a) i) Accounting Policies

According to IAS 8, accounting policies are the specific principles, bases, conventions, rules, and practices applied by an entity in preparing and presenting financial statements. They are developed to ensure the financial statements provide relevant and reliable information. When an IFRS applies, the entity must follow it; otherwise, management uses judgment, considering IFRS for similar issues, the conceptual framework, and other accounting literature. Changes in accounting policies are applied retrospectively, with restatement of comparative information, unless impracticable.

ii) A Change in Accounting Estimates

A change in accounting estimates arises from new information or developments and is not a correction of an error. It is an adjustment to the carrying amount of an asset or liability or the amount of periodic consumption, based on revised assessments of future benefits or obligations. Changes are applied prospectively from the period of change, affecting current and future periods. Examples include revising the useful life of an asset from 10 to 8 years or changing the bad debt provision rate from 5% to 7%.

b) Four challenges Management will face when implementing a Zero-Based Budgeting System:

1. Time and Labor Intensive: ZBB requires justifying every expense from zero, involving detailed analysis and documentation, which can be time-consuming and strain resources, especially in large organizations like banks with complex operations.
2. Employee Resistance and Morale Issues: Managers may resist the scrutiny of their budgets, fearing cuts that could affect their departments or jobs, leading to lower morale and potential turnover, as seen in Ghanaian banks during cost-cutting post-2017 cleanup.
3. Data and Skill Requirements: Implementing ZBB demands accurate data and analytical skills to justify expenses, which may not be available, requiring training or new systems, increasing costs and complexity.
4. Potential for Short-Termism: The focus on justifying immediate necessity may lead to cutting long-term investments like technology upgrades or training, hindering strategic growth in competitive sectors like banking.

c) Three factors necessary for an effective Budgetary Control System:

1. Clear Organizational Goals and Communication: The system must align budgets with strategic objectives, with clear communication to all levels to ensure understanding and commitment, enabling effective monitoring.
2. Participation and Responsibility: Involving managers in budget setting promotes ownership and realistic targets, improving accuracy and motivation for achievement.
3. Flexible and Timely Reporting: The system should allow budget revisions for changing conditions and provide timely variance reports for quick corrective actions, ensuring relevance in dynamic environments like Ghana’s banking sector affected by DDEP.