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

AA – Mar 2024 – L2 – Q1b – Planning and Approach for Audit and Assurance Engagements

Distinguish between audit strategy and audit plan and identify their contents as required by ISA 200 and ISA 300.

Question

ISA 200: Overall Objectives of Independent Auditor and the Conduct of an Audit and ISA 300: Planning an Audit of Financial Statements require that auditors should plan in order to conduct the audit in an effective, efficient, and timely manner. The plan should include an overall audit strategy and a detailed audit plan.

Required:
i) Clearly distinguish between audit strategy and audit plan. (5 marks)
ii) Identify the contents of audit strategy and audit plan. (10 marks)

Answer

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Tags: Audit Planning, Audit strategy, ISA 200, ISA 300
Level: Level 2

Topic: Planning and Approach for Audit and Assurance Engagements
Series: MAR 2024

AA – Mar 2024 – L2 – Q1a – Audit and Assurance Evidence

Ways in which management can support auditors in obtaining appropriate and sufficient audit evidence.

Question

Management of Bagabu Ltd has a filing system that is largely manual. Their external auditors have expressed concern about how to obtain appropriate and sufficient evidence to support their opinion.
Required:
State FIVE (5) ways management of Bagabu Ltd can support the auditors to obtain appropriate and sufficient audit evidence to support their opinion.

Answer

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Tags: Audit evidence, Audit opinion, External audit, Financial Statements, Internal Controls
Level: Level 2

Topic: Audit and Assurance Evidence
Series: MAR 2024

FR – March 2024 – L2 – Q5d – Financial Reporting Standards and Their Applications

Identify factors that indicate significant influence under IAS 28.

Question

Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

Required:
Outline FIVE (5) factors/conditions that indicate significant influence (other than shareholding).
(5 marks)

Answer

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Tags: Associates, Equity Method, Financial Reporting, IAS 28, Significant influence
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: MAR 2024

FR – March 2024 – L2 – Q5c – Financial Reporting Standards and Their Applications

Identify the qualities required in information when management uses judgment in developing accounting policies under IAS 8.

Question

According to IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors, when an IFRS specifically applies to a transaction, other event, or condition, the accounting policy applied to that item shall be determined by applying the IFRS. In the absence of an IFRS that specifically applies to a transaction, other event, or condition, management shall use its judgment in developing and applying an accounting policy that results in information that has certain qualities.

Required:
Identify the qualities that must be present in the resultant information when management of an entity uses its judgment in developing and applying an accounting policy.
(5 marks)

Answer

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Tags: Accounting estimates, Accounting Policies, IAS 8, Judgement in Financial Reporting, Qualities of Information
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: MAR 2024

FR – March 2024 – L2 – Q5b – Conceptual Framework for Financial Reporting

Discuss the reasons for the need of a conceptual framework in the standard-setting process.

Question

Discuss FIVE (5) reasons for the need of a conceptual framework in the standard-setting process.
(5 marks)

Answer

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Tags: Conceptual Framework, Financial Reporting, IASB, IFRS, Standard Setting
Level: Level 2

Topic: Conceptual Framework for Financial Reporting
Series: MAR 2024

FR – March 2024 – L2 – Q5a – Professional and Ethical Issues in Financial Reporting

Advise Esther on the appropriate actions to take in response to unethical pressure in financial reporting.

Question

Esther is a Chartered Accountant who works in a team that reports to Ameka, the Finance Director of Novak Ltd. Ameka is also a Chartered Accountant and has a domineering personality. Novak Ltd revalues commercial properties in line with IAS 16: Property, Plant and Equipment. Valuation information received last year showed that the fair value of the property portfolio was 2% less than the carrying amount of the properties (with no single property being more than 4% difference). A downward revaluation was not recognised on the grounds that the carrying amount was not materially different from the fair value.

This year’s valuation shows a continued decline in the fair value of the property portfolio. It is now 5% less than the carrying amount of the properties with some properties now being 15% below the carrying amount. Esther submitted workings to Ameka in which she had recognised the downward revaluations in accordance with IAS 16. Ameka has sent Esther an email in response in which he wrote: “Stop bothering me with this rubbish. There is no need to write the properties down. The fair value of the portfolio is only 5% different from its carrying amount. Restate the numbers immediately.”

Required:
Advise Esther on the appropriate actions to take.
(5 marks)

Answer

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Tags: Ethical dilemma, Financial Reporting, IAS 16, Professional Ethics, Revaluation
Level: Level 2

Topic: Professional and Ethical Issues in Financial Reporting
Series: MAR 2024

FR – March 2024 – L2 – Q4a – Financial Statement Analysis

Calculate financial ratios for Mantemante Ltd and compare them with industry averages.

Question

The following information has been extracted from the Financial Statements of Mantemante Ltd.

Statement of Financial Position as at 31 December 2023

Additional information, including ratios such as Return on Capital Employed, Net Profit Margin, Asset Turnover, Gearing, etc., is also provided.

Required:
a) Compute the comparable ratios for Mantemante Ltd for the years 2022 and 2023.
(10 marks)
b) Write a report for the Board of Directors analyzing the performance of Mantemante Ltd with references to the ratios for the two years and industry averages.
(10 marks)

Answer

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Tags: Efficiency Ratios, Financial Performance, Gearing, Liquidity Ratios, Profitability Ratios, Ratio Analysis
Level: Level 2

Topic: Financial Statement Analysis
Series: MAR 2024

FR – March 2024 – L2 – Q3 – Preparation of Financial Statements

Preparation of the statement of comprehensive income for Skolom Ltd.

Question

The following figures have been extracted from the accounting records of Skolom Ltd on 31 December 2022:

Additional information provided includes notes on Skolom Ltd’s agency arrangements with Keke Ltd, joint venture details, and depreciation policies.

Required:
Prepare for Skolom Ltd in accordance with International Financial Reporting Standards (IFRSs):
a) Statement of Comprehensive Income for the year ended 31 December 2022
b) Statement of Financial Position as at 31 December 2022

Answer

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Tags: Financial Reporting, IFRS, Investment Property, Leasehold, Profit or Loss, Statement of Comprehensive Income
Level: Level 2

Topic: Presentation of financial statements
Series: MAR 2024

FR – March 2024 – L2 – Q2c – Financial Reporting Standards and Their Applications

Accounting treatment of distribution rights purchased by Mankeni Ltd in accordance with IAS 38.

Question

Mankeni Ltd (Mankeni) is one of Africa’s leading entertainment companies which creates and secures the rights to phenomenal content from all over the world. Mankeni has entered into the following transactions during the financial year ended 30 November 2023:
i) On December 1, 2022, Mankeni purchased the sole West African distribution rights for a special digital set-top box for home entertainment. The rights were purchased for GH¢5.25 million over a three-year period.
(3 marks)

ii) Mankeni started working on building the brand and increasing sales of the item mentioned in (i) above on December 1, 2022. Due to the enormous success of this endeavour, the “Mankeni” brand became popular. Mankeni wishes to include the brand in its financial statements for the year ended 30 November 2023 at its estimated fair value of GH¢30 million.
(2 marks)

iii) Mankeni wishes to replicate its West African success in Eastern African countries by selling the product in other markets. The company has spent GH¢1.25 million during the year researching the Eritrea market and wishes to capitalise this expenditure as an intangible asset.
(2 marks)

Answer

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Topic: Financial Reporting Standards and Their Applications
Series: MAR 2024

FR – March 2024 – L2 – Q2b – Financial Reporting Standards and Their Applications,

Explain the differences between operating segments and reportable segments as per IFRS 8.

Question

IFRS 8: Operating Segments requires particular classes of entities (essentially those with publicly traded securities) to disclose information about their operating segments. Information is based on internal management reports, both in the identification of operating segments and measurement of disclosed segment information. It applies to the separate or individual financial statements of an entity and to the consolidated financial statements of a group.

Required:
Distinguish between operating segments and reportable segments.

Answer

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Tags: Financial Reporting, IFRS 8, Operating segments, Reportable Segments
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
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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AA – Mar 2024 – L2 – Q1b – Planning and Approach for Audit and Assurance Engagements

Distinguish between audit strategy and audit plan and identify their contents as required by ISA 200 and ISA 300.

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AA – Mar 2024 – L2 – Q1a – Audit and Assurance Evidence

Ways in which management can support auditors in obtaining appropriate and sufficient audit evidence.

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FR – March 2024 – L2 – Q5d – Financial Reporting Standards and Their Applications

Identify factors that indicate significant influence under IAS 28.

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FR – March 2024 – L2 – Q5c – Financial Reporting Standards and Their Applications

Identify the qualities required in information when management uses judgment in developing accounting policies under IAS 8.

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FR – March 2024 – L2 – Q5b – Conceptual Framework for Financial Reporting

Discuss the reasons for the need of a conceptual framework in the standard-setting process.

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FR – March 2024 – L2 – Q5a – Professional and Ethical Issues in Financial Reporting

Advise Esther on the appropriate actions to take in response to unethical pressure in financial reporting.

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FR – March 2024 – L2 – Q4a – Financial Statement Analysis

Calculate financial ratios for Mantemante Ltd and compare them with industry averages.

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FR – March 2024 – L2 – Q3 – Preparation of Financial Statements

Preparation of the statement of comprehensive income for Skolom Ltd.

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FR – March 2024 – L2 – Q2c – Financial Reporting Standards and Their Applications

Accounting treatment of distribution rights purchased by Mankeni Ltd in accordance with IAS 38.

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FR – March 2024 – L2 – Q2b – Financial Reporting Standards and Their Applications,

Explain the differences between operating segments and reportable segments as per IFRS 8.

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