73292617 ACCA P1 Mock Interim Answer Dec 2011

ACCA

Paper P1

Governance, Risk and Ethics December 2011

Interim Assessment – Answers

To gain maximum benefit, do not refer to these answers until you have completed the interim assessment questions and submitted them for marking.

ACCA P1 : GOVERNANCE, RISK AND ETHICS

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© Kaplan Financial Limited, 2011

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INTERIM ASSESSMENT ANSWERS

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ANSWER 1

Key answer tips

This question focuses on the corporate governance syllabus area. Be careful to note the verbs used for each part and ensure that your answer meets these requirements.

(a) Evaluation of board/committees of Quasi

Good corporate governance points

Overview of board

There is an appropriate mix of executive and non-executive directors (50% executive to 50% non-executive, with the chairman having a casting vote, meets most codes of corporate governance). This means that the non-executive directors can provide an appropriate check on the decisions being taken and the power of the executive directors.

Similarly, the fact that non-executive directors (NEDs) are only appointed for up to six years provides for ongoing independence in their role.

Appropriate committees in place

The board has also established the 'normal' committees expected under corporate governance of audit, remuneration and nominations. The members of the audit and remuneration committees (NEDs only) are also in line with good corporate governance practice, providing for appropriate control and independence in those areas.

Split chairman and CEO

The roles of the chairman and the CEO are split on the board, ensuring that one person does not have too much power on the board itself. Codes of governance do allow for these roles to be combined, but only in exceptional circumstances.

Poor corporate governance points

No risk appraisal or risk management committee

There does not appear to be any section of the governance structures that draws up a risk management policy. The lack of this policy means that risks facing Quasi will not be identified or appropriate responses determined.

The risk is made worse by the apparent lack of any internal audit department. This implies that there is no formal review of the detailed internal control systems in Quasi. These systems could therefore be incomplete or ineffective. In jurisdictions with statutory reporting requirements, this would be considered a fundamental weakness.

Clearly a risk management committee and internal audit department need to be established as soon as possible.


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Senior independent director is a close friend of the chairman

While there is a senior independent director (SID), in accordance with corporate governance codes, that director appears to be a friend of the chairman of Quasi. This relationship may limit the independence of this director as he may not want to criticise the decisions of the chairman on the board. Similarly, the remuneration committee may be flawed in that the chairman and the SID both sit on this committee. The SID is unlikely to provide an independent view on salaries when the chairman is present.

The SID should be replaced as soon as possible with another NED. The current SID could maintain a general NED appointment although closeness to the chairman may provide too greater an independence threat.

Conflict resolution – inadequate

There has been some disagreement between one of the NEDs and other board members. As this situation has not been resolved, it is really up to the chairman to provide some dispute resolution procedure. To allow the conflict to remain unresolved is likely to affect the effective functioning of the board as the directors concerned will still have this problem at the back of their minds as they try to focus on other issues.

A conflict resolution process must be put in place as soon as possible. It is probably not appropriate for the NED to resign given that his/her views ought to be heard, and continue to be heard, by the board.

Composition of the nominations committee

The nominations committee currently consists solely of NEDs. The committee should also have executive director input, since the executives will be in the best position to identify candidates for promotion from within the company’s management team.

Work of the nominations committee

The nominations committee appears to be doing an appropriate job in providing job specifications for the existing directors. The weakness in their work appears to be with succession planning. While the dates of retirement of NEDs are known, the actual appointment of new NEDs appears to be left to chance – there is no plan to start recruitment in advance of an NED leaving. This means that Quasi will, at some times, not have the appropriate number of NEDs and there is no chance of outgoing NEDs briefing new NEDs on the company.

The scope of work of the nominations committee should be broadened to include succession planning.

(b) CEO and NEDs – performance appraisal

In terms of corporate governance, performance appraisal applies to all members of the board, not just the executive directors. General comments concerning performance appraisal therefore apply to the CEO and NEDs as well as any other board member. There are some specific comments regarding evaluation that can apply to the CEO and NEDs and these are considered separately below.

CEO appraisal – general comments

Being an executive officer, the main elements of CEO appraisal will be the same as for the other executive directors. The CEO will therefore be appraised against targets set for the whole board as well as the CEO individually. The appraisal process will


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normally be selected by the chairman and may involve outside consultants to provide an independent check on the process. Information on outcomes will be shared with the board and the process in general terms outlined in the annual report.

CEO – specific comments

As the CEO is responsible for the running of the company, then it is likely that performance appraisal will be linked to the success of Quasi. Attainment of specific targets such as return on operations or implementation of new product strategies could therefore form part of the CEO's appraisal process.

Within Quasi, the requirement for the CEO to be responsible for operational systems appears to be inappropriate; given this is not a senior management responsibility. This could be removed and other more strategic indicators used to assess how well the CEO is performing.

NED performance appraisal

The main difference with NED performance appraisal and executive performance appraisal is that NED appraisal is not linked to remuneration. NEDs receive a fixed fee for their services not linked to any incentive payment. Appraisal in NED terms is therefore linked primarily to how well they have fulfilled their responsibilities in the company.

Performance appraisal overall is again via questionnaires and board discussion. However, NEDs also need to satisfy themselves that they remain independent of the company – or their position and performance may be compromised. In Quasi there remains the issue of all directors being required to hold shares in Quasi which could compromise decision making, particularly of the NEDs.

To ensure that they have performed adequately during the year, NEDs also need to ensure that they are satisfied on areas such as:

• their ability to prepare for, attend and influence board meetings

• being able to devote sufficient time to understand the company, make site visits, etc

• being able to make a positive contribution to strategy development and risk management

• their ability to retain their own views and resist changes being suggested by others

• whether their performance and behaviour generate mutual trust and respect on the board.

So appraisal is not against specific targets, but rather an assessment of how well their responsibilities have been carried out. NEDs will need to be honest with themselves as to whether those responsibilities have been fulfilled, and then agree action plans where improvement and/or changes are required.


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(c) Roles of non-executive directors

According to the Higgs Report published in 2003, NEDs have four distinct roles in an organisation:

Strategic. NEDs should constructively challenge and help to develop proposals on strategy. NEDs can bring external knowledge and experience to the company, providing an external check on whether company strategy is appropriate and achievable.

Scrutinising. NEDs should scrutinise the decisions and performance of executive management in achieving agreed goals and targets as well as monitoring the reporting of performance. Again NEDs can provide an external check that board performance targets are appropriate and achievable, and then ensure that reporting systems correctly report the achievement, or otherwise, of those targets.

Risk. NEDs should satisfy themselves regarding the integrity of the financial statements and that the systems of internal control and risk management are robust. NEDs will again be responsible for providing an independent check on these areas.

People. NEDs should be involved in setting executive remuneration as well as appointing directors and providing for succession planning. Involving NEDs in this way removes the independence issue of executive directors setting their own remuneration and deciding who they would like on the board (compared to who they actually require on the board).

Tutorial note

These are the four key roles of NEDs – useful to learn for any similar questions.

NEDs can enhance the standing of board sub-committees as follows:

• NEDs help to limit the power of executive directors. As board sub-committees normally comprise solely, or a majority of NEDs, this ensures that executive power is limited in key areas such as remuneration and appointments.

• NEDs can provide specialist knowledge and experience to enhance the decision-making ability of the board and the sub-committees. Experience specifically relates to other companies with which NEDs have contact. For example, many NEDs are NEDs or even executives of other companies; they can therefore check whether remuneration, for example, is congruent with industry standards from first-hand experience.

• NEDs should be independent of the company – that is their actions are not influenced by other senior management in the company. Independence helps ensure that board and sub-committee decisions are acceptable to shareholders – they will be less concerned that executive directors are running the company for their own benefit.

• To maintain independence, NEDs are rotated and the committees therefore refreshed on a regular basis. This rotation helps to ensure that NEDs do remain independent, providing the benefit mentioned above. Rotation ensures that NEDs do not get too close to the executive directors and are not swayed by executive decision making from familiarity threats.


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(d) BRIEFING PAPER

To: Quasi Board

From: Remuneration Committee

Subject: Executive directors’ remuneration

In preparation for the management meeting this paper will provide information regarding how directors’ remuneration should be determined, and how Quasi performs in this respect.

Tutorial note

Think about your audience here and their information requirements. Board members will want to receive the main facts up front in a briefing paper, with detail to follow.

There is no need for the introduction and conclusion that would normally be required in a report.

Summary of key points for the meeting

Components of directors’ remuneration package:

• Basic pay – determined through benchmarking against peer group, as is done by Quasi.

• Performance related: bonus payments – usually set on profit targets or total shareholder value. Quasi’s system has a guaranteed element which is contrary to the concept of bonuses linked to performance.

• Other PRP – should form a significant part of total package, so the 25% linked to PRP within Quasi is not optimal.

• Performance related: share options – options are often recommended to align your interests as directors with those of shareholders.

• Pension contributions – these are usually connected to the basic salary level.

• Benefits in kind: company car – such benefits are provided in addition to the normal salaries.

The detail behind these points follows.

Remuneration strategy

The overall aim of a remuneration strategy should be to link reward to performance of the company. The remuneration strategy is therefore about creating a link to corporate strategy since the corporate strategy is the process through which performance is improved.

Components of directors’ remuneration package

Basic salary

As with most jobs all directors are promised a specific annual salary. This is usually determined through benchmarking peer group salaries. Peer groups should be industry specific and should reference equivalent sized ventures.


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The amount of the basic salary provides an indication of the performance expected from the director, with salaries in the top quartile of payments indicating higher levels of expected performance.

You, as directors in Quasi, are being paid at the industry average. The only consideration appears to be that 'industry' in this case applies to the whole economy rather than to Quasi’s specific business. Some adjustment may be necessary if it is found that salaries in Quasi’s industry differ significantly from the economy norm.

Bonus payments

The purpose of a bonus is to adjust pay on the basis of performance. To award a bonus regardless of any particular effort is to make the term meaningless as there is no set level of performance necessary to actually obtain that bonus.

A bonus paid to a director at the end of the accounting year may be based on any number of accounting measures including gross profit, net profit, earnings per share and total shareholder value. Most corporate governance systems recommend that the bonus is linked to shareholder value in some way to show that the shareholders' and directors' interests are the same.

Quasi’s bonus system can be criticised on two counts – firstly, there is a guaranteed element which indicates this is not really a bonus. Secondly, the bonus is linked to net profit which can give rise to the perception of manipulation to improve payments. Linking to an increase in shareholder value would help to remove this possibility.

Performance related pay (PRP)

Performance related elements of remuneration are defined as those elements of remuneration dependent on the achievement of some form of performance measurement criteria. Good corporate governance principles state that the performance related element should form a significant part of the total remuneration package. The PRP elements of remuneration should be attainable in order to provide motivation since unattainable targets are generally demotivating.

In Quasi, only 25% of remuneration is linked to PRP. This is probably insufficient as this is not a significant element of total remuneration and may therefore not be sufficiently motivating. Also, linking PRP to share price is generally thought to be inappropriate as you cannot be expected to control market conditions; so a general decline in market conditions is not caused by directors’ actions and so you should not be penalised for this. Similarly, you are not responsible for favourable market conditions and should not be rewarded for these. Quasi needs to consider linking PRP to other indicators such as shareholder returns.

Shares and share options

Share options are contracts that allow the executive to buy shares at a fixed price or exercise price. Directors make a profit if the share price of the company increases – the option is exercised to purchase at a lower price and reselling the shares provides the profit. Share options are good because they attempt to link company performance to director performance in the longer term (although market factors distort this as mentioned above).

The inclusion of share options in Quasi’s remuneration package is therefore acceptable.


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Pension contributions

These are a common part of any remuneration package. Their level is usually set in relation to the market conditions (i.e. amounts paid to peer groups) and taking into account the age of the director in question.

It is possible that a proportion of these pensions contributions could be performance related, providing a further incentive element to the overall package.

Benefits in kind

The provision of ‘perks’ such as a company car and health insurance is a common part of any senior level remuneration package.

These will serve to attract directors into a role, and maybe retain them in it, but rarely have a motivational impact. As long as they are not viewed to be excessive for the position they are widely accepted.

Marking scheme Marks (a) 1 mark for each positive aspect of the board or committee approach Up to 5 Up to 2 marks for each negative aspect of the board or committee

approach: − I mark for identifying negative aspect − 1 mark for specifying why this is a problem

Up to 10

1 marks for each recommendation Up to 5 –––– Maximum 14 –––– (b) 1 mark for each element of a process of appraisal Up to 6 1 mark for each limitation Up to 4 (could be done as two separate sections or combined with element &

limitation together)

–––– Maximum 8 –––– (c) 2 marks for each described role (only the 4 specified in solution), 4 roles

in total 8

1 mark for each issue relating to enhancement Up to 4 –––– Maximum 12 –––– (d) For each of the components (basic salary, bonus, PRP, share options,

pension and benefits in kind): – 1 mark per point made in description of how to determine – 1 mark per point made for a discussion of how this has been

done in Quasi Maximum 3 marks on each component

Up to 12

Up to 4 professional marks for the structure, content, style and logical flow of the briefing paper. [Briefing paper should be addressed to the correct audience, have a summary at start with detail provided later. the body of the paper should ‘read’ as though written by one group of directors to the whole board]

Up to 4

–––– Maximum 16 –––– Total 50 ––––


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ANSWER 2

Key answer tips

Part (a) focuses on an area of current interest in disclosure: CSR reporting and the importance of voluntary disclosure.

Part (b) provides a model around which to base your answer – Carroll’s four part model. It is important that your advice is relevant to the situation facing Eddis.

(a) Definition of CSR

The pressure group Business for Social Responsibility defines corporate and social responsibility (CSR) as 'it generally refers to business decision making linked to ethical values, compliance with legal requirements and respect for people, communities and the environment'.

Carroll provided the following definition of CSR:

‘CSR encompasses the economic, legal, ethical and philanthropic expectations placed on organisations by society at a given point in time’.

In many companies, therefore, CSR is viewed as having policies in place that support the CSR objectives of the organisation. The company has a statement that it will, for example, trade ethically, and has policies in place to ensure that this actually happens.

Benefits of voluntary disclosure of CSR information

The extent of CSR reporting varies from jurisdiction to jurisdiction; however, in most countries, CSR reporting tends to be voluntary. However, the benefits of reporting, whether statutory, code or voluntary, include:

Accountability

Disclosure is the dominant philosophy of the modern system and the essential aspect of corporate accountability. Disclosing CSR information helps to show the company’s stance on CSR and its ability to meet its CSR objectives.

Information asymmetry

Disclosure removes some aspects of information asymmetry. The decision makers in a company have more information than other stakeholders, who may well have an interest in the CSR obligations of the company. Disclosure starts to provide these other stakeholders with that information.

Attracts investment

Institutional investors are attracted by increased disclosure and transparency. Greater disclosure reduces risk and with it the cost of capital to the company. In some situations, taking an ethical stance and disclosing work on this stance will attract more investors. For example, in the UK, the Co-op group of shops attempts to source food supplies from farms where workers are paid a fair wage under 'Fair Trade' agreements. This attracts investors who share the fair trade principles and customers who wish to be ethical consumers.


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Compliance

In jurisdictions where there are CSR reporting obligations, non-compliance may threaten listing and could result in fines through civil action in the courts. In the UK, the Companies Act 2006 will start to introduce some basic CSR reporting in the next few years, but without as yet strict rules for non-compliance.

Reputation risk

Lack of disclosure may adversely affect the company’s reputation, especially where it is perceived to be involved in unethical activities.

Stakeholders

Taking an ethical stance may attract other stakeholders such as employees who wish to work for ethical organisations. Shared ethical values between the company and its employees may help to attract more customers or provide better customer service (e.g. the Body Shop where the company and employees share views on not producing cosmetics using testing on animals).

(b) Branch closure and Carroll’s theory

Carroll developed a four-part theory of CSR which is applicable to companies. There are four responsibilities which are represented by layers of a pyramid. Carroll argued that true social responsibility requires meeting all four levels consecutively.

Economic responsibility

Eddis has an economic responsibility in terms of providing shareholders with a reasonable return on their investment, to provide employees with safe and fairly paid jobs and also to provide consumers with good quality products at a reasonable price. In other words this is the main reason for the existence of the company, and the economic responsibility is expected by society as a whole. In some jurisdictions, economic responsibility is extended to apply to communities, not simply workers.

There is a clear conflict between the decision to close the factory or not and Eddis' responsibilities. Saving money in the short term does meet the aims of the shareholders in terms of continuing to provide a reasonable return on their investment. However, branch closure will mean employees losing jobs in a poor jurisdiction. If the directors subscribe to the wider view on economic responsibility, then this action may not be taken.

Similarly, closure may result in adverse publicity and a fall in demand for Eddis’ products which would not be in the interests of shareholders. Retaining the branch, even at a loss, for the next three years appears advisable.

Legal responsibility

Legal responsibility means that companies abide by the laws of their jurisdiction. Laws are seen as the codification of society’s moral views – they are things that must be done or followed, so it is required that companies follow those laws.

In terms of Eddis, if the branch is closed, then the company will be required to follow any laws regarding payment of redundancy pay, payment of remaining taxes to the government, etc. There are not normally any laws which state that a company must continue in existence, so as long as laws are followed, Eddis can close the branch.



Ethical responsibility

Ethical responsibilities mean a company should do what is right and not simply follow what they have to do from any legal responsibility. These responsibilities are generally expected by society – so the company does not have to follow them, but may find adverse affects if those expectations are not met. For example, the Shell oil company had a legal right to dispose of an old oil drilling platform at sea. However, pressure groups and the expectation of the public not to take this action meant that alternative disposal options were taken.

For Eddis, there is a legal right to close the branch. However, the public may have expectations of companies being ethically obliged to assist poorer jurisdictions. This would mean that Eddis should keep the branch open as it meets those expectations. Closure against public expectation may again harm Eddis if its customers move to alternative suppliers.

Philanthropic responsibility

Philanthropic responsibility, or the love of the fellow human in the original Greek, refers to the responsibility of organisations to improve the quality of life of employees, local communities and ultimately society in general. This responsibility includes the provision of facilities for employees (e.g. sports halls) through to sponsoring of the arts (e.g. the Tate Gallery in London – originally sponsored by Tate and Lyle, the sugar manufacturer). The philanthropic responsibility is not required by society, but is normally desired so that corporations are showing some interest in the world apart from profit making.

For Eddis, there is no clear philanthropic responsibility in terms of providing employee benefits, etc. It can be argued that keeping the branch open will cost Eddis money, and in this sense Eddis has to be philanthropic to continue to pay their employees in this location. There would also be a direct benefit to the community in that jobs would not be lost.

Summary

In terms of Carroll, by closing the branch, Eddis can fulfil its legal responsibilities. However, the directors may find that the wider context of economic responsibility is not fulfilled, and that ethically and philanthropically the branch should remain open in the short term. The board is therefore correct in re-considering its action.

Tutorial note

The advice and recommendations that you give must be wholly relevant and applicable to Eddis. Any advice, well argued, will be awarded marks.



Marking scheme Marks

(a) 1 mark per point for definition Up to 3

1 mark for identifying a benefit and 1 mark for assessment (size of benefit, significance to a company etc)

Up to 8

––––

Maximum 10

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(b) For each of the four parts to the model:

− 1 mark for description of part (½ mark for just identifying part)

− 1 mark for application to Eddis

− Up to 2 marks for each advisory issue raised and discussed

Up to 15

Up to 2 additional marks for overall summary

[Note: If answer has not used Carroll’s model can still earn application & issues marks, and hence maximum of 11 marks in this situation (4 marks were for description of model)]

––––

Maximum 15

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Total 25

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ANSWER 3

Key answer tips

Part (a) provides a theoretical start to this question. Ensure that you do not miss the second part of the requirement looking for the link between the theories.

Part (b) allows for a small theory section to begin, where you can earn easy marks for the matrix. The bulk of the marks will be for applying this to the stakeholders of CityWide.

(a) Agency theory and stakeholder theory

Agency theory

Agency theory is a group of concepts describing the nature of the agency relationship deriving from the separation between ownership and control.

The basic agency relationship occurs when one party, the principal, employs another party, the agent, to perform a task on their behalf. In the context of companies and corporate governance, the principal is the shareholders, the agent is the directors and the task is running the company. The principal either cannot or does not want to run the company and therefore delegates this task to the agent. The agent is employed by the principal to carry out a task on their behalf.

Having established the principal/agent relationship, agency costs are incurred in the set up, operation and monitoring of schemes to ensure the alignment of principal and agent interests. Examples of such costs include profit-related bonuses and productivity schemes to align the interests of directors with shareholders and audits to ensure that financial information produced by directors is accurate.



Stakeholder theory

The basis for stakeholder theory is that companies are so large and their impact on society so pervasive that they should discharge accountability to many more sectors of society than solely their shareholders. Taking into account the interests of stakeholders may be important for a company depending on the power that each stakeholder group has. Stakeholder interest could therefore override shareholder interests in some situations e.g. a pressure group suggesting that activities are unethical and providing extensive publicity to show this. Action may have to be taken by the company in response to this group which could decrease shareholder return e.g. provision of a more environmentally friendly method of disposal of waste products.

The word 'stake' suggests an exchange relationship with the company, which is generally correct. The stakeholder will have an interest in the company, and in most situations the company will need to take those interests into account. Typical stakeholder groups include:

• shareholders and employees

• customers and suppliers

• creditors and communities

• governments and the general public/world society

• environment, animal species and future generations.

A stakeholder provides the company with an input (e.g. road infrastructure) and expects their own interests to be satisfied via inducements (to enhance not degrade the quality of life as a corporate citizen).

Link between agency theory and stakeholder theory

Agency theory is a narrow form of stakeholder theory – in agency theory the only 'stakeholder' is effectively the shareholder, whereas in stakeholder theory there are many other stakeholders including customers, the government, etc.

Stakeholder theory may be the necessary outcome of agency theory given that there is a business case in considering the needs of stakeholders through improved customer perception, employee motivation, supplier stability, shareholder conscience investment

Both stakeholder and agency involve a contract, the purpose of which is to align divergent interests between the directors and the shareholder/stakeholder.



(b) Stakeholder power and interest

Mendelow’s stakeholder mapping matrix can be used to explain the action to take for different stakeholder groups. The matrix can be expressed as follows:

Level of interest

Low High

Pow

er

Low

Minimum Effort Keep Informed

High

Keep Satisfied Key Players

The matrix was designed to track interested parties and evaluate their viewpoint in the context of some change in business strategy.

Power relates to the amount of influence (or power) that the stakeholder group can have over the organisation. However, the fact that a group has power does not necessarily mean that their power will be used.

The level of interest indicates whether the stakeholder is actively interested in the performance of the organisation. The amount of influence the group has depends on their level of power.

Low interest – low power

These stakeholders include small shareholders, the unskilled element of the labour force and the general public. They have low interest in the organisation primarily due to lack of power to change strategy.

CityWide has a significant number of shareholders in this category who were allocated shares when CityWide obtained a listing. As the members obtained the shares by default, rather than actively deciding to invest in CityWide they appear to have little interest in the company. They also have little power – there are 2,000,000 shareholders in this category. While not necessarily ignoring the group, there is little CityWide needs to do apart from keep them 'happy', that is pay a regular dividend.

High interest – low power

These stakeholders would like to affect the strategy of the organisation but do not have the power to do this. Stakeholders include salaried staff, customers and suppliers, particularly where the organisation provides a significant percentage of sales or purchases for those organisations. Environmental pressure groups would also be placed in this category as they will seek to influence company strategy, normally by attempting to persuade high power groups to take action.



For CityWide, the main stakeholder group from the scenario appears to be the customers. Customers expect a good level of service – they have a high interest in their money being managed appropriately by CityWide. While the level of customer service has been good, CityWide may need to address the issue of the call centre appearing to provide poorer service. While customers individually have little or no power over CityWide, a significant number of customers leaving CityWide could exert significant power.

Low interest – high power

These stakeholders normally have a low interest in the organisation, but they do have the ability to affect strategy should they choose to do so. Stakeholders in this group include the national government and in some situations institutional shareholders. The latter may well be happy to let the organisation operate as it wants to, but will exercise their power if they see their stake being threatened.

CityWide does have a few institutional shareholders. Given the limited number, it should not be difficult for the chairman, or other director in CityWide, to contact them and assess their objectives. The board of CityWide should take those objectives into account when planning CityWide’s strategy, because stakeholders could exert their power on CityWide if their objectives are not being met – by selling their shares. However, as institutional shareholders hold a minority of the shares, the board must still remember to cater for the interests of the majority of shareholders also.

High interest – high power

These stakeholders have a high interest in the organisation and have the ability to affect strategy. Stakeholders include the directors, major shareholders and trade unions.

The main stakeholder in this group is the directors. As there are no major shareholders or trade unions, the directors appear to have fewer outside influences to consider than other companies. Their apparent high level of power will need to be checked by having appropriate corporate governance structures in place. These structures will help to reassure shareholders that CityWide is being run for their benefit.

Tutorial note

Your answer may have classified stakeholders differently to that above, or identified different stakeholders in this scenario. Marks will be awarded for all sensible and well-explained suggestions.



Marking scheme Marks

(a) Explanation of each theory:

1 mark per point, up to a maximum of 4 marks on each theory

8

1 mark for each link Up to 4

––––

Maximum 10

––––

(b) Description of matrix, power & influence terms – 1 mark per point Up to 4

For each stakeholder group (power / influence):

− 1 mark for identifying example for CityWide

− up to 2 marks for discussion of actions

Maximum of 4 per group, for 4 groups

Up to 16

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Maximum 15

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Total 25

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73292617 ACCA P1 Mock Interim Answer Dec 2011