean that you can get underway
with planning and writing your answer to the Section A question as soon as the three hours start. It will give you
more actual writing time during the one and a half hours you should allocate to it and it's writing time that you'll
need. Comments from examiners of other syllabuses that have similar exam formats suggest that students appear
less time-pressured if they do the big compulsory questions first.
During the second half of the exam, you can put Section A aside and concentrate on the two Section B questions
you’ve chosen.
However our recommendations are not inflexible. If you really think the Section A question looks a lot harder than
the Section B questions you’ve chosen, then do those first, but DON'T run over time on them. You must leave
yourself at least one hour and 30 minutes to tackle the Section A question. When you come back to it, having had
initial thoughts during the reading time, you should be able to generate more ideas and find the question is not as
bad as it looks.
Remember also that small overruns of time during the first half of the exam can add up to your being very short of
time towards the end.

Revising P1

xiii


Tackling questions
Scenario questions
You'll improve your chances by following a step-by-step approach to Section A scenarios along the following lines.

Step 1

Read the background
Usually the first couple of paragraphs will give some background on the company and what it is
aiming to achieve. By reading this carefully you will be better equipped to relate your answers to the

company as much as possible.

Step 2

Read the requirements
There is no point reading the detailed information in the question until you know what it is going to
be used for. Don't panic if some of the requirements look challenging – identify the elements you are
able to do and look for links between requirements, as well as possible indications of the syllabus
areas the question is covering.

Step 3

Identify the action verbs
These convey the level of skill you need to exhibit and also the structure your answer should have. A
lower level verb such as define will require a more descriptive answer; a higher level verb such as
evaluate will require a more applied, critical answer. It should be stressed that higher level
requirements and verbs are likely to be most significant in this paper.
Action verbs that are likely to be frequently used in this exam are listed below, together with their
intellectual levels and guidance on their meaning.
Intellectual level

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1

Define

Give the meaning of

1

Explain

Make clear

1

Identify

Recognise or select

1

Describe

Give the key features

2

Distinguish

Define two different terms, viewpoints or
concepts on the basis of the differences between
them

2

Compare and

contrast

Explain the similarities and differences between
two different terms, viewpoints or concepts

2

Contrast

Explain the differences between two different
terms, viewpoints or concepts

2

Analyse

Give reasons for the current situation or what has
happened

3

Assess

Determine the strengths/weaknesses/
importance/ significance/ability to contribute

3

Examine

Critically review in detail

3

Discuss

Examine by using arguments for and against

3

Explore

Examine or discuss in a wide-ranging manner

3

Criticise

Present the weaknesses of/problems with the
actions taken or viewpoint expressed, supported
by evidence


Intellectual level
3

Evaluate/critically
evaluate

Determine the value of in the light of the

arguments for and against (critically evaluate
means weighting the answer towards
criticisms/arguments against).

3

Construct the case

Present the arguments in favour or against,
supported by evidence

3

Recommend

Advise the appropriate actions to pursue in terms
the recipient will understand

Also make sure you identify all the action verbs; some question parts may have more than one.

Step 4

Identify what each part of the question requires
Think about what frameworks or theories you could choose if the question doesn't specify which one
to use.
When planning, you will need to make sure that you aren't reproducing the same material in more
than one part of the question.
Also you're likely to come across part questions with two requirements that may be at different
levels; a part question may for example ask you to explain X and discuss Y. You must ensure that you
fulfill both requirements and that your discussion of Y shows greater depth than your explanation of

X (for example by identifying problems with Y or putting the case for and against Y).

Step 5

Check the mark allocation to each part
This shows you the depth anticipated and helps allocate time.

Step 6

Read the whole scenario through, highlighting key data
Put points under headings related to requirements (eg by noting in the margin to what part of the
question the scenario detail relates).

Step 7

Consider the consequences of the points you’ve identified
Remember that you will often have to provide recommendations based on the information you've
been given. Consider that you may have to criticise the code, framework or model that you’ve been
told to use. You may also have to bring in wider issues or viewpoints, for example the views of
different stakeholders.

Step 8

Write a brief plan
You may be able to do this on the question paper as often there will be at least one blank page in the
question booklet. However any plan you make should be reproduced in the answer booklet when
writing time begins.
Make sure you identify all the requirements of the question in your plan – each requirement may have
sub-requirements that must also be addressed. If there are professional marks available, highlight in
your plan where these may be gained (such as preparing a report).

Revising P1

xv


Step 9

Write the answer
Make every effort to present your answer clearly. The pilot paper and exam papers so far indicate that
the examiner will be looking for you to make a number of clear points. The best way to demonstrate
what you’re doing is to put points into separate paragraphs with clear headers.

Discussion questions
Remember that depth of discussion will be important. Discussions will often consist of paragraphs containing 2-3
sentences. Each paragraph should:


Make a point



Explain the point (you must demonstrate why the point is important)



Illustrate the point (with material or analysis from the scenario, perhaps an example from real-life)

In this exam a number of requirement verbs will expect you to express a viewpoint or opinion, for example
construct an argument, criticise, evaluate. When expressing an opinion, you need to provide:



What the question wants. For instance, if you are asked to criticise something, don't spend time discussing
its advantages. In addition if a scenario provides a lot of information about a situation, and you are (say)
asked to assess that situation in the light of good practice, your assessment is unlikely to be favourable.



Evidence from theory or the scenario – again we stress that the majority of marks in most questions will be
given for applying your knowledge to the scenario.

Gaining the easy marks
Knowledge of the core topics that we list under topics to revise should present you with some easy marks. The pilot
paper suggests that there will be some marks available on certain part questions for definitions, explanations or
descriptions that don’t have to be related to the scenario. However don’t assume that you can ignore all the
scenarios and still pass!
As P1 is a Professional level paper, 4 or 5 professional level marks will be awarded in the compulsory question.
Some of these should be easy to obtain. The examiner has stated that some marks may be available for presenting
your answer in the form of formal business letters, briefing notes, memos, presentations, press releases, narratives
in an annual report and so on. You may also be able to obtain marks for the format, layout, logical flow and
persuasiveness of your answer.
What you write should always sound professional, and you will be awarded marks for good introductions and
conclusions. You must use the format the question requires. You must also lay your answer out so that somebody
could actually read it and use it. A good way to end all documents is to invite further communication.
How you make the document persuasive will depend on who you are and who the recipients are. If you are writing
to shareholders you should consider how much information you need to provide. If you are trying to convince the
reader that a decision is right, you should focus on the benefits. If you are apologising for something that has gone
wrong, you need to reassure the reader and ensure they are happy with the information you provide.
Reports
A report should have the following formal elements at the top:






xvi

Title
Report writer
Report recipient
Date

Revising P1


It should include:




An introduction summarising its scope, terms of reference and the information used
Findings/points made, in sections with headings. The points should be specific and factual
Recommendations/conclusions at the end

It should be written in the first person. (I)
Memorandum
A memorandum should have the same formal elements at the top as a report. Its recipient should be referred to as
you. A memo should finish with a conclusion or recommendation – you should not end it with yours faithfully.
Letter
A letter should include:





The address of the sender
The date it is written
If to a single recipient, the recipient's name and address at the top.

It should have:


An introductory paragraph, setting out the reasons why the letter is written



A clear and logical flow of content



A personal element, using the first person (I, our company) and referring to the recipients and their interests



A concluding paragraph, re-emphasising the purpose of the letter and, if appropriate, inviting further action
by the recipient(s) (eg please get in touch if you would like further information)

If it is a business letter, addressed formally (Dear Sir), it should be signed Yours faithfully. If the addressee is
named, it should be signed Yours sincerely.
Speech or statement at meeting
A speech should:



Be easy to read out. If you answer any questions requiring speeches during your revision you should read
your answer to yourself to see whether you say it easily (Do NOT however, read your answer aloud in the
actual exam!)



Begin with a formal introduction, for example Welcome Ladies and Gentlemen



Provide an overview of what will be covered



Connect each section with narrative designed to make the speech sound convincing, logical and persuasive



Not contain bullet points (how would you deliver them)



End with an invitation to respond: ‘Thank you for listening. I now open the floor to questions’.

Briefing notes
These may be required for use at a board meeting or to inform external stakeholders such as institutional
shareholders. They should:




Start with the key points, with background information later on or in appendices
Be written in the third person, referring to the directors or the company

Press or website statement
The statement should have:




A first paragraph that emphasises the key points
Background information later in the statement or in appendices
A third person narrator

Revising P1

xvii


Management narratives in annual report
The narrative should have:





A first paragraph that clearly introduces the purpose of the statement
A narrative that clearly supports this purpose
A clear structure, with separate points being distinguished

A third person narrator

Article in newspaper or magazine
The article should be clearly focussed on the issues to be discussed and designed to attract the reader’s attention
by the use of paragraph ‘headlines’. The article must be tailored to the readership of the publication, explaining (or
maybe better not using) terms they are unlikely to know. Generally articles should have short sentences and avoid
the use of the passive. The article may not necessarily be unbiased. The question requirements may ask you to use
the article to promote an argument or viewpoint, and the article would then have to be slanted in that direction.

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Revising P1


Exam information
Format of the exam
Section A:
Section B:

1 compulsory case study
Choice of 2 from 3 questions (25 marks each)

Number of
marks
50
50
100

Time: 3 hours plus 15 minutes reading time
Section A will be a compulsory case study question with typically four or five sub-requirements relating to the same

scenario information. The question will usually assess and link a range of subject areas across the syllabus. It will
require students to demonstrate high-level capabilities to understand the complexities of the case and evaluate,
relate and apply the information in the case study to the requirements.
The examiner has stressed the importance of reading the case in detail, taking notes as appropriate and getting a
feel for what the issues are. Scenarios may be drawn from any situation involving aspects of governance; this is
likely to be, but need not be, in an organisational setting.
Professional marks will be available in Section A for presentation, logical flow of argument and quality of argument.
Section B questions are more likely to assess a range of discrete subject areas from the main syllabus section
headings; they may require evaluation and synthesis of information contained within short scenarios and
application of this information to the question requirements.
Although one subject area is likely to be emphasised in each Section B question, students should not assume that
questions will be solely about content from that area. Each question will be based on a shorter case scenario to
contextualise the question.
The paper will have a global focus.

Additional information
The Study Guide provides more detailed guidance on the syllabus.

December 2013
Section A
1 Sustainability; risk management; executive remuneration; internal controls and audit
Section B
2 Rules and principles-based approaches; agency; small companies
3 Nomination committee; diversity; corporate social responsibility
4 Director departure from board; technological risk; ethics and public interest

The December 2013 exam is Mock exam 3 in this kit.

Revising P1

xix


June 2013
Question in this Kit
Section A
1 Risks; environmental report; internal controls; integrity and transparency

68

Section B
2 Internal audit; audit committee; internal financial controls
3 Risk assessment; fiduciary duty; financial risk

35
28

4 Governance code; executive remuneration; non-executive directors

18

Examiner’s comments. In each question, requirements followed on from a case scenario, and it was necessary to
have studied each scenario before meaningfully engaging with the requirements.
A general comment I have with regard to this paper is that weaker candidates used ‘trigger’ words in the question
requirements to sometimes produce ‘lists’ of content rather than actually answering the question set. This paper
contained relatively few ‘bookwork’ marks and mainly required detailed application of material from the case
scenarios, so candidates that saw a key phrase and reproduced remembered notes in the hope of attracting marks
were often not well rewarded. As in all exams, it is important to answer the question set, not the one you wish you
had been set.

December 2012
Question in this Kit
Section A
1 Social footprint; risk diversification; professionalism; strategic and operational risks;
control systems

67

Section B
2 Corporate governance; rules and principles-based approaches; accountability
3 Internal control system failings; information quality and provision

17
34

4 Tucker’s 5 question model; stakeholder recognition and claims

53

Examiner’s comments. The overall performance in December 2012 was similar to previous diets. There were
some excellent scripts and many candidates had obviously worked hard and prepared thoroughly for the exam. The
parts of questions done well by many candidates were 1(a), 1(c), 2(a), 2(b), 3(a), 3(b) and 4(a). The parts that were
often done poorly were 1(b), both parts of 1(d) and also 4(b).

June 2012
Question in this Kit
Section A
1 Risk appetite; AAA model; general meetings; purposes and challenges of internal
control systems; accountability, agency and stakeholders

66

Section B
2 Independence of non-executive directors; risk committee and mitigation systems

xx

3 Conflict of interest; ethical safeguards; performance measurement of directors

27
52

4 Governance in family companies; induction programme; unitary/two-tier boards

16

Revising P1


Examiner’s comments. I am pleased to report that many people passed the exam with some achieving excellent
marks, and as usual, I congratulate all successful candidates and their tutors for all the hard work and commitment
they put into the teaching and learning. The paper itself was similar in tone and feel to previous P1 diets and there
should not have been anything too surprising or difficult for well-prepared candidates to cope with.

December 2011
Question in this Kit
Section A
1 Ethical codes; voluntary and mandatory disclosure; internal controls; risk assessment
and management

65

Section B
2 Principles or rules; chairman and chief executive; comply or explain
3 Chief executive remuneration; market risk; proxy voting

14
15

4 Corporate social responsibility

51

Examiner’s comments. In this paper I examined two of the new (for June 2011) elements of the P1 study guide:
objective and subjective risk assessment and ALARP. I wrote a technical article on these important study guide
additions in May 2010 to emphasise their importance. I will discuss these below in more detail but just to mention
here that some candidates did these question parts quite poorly. This should serve as a reminder that technical
articles are written to help students to understand parts of the study guide and some may even help with answering
questions in future exams. There are several technical articles on the ACCA website written by either myself, or
other informed authors, and I strongly advise P1 candidates to study these as a part of their preparations for P1
exams.

June 2011
Question in this Kit
Section A
1 Internal controls; Kohlberg; general meetings; chief executive; Gray, Owen and Adams

64

Section B

2 Risk assessment; risk management; related risks; risk awareness
3 Charities; transparency; audit committee

26
13

4 Ethical threats; public interest; insider dealing

50

Examiner’s comments. As in previous exam reports, I would remind candidates preparing for P1 exams not only
to ensure they have studied the entire P1 study guide (and not ‘question spotted’), but also to make themselves
familiar with the content of technical articles on P1. These are published in Student Accountant magazine and are
also posted on the ACCA website.

Revising P1

xxi


December 2010
Question in this Kit
Section A
1 Institutional investors; approaches to ethics; good corporate governance; reporting on
controls and risks

63

Section B
2 Sustainability; environmental auditing; environmental risk

3 Conflicts of interest; non-executive directors; corporate governance reporting
4 Liquidity risk; embedding risk awareness and management; social responsibility

49
12
Mock 2 Q4

Examiner’s comments. First, there is still evidence that candidates are not correctly or fully reading the
questions. I will discuss the specifics below but in, for example, Q1(c)(i) and also Q3(c), many candidates seemed
not to realise what the question was actually asking. Perhaps some candidates answered the question they wish
had been asked rather than the actual question set.
Second, it was frustrating to see that many candidates were unable to bring the content of one of my technical
articles into their answers when it was appropriate to do so. The content on environmental auditing for Q2 (b) was
covered in a technical article in Student Accountant. Perhaps the fact that the article was published some time ago
made some candidates think the content would not be covered. Technical articles should be studied carefully by all
P1 candidates including those written by the examiner and by other authors.
Third, there is ample scope for improvement in the development of level 3 intellectual outcomes like ‘construct’ and
‘criticise’ (such as in Q1(c) (ii), Q2 (a) and Q4 (d)). Being able to operate at ‘level 3’ is important at the professional
level in ACCA exams (and in professional life) and there was evidence that some candidates lacked an insight into
what these verbs meant.

June 2010
Question in this Kit
Section A
1 Voluntary and involuntary stakeholders; employee representatives; agency; risk
assessment; social and environmental footprint

62

Section B

2 Remuneration committee; director’s remuneration; chief executive’s responsibilities
3 Internal control systems; internal audit testing

11
33

4 Insider-dominated businesses; professionalism; disclosure

48

Examiner’s comments. Firstly, I sadly must repeat comments made in previous examiner’s reports about the four
professional marks in Q1. Many candidates did not gain many professional marks in writing the statement required
in Q1(d). Secondly, the ethical reasoning questions, Q2c and Q4c, were both done poorly overall. This suggests that
candidates are less well prepared for these tasks than they might be.

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Revising P1


December 2009
Question in this Kit
Section A
1 AAA model; internal control failures; non-executive directors; information provision

61

Section B
2 Directors’ induction; board structure; chairman
3 Integrity; behaviour of partner; ethical problem

10
47

4 Embedding risk; management culture; external risk auditing

32

Examiner’s comments. As in previous diets, Question 1 was a multi-part requirement covering a wide range of
outcomes from the study guide. The Section B questions tended to be located within one area of the study guide
but, as in previous papers, also contained supporting requirements from other areas. All questions were based on
case scenarios and marks were often awarded for application to the case material.

June 2009
Question in this Kit
Section A
1 Kohlberg; internal controls; agency; stakeholders; role of chief executive

60

Section B
2 Public interest; ethical threats; Gray, Owen and Adams
3 Departure from board; chairman’s statement; remuneration package; chairman

46
9

4 Risk manager; risk management; entrepreneurial risk

25

Examiner’s comments. There was evidence of ‘question spotting’ or ‘question guessing’ by over-relying on exam
tips. This meant that some candidates concentrated on a few areas that they thought and hoped would come up on
the paper. Importantly, however, this revision may have been at the expense of content they thought would not
come up. The danger of this strategy was realised in some of the responses to Q1(a) on Kohlberg. Because
Kohlberg was on a previous paper (December 2007), some candidates evidently thought that it wouldn’t come up
again so soon – and it did. It was disappointing that marks went unawarded to candidates who made the wrong
question-spotting guess.
The other potential question-spotting error was on the content of recent technical articles. When an examiner writes
a technical article in Student Accountant, it does not necessarily signal that the content of that article will be in the
next exam paper, or indeed in any future exam paper. It might be that an examiner wants to clarify or re-emphasise
an important area or it may be to update material in the light of recent events.
This, then, is a general warning against question-spotting and question-guessing. All candidates should learn and
revise all of the content of the P1 study guide. They should also practise using all past papers and study the model
answers for each one.
The level of analysis, where required, was often poor. This applied to questions specifically asking for answers
using the context of the case such as Q3 (b). In question 3(c) most candidates could not use the deep green ethical
position to assess Ivor Nahum’s remarks and this was not necessarily because they didn’t understand what the
deep green position is. It was because they were unable to tie their book learning to the case. This lack of analytical
and evaluative ability was why many candidates failed to pass the exam.

Revising P1

xxiii


December 2008
Question in this Kit
Section A
1 Tucker's model: strategic and operational risks; confidentiality and transparency;

disclosures

59

Section B
2 Risk management committee; risk response strategies
3 Objectives of internal control; internal audit; control and audit weaknesses; market risk
4 Corporate code of ethics; ethical theories

Mock 1 Q3
31
45

Examiner’s comments. It is very important that all candidates study carefully all previous papers along with the
answers. Examiner’s reports enable candidates and tutors to see the areas that were done well and not so well by
candidates.
I would like to make two overall points. First there is still ample evidence that some candidates are yet to learn the
importance of the verb used in the question. Second, some candidates underachieved in the exam because of a
failure to read the questions carefully enough. In some cases, candidates answered the question they wished had
been set rather than the one that was actually set.

June 2008
Question in this Kit
Section A
1 Stakeholders; risk assessment; sustainable development; internal controls

58

Section B
2 Auditor independence; employee and professional responsibilities; ethical positions

3 Agency; nomination committee; retirement by rotation
4 Rules vs principles; reporting on internal controls

44
Mock 2 Q2
8

Examiner’s comments. Candidates who performed well in the paper were those who, in addition to having a good
understanding of the P1 subject matter, were able to bring two other important intellectual skills to bear on the
examination.
1.

It was important to correctly interpret the verb in the question and use that as the basis for their answers.
This meant that if the question asked candidates to ‘explain’ or ‘describe’ and the answer just contained
(say) a list of points, few marks were awarded. Similarly, where a question asked candidates for a higher
level skill such as ‘evaluate’, ‘assess’,’ construct’ or ‘criticise’, answers that did not address the content at
the level required were poorly rewarded. Candidates must not ‘explain’ when they are meant to ‘construct’ or
‘criticise’, and they must not ‘identify’ when they are meant to ‘describe’.

2.

It was important to correctly analyse the case materials given in the exam paper, especially when specifically
instructed to do so in the question. The exam questions contained numerous instructions to work with
information from the case. For example:
Q1 (a)(i) ... and identify from the case...
Q1 (c) ... using information from the case...
Q2 (a) ... and describe three threats to auditor independence in the case
(Other types of wording are used to mean the same thing).

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