Series: APR 2024

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SMM – APRIL 2024 – L4 – Q6 – Evaluating Alternative Distribution Channels

Explain five criteria that can be used to evaluate alternative channels for distributing bank products and services, in the context of marketing strategy formulation.

Distribution is a key element of Marketing Strategy formulation. In your role as the Head of Business Development of your Bank, your Deputy Managing Director-Operations, has asked you to to write a report explaining five (5) criteria that can be used to evaluate Alternative Channels of distributing bank products and services.

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SMM – APRIL 2024 – L4 – Q5 – Financial Services, Inseparability, Customer Service Personnel, Marketing Strategy, Personnel Quality, Improvement Methods, Banking Sector, Ghanaian Context

Explain five ways a bank can maintain and improve the quality of its customer service personnel and their performance in service delivery, in the context of inseparability in financial services.

One of the key characteristics of Financial Services is that of inseparability. The selling of the service cannot be separated from the individual rendering the service. This implies that Customer Service personnel constitute an important element of Financial Services Marketing Strategy. In your role as the Head of Customer Service in your Bank, your Chief Executive Officer has asked you to write a report explaining five (5) ways in which the bank can maintain and improve the quality of its personnel and their performance in Customer Service Delivery.

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SMM – APR 2024 – L4 – Q4 – Internal Marketing Communications

Write a memorandum explaining the importance of internal marketing communications in banks and prepare an outline of an internal marketing plan for presentation.

The increased recognition and use of Internal Marketing Communications by banks throughout the world suggests that Bank employees can be regarded as an important but often neglected target audience. In your role as the Head of Marketing and Corporate Affairs Department in your Bank, write write a memorandum on the subject to be sent to the Head of Human Resource. Explain briefly why Internal Marketing Communications are important. Prepare an outline of an Internal Marketing Plan for presentation at the next Management meeting.

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SMM – APR 2024 – L4 – Q3 – Price Elasticity in Banking Products

Explain five reasons why demand for some banking products price elastic is while for others it is price inelastic, in the context of training Treasury Officers.

In your role as the Head of Marketing in your Bank, your Head of Human Resource Management has asked you to run a workshop for newly recruited Treasury Officers. Explain with five (5) reasons why the demand for some banking products is Price Elastic and the demand for others Price Inelastic.

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SMM – APR 2024 – L4 – Q2 – Factors for Selecting a West African Market under AfCFTA

Write a paper explaining five factors with examples for a multinational bank to consider before selecting a West African market to enter, leveraging the AfCFTA initiative.

In your role as Head of Business Development of a multinational Bank planning to enter the West Africa market to take advantage of the African Continental Free Trade Area (ACFTA) initiative, your Managing Director has asked you to write a paper to Management. Explain, with examples, five (5) factors the bank should take into consideration before selecting a particular market in West Africa.

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SMM – APR 2024 – L4 – Q1 – Development of 5-Year Strategic Marketing Plan for New Investment Product

Develop a 5-Year Strategic Marketing Plan for a new investment product targeted at high-net-worth bond holders affected by Ghana's DDEP, focusing on value creation in the banking sector.

Any investment decision should be aimed at a coherent objective of creating value. As a result of Ghana’s Domestic Debt Exchange Programme (DDEEP), the value of Government of Ghana Bonds as well as sales has reduced considerably. Potential and existing investors who are highnetwork individuals are now diversifying their investments from the bonds.

Your Bank after market research on bonds purchased has decided to develop a new investment product targeted at those potential and existing bond holders. The success of any New Product Development includes the development of a Strategic Marketing Plan for the product. As the Head of Business Development of your Bank, you have been asked by the Chairman of the Product Development Committee to develop a 5-Year Strategic Marketing Plan for the new product.

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RM – APR 2024 – L4 – Q8 – Liquidity Management and Governance Measures

Discusses five internal or regulatory measures to avoid bank liquidation due to poor liquidity and governance.

Improper Liquidity Management and weak Corporate Governance practices have caused the collapse of Ghanaian banks in the past.

Discuss any five (5 internal or regulatory measures that these banks could have resorted to in a bid to avoid liquidation.

(20 marks)

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RM – APR 2024 – L4 – Q7 – Outsourcing and Collaboration Risks

Discusses five key risk implications from outsourcing and collaborations with Telecom and Fintech.

Discuss at least five (5) key risk implications arising from the inevitable outsourcing of aspects of the banks’ operations and collaboration with Telecommunication and Fintech companies. (Hint – Discuss operational risk perspectives)

(20 marks)

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RM – APR 2024 – L4 – Q6 – Treasury Policy Areas

Discusses five key areas for a Treasury Policy and their criticality.

Discuss broadly five (5) key areas to be addressed by a Treasury Policy, indicating why these are critical for the effective functioning of the Treasury Department in its capital maintenance, liquidity and income generation functions.

(20 marks)

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RM – APR 2024 – L4 – Q5 – Cyber Security in Information Security Management

Defines Cyber Security, sources of vulnerabilities, and its importance in banking.

(a) What is “Cyber Security” in the context of Information Security Management? (10 marks)

(b) What are the key sources of vulnerabilities in the Cyber Space of Banking Businesses? (5 marks)

(c) Why has Cyber Security assumed such importance in Contemporary Banking? (5 marks)

[Total: 20 marks]

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FRPA – APRIL 2024 – L3 – Q6 – External Auditors and Corporate Governance

Discuss six responsibilities of external auditors in promoting good corporate governance in banks, and explain four mechanisms for maintaining financial reporting integrity and enhancing shareholder confidence.

a) Discuss the responsibilities of External Auditors in promoting Good Corporate Governance of banks. (You are required to state and discuss six (6) key responsibilities.) (12 marks)

b) Explain how External Auditors contribute to maintaining the Integrity of Financial Reporting and enhancing Shareholder confidence. (You are required to list and explain four (4) mechanisms.) (8 marks)

(Total: 20 marks)

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FRPA – APRIL 2024 – L3 – Q5 – Budgetary Control and IFRS 10 Consolidation

Explain budgetary control system and three ways it ensures operational efficiency; explain consolidated financial statements and four circumstances where control exists but consolidation not required.

a) Budgetary Control is a crucial aspect of managing businesses finances. By implementing a robust Budgetary Control System, businesses can use their financial resources effectively and efficiently to achieve their goals and objectives.

You are required to:

i) Explain what is meant by Budgetary Control System. (3 marks) ii) Recommend three (3) ways by which Budgetary Control System can help to provide information to ensure operational efficiency. (6 marks) b) IFRS 10: Consolidated Financial Statements outlines the requirements for the preparation and presentation of Consolidated Financial Statements, requiring entities to consolidate other entities it controls. The Control Principle in IFRS 10 sets out the following three (3) elements of control: power over the investee; exposure to, or rights to, variable returns from its investment with the investee; and the ability to use power over the investee to affect the amount of those returns.

You are required to: i) Explain what Consolidated Financial Statements are (3 marks) ii) Identify four (4) circumstances under which a company may gain control over another company but would not be required to prepare Consolidated Financial Statements. (8 marks) (Total: 20 marks)

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FRPA – APRIL 2024 – L3 – Q4 – Potco PLC Ratios and Performance Report

Compute six ratios for Potco PLC and write a report assessing its financial performance and position relative to the industry.

Potco PLC is a listed Ghanaian company that produces textile prints for both local and African markets. As at the year ended 31 March 2023, the company made a Gross Profit of GH$12,150. Cost of Sales for the year was GH$77,850 and Operating Profit Before Interest and Tax was GH$47,130. Finance Cost for the year was GH$920 and Tax Charged to Profit or Loss was GH$1,400.

The Inventory Turnover was 3.6 times. Dividend Paid Per Share was GH$0. 36 resulting in a Dividend Yield of 6 %. Current Assets consist of Inventory, Cash and Trade Receivables.

Extracts from the Statement of Financial Position as at 31 March 2023 were as follows: GH$

| Non-Current Assets | 63,320 | | Current Asset (excluding Inventory and Cash) | 18,605 | | Current Liabilities | 27,600 | | Shareholder’s Fund | 58,480 | | Cash | 6,000 | | 10% Debenture | 23,500 | | Share Capital (@ GH63) | 18,000 |

The following ratios relate to the industry in which Potco Plc belongs to:

| Profit (after Tax) Margin | 4.1% | | Current Ratio | 1.12 | | Return on Capital Employed (ROCE) | 10.0% | | Inventory Turnover | 3.47 | | Receivables Period | 87 days | | Dividend Yield | 5.8% | | EPS Ratio | 12.0 | | Debt/Equity Ratio | 32.6% |

You are required to: a) As far as the above information permits, compute the following ratios for Potco PLC. i. Profit (after Tax) Margin ii. Current Ratio iii. Return on Capital Employed (ROCE) iv. Receivables Period v. Price/Earnings Ratio vi. Debt/Equity Ratio (12 marks) b) Using the ratios above, write a report to the Board of Potco PLC to assess the Financial Performance and Financial Position of the entity, relative to its industry. (8 marks) [Total: 20 marks]

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FRPA – APRIL 2024 – L3 – Q3 – IAS 38 Intangible Assets

Define intangible asset, explain recognition criteria, state five disclosure requirements, explain research and development expenditure, and conditions for capitalisation per IAS 38.

IAS 38: Intangible Assets defines the difference between Research Expenditure and Development Expenditure IAS 38 also lays down rules which must be applied to the Capitalisation of Research and Development Expenditure

You are required to: i. Define an Intangible Asset under IAS 38: Intangible Assets. ii. Explain the Recognition Criteria for Intangible Assets. iii. State five (5) Disclosure Requirements of Intangible Assets under IAS 38 iv. Explain the meaning of the terms Research Expenditure and Development Expenditure. v. Explain the conditions applied to Research and Development Expenditure, according to IAS 38, to determine whether or not the cost should be capitalised. (20 marks)

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FRPA – APRIL 2024 – L3 – Q2 – IAS 8, ZBB Challenges, Budgetary Control Factors

Explain accounting policies and changes in estimates per IAS 8, four challenges of implementing ZBB, and three factors for effective budgetary control.

a) IAS 8. Accounting Policies, Changes in Accounting Estimates and Errors is applied in selecting and applying Accounting Policies, Accounting for Changes in Estimates and reflecting Corrections of Prior Period Errors. The standard requires compliance with any specific IFRS applying to a transaction, event or condition, and provides guidance on developing Accounting Policies for other items that result in relevant and reliable information.

You are required to:

Explain the following in accordance with IAS 8. Accounting Policies, Changes in Accounting Estimates and Errors. i) Accounting Policies (3 marks) ii) A Change in Accounting Estimates (3 marks)

b) Zero Based Budgeting (ZBB) is a process of budgeting that allocates funding based on programme efficiency and necessity rather than budget history. ZBB aims to put the onus on managers to justify expenses and to drive value for an organisation by optimising cost and not just revenue. Adopting a ZBB Approach for a company may seem like an intending task but when weighed against the value derived, the effort is worth the result.

You are required to:

Explain four (4) challenges Management will face when implementing a Zero-Based Budgeting System (8 marks) c) Organisations invest time and resources in creating and controlling budgets to ensure stability and predictability of their operations.

You are required to:

Explain three (3) factors necessary for an effective Budgetary Control System (3 marks)

[Total: 20 marks]

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FRPA – APRIL 2024 – L3 – Q1B – AFEN Ltd Mine Accounting Treatment

Explain the accounting treatment for the license, development costs, reclamation provision, and earthquake damage for AFEN Ltd.

AFEN Ltd. obtained a license, free of charge from the government, to dig and operate a gold mine. AFEN Ltd. spent GH$6 million digging and preparing the mine for operation and erecting buildings on the site. The mine commenced operations on 1 September 2022. The license requires that at the end of the mine’s useful life of 20 years, the site must be reclaimed, all buildings and equipment must be removed and the site landscaped. At 31 August 2023, AFEN Ltd. estimated that the cost in 19 years’ time of the removal and landscaping will be GH$5 million and its present value is GH$3 million.

On 31 October 2023, there was a massive earthquake in the area and AFEN Ltd’s mine shaft was badly damaged.It is estimated that the mine will be closed for at least six (6) months and will cost GH$1 million to repair.

You are required to:

Explain the accounting treatment for the license, the development costs, the reclamation provision, and the earthquake damage in the financial statements for the year ended 31 August 2023.

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FRPA – APRIL 2024 – L3 – Q1A – Preparation of Financial Statements for Vandee Oil Ltd

Using the provided trial balance and additional information on inventory, asset purchases, depreciation rates, utilities adjustments, and staff bonuses, prepare the Statement of Profit or Loss for 2023 and the Statement of Financial Position as at 31 December 2023.

Vandee Oil Ltd. has been in business for the past ten (10) years. The following Trial Balance was extracted from the books of Vandee Oil Ltd. for the year ended 2023.

Item GH¢’000 (Debit) GH¢’000 (Credit)
Bank 46,200
Petty Cash 4,000
Computer and Accessories 8,370
Furniture and Fittings 10,255
Land and Building 214,000
Office Equipment 12,250
Plant and Machinery 239,400
Inventory 1,900
Staff Loan 5,088
Purchases 355,000
Bank Service Charges 1,300
Business Promotion 1,500
Communication 1,900
Insurance 1,660
Licenses and Permits 6,650
Medical Expenses 155
Printing and Stationery 300
Professional Fees: Legal Fees 500
Repairs: Equipment Repairs 2,600
Salaries 23,050
Electricity 780
Water 280
Vehicle Running Expense 4,560
Trade Payable 25,000
Directors Current Account 320,000
Computer and Accessories: Accumulated Depreciation 3,348
Furniture and Fittings: Accumulated Depreciation 2,050
Land and Building: Accumulated Depreciation 8,560
Office Equipment: Accumulated Depreciation 2,450
Plant and Machinery: Accumulated Depreciation 47,880
Payroll Liabilities 550
Retained Earnings 49,282
Taxation 3,003
Share Capital 10,000
Sales 574,145
TOTALS 993,983 993,983

Additional Information: i) Closing Inventory as at December 2023 amounts to GH¢48,500,000 ii) The following assets were bought during the year 2023. However, these transactions were not recorded in the above Trial Balance:

  • Computers and Accessories GH¢8,000,000
  • Fixtures and Fittings GH¢5,000,000
  • Plant and Machinery GH¢25,000,000 The following are the rates of Depreciation being used by the company, however Depreciation for 2023 is yet to be charged:
  • Land and Building 1%
  • Computers and Accessories 20%
  • Furniture and Fittings 10%
  • Plant and Machinery 20%
  • Office Equipment 20% iii) Electricity stated in the Trial Balance include January 2024 Electricity Bill while that of Water represents six (6) months’ payment for the year 2023. iv) Staff bonuses amounting to GH¢15,000,000 was agreed on 31 December 2023 for staff. However, it was paid after the year end.

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EOB – APR 2024 – L1 – Q8 – Short Notes on International Commercial Terms (Incoterms)

Write short notes on specified Incoterms: Free Carrier, Delivered Ex Quay, Delivered at Frontier, Free on Board.

Write short notes on the following International Commercial Terms:

a. Free Carrier

b. Delivered Ex Quay

c. Delivered at Frontier of a Named Country

d. Free on Board (20 Marks)

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EOB – APR 2024 – L1 – Q7 – Laws Related to Banking and Differences Between Banks and Microfinance Institutions

State four other laws related to the banking system; identify and explain four differences between a bank and a microfinance institution

a. The Banks and Specialized Deposit Taking Institutions Act (Act 90) defines “banking law” as an enactment related to the banking system. State any other four (4) laws (Acts of Parliament) that are related to the Banking System in Ghana. (4 marks)

b. Banks and Micro Finance Institutions are all players in the Banking Industry with similarities and differences. Identify and explain any four (4) differences between a Bank and a Micro Finance Institution. (16 marks)

(Total: 20 marks)

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EOB – APR 2024 – L1 – Q6 – Benefits of Shift to Electronic or Digital Banking in Ghana

State and explain five benefits from changing from manual to electronic/digital banking in Ghana

State and explain any five (5) benefits that have resulted from the change from Manual Based System of Banking to Electronic or Digital Based Banking System in Ghana.

(20 marks)

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