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FIA Passcards
FIA FAB / ACCA Paper F1
Accountant in Business
Passcards for exams from
1 September 2015 – 31 August 2016

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FIA FAB
ACCA Paper F1
Accountant in Business

8:45 AM

Page i


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First edition 2011, Fourth edition March 2015
ISBN 9781 4727 3542 3
e ISBN 9781 4727 2875 3
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the
British Library
Published by
BPP Learning Media Ltd,
BPP House, Aldine Place,
142-144 Uxbridge Road,
London W12 8AA
www.bpp.com/learningmedia

Page ii

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.

Printed in the United Kingdom by
Ricoh UK Limited
Unit 2
Wells Place
Merstham RH1 3LG

Your learning materials, published by BPP Learning

Media Ltd, are printed on paper obtained from traceable
sustainable sources.

©
BPP Learning Media Ltd
2015


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Preface

Contents

Welcome to BPP Learning Media's FIA FAB/ACCA F1 Passcards.
They save you time. Important topics are summarised for you.
They incorporate diagrams to kick start your memory.
They follow the overall structure of the BPP Learning Media Interactive Texts, but BPP Learning Media's
new Passcards are not just a condensed book. Each card has been separately designed for clear
presentation. Topics are self contained and can be g rasped visually.
Passcards are just the right size for pockets, briefcases and bags.
Passcards focus on the exam you will be facing.
Run through the complete set of Passcards as often as you can during your final revision period. The day
before the exam, try to go through the Passcards again! You will then be well on your way to completing your

exam successfully.
Good luck!

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Page iv

Preface

Contents

Page
1

Business organisations and their
stakeholders

1

2

The business environment

5

3

The macroeconomic environment

17

4

Microeconomic factors

29

5

Business organisation, structure
and strategy

43

6

Organisational culture and committees

51

7

Corporate governance and social

responsibility

57

8

The role of accounting

65

9

Control, security and audit

75

Page
10

Identifying and preventing fraud

83

11

Leading and managing people

93

12

Recruitment and selection

107

13

Diversity and equal opportunities

123

14

Individuals, groups and teams

131

15

Motivating individuals and groups

139

16

Training and development

151

17

Performance appraisal

163

18

Personal effectiveness and
communication

173

19

Ethical considerations

189


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Page 1

1: Business organisations and their
stakeholders
Topic List

Types of business organisation
Stakeholders

This chapter explains why organisations are formed and
considers some of the different types of organisation.
Organisations are influenced by stakeholders. The
second part of this chapter identifies different stakeholder
groups, and considers how management may respond to
these groups.


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Page 2

Types of business
organisation

Stakeholders

Organisation
'A social arrangement which pursues collective goals, which controls its own performance and which has a
boundary separating it from its environment.'
Points of difference
They enable people to be more
PRODUCTIVE:

Overcoming individual limitations
Saving time
Accumulating and sharing knowledge
Enabling synergy
Enabling specialisation

Ownership – public or private sector
Control – owners, workers or government
Activities
Profit orientation – or not
Legal status – limited company/partnership
Size – small or multinational
Sources of finance
Technology usage

Other organisation types to consider are co-oper ative societies, mutual associations and non-governmental
organisations (NGOs).


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Page 3

Types of business
organisation

Stakeholders

Stakeholders
Those individuals or groups that have an interest in what the organisation does .
Internal
Contractual
relationships

Employees
Management

Connected

External

Shareholders
Customers
Suppliers
Financiers

Community
Government
Pressure groups

Contractual
relationships

Each of these groups has its own particular interests to defend, such as:
Jobs (employees)
Loan security (financiers)

Different interests and aims can lead to conflict

Tax revenues (governments)
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1: Business organisations and their stakeholders


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Page 4

Types of business
organisation

Stakeholders

Mendelow suggests that stakeholders may be positioned on a matr ix.
LEVEL OF INTEREST
Low

High

High

C

D

A

B

POWER
Low

Key players are to be found in segment D
Those in segment C should be kept satisfied

Those in segment B should be kept informed
Minimal effort should be expended on segment A


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Page 5

2: The business environment

Topic List
Analysing the environment

Employment protection
Data protection
Health and safety protection
Social, cultural and technological
trends
Porter

An organisation has many interactions with its
environment, and general environmental trends can be
usefully summarised in the PEST model. The PEST
model is here drawn out into its component par ts.
The chapter concludes with the competitive forces which
can shape the organisation, and the value chain within it.


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Analysing the
environment

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Employment
protection

1:38 PM

Data
protection

Page 6

Health and
safety protection

Social, cultural and
technological trends

All organisations must take account of
the environment in which they operate.

POLITICS

TECHNOLOGY
COMPETING
ORGANISATIONS

MATERIALS

SUPPLIERS
LABOUR
CAPITAL

ECONOMY

GENERAL
ENVIRONMENT

ORGANISATION

GOODS TO
CUSTOMERS
WAGE TO
LABOUR
PROFIT TO
INVESTORS

SOCIETY
(& CULTURE)

POLLUTION

Porter


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Page 7

Legal factors affecting all companies
Factor

Example

General legal framework:
contract, tort, agency

Basic ways of doing business, negligence proceedings

Criminal law

Theft, insider dealing, bribery, deception

Company law

Directors and their duties, reporting requirements, takeover proceedings, shareholders' rights,
insolvency

Employment law

Trade Union recognition, Social Chapter provisions, minimum wage, unfair dismissal,
redundancy, maternity, Equal Opportunities

Health and Safety

Fire precautions, safety procedures

Data protection

Use of information about employees and customers

Marketing and sales

Laws to protect consumers (eg refunds and replacement, 'cooling off' per iod after credit
agreements), what is or isn't allowed in advertising

Environment

Pollution control, waste disposal

Tax law

Corporation tax payment, Collection of income tax (PAYE) and National Insurance
contributions, sales tax (VAT)

Page 7

2: The business environment


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Analysing the
environment

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Employment
protection

1:38 PM

Data
protection

Page 8

Health and
safety protection

Social, cultural and
technological trends

Porter

There are several ways in which the government can affect the economic structure of an industry, by
encouraging or stifling:
Role is felt in:
Capacity expansion
Demand for goods and services
Divestment strategies
Emerging industries
Entry barriers
Competition

Product standards
Environmental protection
Monetary policy
R&D
Regional policy
Labour costs

Political change complicates the planning activities of man y firms, and this is par ticularly felt in international
trade – higher level of political risk.

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environment

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Employment
protection

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Data
protection

Page 9

Health and
safety protection

Social, cultural and
technological trends

Porter

Much legislation has been aimed at this area.

Legislation
Retirement
Resignation

Dismissal – wrongful
– unfair
Disciplinary procedures
Redundancy
Equal opportunities

Page 9

Companies must be very careful when
handling these matters.
Note that you will not be examined on specific
legislation and exam questions will not be
country specific.

2: The business environment


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Analysing the
environment

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Employment
protection

1:38 PM

Data

protection

Page 10

Health and
safety protection

Social, cultural and
technological trends

Porter

The main legislation in the UK is the Data Protection Act 1998 co vered here as an example of 'typical' data
protection legislation.

Data Protection Principles
1

Personal data shall be processed fairly and lawfully

2

Obtained only for specified and lawful purposes

3

Adequate, relevant and not excessive

4

Accurate and up-to-date

5

Not kept for longer than necessary

6

Processed in accordance with the r ights of data subjects

7

Appropriate measures shall be taken against unauthorised use

8

Shall not be transferred to a country where data protection rights are not upheld
The Act also establishes rights for data subjects

Compensation
Correction of data
Access to data held
Sue (damages)


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environment

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Employment
protection

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Data
protection

Page 11

Health and
safety protection

Employers and employees have duties and obligations.
Although laws differ in different countries, the main points
and principles are often similar.
Employer duties
All work practices must be safe
Environment must be safe
Plant/machinery maintained
Training
Communication of policies
Risk assessments and controls
Share information
Identify those most at risk
Employ competent advisers

Page 11

implement
and
promote

Social, cultural and
technological trends

Porter

Employee duties
Take reasonable care
Allow employer to carry out duties
Not interfere with machinery
Inform employer of dangers
Use all equipment properly
Health and safety policy
Statement of principles
Detail of safety procedures
Compliance with the law
Detailed equipment instructions
Training requirements

2: The business environment


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Analysing the
environment

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Employment
protection

1:38 PM

Data
protection

Page 12

Health and
safety protection

Social, cultural and
technological trends

Porter

Population affects an organisation's supply of labour and hence its human resources policies . Cultural trends will
also have an impact on a business and demand for its products/services.
Factors to consider
Changing age structure
Women participating
Older workers
Family life cycle
Social structures/class

Buying patterns
Income and wealth
Health and diet
Equal opportunities
Environmentalism


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Technology has often resulted in reduced staff
reduced layers: 'flatter' organisations

Page 13

reduced spans of control;

Information systems such as intranets
can help to foster unity and coherency

Centralised systems
Decentralised systems

Effects of IT on organisations

Routine processing is quicker
Digital information is easily sorted

Employee skills base changing
Continued change to keep up
Customer service enhanced
Information as a 'commodity'
Email, voicemail, video-conferencing
Outsourcing of operations to specialists
Page 13

For the employee it can lead to information
overload, and changes in the nature of
work, but it also fosters close business
relationships regardless of geographical
location, and more flexible working
arrangements.

2: The business environment


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Analysing the
environment

3/19/2015

Employment
protection

1:38 PM

Data
protection

Page 14

Health and
safety protection

Social, cultural and
technological trends

Porter

The value chain
The value chain model is one way of analysing what a fir m does – and how it organises and performs its
activities in order to add value.

HUMAN RESOURCE MANAGEMENT
TECHNOLOGY DEVELOPMENT

MA
RG

SUPPORT
ACTIVITIES

FIRM INFRASTRUCTURE

IN

PROCUREMENT

MA

MARKETING
& SALES

SERVICE

PRIMARY ACTIVITIES

The margin is what the customer pays over and above the costs to the fir m.

N

RG
I

INBOUND OPERATIONS OUTBOUND
LOGISTICS
LOGISTICS


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Activity

Comment

Inbound logistics

Receiving, handling and storing inputs to the production system: warehousing,
transport, inventory control and so on.

Operations

Convert resource inputs into a final product. Resource inputs are not only
materials. People are a resource especially in ser vice industries.

Outbound logistics

Storing the product and its distr ibution to customers: packaging, testing, delivery
and so on.

Marketing and sales

Informing customers about the product, persuading them to b uy it, and enabling
them to do so: advertising, promotion and so on.

After sales service

Installing products, repairing them, upgrading them, providing spare parts and so
forth.

Procurement

Acquire the resource inputs to the pr imary activities (eg purchase of mater ials,
subcomponents equipment).

Technology development

Product design, improving processes and/or resource utilisation.

Human resource management

Recruiting, training, developing and rewarding people.

Firm infrastructure

Planning, finance, quality control: Porter believes they are crucially important to an
organisation's strategic capability in all primary activities.

Page 15

2: The business environment


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Analysing the
environment

3/19/2015

Employment
protection

1:38 PM

Data
protection

Porter's five forces model

Page 16

Health and
safety protection

Social, cultural and
technological trends

Potential
entrants
Threat of
new entrants

Suppliers

Bargaining
power of
suppliers

Industry competitors

Rivalry among
existing firms

Threat of
substitute products
or service
Substitute

Bargaining
power of
customers

Customers

Porter


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3: The macroeconomic environment

Topic List
Government policies and objectives
The business cycle

National income and economic growth
Inflation and unemployment
Fiscal and monetary policy
The balance of payments

Macroecomonics is a branch of economics which
considers the economy as a whole.
This chapter presents an overview of the goals of
macroeconomic policy. Macroeconomic policy objectives
relate to economic growth, inflation, unemployment and
the balance of payments, looking at the complete
national economy.


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Government policies
and objectives

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The business
cycle

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Page 18

National income
and economic growth

Inflation and
unemployment

Fiscal and
monetary policy

The balance of
payments

There is a circular flow of income in the economy.
Expenditure, output and income will all have the same total value.

Income (Y)
Households

Consumption (C)

Firms
Total expenditure (E)

Saving (S)

Financial
sector

Taxation (T)

Government
sector

Import demand (M)

Foreign
sector

Investment spending (I)

Government spending (G)

Export demand (X)


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All modern governments are expected to manage their national economies to some e xtent.
Objectives of economic
policy

To achieve economic
growth – an increase in
national income
To control price inflation
To achieve full employment

To achieve a balance
between exports and
imports (known as the
balance of payments)

Page 19

Government influences over company decisions
Decision

Comment

Output capacity

Grants or tax incentives to invest

Competition

Forbid or allow takeovers/mergers
Outlaw anti-competitive practices
Opening markets to new entrants (eg gas)

Monopolies

Break them up; regulate them

Sales demand

Government policy affects demand

Health and safety

Legislation, regulations

Employment

Equal opportunities legislation

Consumers

Product safety standards

Tax

Sales tax procedures, income tax, accounting control
3: The macroeconomic environment


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Government policies
and objectives

G
O

3/19/2015

The business
cycle

Overall economic
policy

R
N
M
E
N
T

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National income
and economic growth

Inflation and
unemployment

Fiscal and
monetary policy

Market demand
Cost of finance
Taxation
Protection vs Free Trade

V
E

9:05 AM

Grants, incentives, sponsorship

Industry policy
Environment and
infrastructure
policy
Social policy

Regulation (eg investor protection,
company law)
Entry barriers, capacity
Distribution
Workplace regulation, employment law
Labour supply, skills, education
Trade promotion, export credits

Foreign policy

EU and GATT obligations
Export promotion to allies,aid recipients

The balance of
payments

O
R
G
A

N
I
S
A
T
I
O
N