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7 C. 8 C. 9 B. 10 C. 11 D. 12 A. Section B. Questions 1–4 in Section B are all worth 14 marks each. Question 5 is wort

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Answers

ACCA Certified Accounting Technician Examination – Paper T5 Managing People and Systems

December 2010 Answers

Section A Questions 1–12 are all worth 2 marks each. 1 2 3 4 5 6 7 8 9 10 11 12

A D B A B D C C B C D A

Section B Questions 1–4 in Section B are all worth 14 marks each. Question 5 is worth 20 marks. 1

(a)

Policies are general statements, derived from an organisation’s strategy, which guide management thinking in decision-making. (They can also be about a general understanding and are often implied from the actions of managers.) They help to decide issues before they become problems, making it unnecessary to analyse the same situation every time it comes up. This permits managers to delegate authority and still maintain control over what their subordinates do. Policies do not usually require action but are intended to guide managers in their commitment to the decisions that they ultimately make. For example, the manager of a company may follow the practice of strictly promoting from within; this may then be interpreted as policy and followed carefully by subordinates. Policies also emphasise rules and can be stated in the form of directives. For example, a marketing objective might be to have complete market coverage, whereas the policy or goal adopted to achieve it might be that the company will sell to every retail outlet that is creditworthy, as decided by the company accountant. A finance objective such as the ‘maintenance of adequate liquidity’ might specify a policy that the accountant will draw up a cash budget and inform the Board if working capital is likely to fall below a specified limit. Policies exist at all levels of the organisation, ranging from major company policies, through to departmental policies and minor policies applicable to the smallest segment of the organisation. They may be related to functions such as sales and finance or merely to a project such as the design of a new product to meet specified competition. The ‘policy’ of an organisation is the total of all of their policies e.g. marketing, HR, purchasing, research and development etc. Each of these areas can then be broken down such that HR policy includes policy relating to industrial relations, promotion, recruitment, welfare etc. In turn, welfare policies set out principles and guidelines concerning holiday provision and retirement courses for employees nearing the end of their working lives. In summary, policies are guides to decision-making and therefore they allow for some discretion (otherwise they would be rules). Policy guidelines allow managers to exercise their own discretion and freedom of choice, but within certain acceptable limits.

(b)

2

Procedures are sequences of actions for performing certain tasks. Procedures prescribe the most efficient way of doing a job. They are guides to action, rather than to thinking and they detail the exact manner in which certain activities must be accomplished. Procedures remove the need for the exercise of discretion or ad-hoc decision-making. This degree of standardisation makes output more predictable and more consistent throughout the organisation. Procedures exist at all levels of management but become more extensive and onerous lower down the organisation’s hierarchy. Procedures often cut across departmental lines e.g. in a manufacturing company, the procedure for handling orders will almost certainly involve the sales department (for the original order); the finance department (for acknowledging receipt of funds and for customer credit approval); the accounting department (for recording the transaction); the production department (for the order to produce goods or authority to release them from stock); and the transport department (for determination of route and shipping).

Internal controls can be categorised as administrative controls or accounting controls. Administrative controls consist of all methods and procedures that are concerned with operational efficiency and adherence to management policies. These controls will include statistical analysis, performance reports, quality controls, employee training programmes etc. Accounting controls consist of all methods and procedures that are concerned with the safeguarding of assets and the reliability of financial records. Such controls will include systems of authorisation and approval, separation of duties concerned with asset custody, physical controls over assets and internal auditing. There are usually eight types of control (five only required here) and these are often remembered by using the mnemonic SPAMSOAP.

9

3

4

1.

Segregation of duties. Clear job descriptions should segregate execution from control tasks. One of the prime means of control is the separation of those responsibilities or duties, which would, if combined, enable one individual to record and process a complete transaction.

2.

Physical controls. Procedures and security measures are needed to ensure that access to assets is limited to authorised personnel. Such controls include locks, safes and entry codes.

3.

Authorisation and approval. All transactions should be authorised or approved by an appropriate responsible person. The limits for these authorisations should be specified.

4.

Management controls. Management controls are exercised by management outside the day-to-day routine of the system. Management controls include: overall supervisory controls, review of management accounts and comparison with budgets, the internal review function and also special review procedures.

5.

Supervision. Any system of internal control should include supervision of day-to-day transactions, and how they are recorded, by responsible officials.

6.

Organisation. Enterprises should have a plan of their organisation, defining and allocating responsibilities and identifying lines of reporting for all aspects of the enterprise’s operations, including the controls. The delegation of authority and responsibility should be clearly specified.

7.

Arithmetical and accounting controls. These are controls within the recording function which check that the transactions to be recorded and processed have been authorised, that they are all included and that they are correctly recorded and accurately processed.

8.

Personnel controls. These are procedures to ensure that personnel have capabilities appropriate to their responsibilities, since the proper functioning of any system depends on the competence and integrity of those operating it. The qualifications, selection and training of the personnel involved are important features to be considered in setting up any control system.

Blake and Mouton observed two basic dimensions of managerial behaviour, concern for people and concern for production. Along each of these two dimensions, managers could be located at any point on a continuum from very low to very high concern. The five management styles that subsequently appeared on the Blake and Mouton Managerial grid are explained below (list of five required but explanation of three only required): 1.

The impoverished style. The manager shows little interest in either staff or work. This style would be observed if a supervisor or manager abdicated his or her responsibility and left others to work as they saw fit. Contact is minimised and commitment to problems raised is almost non-existent. Typically this supervisor or manager is a frustrated individual, passed over for promotion, moved sideways, or has been in a routine job for years, possibly because of lack of personal maturity.

2.

The country club style. This style emphasises people. People are encouraged and supported and inadequacies are overlooked, on the basis that people are doing their best, and coercion may not improve things substantially. The manager is attentive to staff needs and has developed satisfying relationships, but there is little attention paid to achieving results. This style often pervades in inefficient, quasi-monopolistic, time serving organisations.

3.

The task-orientated style. This style has total concentration on achieving results. People’s needs are virtually ignored. People are treated as a commodity, like machines. The manager will be responsible for planning, directing and controlling the work of subordinates. However, while this can achieve high production, there are some notable deficiencies – it is a ‘Theory X’ approach and in certain environments creative energy may be channelled into trying to ‘beat the system’. Subordinates can become indifferent and apathetic or even rebellious.

4.

The middle of the road style (sometimes referred to as the dampened pendulum). This can be described as a happy medium. This style would push for productivity and considers people, but does not overemphasise either. It is a style of ‘give and take’, not too lenient or too coercive, arising probably from a feeling that any improvement is idealistic and unachievable. Adequate performance is achieved through balancing the necessity to get the work completed while maintaining the morale of people at a satisfactory level.

5.

The team style. This style is displayed by a high performance manager, who achieves high work accomplishment through leading committed people, who identify themselves with the organisational aims. It advocates a high degree of concern for production and also for people who in turn generate production. This style endeavours to discover the best and most effective solutions, aiming at the highest attainable level of production to which all involved contribute and in which everyone finds his or her own sense of accomplishment.

Formal communication channels are normally established as part of the organisation’s structure. Workflow is an important factor that helps determine the formal pathway or channel for the sending and receiving of communication. Formal channels in an organisation may run in three main directions. 1.

Vertical, i.e. up and down the scalar chain (a)

Downward communication is very common and takes the form of instructions, briefings, rules and policies and the announcement of plans, from superior to subordinate.

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(b)

Upward communication is rarer – but very important for the organisation. It takes the form of reporting back, feedback and suggestions. Managers need to encourage upward communication to take advantage of employees’ experience and to be able to understand their problems and needs in order to manage better.

2.

Horizontal or lateral – this is communication between people at the same level in the organisation, in the same section or department, or in different sections or departments. Horizontal communication between ‘peer groups’ is usually easier and more direct than vertical communication, being less inhibited by considerations of rank. This channel of communication can be both formal and informal: formal – to co-ordinate the work of several people and perhaps departments, who have to co-operate to carry out a certain operation; informal to provide emotional and social support to an individual.

3.

Diagonal. This is interdepartmental communication by people of different ranks. Departments in the technostructure which serve the organisation in general, such as human resources managers, who may have no clear ‘line authority’ linking them to managers in other departments who need their involvement. Diagonal communication aids co-ordination and also innovation and problem solving, as it puts together the ideas and information of people in different functions and levels. It also helps to by-pass longer, less direct channels, avoiding blockages and speeding up decision-making.

While the organisation structure will have a designed, formal communication network, in almost all organisations there will be a number of informal communication channels, e.g. the grapevine, rumour and gossip. The channels are described as informal because they are not consciously structured by management into a fixed pattern. The grapevine can be described as ‘the network of social relations that arises spontaneously as people associate with one another. It is an expression of people’s natural motivation to communicate’. In many organisations, the grapevine is the major informal communication channel. Rumour is another type of informal communication channel. This is a message transmitted over the grapevine and is not based on official information. As a rumour, it may be true or false or have elements of both. An important problem with rumours is that they travel very quickly and can be very influential, especially if the rumour is about important bad news. Gossip. Idle talk, along with rumour often communicates gossip. This is often of little consequence, though it can be hurtful or malicious. More positively, it can be a morale booster; a socialising force which spells out group norms and it can be beneficial to an individual as a means of sharing employment worries. In the workplace it can be a humanising factor, especially where the work is tedious.

5

(a)

There are a number of potential causes of fire in the workplace, including: 1. 2. 3. 4. 5.

(b)

Electrical appliances and tools, which create sparks. Smoking. Flammable materials (such as waste paper, chemical soaked rags, clothing and some furniture material), particularly where these are likely to come into contact with heaters or cigarettes. Flammable substances (such as chemicals, or aerosol cans left in direct sunlight). Poor housekeeping. Well-organised and carefully maintained premises lessen the likelihood of fire breaking out and enable it to be more readily controlled if it does.

Fire precautions and safety measures in the workplace may include the following (five only required). 1.

Cleanliness/tidiness. (a) Keeping premises clear of combustible waste and refuse. (b) Keeping separate receptacles for waste and special hazards (such as flammable liquids).

2.

Storage. (a) Ensuring that fire doors, exits, fire equipment and fire notices are unobstructed at all times. (b) Keeping storage areas accessible to fire fighters.

3.

Building maintenance. (a) Keeping points of entry secured against intruders (limiting the risk of arson). (b) Ensuring that gangways, exit routes and fire floors are clear and in good repair. (c) Keeping windows, doors and air vents shut unless required to be opened for ventilation. (d) Switching off or unplugging electrical equipment when not in use.

4.

Flammable liquids and gases. (a) Keeping flammable substances away from possible sources of ignition. (b) Posting appropriate warning notices and labels.

5.

Machinery. (a) Regularly maintaining all machinery and equipment. (b) Ensuring adequate cleaning, lubrication and cleaning of vents (to prevent overheating). (c) Ensuring safe and proper usage.

6.

Heating and lighting. (a) Restricting the use of unauthorised heaters. (b) Keeping safe distance from combustible material.

7.

Smoking. (a) Prohibiting smoking in all but designated smoking areas. (b) Enforcing non-smoking regulations.

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8.

Fire protection equipment. (a) Keeping the fire doors free for emergency access (never locking or blocking them). (b) Ensuring that fire doors can be closed in the event of fire (not wedging them open). (c) Ensuring that fire doors are fitted with effective self-closing devices. (d) Ensuring that fire doors are clearly labelled ‘Fire Door: Keep Shut’. (e) Ensuring that any door on an escape route can be opened easily and immediately without a key.

9.

Warning notices. (a) Displaying prominent fire warning notices on hazardous substances and equipment. (b) Clearly identifying fire doors, fire alarm call points and exit routes. (c) Posting emergency evacuation procedures (including details of safe rendezvous/roll call points outside the building). (d) Posting fire exit signs where they can be clearly seen, and including a pictogram (e.g. showing a person running through a door with a directional arrow).

10. Staff training. (a) Instructing all new staff in fire procedures and escape routes during induction. (b) Appointing and training fire wardens. (c) Training staff in the correct use of fire-fighting equipment. 11. Damage control. (a) Keeping duplicate copies of important records and computer disks in another building. (b) Drawing up contingency plans to enable work to recommence as soon as possible after a fire.

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ACCA Certified Accounting Technician Examination – Paper T5 Managing People and Systems 1

December 2010 Marking Scheme

(a)

8 marks for a full explanation of the purpose of policies, which shows a clear understanding of the use of policies in organisations and also includes some examples. 2 marks only to be awarded if a simple definition/outline is provided – without any examples.

(b)

6 marks for a full explanation of the purpose of procedures, which shows a clear understanding of the use of procedures in organisations and also includes some examples. 2 marks only to be awarded if a simple definition/outline is provided – without any examples. (14 marks)

2

3 marks for each control explained, up to a maximum of 14 marks. 1 mark only to be awarded if a control is identified but no explanation is provided. (14 marks)

3

1 mark for each style listed, up to a maximum of 5 marks. 3 further marks for each of three styles explained in more detail – up to a maximum of 9 marks. (14 marks)

4

Total 7 marks for an explanation of formal communication channels to include 1 mark for a general definition and then a further 2 marks each for the three main directions, including how they operate. Total 7 marks for an explanation of informal communication channels to include 1 mark for a general definition and then two further marks each for three main forms, including how they operate. (14 marks)

5

(a)

1 mark for each potential cause identified.

(b)

1 mark for each type of precaution or safety measure identified and a further two marks for each one described/expanded upon. (Care to be taken to ensure that marks are not awarded more than once for the same point.) (20 marks)

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