Series: MAY 2021

Search 500 + past questions and counting.

CSME – May 2021 – L2 – Q6 – Ethics in Business

Analysis of Mr. John’s actions regarding insider trading based on various ethical perspectives.

Question

Mr John, a professional accountant, is the Chief Executive Officer of a company quoted on the Nigerian Stock Exchange. He also owns about 20% of the company’s shares worth hundreds of millions of Naira. Due to several factors, the company began performing poorly, leading to an unpublished financial report indicating a huge loss. In anticipation of a slide in the company’s share price, Mr. John instructed his stockbroker to sell half of his shares for potential repurchase once the price drops after the financial statements are released. He profited substantially from this transaction.

Required:

a. Analyse the action of Mr. John using:
i. The Model Code (3 Marks)
ii. Critical Theory (3 Marks)
iii. Moral Development of Accountants (4 Marks)

b. Advise Mr. John on the fundamental ethical principles which professional accountants are expected to comply with. (10 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Critical Theory, Ethical Principles, Insider Trading, Model Code, Moral Development
Level: Level 2

Topic: Corporate Governance, Ethics in Business
Series: MAY 2021

CSME – May 2021 – L2 – Q5c – Risk Management and Corporate Strategy

Relating 'Impact and Likelihood' to 'Objective and Subjective' risk perception using a table.

Question

Risk Assessment is a very important activity in an organisation. With the use of a table, relate ‘Impact and Likelihood’ to ‘Objective and Subjective’ risk perception.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Impact, Likelihood, Risk Management, Risk Perception
Level: Level 2

Topic: Risk Management and Corporate Strategy
Series: MAY 2021

CSME – May 2021 – L2 – Q5b – Risk Management and Corporate Strategy

Explanation of the ALARP principle with the aid of a diagram.

Question

With the aid of a diagram, explain the concept of “As Low as Reasonably Practicable” (ALARP) principle. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: ALARP Principle, Risk Evaluation, Risk Management, Safety Standards
Level: Level 2

Topic: Risk Management and Corporate Strategy
Series: MAY 2021

CSME – May 2021 – L2 – Q5a – Corporate Governance

Discussing four different ways in which agency conflict can arise between stakeholders.

Question

Discuss FOUR of the different ways in which agency conflict can arise. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agency Conflict, Earnings Retention, Effort Level, Moral Hazard, Risk Aversion
Level: Level 2

Topic: Corporate Governance
Series: MAY 2021

CSME – May 2021 – L2 – Q4 – Corporate Social Responsibility (CSR)

Explanation of social responsibility levels by Gray, Owen, and Adams, and ethical stances by Johnson and Scholes.

Question

Gray, Owen, and Adams (1996) provided a framework for classifying different groups of people and their views of the relationship between business organizations and society.

Required:

a. State and explain SEVEN levels or positions on social responsibility by Gray, Owen, and Adams (1996). (15 Marks)
b. State Johnson and Scholes FOUR possible ethical stances for a business entity. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Governance, Ethical Stances, Social responsibility, Stakeholder Management
Level: Level 2

Topic: Corporate social responsibility
Series: MAY 2021

CSME – May 2021 – L2 – Q3b – Corporate Governance

Explanation of board responsibilities per ICSA guidelines that cannot be delegated.

Question

Using the Institute of Chartered Secretaries and Administrators (ICSA) guidance note, explain responsibilities of board of directors that should not be delegated.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Board Responsibilities, Corporate Governance, ICSA Guidelines, Non-Delegable Duties
Level: Level 2

Topic: Corporate Governance
Series: MAY 2021

CSME – May 2021 – L2 – Q3a – Corporate Governance

Advising on voting rights to protect a shareholder's investment in a struggling company.

Question

A friend of yours, who invested heavily in the ordinary shares of a company that has been struggling in recent years, came to you for advice. He is confused as to what he can do to protect his investment.

Advise him on:
i. How he can use his voting rights as a shareholder to secure his investment. (6 Marks)
ii. Limitations to the use of his voting rights. (4 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Governance, Investment Protection, Rights Limitations, Shareholder Voting
Level: Level 2

Topic: Corporate Governance
Series: MAY 2021

CSME – May 2021 – L2 – Q2 – Risk Management and Corporate Strategy

Examination of a risk manager’s role, specific risks managed, and purposes of risk monitoring.

Question

“A risk manager is not a line manager and is not directly responsible for risk management but might help with the management of specific risks.”

Required:

a.
i. Review the statement above within the context of the role of a risk manager. (7 Marks)
ii. Evaluate THREE specific risks that can be managed. (3 Marks)

b. Discuss the purposes of risk monitoring. (10 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Evaluation, Risk Management, Risk Monitoring, Role of Risk Manager, Specific Risks
Level: Level 2

Topic: Risk Management and Corporate Strategy
Series: MAY 2021

CSME – May 2021 – L2 – Q1 – Strategic Implementation

Assessing Davidson Ltd's key resources, strategic choices, and restructuring to address international opportunities.

Question

Davidson Ltd is an automobile company based in Aba, Nigeria. It has been in
existence for nearly eighty years. The company originally began by supplying
components for small vehicles and was producing equipment during the Second
World War. However, in the nineties, it underwent rapid transformation under
the founder‟s son, Tony. Tony has diversified the company into supplying tricycle
components and spare parts to the Nigerian market. The company now employs
some 500 staff around the country and is well known for the quality of its
workmanship. The company operates under three divisions. One division is
concerned with the manufacture of tricycle components, a second division with
spare parts and the third division undertakes specific one–off work in automobile
and automobile design. The tricycle component division is by far the biggest and
accounts for seventy per cent of the total turnover. The smaller specialist
automobile design division is by far the most profitable in terms of return on
capital employed and it relies a great deal on a senior engineer, Emmanuel, who
has been with the company for more than twenty years.
Recently, the company was invited to send sample components to a Japanese car
manufacturer who is keen to commence operations in Nigeria. These components
are needed within eight months. However, Mr. Tony is concerned that his
company may not be able to meet the strict standard imposed by the Japanese
manufacturer. The deal, if it is sealed, would establish Davidson Ltd as an
important auto component supplier in South East Asia, thus, opening up the
potential for exports. Tony realises that the export potential is great and that any
initiative towards exports would get full backing from the government. While,
this is happening, the spare parts division is also showing signs of growth.
Recent reforms in part of North Africa has made companies in that region to be
very keen to modernise and innovate their old manufacturing processes and
Davidson had received business enquiries from the region.
Tony faces a dilemma. He knows that the opportunities that have presented
themselves would give the company a global presence. At the same time, he
knows that the company is solely under his management as chief executive.
Tony holds eighty percent of the shares. The other two directors hold ten percent
each. Although the other divisions have managing directors, they rely on him for
decision making. The current managing directors are family members. One is a brother in-law and the other a cousin. Their knowledge of the industry and its
workings is generally poor. He made these appointments to please his father so
that he could be left to run the company as he deems fit. Tony knows that to
satisfy the Japanese auto manufacturer, he needs to reorganise the automobile
design division and consider issues of Total Quality Management (TQM). This will
take time and requires that he delegates responsibilities to other divisions.
However, he feels uncomfortable doing this.
The company is at crossroads. The three divisions are doing well, but could do
even better, if their old, bureaucratic and hierarchical systems are reviewed.
Indeed, some of the younger managers and engineers would prefer a more open,
flexible management structure. Some of them have studied both engineering and
management in Holland and the United States, and are keen to see key
innovations in place. While Tony knows that these opportunities highlighted
above should not be missed, he has to ensure that they are handled successfully
so that the future is secured for Davidson Ltd. This requires that he takes some
tough decisions in restructuring the company within a few months.

Required:

Write a report to the Chief Executive of Davidson Ltd addressing the following issues:

a.
i. The key resources and implementation issues facing Davidson Ltd in the scenario above. (15 Marks)
ii. How the key resources will affect strategic choices. (7 Marks)
iii. How implementation issues will affect strategic choices. (8 Marks)

b. How should Tony restructure the company? (10 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Delegation, Implementation, Restructuring, Strategic Resources, TQM
Level: Level 2

Topic: Strategic Implementation
Series: MAY 2021

PSAF – May 2021 – L2 – Q6b – The Budgeting Process in the Public Sector

Explanation of budget uses and steps for National Chart of Accounts application in public budgeting.

Question

The importance of classification code as a system driven for budget cannot
be over emphasised as it forms the basis for budgeting and budgetary
control mechanism. Thus, for a country, state or local government to
achieve a reasonable level of success in accountability, transparency,
performance evaluation and adherence to Appropriation Act, the
application of unified chart of accounts is paramount.

Required:

Discuss FOUR uses of budget and FOUR steps to be followed to ensure completeness of using the National Chart of Accounts for budgeting.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accountability, Budget Classification, Budget Completeness, Chart of Accounts, Transparency
Level: Level 2

Topic: The Budgeting Process in the Public Sector
Series: MAY 2021

PSAF – May 2021 – L2 – Q6a – Fiscal Policy and Public Finance

Explanation of expenditure assignment principles and drawbacks in a multi-level government setting.

Question

Expenditure assignment deals with the division or sharing of expenditure, regulatory, and tax functions or responsibilities among multi-levels of government in a federation.

Required:

Explain THREE principles guiding expenditure assignment and highlight TWO of its drawbacks.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Decentralization, Expenditure assignment, Fiscal Management, Government Functions, Public Sector
Level: Level 2

Topic: Fiscal Policy and Public Finance, Government Expenditure
Series: MAY 2021

PSAF – May 2021 – L2 – Q5b – Fiscal Policy and Public Finance

Analysis of debt burden through key ratios and explanation of sources for external debt

Question

External debt does not constitute a burden when contracted loans are optimally deployed and the return on investment is sufficient to meet maturing obligations, as and when due, while servicing of the domestic economy is not undermined. The magnitude and severity of debt burden cannot be determined on the basis of debt volume only, rather, the debt volume should be viewed in combination with certain debt ratios for better appreciation of the debt problem.

Required:

Discuss THREE ratios commonly used to analyze the degree of indebtedness of a country and explain TWO sources of external debts.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Debt Analysis, Debt Ratios, External Debt, Fiscal Responsibility, Public Finance
Level: Level 2

Topic: Fiscal Policy and Public Finance
Series: MAY 2021

PSAF – May 2021 – L2 – Q5a – Public Sector Financial Statements

Identification of inventory costs excluded under IPSAS 12 and disclosure requirements for financial statements.

Question

IPSAS 12 on Inventories deals with the valuation and presentation of inventories in the financial statements in the context of the historical cost system, the most widely adopted basis on which financial statements are presented.

Required:

In accordance with IPSAS 12, identify FOUR costs that are excluded from the cost of inventories and FOUR requirements to be disclosed in the financial statements.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Disclosure Requirements, Exclusions, Financial Reporting, Inventory Valuation, IPSAS 12
Level: Level 2

Topic: Government Expenditure, Public Sector Financial Statements
Series: MAY 2021

PSAF – May 2021 – L2 – Q4b – Public Sector Reforms

Feasibility analysis of primary health centre PPP project based on guiding principles and associated risks.

Question

The Ministry of Health of Federal Republic of Wazobia is currently
considering public-private partnership as a means of improving health
facilities in some rural areas in the country. The Ministry intends to use
Public-Private Partnership (PPP) to construct and manage modern primary
health centres in rural areas to increase access to quality health facilities.
The project would be fully financed by the private sector, but will be built
on land secured from the state governments. The private sector requires
government guarantee to borrow externally to execute the project.
Currently, health services are free, however, the new project, when executed through Public-Private Partnership would be on “user-pay” basis.
The government and the private contractors determine the average fees
payable per user and it will be subject to an upward review from time to
time. In order to stimulate private sector interest in the project, the Ministry
intends to protect the private sector against risks associated with the
project. Meanwhile, the Ministry would insist that local materials and skills
are employed in the construction and management of the primary health
centre projects. The project is also environmentally friendly as there will be
little or no destruction of the forest vegetation. The project when completed,
will be of great benefit to the country as a whole.

Required:
Based on guiding principles of Public-Private Partnership identify and
explain THREE principles and TWO associated risks of the feasibility of the
proposed primary health centre projects by the Ministry of Health.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Health Facilities, PPP, Project Feasibility, Public Sector Finance, Risk Assessment
Level: Level 2

Topic: Public Sector Reforms
Series: MAY 2021

PSAF – May 2021 – L2 – Q4a – The Budgeting Process in the Public Sector

Explanation of MTEF, Budget Call Circular, and their main differences for public sector budgeting.

Question

As the Accountant in charge of the expenditure division, you are to assist the Director of Finance in the ministry to set up a budget committee. You have also been asked to review the recently issued 2020 Budget Call Circular.

Required:

Explain briefly the following:

Medium Term Expenditure Framework (MTEF) including FOUR of its objectives (6 Marks)
Budget Call Circular (2 Marks)
The main difference between MTEF and Budget Call Circular (2 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Budget Call Circular, Budgeting Process, Fiscal Policy, Government Expenditure, MTEF
Level: Level 2

Topic: Government Expenditure, Regulatory and Institutional Framework, The Budgeting Process in the Public Sector
Series: MAY 2021

PSAF – May 2021 – L2 – Q3b – Fiscal Policy and Public Finance

NPV-based investment recommendation for Omidan Local Government among three projects and a risk-free security alternative.

Question

Omidan Local Government Council has N20,000,000 to invest, if there is an assurance that the investment will earn at least 12% p.a. In view of this, the following projects are being considered:

Project A will earn N21,800,000 at the end of year one with a residual value of N1,500,000;
Project B will earn N24,000,000 at the end of year two with a residual value of N500,000; and
Project C will earn N14,000,000 at the end of year one and another N10,000,000 at the end of year two with no residual value.

If none of the projects is undertaken, Omidan Local Government Council will invest the N20,000,000 in a risk-free security that will earn interest of 12% p.a.

Required:

Assess and advise Omidan Local Government Council on which of the projects to be undertaken using Net Present Value (NPV) method.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Budgeting, Investment Decision, NPV Analysis, Public Sector Finance, Risk-Free Investment
Level: Level 2

Topic: Government Revenue
Series: MAY 2021

PSAF – May 2021 – L2 – Q3a – Treasury Management in the Public Sector

Explain strategies to enhance cash management and factors affecting its effectiveness in public finance.

Question

Cash management implemented by the Budget Office of the Federation (BoF) was to ensure that the right amount of money is made available to fund government expenditure in a timely manner as well as meeting its obligations as they fall due.

Required:
Explain FIVE strategies to enhance cash management control and FIVE factors militating against effective cash management. (10 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Budget Office, Cash Management, Financial Control, Public Expenditure, Treasury Management
Level: Level 2

Topic: Treasury Management in the Public Sector
Series: MAY 2021

PSAF – May 2021 – L2 – Q2b – International Public Sector Accounting Standards (IPSAS)

Explain differences between accrual and cash accounting, justify IPSAS adoption, and describe commitment accounting benefits.

Question

You have received an official memo from your Permanent Secretary, which reads:

Director of Account and Finance: Hope you are doing well. We have just closed from a workshop organised by the Ministry of Finance on public finance management not long ago, and the discussion was all about the adoption of IPSAS accrual accounting in the public sector. It was emphasised that migration from IPSAS Cash Basis to IPSAS Accrual Basis is necessary to improve financial reporting and transparency in the public sector. You know I have little knowledge in accounting, so I was completely lost in the discussions and I wished you had attended the workshop with me.

Another issue discussed was commitment accounting. We were made to understand that commitment accounting strengthens public finance management and therefore all Ministries, Departments and Agencies (MDAs) must ensure that every expenditure is committed in accordance with the appropriation prior to spending.

Please could you help me with some information on these issues?

Required:
Explain to the Permanent Secretary:
i. THREE differences between accrual accounting and cash accounting. (3 Marks)
ii. THREE justifications for adopting IPSAS accrual accounting in the public sector. (3 Marks)
iii. The term “commitment accounting” and illustrate THREE ways it could strengthen public financial management. (4 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accrual Basis, Cash Basis, Financial Transparency, IPSAS, Public Finance Management
Level: Level 2

Topic: International public sector accounting standards
Series: MAY 2021

PSAF – May 2021 – L2 – Q2a – Fiscal Policy and Public Finance

Define debt sustainability analysis, outlining objectives and benefits.

Question

Debt management is a key component of public finance management that enables the government to meet its financing needs at minimum costs and within acceptable levels of risk. One of the diagnostic tools that the government uses in managing its debt portfolio is to conduct an annual Debt Sustainability Analysis (DSA).

Required:
Explain the term “Debt Sustainability Analysis,” identifying its THREE objectives and FIVE benefits.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Debt Management, Debt Sustainability, Economic Analysis, Public Finance
Level: Level 2

Topic: Fiscal Policy and Public Finance
Series: MAY 2021

PSAF – May 2021 – L2 – Q1 – Public Sector Financial Statements

Apply IPSAS standards to adjust and analyze financial information for Okuku State University.

Question

Okuku State University is a parastatal under Okuku State, not classified as a Government Business Enterprise (GBE). The following is the statement of financial position for the University as of December 31, 2018:

Statement of Financial Position (as at Dec 31, 2018)

Item	Cost (₦’million)	Accumulated Depreciation (₦’million)	Carrying Amount (₦’million)
Land and Buildings	15,000	250	14,750
Equipment	1,000	100	900
Furniture	800	80	720
Plant & Machinery	550	50	500
Motor Vehicles	450	45	405
Total Non-Current Assets	17,800	525	17,275
Inventories	11,000	–	–
Receivables	15,000	–	–
Bank	3,000	–	–
Total Current Assets	–	–	29,000
Total Assets	–	–	46,275
Non-Current Liabilities	–	–	30,000
Current Liabilities	–	–	8,000
Total Liabilities	–	–	38,000
Net Assets	–	–	8,275
Reserves	–	–	8,275

Additional Information:

Office equipment was purchased for ₦150,000,000 from Joko Nigeria Limited, with installation and transportation costing ₦3,000,000. Half was paid during the year, with the remainder in January 2019. The University also acquired a building valued at ₦500,000,000 from a defunct State College.
The University Teaching Hospital received motor vehicles and laboratory equipment donations worth ₦20,000,000 and ₦50,000,000, respectively, from a UK-based research institute.
A motor vehicle bought on January 1, 2017, for ₦8,000,000 with a five-year life was sold for ₦4,000,000 at year-end.
Computers bought in 2017 for ₦1,000,000, with an expected five-year lifespan, were damaged in a fire and written off.
Land was bought for ₦50,000,000 for constructing a plaza valued at ₦250,000,000, with an estimated 25-year life.
One building, valued at ₦160,000,000, was damaged by fire, with a post-fire valuation of ₦130,000,000.
A motor vehicle was acquired on January 1, 2018, for ₦150,000,000.
The University’s depreciation policy includes full-year depreciation with rates: Motor Vehicle 20%, Building 4%, Furniture 10%, Equipment (including Lab and Computers) 20%, and Plant and Machinery 15%.

Required:
a. Identify FOUR characteristics of Government Business Enterprises (GBEs) as
stated in IPSAS 1 on presentation of financial statements. (2 Marks)
b. Prepare the necessary journal entries to record the above transactions for
the year ended December 31, 2018. (10 Marks)
c. Prepare the adjusted statement of financial position as at December 31,
2018. (20 Marks)
d. Identify and explain FOUR qualitative characteristics of financial reporting as
required by appendix 2 of IPSAS 1 on presentation of financial statements.
(8 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Financial Position Adjustments, Government Business Enterprises, IPSAS Standards, Journal Entries, Qualitative Characteristics
Level: Level 2

Topic: Public Sector Financial Statements
Series: MAY 2021

Series: MAY 2021

Filter by Professional Bodies

Filter by Subject

Filter by Series

Filter by Topics

Filter by Levels

CSME – May 2021 – L2 – Q6 – Ethics in Business

Analysis of Mr. John’s actions regarding insider trading based on various ethical perspectives.

CSME – May 2021 – L2 – Q5c – Risk Management and Corporate Strategy

Relating 'Impact and Likelihood' to 'Objective and Subjective' risk perception using a table.

CSME – May 2021 – L2 – Q5b – Risk Management and Corporate Strategy

Explanation of the ALARP principle with the aid of a diagram.

CSME – May 2021 – L2 – Q5a – Corporate Governance

Discussing four different ways in which agency conflict can arise between stakeholders.

CSME – May 2021 – L2 – Q4 – Corporate Social Responsibility (CSR)

Explanation of social responsibility levels by Gray, Owen, and Adams, and ethical stances by Johnson and Scholes.

CSME – May 2021 – L2 – Q3b – Corporate Governance

Explanation of board responsibilities per ICSA guidelines that cannot be delegated.

CSME – May 2021 – L2 – Q3a – Corporate Governance

Advising on voting rights to protect a shareholder's investment in a struggling company.

CSME – May 2021 – L2 – Q2 – Risk Management and Corporate Strategy

Examination of a risk manager’s role, specific risks managed, and purposes of risk monitoring.

CSME – May 2021 – L2 – Q1 – Strategic Implementation

Assessing Davidson Ltd's key resources, strategic choices, and restructuring to address international opportunities.

PSAF – May 2021 – L2 – Q6b – The Budgeting Process in the Public Sector

Explanation of budget uses and steps for National Chart of Accounts application in public budgeting.

PSAF – May 2021 – L2 – Q6a – Fiscal Policy and Public Finance

Explanation of expenditure assignment principles and drawbacks in a multi-level government setting.

PSAF – May 2021 – L2 – Q5b – Fiscal Policy and Public Finance

Analysis of debt burden through key ratios and explanation of sources for external debt

PSAF – May 2021 – L2 – Q5a – Public Sector Financial Statements

Identification of inventory costs excluded under IPSAS 12 and disclosure requirements for financial statements.

PSAF – May 2021 – L2 – Q4b – Public Sector Reforms

Feasibility analysis of primary health centre PPP project based on guiding principles and associated risks.

PSAF – May 2021 – L2 – Q4a – The Budgeting Process in the Public Sector

Explanation of MTEF, Budget Call Circular, and their main differences for public sector budgeting.

PSAF – May 2021 – L2 – Q3b – Fiscal Policy and Public Finance

NPV-based investment recommendation for Omidan Local Government among three projects and a risk-free security alternative.

PSAF – May 2021 – L2 – Q3a – Treasury Management in the Public Sector

Explain strategies to enhance cash management and factors affecting its effectiveness in public finance.

PSAF – May 2021 – L2 – Q2b – International Public Sector Accounting Standards (IPSAS)

Explain differences between accrual and cash accounting, justify IPSAS adoption, and describe commitment accounting benefits.

PSAF – May 2021 – L2 – Q2a – Fiscal Policy and Public Finance

Define debt sustainability analysis, outlining objectives and benefits.

PSAF – May 2021 – L2 – Q1 – Public Sector Financial Statements

Apply IPSAS standards to adjust and analyze financial information for Okuku State University.

Our offerings

Contact Info

Customer

Get In Touch