ACCA份考试真题P1.docx

ACCA份考试真题P1.docx

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ACCA份考试真题P1

考试真题（P1）

　　SectionA-ThisONEquestioniscompulsoryandMUSTbeattempted

　　1Inthe2009resultspresentationtoanalysts,thechiefexecutiveofZPT,aglobalinternetcommunicationscompany,announcedanexcellentsetofresultstothewaitingaudience.ChiefexecutiveCliveXuannouncedthat,comparedto2008,saleshadincreasedby50%,profitsby100%andtotalassetsby80%.Thedividendwastobedoubledfromthepreviousyear.Healsoannouncedthatbasedontheiroutstandingperformance,theexecutivedirectorswouldbepaidlargebonusesinlinewiththeircontracts.Hisownbonusaschiefexecutivewouldbe$20million.Whenoneoftheanalystsaskedifthebonuswasexcessive,MrXuremindedtheaudiencethatthesharepricehadrisen45%overthecourseoftheyearbecauseofhiseffortsinskilfullyguidingthecompany.Hesaidthatheexpectedthesharepricetorisefurtherontheresultsannouncement,whichitdulydid.Becausetheresultsexceededmarketexpectation,thesharepriceroseanother25%to$52.

　　Threemonthslater,CliveXucalledapressconferencetoannouncearestatementofthe2009results.Thiswasnecessary,hesaid,becauseofsome'regrettableaccountingerrors'.ThisfollowedameetingbetweenZPTandthelegalauthoritieswhowereinvestigatingapossiblefraudatZPT.Hedisclosedthatinfactthefiguresfor2009wereincreasesof10%forsales,20%forprofitsand15%fortotalassetswhichwereallsignificantlybelowmarketexpectations.Theproposeddividendwouldnowonlybeamodest10%morethanlastyear.Hesaidthatheexpectedamarketreactiontotherestatementbuthopedthatitwouldonlybeashort-termeffect.

　　Thefirstquestionerfromtheaudienceaskedwhytheauditorshadnotspottedandcorrectedthefundamentalaccountingerrorsandthesecondquestioneraskedwhethersuchadisparitybetweeninitialandrestatedresultswasduetofraudratherthan'accountingerrors'.WhenajournalistaskedCliveXuifheintendedtopaybackthe$20millionbonusthathadbeenbasedonthepreviousresults,MrXusaidhedidnot.Thesharepricefelldramaticallyupontherestatementannouncementand,becauseZPTwassuchalargecompany,itmadeheadlinesinthebusinesspagesinmanycountries.

　　Laterthatmonth,thecompanyannouncedthatfollowinganinternalinvestigation,therewouldbefurtherrestatements,alldramaticallydownwards,fortheyears2006and2007.ThiscausedanothermasssellingofZPTsharesresultinginafinalsharevaluethefollowingdayof$1.Thisrepresentedalossofshareholdervalueof$12billionfromthepeakshareprice.CliveXuresignedandthegovernmentregulatorforbusinessorderedaninvestigationintowhathadhappenedatZPT.Thesharesweresuspendedbythestockexchange.Amonthlater,havingfailedtogainprotectionfromitscreditorsinthecourts,ZPTwasdeclaredbankrupt.Nothingwaspaidouttoshareholderswhilstsuppliersreceivedafractionoftheamountsduetothem.Somenon-currentassetswereacquiredbycompetitorsbutallofZPT‘s54,000employeeslosttheirjobs,mostlywithlittleornoterminationpayment.BecausetheZPTemployees’pensionfundwasnotprotectedfromcreditors,thevalueofthatwasalsoseverelyreducedtopaydebtswhichmeantthatemployeeswithmanyyearsofservicewouldhaveagreatlyreducedpensiontorelyoninoldage.cedtopaydebtswhichmeantthatemployeeswithmanyyearsofservicewouldhaveagreatlyreducedpensiontorelyoninoldage.cedtopaydebtswhichmeantthatemployeeswithmanyyearsofservicewouldhaveagreatlyreducedpensiontorelyoninoldage.cedtopaydebtswhichmeantthatemployeeswithmanyyearsofservicewouldhaveagreatlyreducedpensiontorelyoninoldage.

　　ThegovernmentinvestigationfoundthatZPThadbeenmaintainingfalseaccountingrecordsforseveralyears.Thiswasdonebydevelopinganoverly-complicatedcompanystructurethatcontainedanetworkofinternationalbranchesandabusinessmodelthatwasdifficulttounderstand.WhereasZPThadbegunasasimpletelecommunicationscompany,CliveXuhadincreasedthecomplexityofthecompanysothathecould'hide'lossesandmis-reportprofits.Inthecompany‘sreporting,healsosubstantiallyoverestimatedthevalueoffuturecustomersupplycontracts.Theinvestigationalsofoundanumberofsignificantinternalcontroldeficienciesincludingnoeffectivemanagementoversightoftheexternalreportingprocessandadisregardoftherelevantaccountingstandards.

　　InadditiontoMrXu,severalotherdirectorswerecomplicitintheactivitiesalthoughShaziaLo,aseniorqualifiedaccountantworkingforthefinancialdirector,hadbeenunhappyaboutthesituationforsometime.Shehadapproachedthefinancedirectorwithherconcernsbuthavingfailedtogettheanswersshefeltsheneeded,hadthreatenedtotellthepressthatfuturecustomersupplycontractvalueshadbeenintentionallyandmateriallyoverstated（thechangeinfairvaluewouldhavehadaprofitimpact）。

Whenherthreatcametotheattentionoftheboard,shewasintimidatedinthehopethatshewouldkeepquiet.Shefinallyacceptedalargepersonalbonusinexchangeforhersilenceinlate2008.

　　TheinvestigationlaterfoundthatShaziaLohadbeencontinuallyinstructed,againstherjudgement,toreportfiguressheknewtobegrosslyoptimistic.Whenshewasofferedthelargepersonalbonusinexchangeforhersilence,sheaccepteditbecausesheneededthemoneytomeetseveralexpensesrelatedtohermotherwhowassufferingalong-termillnessandforwhomnostatehealthcarewasavailable.Themoneywasusedtopayforalifesavingoperationforhermotherandalsotorehouseherinamorehealthyenvironment.ShaziaLomadenopersonalfinancialgainfromthebonusatall（themoneywasallusedtohelphermother）butherbehaviourwaswidelyreportedandcriticisedinthepressafterthecollapseofthecompany.

　　Theinvestigationfoundthattheauditor,JJCpartnership（oneofthelargestinthecountry），hadhaditsindependencecompromisedbyalargeauditfeebutalsothroughreceivingconsultancyincomefromZPTworthseveraltimestheauditfee.BecauseZPTwassuchanimportantclientforJJC，ithadmanyresourcesandjobsentirelycommittedtotheZPTaccount.JJChad，itwasfound，knowinglysignedoffinaccurateaccountsinordertoprotectthemanagementofZPTandtheirownseniorpartnersengagedwiththeZPTaccount.Aftertheinvestigation,JJC‘sotherclientsgraduallychangedauditor,notwantingtobeseentohaveanyconnectionwithJJC.Accordingly,JJC’sauditbusinesshassincecloseddown.Thiscausedsignificantdisturbanceandupheavalintheauditindustry.

　　BecauseZPTwasregardedformanyyearsasahighperformingcompanyinagrowingmarket,manyinstitutionalinvestorshadincreasedthenumberofZPTsharesintheirinvestmentportfolios.Whenthesharepricelostitsvalue,itmeantthattheoverallvalueoftheirfundswasreducedandsomeindividualshareholdersdemandedtoknowwhytheinstitutionalinvestorshadnotintervenedsoonertoeitherfindoutwhatwasreallygoingoninZPTordivestZPTshares.Somewereespeciallyangrythatevenafterthefirstrestatementwasannounced,theinstitutionalinvestorsdidnotmakeanyattempttointervene.Onesmallinvestorsaidhewantedtoseemore'shareholderactivism',especiallyamongthelargeinstitutionalinvestors.

　　Sometimelater,MrXuarguedthatoneofthereasonsforthedevelopmentofthecomplexZPTbusinessmodelwasthatitwasthoughttobenecessarytomanagethemanyrisksthatZPTfacedinitscomplexandturbulentbusinessenvironment.Hesaidthatamultiplicityofoverseasofficeswasnecessarytoaddressexchangeraterisks,abeliefchallengedbysomeobserverswhosaiditwasjusttoenabletheZPTboardtomaketheirinternalcontrolsandriskmanagementlesstransparent.

　　（a）Becauseoftheirlargeshareholdings,institutionalinvestorsaresometimesabletointervenedirectlyinthecompaniestheyholdsharesin.

　　Required:

　　（i）Explainthefactorsthatmightleadinstitutionalinvestorstoattempttointervenedirectlyinthemanagementofacompany;（6marks）

　　（ii）ConstructthecaseforinstitutionalinvestorsattemptingtointerveneinZPTafterthefirstresultsrestatementwasannounced.（6marks）

　　（b）DistinguishbetweenabsolutistandrelativistapproachestoethicsandcriticallyevaluatethebehaviourofShaziaLo（theaccountantwhoacceptedabonusforhersilence）usingbothoftheseethicalperspectives.（10marks）

　　（c）TheZPTcasecametotheattentionofRobertNie,aseniornationallegislatorinthecountrywhereZPThaditsheadoffice.ThecountrydidnothaveanystatutorycorporategovernancelegislationandMrNiewasfuriousattheZPTsituationbecausemanyofhisvotershadbeenbadlyfinanciallyaffectedbyit.Hebelievedthatlegislationwasneededtoensurethatasimilarsituationcouldnothappenagain.MrNieintendstomakeabriefspeechinthenationallegislativeassemblyoutliningthecaseforhisproposedlegislationandsomeofitsproposedprovisions.

　　Required:

　　Draftsectionsofthespeechtocoverthefollowingareas:

　　（i）ExplaintheimportanceofsoundcorporategovernancebyassessingtheconsequencesofthecorporategovernancefailuresatZPT;（10marks）

　　（ii）Constructthecaseforthemandatoryexternalreportingofinternalfinancialcontrolsandrisks;

　　（8marks）

　　（iii）Explainthebroadareasthattheproposedexternalreportoninternalcontrolsshouldinclude,drawingonthecasecontentasappropriate.（6marks）

　　Professionalmarkswillbeawardedinpart（c）forthestructure,flow,persuasivenessandtoneoftheanswer.（4marks）

　　（50marks）　Se