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[主观题]

WSK produces chemicals for use in the agricultural sector, some which are highly toxic in

both liquid and gaseous states. They need to be safely stored on site after processing until they are shipped out to customers either by road or rail.

Analysis of recently published data, detailing the frequency and impact of earthquakes around the world, suggest that the likelihood of a strong earthquake occurring in the area where WSK has its only manufacturing and chemical storage facility is high. This very serious claim was made by the operations director at a recent board meeting following consultation with the senior scientific team. It has always been recognised that the WSK factory was situated in an area where earthquakes could occur, but the area had not experienced any major tremors for several years.

The possibility of an earthquake which could destroy the WSK factory and then cause a major environmental incident was of grave concern to the board, who decided that it needed to be fully evaluated and then effectively managed. The board asked the scientific team to calculate the probability of a toxic chemical emission being caused by an earthquake together with the consequential effects on the local environment and population, many of whom depended on WSK for employment and commercial activity. However, the scientific team were unable to provide any objective analysis to support their initial claim, they merely offered their best guess of what they perceived the risk to be.

The board concluded that this was inadequate, so they tasked the internal audit team to conduct an environmental audit, and to determine WSK’s environmental footprint.

Required:

(a) Evaluate the difficulties of risk perception, and describe the problems with the perception of risk shown by the scientific team at WSK. (8 marks)

(b) Explain the stages and benefits to WSK of conducting an environmental audit, and assess the importance of then reporting good quality information to the board. (10 marks)

(c) Explain the term environmental footprint, and assess how the activities of WSK contribute to its footprint. (7 marks)

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第1题

Angus Fortune, an ACCA qualified accountant, is a director of a medium-sized consultancy c

ompany and he heads up the business advisory division. Angus qualified 15 years ago and has worked for his current employer for nearly eight years, where he is viewed by his colleagues as a knowledgeable and experienced professional. His reputation for always offering good quality advice to clients, together with his work ethic and loyalty, earned him promotion to the board last year.

In recent discussions with Peter Wise, the managing director, it was agreed that as part of his continuous professional development (CPD) as a director, Angus should attend an overseas conference on tackling internet fraud, a line of business activity the company was keen to develop.

After the opening session, which gave delegates details of the content of the three-day conference, Angus realised that he already knew everything which was going to be covered from his private studies. So he decided instead to spend his time more productively at a local library reading up on issues which would directly help him with a forthcoming major assignment. He phoned Peter before leaving the conference explaining what he planned to do, but Peter said that he would still like him to attend the conference as he was bound to pick up new areas of useful and relevant knowledge. However, Angus still decided to leave after the morning coffee break.

He was observed leaving by one of the conference organisers, despite remaining signed in for the whole all day. At the start of Day 2, Angus returned to sign the attendance register again, but then immediately proceeded to leave the conference building. He was approached by the conference organiser who advised Angus that he really ought to report his absence. Angus explained to the conference organiser that he already knew much of the content of the conference, and so felt that it would be waste of his time if he stayed. Instead, he explained, he planned to spend the time more productively researching subject matter which better suited both his personal development and his company’s needs. On reflection, the conference organiser decided to report Angus’s absence.

Required:

(a) Evaluate the benefits of CPD to Angus Fortune, and describe the features of effective CPD. (10 marks)

(b) With reference to Kohlberg’s theory of human moral development, describe conventional level reasoning and discuss how Kohlberg’s conventional level arguments could be used to justify the conference organiser’s decision to report his absence. (8 marks)

(c) Evaluate Angus’s actions at the conference against the fundamental ethical principles which should have guided his behaviour as a professional accountant. (7 marks)

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第2题

Section B – TWO questions ONLY to be attemptedArthur Jellicoe has been the chief executive

Section B – TWO questions ONLY to be attempted

Arthur Jellicoe has been the chief executive officer (CEO) of Scapa Holdings, a listed company, for over 15 years, during which time the company has been very successful in capturing market share and achieving levels of profitability well in excess of it direct competition. Much of this success has been credited specifically to the way Arthur has managed the company. So when he advised the board at its last meeting that he plans to retire at the end of the year, there was real concern about appointing his successor. Scapa Holdings is particularly aware that any uncertainty which may arise during the CEO transitional period could result in a fall in share price, which they clearly wish to avoid.

The remuneration policy at Scapa Holdings includes a provision for awarding significant share options to executive directors when the company attains high levels of performance. For many years the targets set by the remuneration committee have been exceeded, so Arthur has accumulated a large number of share options which he can exercise any time over the next year. As part of his retirement planning, Arthur has consulted with an independent financial adviser who has recommended that he exercises his share options before he retires because they will deliver a tax efficient capital gain which he can then invest for his future. Clearly it will be in Arthur’s best interest to choose an exercise date when the share price is trading at its highest. So when a new contract opportunity was tabled by the sales director, which would clearly increase the company’s share price this year, Arthur was an enthusiastic supporter. Unfortunately, the finance director advised the board that its bank loan contained a restrictive covenant requiring the company to maintain interest cover of four times its pre-tax profit. Although Scapa Holdings has always been able meet this loan condition, the finance director is concerned that the further investment in the working capital needed for the proposed new contract presented a significant risk of breaching the loan covenant.

To address this issue the CEO suggested that inventory could be valued differently in order to report a higher profit figure, and thereby increase the level of interest cover. He further suggested that ‘this minor policy change would not be opposed by shareholders’ as it would undoubtedly increase the value of the share price. He also advised the board that he was sure that he could use his longstanding friendship with the engagement partner of Scapa Holdings’ auditors, who he had trained with as an accountant many years ago, to convince the audit team to agree with the higher inventory valuation during the forthcoming audit.

Required:

(a) An inherent risk in any listed company is that its directors have the power to pursue their own personal interests, which may not be aligned with their fiduciary duties towards shareholders.

Explain the term conflict of interest in this context, and using information from the scenario, discuss how Arthur Jellicoe’s behaviour presents a clear conflict of interest, stating what course of action he should take. (8 marks)

(b) Describe the agency relationships at Scapa Holdings, and explain how clear accountability could increase trust between principal and agent thereby reducing agency costs. (9 marks)

(c) Explain the meaning of ‘probity’ when maintaining professional business relationships as described in the scenario, and criticise the ethical behaviour of Arthur Jellicoe with respect to probity. (8 marks)

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第3题

Section A – This ONE question is compulsory and MUST be attemptedIn the city of Philo, the

Section A – This ONE question is compulsory and MUST be attempted

In the city of Philo, the closure of a large factory released a large amount of land very close to the city centre which was bought by the Philo local government authority. As an area of high unemployment due to closures of heavy industry including shipbuilding and coal mining, Philo had an unemployment rate higher than the national average. As such, the local government authority was always keen to see new investments which would create high quality jobs. Although the former factory land had a potentially high commercial value if sold to housing developers, the local government authority offered the local university the chance to buy it for a favourable rate due to what it could offer the town as a whole. It was hope that the university would buy the land, creating a new development called ‘Science First’ on the old factory site which would in turn create 500 jobs.

As a city, Philo was well known for its science and engineering history, with many innovations, inventions and science developments having been made in the city going back over 200 years. Philo University saw investment in science as strategic to its future and as a key part of its competitive advantage. The Philo local government authority discussed the possibility of developing the former factory site with the university. After a series of meetings between the university and the local government authority, the university bought the land, as co-owners with the local government authority, with the full support of the local authority for building laboratories and related buildings on the site. They agreed the name Science First for the development and jointly formed a company of the same name for the investment.

It was planned to build four large science laboratories on the site for medical, pharmacological and technology research. Science First Company also wanted to develop a cluster of science-based businesses on the site and offered discounted rents as well as negotiating lower local taxes, to attract these business to the site. One of these new businesses, Topscience Company, had received international attention because of a key breakthrough it had made in medical research. Topscience was very concerned about how its building would appear on promotional photographs and it noticed that just beyond the science park, and within a few metres of its new building, were a number of blocks of poor quality social housing, owned by the Philo local government authority and accommodating rental tenants. Topscience asked if the local government authority would require Science First Company to re-landscape the area around the flats and knock them down in favour of green spaces more in keeping, in Topscience’s opinion, with the image of a science park. They suggested they would not be able to locate to the Science First development in Philo unless this was done.

Anxious not to be seen to be doing anything to hinder the park’s development, the Philo local government authority agreed to Topscience’s demands and issued a notice to quit for all of the local residents affected by the potential demolition of the flats. Upon hearing of the plan to demolish the flats, the head of the local residents’ association, Ann Tang, was outraged. She criticised the Philo local government authority for a lack of fairness and transparency in their dealings with the residents. She said that the local authority was so concerned about the science park’s development that it did not care about social housing residents and that this was a betrayal of the authority’s ethical responsibilities. Ann Tang also said that if the flats were demolished, there would be a loss of a ‘close-knit, effective and cohesive’ community of people who did not deserve to lose their homes in this way, all for the sake of a science development in which they, the local residents, had no say and did not vote for.

Ann Tang also acquired some figures which showed that, in order to invest in the Science First Company, the local government authority had to take budgeted funding from other services including the cancellation of a proposed new public library in the area where Ann Tang lives. Local residents, who were excited about the new library development, planned to use the new library as a lending library, as a place to study, as a café where people could meet and enjoy time with friends, and as a place for other services to be provided including ‘mums and toddlers’, ‘unemployment clubs’ and art classes. The cancellation of this library development would also mean that the ten jobs in the library would not now be created.

In seeking to address the challenges from the residents’ association and others, the local government authority asked the finance director of Science First Company, accountant Kathy Wong, to produce a balanced assessment of the contribution of the Science First development to the city and the region. The local government authority, co-owners of Science First Company, insisted that she produce a balanced assessment which could also be published for the benefit of local residents. As a director of the development, however, she felt she ought to produce a report which clearly showed the benefits of the park to the city of Philo. Accordingly, she produced a report which concentrated on the benefits to Philo of the Science First development, in terms of the creation of jobs, marginal revenues and improved reputation for both the university and the city. Kathy Wong’s report concluded that the park was of substantial benefit and should be supported by the local government authority, by the university and by local residents, who, she argued, should understand the strategic benefits of the development to the city.

Ann Tang criticised Kathy Wong for not taking into account the costs to residents and other local services of the Science First development. She said that the true social cost of the development was negative because it threatened to destroy homes and it would entail the cancellation of the proposed library. It would also have a negative effect on local infrastructure, including the diversion of roads, footpaths and bus routes.

The Philo local government authority, as a democratic body, is controlled by elected representatives from a range of different political parties, each of whom represents a portion of the total city population. Despite their political differences, the majority of elected representatives strongly supported the Science First development.

Some of the elected representatives on the Philo local government authority decided that it was right to consider the various stakeholders in the Science First development. Some elected representatives, especially those representing residents around the development, wanted to minimise the damage to local communities. They decided that the three main stakeholders to be considered were the Science First Company, the residents’ association and the potential library users.

The head of the Philo local government authority, Simon Forfeit, sought to address the concerns of the elected representatives in a meeting of the elected members in which he set out the case for why the Philo local government authority had so strongly supported the Science First development. He said he recognised that in allowing and encouraging the Science First development, it was clear there would be local problems to address, but that the strategic interests of the city of Philo required this development. The city’s reputation as a science city would, in his view, be enhanced by the Science First development. He argued that public sector organisations had complicated objective-setting processes which have to prioritise some interests over others. He said that he ‘can’t please everybody all the time and in any planning decision there are winners and losers.’

Mr Forfeit said that a local government authority had many obligations and had to serve the interests of local taxpayers who fund its work, and also the people who use its services. At the same time, it had to act in the long-term strategic interests of the city, which was why it so strongly supported the Science First development. The quality of jobs attracted by the science site, being highly skilled and highly paid, meant that the local government authority had no choice but to support and invest in the development even though some of the effects on local residents might be perceived as negative. In addition to the 500 new jobs, which will be advertised locally, Mr Forfeit said that the site would also provide space for expansion of the businesses which locate to the site. Mr Forfeit said that in addition to Topscience, other companies attracted to the site included companies producing electric vehicles, advanced medical solutions and other companies in growth sectors.

Required:

(a) (i) Analyse the stakeholder claims of Science First Company, the residents’ association and the potential library users, using the Mendelow matrix to plot these three stakeholders in the Science First development. (9 marks)

(ii) Explain how the potential library users and residents’ association might attempt to increase their influence as stakeholders in the Science First development. (4 marks)

(b) Critically evaluate the contribution to the public interest of the new Science First development to the city of Philo. (10 marks)

(c) Explain the role of accountants in society and criticise Science First Company’s finance director, Kathy Wong, in her assessment of the Science First development. (8 marks)

(d) The head of the local authority was criticised by the residents’ association for lacking transparency and fairness in its dealings with the residents.

Required:

Draft a statement on behalf of the head of the Philo local government authority, for their website, which covers the following issues:

(i) Explanations of transparency and fairness and their importance in public sector governance. (6 marks)

(ii) An analysis of the complexities of performance measurement for public sector organisations and an explanation of how the 3Es model can be a used for this purpose. (9 marks)

Professional marks will be awarded in part (d) for flow, tone, persuasiveness and structure of the statement. (4 marks)

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第4题

When MRA was shortlisted for a valuable contract for the development of a coastal defence

system for another country, it was contingent on the payment of a facilitation fee to an official in the defence ministry. Clearly this was an unusual request but it was also made very clear that MRA would not be awarded the contract, worth $2 billion over 10 years, unless the relatively modest sum of $1 million was paid immediately.

Recently, business activity in the defence sector had been very slow, and MRA was about to announce around 500 staff redundancies. Therefore news that this contract was about to be awarded came as a great relief to the board of MRA, as the jobs would now be secured. However, only the chief executive officer (CEO) and operations director knew about the facilitation fee, so an emergency meeting of the board was convened with only one item on the agenda.

Due to the very sensitive nature of the matter at hand, it was decided not to make a formal record of the discussions at the board meeting. This was more likely to result in a frank exchange of views and encourage all directors to express their opinions openly.

The CEO, Charlie Desborough, explained the dilemma to the board, making it very clear that without this contract there would be no way to protect jobs. The finance director, Jake Neilson, said that he was personally very uncomfortable with the idea of paying a facilitation fee, which was in effect a ‘bribe’. As a professional accountant he was bound by a code of ethics which strictly prohibited making such payments, therefore he could not sanction the payment under any circumstances.

The HR director, Sarah Shue, took a far more pragmatic stance. She acknowledged that any form. of corruption was utterly deplorable; however, it was a fact of life in many countries. She asserted that if the board of MRA decided not to make the payment and forego the contract, then it could be assured that a competitor would not adopt such a high-minded position. The net effect was that by avoiding a relatively small payment, the firm would be doing a disservice to both its employees and its shareholders, who would undoubtedly suffer a reduction in their shareholder value. She maintained that sometimes it is necessary to take difficult decisions in business that are for the greater good, and so suggested that the payment to the official should be made.

Required:

(a) (i) Compare relativism and absolutism and explain the significance of individual or personal differences in guiding ethical behaviour under each approach in a given scenario such as the situation at MRA. (5 marks)

(ii) Explain the ethical theories of deontology and teleology or consequentialism, and analyse which of the approaches have been adopted by Sarah Shue and Jake Neilson. (6 marks)

The involvement of directors in bribery and corruption can seriously undermine the relationships of trust upon which corporate governance is based.

Required:

(b) (i) Assess how bribery and corruption could undermine confidence and trust in MRA, with reference to the principles of corporate governance. (8 marks)

(ii) Describe best practice measures which could be employed by MRA to combat bribery and corruption. (6 marks)

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第5题

Branscombe Co has been supplying and fitting premium bathrooms and kitchens in hotel chain

s throughout Effland for the past 20 years. The company started as a small family concern, but because of the rapid growth it experienced and an associated need for additional capital, it was recently listed on the national stock exchange by an initial public offering.

To remain fully compliant with the Effland corporate governance code, the board established audit, remuneration and nomination committees which were solely populated by independent non-executive directors. However, it did not consider it necessary to create a separate risk committee because the board believed that the remit of the audit committee included all aspects of risk management policy. This explanation was formally submitted to the shareholders at its first general meeting, who agreed with the board’s proposal.

As part of its expansion strategy, the board of Branscombe Co decided it needed to enter overseas markets, and in particular the developing country of Geeland. The reason that Geeland was selected as a suitable market was because it had experienced rapid economic growth and domestic prosperity following the discovery of rich, offshore mineral deposits. Unfortunately, this small island nation has never enjoyed stable democratic government and is notorious for corrupt business practices, with customs officials regularly demanding bribes from both importers and exporters. As a result, Geeland has a poor international credit rating. In order to attract both domestic and foreign inward investment, the government of Geeland operates with very low levels of indirect tax, which has stimulated the island’s tourist industry and led in turn to a significant increase in hotel building.

Following a successful tendering exercise, Branscombe Co was awarded the contract to supply all of the bathroom equipment for a 200-room hotel, currently under construction in a remote area of the island. The total value of the supply contract amounted to Geeland $1,800,000, and it was to be paid in three equal instalments as the bathrooms were delivered to the hotel. The contract assigns responsibility for shipping the goods the 3,000 km from Effland to the island solely with Branscombe Co, and no payment will be made until an agreed volume of goods clears Geeland customs. A further problem is that the Geeland dollar is quite volatile, but recently it has been strengthening against the Effland dollar. As all contract payments are to be made in Geeland currency, Branscombe Co is exposed to foreign exchange risks.

The many contract-related issues amount to significant risks to Branscombe Co requiring effective management if the supply contract is to be a success and contribute to the company’s ambitious growth targets.

Required:

(a) Explain the function and roles of a risk committee within an effective corporate governance framework, and discuss the advantages which a risk committee could add to the governance of Branscombe Co. (10 marks)

(b) Explain the term risk appetite, and assess how the risk appetite of Branscombe Co has influenced both its corporate strategy and the risks it has chosen to bear. (7 marks)

(c) Explain how Branscombe Co could effectively control the strategic and operational risks which arise from the Geeland supply contract. (8 marks)

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第6题

Section B – TWO questions ONLY to be attemptedPlantex is a large international pharmaceuti

Section B – TWO questions ONLY to be attempted

Plantex is a large international pharmaceutical company which has been at the forefront of research into developing cures for many tropical diseases. The nature of its business means that continuous and significant financial investment is required for research and development activities, for which its shareholders expect sizeable returns.

At a recent meeting of the board of Plantex, the finance director, Rachel Tang, submitted a paper on integrated reporting <IR> for discussion and consideration. She advised the board that Plantex had only ever disclosed the minimum information which it was required to by law, but recent developments in the International Integrated Reporting Framework has made a very strong case for broadening the amount of published corporate information.

The primary objective of <IR> is to demonstrate the clear link between a firm’s competitive strategy, governance system and financial performance, alongside the social, environmental and economic context within which the firm operates. Rachel Tang claimed that by integrating these different areas, the board of Plantex would be in a far better position to allocate its valuable resources more effectively and thereby make more environmental and socially sustainable decisions.

The chairman was highly supportive of the proposal as he had been trying to encourage a corporate citizenship agenda at recent board meetings. He suggested that <IR> would demonstrate that Plantex took corporate social responsibility seriously by being more transparent, accountable and responsive to its stakeholders’ demands.

Rachel Tang further asserted that <IR> would have the effect of simplifying published financial information, with excessive detail being removed and critical information being highlighted. If Plantex voluntarily adopted <IR> , its shareholders, and other stakeholders, would better understand how the firm was really performing and so be able to make a meaningful assessment of the firm’s long-term strategy. This openness could encourage further investment and strengthen the firm’s competitive position.

The chief executive, Stanley Broadway, suggested that this all sounded very good in theory, but he found it hard to justify the extra expense without any recognisable return to shareholders. He said it was ‘just another costly management fad that distracted the company from its real purpose – making money for its shareholders!’

Required:

(a) Explain the concept of corporate citizenship and assess the rights and responsibilities of Plantex as a corporate citizen of society. (7 marks)

(b) Describe the differing opinions about integrated reporting of Rachel Tang and Stanley Broadway and assess them using the relevant Gray, Owen & Adams positions on social responsibility. (6 marks)

(c) (i) Describe the advantages to Plantex and its stakeholders of adopting . (6 marks)

(ii) Explain how using an approach will provide information about the six capitals including the resources and relationships on which Plantex depends. (6 marks)

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第7题

Section A – This ONE question is compulsory and MUST be attemptedCare Services Company (CS

Section A – This ONE question is compulsory and MUST be attempted

Care Services Company (CSC) is a private company, owned by Dr Sam Tan and his wife, Sonja. Sam, a qualified medical doctor, has been involved with the care of elderly and vulnerable adults for over 30 years and set up CSC five years ago to try to improve the quality of care in his locality and to also build a business which he could then sell when he retired. The company employs 180 people in total with 165 of those being the carers who visit service users (usually the elderly, disabled or those with learning difficulties) in their own homes to help with personal needs.

The services provided by CSC are outsourced to them by the local government authority and the government health service. CSC receives funding from these bodies in line with national government policy which determines that care is best delivered by specialist companies such as CSC, rather than directly by the government. Contracts to care providers such as CSC are awarded on a three-year basis. The criteria for provider selection are partly on the basis of cost and partly on the basis of the perception of the quality of the care provided.

Because they deliver important social services and health care, CSC and other companies providing personal care are subject to a rigorous regulatory regime. These regulations apply to all care services, whether provided directly by the government or by companies such as CSC who provide the outsourced care services. All carers, for example, must undergo compulsory training on a wide range of issues. Each potential employee must be checked for past criminal convictions, whilst high standards of hygiene and professional behaviour are expected at all times.

As time passed, rival care service companies entered the market. As a result, CSC experienced increased competition for contracts and it lost some of its care contracts with some government agencies to competitor care providers. Because the award of contracts was partly based on the perception of the company itself, and not just its care quality, Dr Tan came to believe that the governance of the company might be something which should be reconsidered. He believed that the perception of sound governance was necessary to ensure confidence in its services from both its service users and those government bodies outsourcing the service.

Accordingly, he decided to adopt best practice in corporate governance with the creation of a small executive board augmented by the appointment of a number of non-executive directors, along with a committee structure. Natasha Mbana, the current co-ordinator of the company’s care services, was made chief executive and Dr Tan proposed that he himself might become the new non-executive chairman. Over time, a total of five non-executive directors were appointed to the board of CSC and they were each paid a small annual fee for their services. All of the non-executives were retired members of large public listed company boards with little experience of public sector service delivery. They all lived in the locality in which CSC was based and Dr Tan believed their presence on the board would look impressive when it came to CSC renewing its service contracts.

As a company fulfilling public sector contracts for care service delivery, pay rates for carers are often relatively low. This also applies to the financial rewards of the senior management in CSC who receive much less in salary and benefits than those with equivalent responsibilities in the private sector. CEO Natasha Mbana says that she accepts a lower level of reward because she believes in the ‘public sector ethos’ and believes that CSC provides a vital public service. When the new non-executive directors saw what she earned, they noted that she was on much less than the market rate for a chief executive and that she should receive a substantial increase in her rewards to recognise her contribution to the company. Dr Tan said that this might not be possible and that the new non-executive directors should recognise that rewards in the public sector are often much less than those in large listed companies.

Last year, a problem arose for care providers when a small number of companies were exposed by the media for very poor practice. CSC was not implicated in the allegations, but some other companies in the industry were accused of making inadequate or very brief visits to service users, or missing out visiting some service users altogether, under time pressure to see other service users. Most service delivery contracts specified a minimum visit period of 30 minutes per patient and that carers needed to provide a minimum standard of care on each visit, including attending to the service user’s personal needs, food, drinks and medication. But because of the pressure to complete their other duties, carers sometimes ignored these minimum periods and thereby failed to fulfil service users’ personal needs.

This meant that affected service users were left in discomfort, without food, water and medicines, and sometimes in considerable pain. This caused a lot of anger among the public, and led the country’s health minister to ask about the internal controls in care provider companies. The health minister expressed the view that the most vulnerable in society had been let down badly, and the reputation of the care industry was badly damaged. Many companies, including CSC, became aware of public resentment and, in some cases, public hostility.

The manager of ‘We care’, another care supplier, went on television to explain that there were a number of structural problems with providing care under the government contracts. He said it was difficult to recruit carers and the low pay often meant that it was difficult to retain them. Furthermore, the pressure to deliver the outsourced care services was intense with carers having to hurry from one service user to another to complete their work. It was no surprise, he said, that service users often received less care than they needed because the demands on each carer were so high.

Aware that this scandal threatened the reputation of the whole care services industry, Dr Tan decided that it might be beneficial for CSC to develop and publish a code of ethics which would apply to the company and all of its carers. He was aware that the reputation of all care providers might be affected by the bad practice of a few companies and he wanted to ensure that CSC was well-thought of so it could compete successfully for future contracts and continue to enjoy the support of its service users.

In response to the negative publicity, a number of care providers held a conference and it was decided that Dr Tan, as a doctor and a senior figure in the industry, should write to the health minister on behalf of them all. In particular, they asked Dr Tan to address the issues of the internal controls in care provisions and the measures which providers would be undertaking to ensure there would be no repetition of any bad practices. They thought this a worthwhile measure to attempt to convince the health minister that providers had addressed his concerns.

Required:

(a) Explain the meaning of corporate governance and agency relationships, and contrast how the objectives of corporate governance differs between a large listed company and a smaller company delivering public sector services such as Care Services Company (CSC). (8 marks)

(b) The non-executive directors believed that Natasha Mbana was underpaid in her position as chief executive officer (CEO) of Care Services. Required: Explain what ‘market rate’ means and explain why Natasha Mbana’s rewards as CEO of a public sector service provider are likely to be lower than for a CEO of a large listed public company. (10 marks)

(c) Explain the importance of reputation to CSC, and discuss the potential benefits of the proposed corporate code of ethics for CSC. (12 marks)

(d) Draft a letter from Dr Sam Tan to the government health minister, which includes the following:

(i) An explanation of the importance of internal controls in CSC and other care service providers. (8 marks)

(ii) A proposal recommending suitable internal control changes which would help to address the service delivery failures described in the case. (8 marks)

Professional marks will be awarded in part (d) for the layout, flow, tone and structure of the letter. (4 marks)

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第8题

Mahmood is a junior employee of Tzo Company (a large, listed company). Tzo is a processor

of food labelled as containing only high quality meat. The company enjoys the trust and confidence of its customers because of its reputation for high quality products. One day, when passing through one area of the plant, Mahmood noticed some inferior meat being mixed with the normal product. He felt this must be unauthorised so he informed his supervisor, the factory manager, who told Mahmood that this was in fact a necessary cost reduction measure because company profits had been declining in recent months. Mahmood later found out that all stages of the production process, from purchasing to final quality control, were adapted in order to make the use of the inferior meat possible.

The factory manager told Mahmood that the inferior meat was safe for humans to eat and its use was not illegal. However, he told Mahmood that if knowledge of the use of this meat was made public, it would mean that customers might stop buying the products. Many jobs could be lost, probably including Mahmood’s own. The factory manager ordered Mahmood to say nothing about the inferior meat and to conduct his job as normal. Mahmood later discovered that the main board of Tzo was aware of the use of the inferior meat and supported its use in seeking to reduce costs and maintain profits. In covering up the use of the inferior meat, the factory produced a fraudulent quality control report to show that the product was purely based on high quality meat when the company knew that this was not so.

When Mahmood heard this, he was very angry and considered telling an external source, such as the local newspaper, about what he had seen and about how the company was being dishonest with its customers.

Required:

(a) Explain how Mahmood might act, in each case, if he were to adopt either conventional or post-conventional ethical assumptions according to Kohlberg’s definitions of these terms. Your answer should include an explanation of these two terms. (8 marks)

(b) Construct an ethical case for Mahmood to take this matter directly to an external source such as a newspaper. (8 marks)

(c) Some jurisdictions have a compulsory regulatory requirement for an auditor-reviewed external report on the operation and effectiveness of internal controls (such as s.404 of Sarbanes Oxley).

Required:

Explain how such a requirement may have helped to prevent the undisclosed use of the inferior meat at Tzo Company. (9 marks)

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第9题

Hum and Hoo is an established audit practice in Deetown and has a large share of the audit

services market among local businesses. Because Deetown is a relatively isolated area, many clients rely on Hum and Hoo for accounting and technical advice over and above the annual audit. This has meant that, over time, Hum and Hoo has also developed expertise in compliance advice, tax, strategy consulting and other professional services.

Because non-audit work is important to Hum and Hoo, staff have ‘business growth’ criteria strongly linked with bonuses and promotion. This means that many of the professional accountants in the firm actively seek to increase sales of non-audit services to businesses in the Deetown area, including from audit clients. The culture of the firm is such that everybody is expected to help out with any project which needs to be done, and this sometimes means that staff help out on a range of both audit and non-audit tasks. The lines between audit and non-audit services are sometimes blurred and staff may work on either, as workload needs demand. Managing partner Cherry Hoo told staff that the non-audit revenue is now so important to the firm that staff should not do anything to threaten that source of income.

Cherry Hoo said that she was thinking of beginning to offer a number of other services including advice on environmental reporting and the provision of environmental auditing services. She said she had spoken to local companies which were looking to demonstrate their environmental sustainability and she believed that environmental reporting and auditing might be ways to help with this. She said she was confused by the nature of environmental reporting and so was not sure about what should be audited.

Required:

(a) Explain ‘ethical threat’ and ‘ethical safeguard’ in the context of external auditing, and discuss the benefits of effective ethical safeguards for Hum and Hoo. (8 marks)

(b) Explain ‘environmental audit’ and assess how environmental reporting and auditing might enable companies to ‘demonstrate their environmental sustainability’ as Cherry Hoo suggested. (8 marks)

(c) Some corporate governance codes prohibit audit firms such as Hum and Hoo from providing some non-audit services to audit clients without the prior approval of the client’s audit committee. This is because it is sometimes believed to be against the public interest.

Required:

Explain ‘public interest’ in the context of accounting services and why a client’s audit committee is a suitable body to advise on the purchase of non-audit services from Hum and Hoo. (9 marks)

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第10题

Section B – TWO questions ONLY to be attemptedBob Wong was fortunate to inherit some money

Section B – TWO questions ONLY to be attempted

Bob Wong was fortunate to inherit some money and decided he wanted to invest for the long term in one or more investments so he would have a higher income in retirement. He was not a specialist in accounting and had little understanding of how investments worked.

Bob studied an investment website which suggested that he needed to be aware of the level of risk in an investment and also that he needed to know what his basic attitude to risk would be. This meant he needed to decide what his risk appetite was and then select investments based on that.

When Bob studied share listings in newspapers, he noticed that they were subdivided into sectors (e.g. banks, pharmaceuticals, mining, retail). He noticed that some sectors seemed to make higher returns than others and he wanted to know why this was. One website suggested that risks also varied by sector and this was partly explained by the different business and financial risks which different sectors are exposed to.

One website said that if a potential investor wanted to know about any given company as a potential investment, the company’s most recent annual report was a good place to start. This was because, it said, the annual report contained a lot of voluntary information, in addition to the financial statements. Bob could use this information to gain an understanding of the company’s strategy and governance. The website suggested that the contents of the corporate governance section of the annual report would be particularly helpful in helping him decide whether or not to buy shares in a company.

Required:

(a) Explain ‘risk appetite’ and ‘risk awareness’, and discuss how Bob’s risk appetite might affect his choice of investments.

(8 marks) (b) Explain ‘business risk’ and ‘financial risk’ and discuss why risks might vary by sector as the website indicated. (8 marks)

(c) Distinguish, with examples, between mandatory and voluntary disclosure in annual reports, and assess the usefulness of corporate governance disclosure to Bob in selecting his investments. (9 marks)

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