Series: MAR 2024

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SCS – MAR 2024 – L3 – Q6c – Strategy, stakeholders, and mission

Describe and explain the four broad roles of NEDs identified in the Higgs Guidance (2003).

Question

Prestige’s Board acknowledges that by adopting and implementing the highest standards of
corporate governance, this sets the standards and values for the entire Company. The
Company seeks to comply with best practice in all areas of corporate governance and
continues to review the Company’s procedures to maintain proper control and
accountability.
Required

There are nine members on Prestige’s Board of Directors. They include the Chairman, Chief Executive, three executive directors, and four non-executive directors (NEDs). Describe and explain four broad roles for NEDs identified in the document published in the UK in 2003, known as the Higgs Guidance.

Answer

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Tags: Accountability, board roles, Corporate Governance, Non-Executive Directors
Level: Level 3

Topic: Strategy, stakeholders, and mission
Series: MAR 2024

SCS – MAR 2024 – L3 – Q6b – Strategy, stakeholders, and mission

Explain how Principles V and VI of the OECD Principles of Corporate Governance could be applied at Prestige.

Question

Describe and explain how Principles V and VI of the OECD Principles of Corporate Governance – 2015 Edition, could be applied at Prestige to ensure good corporate governance practices.

Answer

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Tags: Accountability, Corporate Governance, OECD principles, Transparency
Level: Level 3

Topic: Strategy, stakeholders, and mission
Series: MAR 2024

SCS – MAR 2024 – L3 – Q6a – Strategy, stakeholders, and mission

Describe and explain 5 key issues in corporate governance for Prestige.

Question

Prestige’s Board acknowledges that by adopting and implementing the highest standards of corporate governance, this sets the standards and values for the entire Company. The Company seeks to comply with best practices in all areas of corporate governance and continues to review its procedures to maintain proper control and accountability.

Required:
Describe and explain five key issues in corporate governance that would establish how well or badly Prestige is governed.

Answer

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Tags: Accountability, Board Structure, Corporate Governance, Transparency
Level: Level 3

Topic: Strategy, stakeholders, and mission
Series: MAR 2024

SCS – MAR 2024 – L3 – Q5c – International financial management

Evaluate the factors restricting foreign investment despite potential good returns.

Question

With reference to Option Three, evaluate the factors that restrict foreign investment despite the perceived potential for good returns.

Answer

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Tags: Barriers, Foreign Investment, international markets, Risk Assessment
Level: Level 3

Topic: International financial management
Series: MAR 2024

SCS – MAR 2024 – L3 – Q5b – Financial management

Calculate the effective rate of borrowing for three months and explain the advantages of convertible bonds.

Question

With reference to Option Two:

i) What would be its effective rate of borrowing for the three months if US dollar LIBOR is 4.50% at the start of the notional interest period for the FRA? (2 marks)
ii) What are the advantages of Convertible Bonds? (3 marks)

Answer

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Tags: Borrowing rate, Convertible Bonds, Financing, FRA
Level: Level 3

Topic: Financial management
Series: MAR 2024

SCS – MAR 2024 – L3 – Q5a – Financial management

Calculate various financial ratios including ROCE, EPS, DPS, and TSR based on given financial data.

Question

With reference to the information in Option One available to Prestige as presented by Professor Joseph Laing, a business consultant, calculate the following:

i) Return on Capital Employed (ROCE) (1 mark)
ii) Earnings Per Share (EPS) (1 mark)
iii) Dividend Per Share (DPS) (2 marks)
iv) Total Shareholders Return (TSR) (2 marks)
v) Explain the difference between ROCE and Accounting Rate of Return, their essential features, and relationship (4 marks)

Answer

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Tags: DPS, EPS, Financial Ratios, ROCE, TSR
Level: Level 3

Topic: Financial management
Series: MAR 2024

SCS – MAR 2024 – L3 – Q4b – Strategy implementation

Advise on an appropriate HR strategy to harmonize the organizational structure for effective delivery at Prestige.

Question

Each company acquired or merged by Prestige was allowed to maintain its human resource structure.

Required:
Analyze and advise on an appropriate HR strategy Prestige should adopt to harmonize the organizational structure for effective delivery of the company’s objectives.

Answer

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Tags: HR Strategy, Mergers and Acquisitions, Organizational Structure, workforce planning
Level: Level 3

Topic: Strategy implementation
Series: MAR 2024

SCS – MAR 2024 – L3 – Q4a – Strategy implementation

Explain how Prestige could leverage ICT using the four broad stages of e-business development to compete.

Question

Prestige’s Board has shifted from their long-standing reluctance to venture into foreign markets to seriously consider the possibility of expansion overseas. An important implication of this decision is that as the size of the market increases, competition becomes international. The main rivals are no longer local suppliers to a domestic market.

Required:
Using the four broad stages of development to a full e-business model, explain how Prestige could leverage ICT to compete.

Answer

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Tags: Business model, Competitive Advantage, E-Business, ICT
Level: Level 3

Topic: Strategy implementation
Series: MAR 2024

SCS – MAR 2024 – L3 – Q3 – Functional strategies

Explain the potential benefits of resource sharing through common IT systems at Prestige.

Question

When five years ago the present regional divisional structure of Greater Accra, Ashanti, and Eastern was formalized, an attempt was made to ensure that common systems and ways of working were adopted across each of the three regions. However, due to the pressures on the Company, this was never fully implemented.

Required:
Explain the potential benefits of resource sharing (configuring an organization’s computing system in such a way that the information and resources within it can be accessed, and remotely accessed, across multiple administrative domains) to Prestige if they adopt common IT systems.

Answer

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Tags: Cost savings, IT Systems, remote access, resource sharing
Level: Level 3

Topic: Functional strategies
Series: MAR 2024

SCS – MAR 2024 – L3 – Q2 – Competitive advantage

Apply and appraise Porter’s three strategies for sustaining competitive advantage for Prestige Designers Ltd.

Question

A strategic clock can be used to consider different business strategies for gaining competitive advantage, based on providing a combination of price and perceived benefits. Porter has suggested three strategies for sustaining competitive advantage over rival firms and their products or services. They are a cost leadership strategy, a differentiation strategy, and a focus strategy.

Required:
Apply and appraise how effective the suggested three strategies for sustaining competitive advantage over rival firms would be useful to Prestige. (10 marks)

Answer

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Tags: Competitive Advantage, cost leadership, Differentiation, focus strategy
Level: Level 3

Topic: Competitive Advantage
Series: MAR 2024

SCS – MAR 2024 – L3 – Q1b – Environment analysis

Identify key issues facing the Building and Construction industry in Ghana and West Africa using PESTLE.

Question

Prestige Designers Ltd, like other house builders, is facing difficult times. There has been a sharp decline in the number of homes over the past 6-8 years, and independent reports suggest that the numbers will fall even further in 2023.

Required: Using the PESTLE analysis, identify the key issues facing the Building and Construction industry in Ghana as well as that of the West African country. (10 marks)

Answer

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Tags: construction industry, environment analysis, PESTLE analysis
Level: Level 3

Topic: Environment analysis
Series: MAR 2024

SCS – MAR 2024 – L3 – Q1a – Strategy, stakeholders, and mission

Analyze the three levels of strategy being pursued by Prestige Designers Ltd.

Question

Johnson, Scholes, and Whittington identified three levels of strategy, namely corporate strategy, business strategy, and functional strategy. These strategies should be consistent with each other.

Required: In the light of the statements above, analyze the three levels of strategy being pursued by Prestige Designers Ltd. (10 marks)

Answer

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Tags: Business Strategy, Corporate Strategy, Functional Strategy, levels of strategy
Level: Level 3

Topic: Strategy, stakeholders, and mission
Series: MAR 2024

AA – Mar 2024 – L2 – Q5b – Internal Audit and Its Relationship with External Audit

Recommend internal control procedures for cheque payments and petty cash systems for Automaga Ltd.

Question

Automaga Ltd has recently acquired the controlling interest in Alkars Ltd, who are importers of car spare parts. In reviewing the organisational structure of Alkars Ltd, Automaga Ltd noticed a weakness in the procedures for the signing of cheques and the operation of the petty cash system. Automaga Ltd engaged you as the company’s auditor and requested that you review the controls over cheque payments and petty cash. Cheques are drawn almost every week and the petty cash account normally has a working balance of about GH¢600, and GH¢1,200 is expended from the fund each month.

Required:
Prepare a letter to Automaga Ltd highlighting your recommendations for good internal control procedures for:
i) Cheque payments. (5 marks)
ii) Petty cash. (5 marks)

Answer

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Tags: Cash Management, Cheque Payments, Internal Control, Petty Cash
Level: Level 2

Topic: Internal Audit and Its Relationship with External Audit
Series: MAR 2024

AA – Mar 2024 – L2 – Q5a – Completion Procedures and Reporting

Identify subsequent events and recommend auditor actions based on two scenarios for Benkum Ltd.

Question

Atiko Audit firm is the external auditor of Benkum Ltd, a company operating in the oil and gas sector. Benkum Ltd is listed on the Ghana Stock Exchange. On completing the audit for the year ended 31 December 2022, the following issues were brought to the attention of the senior partner:

On 25 February 2023, Benkum agreed with the workers’ union to increase the pay of all its employees by 10%, backdated to 1 July 2022. No provision for this has been made in the financial statements.
One of the company’s oil tankers shipwrecked at Cape Three Points on the western side of Ghana. There is a risk of serious oil spillage which could have a significant effect on the future of the company. Further information will not be available until after the auditor’s report has been signed.

Required:
i) State TWO (2) types of the event identified by ISA 560: Subsequent Events in relation to the scenario above. (2 marks)
ii) What further action should Atiko Audit firm take concerning each of the above issues? (8 marks)

Answer

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Tags: Adjusting Events, ISA 560, Non-adjusting Events, Subsequent Events
Level: Level 2

Topic: Completion Procedures and Reporting
Series: MAR 2024

AA – Mar 2024 – L2 – Q4b – Internal Audit and Its Relationship with External Audit

Explain the differences between internal and external auditors in fraud prevention, detection, and reporting responsibilities.

Question

There are similarities and differences between the responsibilities of internal and external auditors. Both internal and external auditors have responsibilities relating to the prevention, detection, and reporting of fraud, for example, but their responsibilities are not the same.

Required:
In reference to the statement above, explain the difference between the responsibilities of internal auditors and external auditors in relation to:
i) Prevention and detection of fraud. (5 marks)
ii) Reporting of fraud. (5 marks)

Answer

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Tags: External audit, Fraud Detection, Fraud Prevention, Internal Audit, Reporting of Fraud
Level: Level 2

Topic: Internal Audit and Its Relationship with External Audit
Series: MAR 2024

AA – Mar 2024 – L2 – Q4a – Institutional Regulation and Standard-Setting

Discuss significant audit issues faced by national standard-setting bodies and the IAASB.

Question

Santom Ltd is a global company that produces and sells consumer electronics. In the past year, Santom Ltd has faced several challenges, including the COVID-19 pandemic, supply chain disruptions, and increased regulatory scrutiny. Recent global events have raised significant audit issues for external auditors.

The national standard-setting bodies and the International Auditing and Assurance Standards Board (IAASB) are currently dealing with several significant audit issues.

Required:
Discuss FIVE (5) of these significant audit issues.

Answer

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Tags: Audit Issues, COVID-19 Impact, Cybersecurity, Fraud Detection, IAASB, Standard-Setting Bodies
Level: Level 2

Topic: Institutional Regulation and Standard-Setting
Series: MAR 2024

AA – Mar 2024 – L2 – Q3b – Audit and Assurance Evidence

Identify examples of external confirmations and their corresponding audit assertions.

Question

ISA 500: Audit Evidence identifies seven main testing procedures. One of these is external confirmation.

Required:
i) List FOUR (4) examples of external confirmation. (2 marks)
ii) For each of the examples in (i) above, explain: ONE (1) audit assertion that the external confirmation supports, and ONE (1) audit assertion that the external confirmation does not support. (8 marks)

Answer

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Tags: Audit Assertions, Audit evidence, External Confirmations
Level: Level 2

Topic: Audit and Assurance Evidence
Series: MAR 2024

AA – Mar 2024 – L2 – Q3a – Audit and Assurance Evidence

Explain audit procedures to obtain sufficient and appropriate audit evidence for Galito Ltd's inventories.

Question

Galito Ltd is a Ghanaian company that operates in multiple industries and has several subsidiaries. Due to the complexity of its operations, its inventories and properties are scattered across the country and used by any of its subsidiaries.

Required:
As the auditor of Galito Ltd, explain FIVE (5) audit procedures to help obtain sufficient and appropriate audit evidence for its inventories.

Answer

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Tags: Audit evidence, Audit Procedures, Inventory Audit, Inventory Valuation
Level: Level 2

Topic: Audit and Assurance Evidence
Series: MAR 2024

AA – Mar 2024 – L2 – Q2b – Audit and Assurance Risk Environment

Discuss audit risks and the necessary measures auditors should take to mitigate issues in the engagement.

Question

Abansro Corporation is a publicly traded company in the manufacturing industry. The company is yet to appoint an auditor to replace its previous auditor. A member of the board of Abansro Corporation, who is also a friend of the owners of an audit firm, referred the audit firm to Abansro Corporation. The board approved the appointment of the audit firm without considering the potential audit risks associated with the referral.

The audit firm conducted the audit for the year 2022, and the audit opinion issued was unqualified. However, in the course of 2023, it was discovered that there were material misstatements in the financial statements that were not detected by the audit firm. These misstatements resulted in a significant loss for the company and its shareholders.

As a result, Abansro Corporation faced legal action from its shareholders for the losses incurred due to the misstatements. The audit firm was also held liable for negligence and breach of professional duty.

Required:
i) Describe THREE (3) audit risks for a board member referring his friend who is the owner of an audit firm to be appointed by Abansro Corporation. (6 marks)

ii) What measures should have been undertaken by the Auditors to mitigate the issues associated with this engagement? (4 marks)

Answer

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Tags: Audit Risk, Auditor Independence, Negligence, Professional Duty
Level: Level 2

Topic: Audit and Assurance Risk Environment
Series: MAR 2024

AA – Mar 2024 – L2 – Q2a – Regulatory Framework and Audit Responsibilities

Discuss the circumstances under which BoG can appoint or terminate the appointment of an auditor for a bank.

Question

In 2018, the Bank of Ghana (BoG) revoked the licenses of five struggling banks in Ghana and merged them to form a new bank. Following the merger, the BoG appointed an external auditor for the new bank, as the previous auditors of the merged banks were no longer able to continue in their roles.

However, in 2019, the BoG terminated the appointment of the external auditor for the new bank due to concerns about the independence and competence of the auditor. As a result, the BoG appointed new external auditors for the bank.

Required:
i) Discuss THREE (3) circumstances under which BoG may appoint an auditor to audit the financial statements of a bank. (5 marks)

ii) Discuss THREE (3) circumstances under which BoG may terminate the appointment of an auditor to audit the financial statements of a bank. (5 marks)

Answer

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Tags: Auditor appointment, Auditor Independence, Bank of Ghana, Termination of Auditor
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: MAR 2024

Series: MAR 2024

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SCS – MAR 2024 – L3 – Q6c – Strategy, stakeholders, and mission

Describe and explain the four broad roles of NEDs identified in the Higgs Guidance (2003).

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SCS – MAR 2024 – L3 – Q6b – Strategy, stakeholders, and mission

Explain how Principles V and VI of the OECD Principles of Corporate Governance could be applied at Prestige.

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SCS – MAR 2024 – L3 – Q6a – Strategy, stakeholders, and mission

Describe and explain 5 key issues in corporate governance for Prestige.

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SCS – MAR 2024 – L3 – Q5c – International financial management

Evaluate the factors restricting foreign investment despite potential good returns.

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SCS – MAR 2024 – L3 – Q5b – Financial management

Calculate the effective rate of borrowing for three months and explain the advantages of convertible bonds.

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SCS – MAR 2024 – L3 – Q5a – Financial management

Calculate various financial ratios including ROCE, EPS, DPS, and TSR based on given financial data.

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SCS – MAR 2024 – L3 – Q4b – Strategy implementation

Advise on an appropriate HR strategy to harmonize the organizational structure for effective delivery at Prestige.

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SCS – MAR 2024 – L3 – Q4a – Strategy implementation

Explain how Prestige could leverage ICT using the four broad stages of e-business development to compete.

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SCS – MAR 2024 – L3 – Q3 – Functional strategies

Explain the potential benefits of resource sharing through common IT systems at Prestige.

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SCS – MAR 2024 – L3 – Q2 – Competitive advantage

Apply and appraise Porter’s three strategies for sustaining competitive advantage for Prestige Designers Ltd.

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SCS – MAR 2024 – L3 – Q1b – Environment analysis

Identify key issues facing the Building and Construction industry in Ghana and West Africa using PESTLE.

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SCS – MAR 2024 – L3 – Q1a – Strategy, stakeholders, and mission

Analyze the three levels of strategy being pursued by Prestige Designers Ltd.

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AA – Mar 2024 – L2 – Q5b – Internal Audit and Its Relationship with External Audit

Recommend internal control procedures for cheque payments and petty cash systems for Automaga Ltd.

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AA – Mar 2024 – L2 – Q5a – Completion Procedures and Reporting

Identify subsequent events and recommend auditor actions based on two scenarios for Benkum Ltd.

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AA – Mar 2024 – L2 – Q4b – Internal Audit and Its Relationship with External Audit

Explain the differences between internal and external auditors in fraud prevention, detection, and reporting responsibilities.

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AA – Mar 2024 – L2 – Q4a – Institutional Regulation and Standard-Setting

Discuss significant audit issues faced by national standard-setting bodies and the IAASB.

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AA – Mar 2024 – L2 – Q3b – Audit and Assurance Evidence

Identify examples of external confirmations and their corresponding audit assertions.

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AA – Mar 2024 – L2 – Q3a – Audit and Assurance Evidence

Explain audit procedures to obtain sufficient and appropriate audit evidence for Galito Ltd's inventories.

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AA – Mar 2024 – L2 – Q2b – Audit and Assurance Risk Environment

Discuss audit risks and the necessary measures auditors should take to mitigate issues in the engagement.

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AA – Mar 2024 – L2 – Q2a – Regulatory Framework and Audit Responsibilities

Discuss the circumstances under which BoG can appoint or terminate the appointment of an auditor for a bank.

You're reporting an error for "AA – Mar 2024 – L2 – Q2a – Regulatory Framework and Audit Responsibilities"

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