Tag (SQ): Customers

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AAA – L3 – SA – Q4.6 – Audit evidence

Which factors contribute to inherent risk in an audit?

Which of the following may be factors contributing to inherent risk?

1 Number of customers

2 Strength of internal controls

3 Number of products

4 Rate of staff turnover

 1,2 and 3 only

B   1,3 and 4 only

C   2,3 and 4 only

 1,2 and 4 only

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BMIS – L1 – QE5 – The internet, cloud computing, IS security and blockchain

List potential benefits of the internet and e-commerce for suppliers.

List the potential benefits of the internet and e-commerce for:

(a) suppliers

(b) customers

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BMIS – L1 – QA1 – Stakeholders

Define connected stakeholders in a company context.

(a) Define ‘connected stakeholders’.

(b) Explain at least one way in which each of the following stakeholders might affect important decisions taken by the board of directors of a large stock market company.

(i) Employees of the company

(ii) Suppliers

(iii) Customers

(iv) A pressure group or special interest group.

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FR – L2 – Q4 – Conceptual Framework

Explain the term "Conceptual Framework" in relation to IFRS Accounting Standards.

(a). Explain the term “Conceptual Framework” in relation to IFRS Accounting Standards.

(b). Define assets and liabilities.

(c) The International Accounting Standards Board’s Conceptual Framework requires that entities should comply with certain accounting concepts and underlying assumptions which include:
(i) Substance over form;
(ii) Materiality;
(iii) Comparability; and
(iv) Going concern.

Explain briefly the meaning of these concepts.

(d). Discuss the information needs of the following users of a company’s financial statements:

(i) Lenders;

(ii) Suppliers;

(iii) Customers;

(iv) Employees; and

(v) Government and its agencies.

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SCS – L3 – Q14- Strategy, stakeholders and mission

Discuss the implications of Sunrise Bank's new philosophy on staff, customers, and shareholders.

Background
Sunrise Bank (the Bank) is a West African clearing bank. It has 500 retail branches. It categorizes its business as retail and corporate. Each category currently accounts for half of the Bank’s revenue.
The Bank defines retail business as “banking for customers in their own right and small businesses where lending would not exceed GH₵1,000,000 in any one year”.
Corporate business is defined as “…where lending would exceed GH₵1,000,000 in any one year”. Corporate lending includes international lending.
Traditionally, corporate lending has been the most profitable business, yielding 70% of profit before taxation. Corporate lending has been carried out by six regional offices and a department at head office in Lagos. The Lagos office is also responsible for international lending. There are 200 staff employed in corporate lending.
Retail banking has operated in the following way.
The number of retail and small business customers at each branch has ranged from 500 to 5,000, although 2,500 is typical. The bank has employed the following Mission statement for its retail banking:
“Our Mission is to deliver a high-quality service to customers based on our managers’ personal knowledge of customers’ affairs.”
The Bank recognized that retail banking was relatively unprofitable. It was willing to operate a policy of cross-subsidization between corporate and retail as it hoped that some retail customers would become corporate ones. It saw its branch managers as assisting in this process because of their financing expertise and deep knowledge of their customers.
The Bank has operated each branch as a cost center. Managers have been provided with a three-monthly expenditure report which compared committed expenditure to budgeted expenditure. The Bank had not operated an accrual accounting system as regards branch expenditures for these three-monthly reports. However, year-end adjustments reconciled committed, actual and budgeted expenditures. These accounting operations were carried out by management accounting staff based at head office.

Required:
(a) The bank’s current mission statement for its retail services states an intention “to deliver a high-quality service to customers based on our managers’ personal knowledge of customers’ affairs”. The emphasis here is on high quality and personal attention. The new philosophy outlined by the managing director is different in several respects. The emphasis is on profitability, to be achieved through low-cost service. And “the days of the bank manager being a personal friend and adviser are over”. Discuss the implications of this change for staff, customers and shareholders.

(b) Until now, the bank has treated its retail branches as cost centers. Discuss the possible advantages and disadvantages for the bank in changing to a system where super branches operate as investment centers.

(c) (i) List the reports that super branch managers might need in order to carry out their new responsibilities.

(ii) Explain THREE qualitative indicators that should be monitored by super branch managers.

(d) Identify the most important stakeholders who should have been consulted about the proposed changes and explain why their involvement is important.

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