Internal control

Professionalism

Risk

Accountability

Corporate ethics

Governance

REVIEW OF PAST EXAMS

WHAT WAS DONE WELL?

Q1 on Global Bank: (b) on internal control failures, (c) on agency theory.

Q3(a)(i) on ways a director can leave service and (c) on criticise the CEO’s reward package.

Q4(a)(i) on roles of risk manager.

June 2009

Q1 was about the Mary Jane. (a) on AAA 7-step model, (b) on internal control failures.

Q2 (Ding Co) (a) on content of a director’s induction programme.

Q3 (a) on integrity.

Q4 (a) on risk embeddedness (although not on application to Saltoc)

December 2009

Q1 was on Hesket Nuclear. (b) on trade unions (after an article I wrote in Student Accountant), (c) on agency, (d)(i) on social and environmental footprint (but not on ‘construct a case’).

Q2 (a) on criticising the remuneration committee, (b) components of rewards package. Less well on alignment with shareholders’ interests.

Q3 (c) define internal audit testing.

June 2010

Q1(a)(i) on why institutional investors might intervene in company management.

Q2(c) on strategic and operational risk.

Q3(a) on conflict of interest and John Soria taking up a NED post at KK Limited.

Q4(a) on liquidity risk.

December 2010

Core CG themes done better than some other areas

‘Knowledge’ marks and level 1 verbs

Timekeeping – little evidence of struggling for time

Most organise material well in answer preparation

Questions similar to those asked previously (such as describing internal control failures in a case)

Overall, things well done

WHAT WASN’T DONE WELL?

Q1(a) about the ‘rogue trader’ at Global Bank: candidates had ‘question spotted’ that Kohlberg wouldn’t come up in this paper. (d) about narrow and wide stakeholders. (e) about the roles of the CEO in internal control.

Q2 on assess the ethical threats and (d) on deep green perspective.

Q3: (d) criticise the chairman’s performance.

June 2009

Q1 on the Mary Jane. (c) on NEDs, (d)(i) on information on controls and risks and (d)(ii) on the qualities of information.

Q2 (c) on Arif Zaman’s understanding of the role of chairman.

Q3 (b) Criticise Potto Sinter’s ethical behaviour. Answers were too descriptive.’

December 2009

Q1 (a) on voluntary and involuntary stakeholders.

Q2 (c) on voluntary reduction in pension value

Q4 on ‘Happy and healthy’ – mostly done poorly.

June 2010

Q1(c) – all three parts.- (i) confusion over ‘sound corporate governance’- (iii) often not attempted

Q2(b) despite a technical article on it in 2009.

Q3(c) on ‘best practice’ CG report.

Q4(d) on SR and the voluntary supplier payment policy

December 2010

Explain the importance of sound corporate governance by assessing the consequences of the corporate governance failures at ZPT.

Corporate governance is the system by which organisations are controlled…

Sound corporate governance includes having a committee structure such as remunerations committee…

It is important to split the roles of CEO and Chairman.

ZPT should form an audit committee…

There is no mention in the case of a nominations committee so ZPT should set one up…

Example of Q1(c)(i)

The ‘second parts’ of two-task requirements (after the ‘and’)

Questions using higher level verbs like evaluate, construct and assess

Ethical reasoning tasks

Professional marks in Q1

Overall, things that weren’t done well

LESSONS LEARNED

WHERE CAN TUITION PROVIDERS HELP?

Work through all past papers.

Rehearse use of common P1 verbs and question types.

Continually emphasise the necessity of properly reading each question and the case itself.

Rehearse presentation of answers for professional marks in Q1.

Study real life situations in which governance, risk and ethics are prominent as part of placing the main themes in context.

My thoughts after seven live P1 exams

FOCUS ON FUTURE EXAMS

WHAT’S NEW?

C1c on dynamic nature of risk assessment

C1d management responses to changing risk assessment

C1e risk appetite

C3f on ALARP

C3g objective and subjective risk perception

C3h related and correlated risk

New content on risk in study guide section C

P1, Professional Accountant

Is now known as:

P1, Governance, Risk and Ethics

New name

Don’t ‘question spot’ – revise the whole study guide and expect anything.

Work through all previous papers.

Concentrate on exam technique for level 2 and 3 verbs.

Answer all tasks in a question (before and after the ‘and’)

Read and study the case and each question before starting the answer.

EXAMINER’S TOP TIPS