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P1 Mnemonics by Miss Raseena Ahmed

P1 mnemonics
PURPOSES OF CORPORATE CODE OF ETHICS
CAGEEE
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C-COMMUNICATION VEHICLE TO DIVERSE STAKEHOLDERS


A-AVOIDS ADVERSE PUBLICITY
G-GLOBALIZATION IMPERATIVE
E-EMPLOYEE BEHAVIOUR
E-ETHICAL DIMENSION
E-IMPROVE ETHICAL REPUTATION OF BRAND AND BRAND IDENTITY

WHY INSTITUTIONAL INVESTORS INTERVENE IN THE GOVERNANCE OF A COMPANY?


RIPCRIP
R-STRATEGIES ARE RISKY AND EXCEEDS RISK APPETITE OF INVESTORS
I-INDEPENDENT NEDS FAIL TO DISCAHRGE DUTIES
P-POOR SUCCESSION PLANNING
C-FAILS TO COMPLY WITH CORPORATE GOVERNANCE CODES AND DOES NOT GIVE VALID AND
JUSTIFIABLE REASONS FOR NOT COMPLYING
R-REMUNERATION GIVEN TO DIRECTORS EXCESS
I-INTERNAL CONTROL FAILINGS
P-PERFORMANCE OF FIRM DECLINING
STAGES IN AUDIT RISK
1. RISK IDENTIFICATION
HOW?-QUESTIONNAIRES,INTERVIEWS ,FOCUS GROUPS,MASS MEDIA
EG-PRODUCT RISK,REPUTATIONAL RISK,POLITICAL RISK
IDENTIFIED RISKS-GOES TO RISK REGISTER
OBSOLETE RISKS-REMOVE FROM REGISTER
2. RISK ASSESSMENT
LIKLIHOOD AND IMPACT OF RISK ASCERTAINED CAN BE DONE QUANTITATIVELY-SCALE
QUESTIONNAIRES AND QUALITATIVELY-RANKING
3. RISK REVIEW
COMPANY WILL REVIEW IF THERE ARE ADEQUATE EXISTING CONTROLS IN PLACE TO MITIGATE
RISK
DEFICIENCIES IN CONTROLS WILL BE MADE AWARE THROUGH RISK REVIEW
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P1 Mnemonics by Miss Raseena Ahmed

4. RISK REPORTING
ABOVE INFORMATION CONSOLIDATED INTO COMPREHENSIVE REPORT-SUBMITTED TO-RISK
COMMITTEE OR BOARD.
INTERNAL RISK AUDIT
EXTERNAL RISK AUDIT
RISK AUDIT DONE BY SOMEONE FROM INSIDE RISK AUDIT DONE BY SOMEONE FROM OUTSIDE
INTERNAL AUDITOR
CONSULTING FIRM,ACCOUNTING/AUDIT FIRM

POSITIVES OF EXTERNAL RISK AUDIT

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COFFE
C-INVESTORS WILL HAVE GREATER CONFIDENCE
O-OBJECTIVE,IMPARTIAL,INDEPENDENT
F-AVOIDS FAMILIARITY THREAT
F-FRESH PERSPECTIVE
E-EXPERIENCE AND EXPERTISE

WHAT IS RISK APPETITE AND RISK AWARENESS


RISK APPETITE:
-TENDENCY OF AN ORGANIZATION/INDIVIDUAL TO TAKE RISK IN PURSUIT OF VALUE
-RISK APPETITE DEPENDS ON RISK THERMOSTAT
- RISK THERMOSTAT- UNCERTAINITY RISK
RISK AWARENESS:
-INDICATES THE AWARENESS ONE HAS PERTAINING TO RISKS WHEN ONE UNDERTAKES A PARTICULAR
ENDEAVOR/TASK
-GREATER YOU FIND OUT ,YOU BECOME MORE AWARE OF THE RISKS, RISK AWARENESS
*RISK APPETITE AFFECTING CHOICE OF INVESTMENTS:
LOW RISK APPETITE-MORE RISK AVERSE
-SHOULD INVEST IN COMPANIES WITH LOW RISK
EG:MORE ESTABLISHES.DIVERSIFIED FIRMS,GOVERNMENT BONDS.
-HIGH RISK APPETITE-RISK SEEKING
HIGH RISK-FOR HIGH RETURNS
EG:INVEST IN FIRMS OPERATING IN TURBULENT AND DYNAMIC ENVIRONMENT

P1 Mnemonics by Miss Raseena Ahmed

-HIGH RISKS AND HIGH REWARDS


IF A HAS HIGH RISK APPETITE-CHOICE OF INVESTMENT WILL HAVE HIGH RISK-ANTICIPATION OF HIGHER
RETURNS AND VICE VERSA
IDEAL-DIVERSIFIED PORTFOLIO OF INVESTMENTS CONSISTING OF HIGH AND LOW RISK/RETURN
INVESTMENTS.
BUSINESS RISK
SLOWD
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S-STRATEGIC RISK
L-LONG TERM
O-FIRM MAY DRIFT FROM ORIGINAL FOOTING AND EXPERIENCE STRATEGIC DRIFT
W-WRONG BUSINESS MODEL
D-DECISIONS,ACTIONS,EVENTS THAT RESULT IN EROSION OF FIRMS MARKET SHARE,SALES AND
ROFIT,BRAND IDENTITY AND COMPETITIVENESS

FINANCIAL RISK(MLCC RHYMES WITH VLCC)


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M-MARKET RISK
L-LIQUIDITY RISK
C-CURRENCY RISK
C-CREDIT RISK

POOR CREDIT MANAGEMENT-DEBTS NOT RECOVERED ON TIME OR NOT RECOVERED AT ALL


AFFECTS CASH FLOW-CASH OUTFLOW >CASH INFLOW-AFFECTS LIQUIDITY AND WORKING CAPITAL
IF A FIRM IS MNC AND HAS OVERSEAS BUSINESS-CHANGE IN CURRENCY RISK
CHANGE ININFLATION,INTEREST RATES-FINANCIAL RISK
USEFULNESS OF CORPORATE GOVERNANACE DISCLOSURES TO A(EG OF COMPANY A)-HOW IT WOULD
HELP TO SELECT INVESTMENT
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FINANCIAL POSITION
CORPORATE GOVERNANCE ARRANGEMENTS
ROLE OF COMMITTEES
REPORT ON RISK EXPOSURE
INTERNAL CONTROLS AND RISK MANAGEMENT
COMPLIANCE SECTION IN ANNUAL REPORT

ETHICAL THREAT-

P1 Mnemonics by Miss Raseena Ahmed

EXTERNAL AUDITORS LOSE INDEPENDENCE AND OBJECTIVITY-IMPAIR QUALITY OF AUDIT


PRODUCES,AUDITOR CAPTURE

BENEFITS OF ETHICAL SAFEGUARDS


SOLIQ(RHYMES WITH SOLID OR THINK SOILQ INSTEAD)
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S-INCREASE SHAREHOLDER CONFIDENCE


O-INDEPENDENT AND OBJECTIVE
I-IMPROVE PERUTAION AND INTEGRITY OF AUDIT PRODESSION
L-LESS SCRUTINY FROM REGULATORS
Q-QUALITY OF AUDIT IMPROVES-OPINION MORE TRUE+FAIR

ENVIRONMENTAL AUDIT
3 STEPS
1. DECIDE ENVIRONMENTAL METRICSAND ENVIRONMENTAL OBJECTIVES
-ENERGY USAGE,GREENHOUSE GAS EMISSION ETC
2. MEASURE FIRMS CURRENT PERFORMANCE AND COMPARE WITH ENVIRONMENTAL
OBJECTIVES
3. REPORT THIS INFORMATION TO SHOW COMPLIANCE/VARIANCE
VARIANCE-EXPLAIN IN THE EXAM WHY THE VARIANCE AND EXPLAIN THE STEPS TAKEN TO
ADDRESS THIS ISSUE FOR SCENARIO QUESTIONS
AUDIT COMMITTEE SUITABLE TO ADVISE ON PURCAHSE OF NON AUDIT SERVICES:WHY/HOW
DIOR
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DDEVELOPS ENGAGEMENT POLICY


I-REVIEW INDEPENDENCE AND OBJECTIVITY OF AUDITOR
O-OBJECTIVE AND RATIONAL
R-REVIEW EFFECTIVENESS OF AUDIT PROCESS

INTERNAL AUDIT FUNCTION(VVIMPORTANT)


RAACCEE
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R-REVIEW RISK MANAGEMENT PROCESS


A-REVIEW WHETHER ASSETS ARE SAFEGUARDED
A-ADDVALUE
C-CGA(CORPORATE GOVERNANCE ADHERENCE) CAN BE REVIEWED
C-COMPLIANCE RISK
E-REVIEW ECONOMY,EFFICIENCY,EFFECTIVENESS
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P1 Mnemonics by Miss Raseena Ahmed

7. E-REVIEW EXISTING INTERNAL CONTROLS


INTERNAL CONTROL OVER FINANCIAL REPORTING(ICOFR)-BENEFITS(V IMP)
TICTAC
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TTRANSPERANCY
I-INTEGRITY
C-DATA COLLECTED ,PROCESSED,UPDATED,MAINTAINED CORRECTLY
T-MITIGATE FINANCIAL REPORTING IN TIMELY MANNER
A-SAFEGUARD ASSETS
C-COMPLIANCE

INTERNAL CONTROLS
OAP SPASM
ORGANISATIONAL CONTROLS
CONTROL OVER THE ORGANISATION STRUCTURE INCLUDING MANAGERS HAVING
SPECIFIC
RESPONSIBILITIES AND DELEGATIONS TASKS.
AUTHORISATION
CONTROLS TO ENSURE THAT TRANSACTIONS DO NOT PROCEED UNTIL AN
APPROPRIATE INDIVIDUAL HAS GIVEN APPROVAL.
PHYSICAL
PROTECTION OF ASSETS AGAINST THEFT, UNAUTHORISED ACCESS OR USE.
SUPERVISION
OVERSIGHT OF WORK OF OTHER INDIVIDUALS TO ENSURE TASKS ARE CARRIED OUT
CORRECTLY.
PERSONNEL
CONTROLS IN PLACE TO ENSURE THE SUITABLE PEOPLE ARE EMPLOYED.
ARITHMETIC ACCOUNTING
CHECKING ACCOUNTING TRANSACTIONS FOR ACCURACY, INCLUDES USE OF
ACCOUNTS AND RECONCILIATIONS (E.G. BANK RECONCILIATION).

P1 Mnemonics by Miss Raseena Ahmed

SEGREGATION/ROTATION
DIFFERENT PEOPLE FOR EACH TRANSACTION TO AUTHORISE, RECORD, MAINTAIN
PHYSICAL CUSTODY OF ANY ASSETS (I.E. PETTY CASH), PAY FOR IT.
MANAGEMENT CONTROLS
CONTROL ACTIONS TAKEN BY MANAGEMENT DEPENDING ON THE CONTENTS OF
REPORTS RECEIVED. MANAGERS SHOULD BE INVOLVED IN THE DAY TO DAY
SUPERVISION OF STAFF.
CORPORATE GOVERNANCE ELEMENTS
HAIRDRIFT
HONESTY/PROBITY
ACCOUNTABILITY
INDEPENDENCE
RESPONSIBILITY
DECISION TAKING/JUDGEMENT
REPUTATION
INTEGRITY
FAIRNESS
TRANSPARENCY/OPENNES
ROLE AND FUNCTION OF AN AUDIT COMMITTEE
CLARISSA
C-CREATE A CLIMATE OF DISCIPLINE AND CONTROL
L- LEND AN AIR OF CREDIBILITY AND OBJECTIVITY
A-ASSIST CFO BY PROVIDING A FORUM
R-REVIEW FINANCIAL STATEMENTS TO IMPROVE THE QUALITY
I-INDEPENDENT JUDGEMENT
S-STRENGTHEN POSITION OF THE INTERNAL AUDITOR
S-STRENGTHEN POSITION OF THE EXTERNAL AUDITOR
A-ASSIST IN THE RESOLUTION OF DISPUTES
TYPES OF STAKEHOLDERS PINKLAVR
PRIMARY/SECONDARY
INTERNAL/EXTERNAL
NARROW/WIDE
KNOWN/UNKNOWN
LEGITIMATE/ILLEGITIMATE
ACTIVE/PASSIVE
VOLUNTARY/INVOLUNTARY
RECOGNISED/UNRECOGNISED
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P1 Mnemonics by Miss Raseena Ahmed

ROLE OF NON-EXECUTIVE DIRECTORS (NEDS)= STRIP PERFORMANCE


ST= STRATEGIC ROLES
RI= RISK ASSESSMENT ROLES
P= PEOPLES ROLE
PERFORMANCE ROLE
IN ACCORDANCE WITH HIGGS REPORT
ROLE OF CHARMAN (HIGGS REPORT) = RAISE DIP
R= RUN THE BOARD
A=(ENSURE) ACTIVE ENGAGEMENT BY BOARD MEMBERS
I= INDUCTION PROGRAMME
S= SUFFICIENT TIME FOR COMPLEX DECISION
E= EFFECTIVE COMMUNICATION WITH SHAREHOLDERS
D-DEVELOPMENT NEEDS OF DIRECTORS
I= INFORMATION PROVIDED ARE ACCURATE AND TIMELY
P= PERFORMANCE EVALUATION
STAKEHOLDERS= ICE
INTERNAL
CONNECTED
EXTENAL
AMERICAN ACCOUNTING ASSOCIATION APPROACH TO ETHICAL ISSUES.
FENABCD
F=FACT.
E=ETHIC (INDEPENDENCE, OBEDIENCE, CONFIDENTIALITY)
N=NORM (OBJECTIVITY,.GOVERNANCE. INDEPENDENCE, TRANSPARENCY)
A= ALTERNATIVE COURSE OF ACTION.
B=BEST COURSE OF ACTION.
C=CONSEQUENCES OF EACH ACTION
D=DECISION
CORPORATE SOCIAL RESPONSIBILITY:
PELE:
P- PHILANTHROPIC
E- ETHICS
L- LEGAL
E- ECONOMY.
APPROACHES TO CSR
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P1 Mnemonics by Miss Raseena Ahmed

PRAD
P- PROACTIVE
R- REACTIVE
A- ACCOMODATIVE
D- DEFENSIVE
PRESSSD
PRISTINE CAPITALIST
RADICAL FEMINIST
EXPEDIENTS
SOCIAL CONTRACT
SOCIAL ECOLOGIST
SOCIALIST
DEEP ECOLOGIST
QUALITY/ CHARACTERISTIC OF GOOD INFORMATION
ACCURATE
ACCURATE
COMPLETE
COST BENEFICIAL
USER TARGETED
RELEVANT
AUTHORITATIVE
TIMELY
EASY TO USE
CORPORATE CODE OF ETHICS
SPICES S
SOCIAL
POSITION
IMPLEMENTATION
CUSTOMER RELATIONS
EMPLOYEES
SUPPLIERS
SHAREHOLDERS
PERLS FOR TUCKER
PROFITABLE
EQUITABLE
RIGHT
LEGAL
SUSTAINABLE
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P1 Mnemonics by Miss Raseena Ahmed

RISK FRAMEWORK
ALARM
APPETITE
LIST (RISK REGISTER)
ASSESS (TARA)
RESPONSE
MONITOR
GENERAL GUIDE TO SOME RISKS:
FROP LIFE(RHYMES WITH FLOP LIFE)
FINANCIAL RISK
REPEUTATION RISK
OPERATIONAL RISK
PRODUCT RISK
LEGAL & POLITICAL RISK
INFORMATION TECHNOLOGY RISK
ENTREPRENEURIAL RISK OR ECONOMIC RISK
FRAUD RISK
FOR AAA MODEL:
FINABCD
F FACTS?
I ISSUES?
N NORMS?
A ALTERNATIVES?
B BEST SOLUTION?
C CONSEQUENCES?
D DECISION?
THEN YOU CAN WRITE THE WHOLE QUESTION IN YOUR OWN WORDS (LIKE F FACTS => WHAT ARE
THE FACTS OF THE CASE?
PRINCIPLES OF ERM (ENTERPRISE RISK MANAGEMENT TOPIC: RISK
MANAGEMENT)

BREACH
BUSINESS STRATEGY CONTEXT
RANGE OF RISKS/ CONSIDER/ BROAD
EVERYONE IS RESPONSIBLE
AWARENESS/ RISK
CULTURE/ RISK-AWARE
HOLISTIC APPROACH
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P1 Mnemonics by Miss Raseena Ahmed

ROLE OF THE BOARD


SERVEC
S: SET STRATEGIC AIMS OF THE COMPANY
E: PROVIDE ENTREPRENEURIAL LEADERSHIP
R: REVIEW MANAGEMENT PERFORMANCE
V: SET VALUES AND STANDARDS OF THE COMPANY
E: ENSURE THAT COMPANY HAS NECESSARY FINANCIAL AND HUMAN RESOURCES
C: CORPORATE CULTURE
RISK STRATEGIES:
TARA
T- TRANSFER
A- ACCEPT
R- REDUCTION/MITIGATION
A- AVOID
ROLE OF CEO CEO IS
MRS RISC
MANAGEMENT TEAM
RISK MANAGEMENT
STRATEGY DEVELOPMENT
RECOMMEND TO BOARD COMMITTEES
INVESTMENT ANALYSIS
STAKEHOLDERS
CONTROL SYSTEMS
ROLE OF CHAIRMAN
RIA SAID CHAIRMAN IS RIA
RUNNING OF BOARD
INFORMATION TO BOARD
APPRAISAL
SHAREHOLDERS COMMUNICATION
ACCOUNTS SIGNING
INDUCTIONS OF NEW DIR
DEVELOPMENT OF BOARD
WHEN SHOULD INSTITUTION INVESTORS INTERVENE
SID SCORN FUND MANGER IS SID

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P1 Mnemonics by Miss Raseena Ahmed

STRATEGY CONCERNS
INTERNAL CONTROL FAILURE
DOMINATED BY SMALL GROUP EXEC
SOCIAL RESPONSIBILITY POOR
COMPLIANCE TO GOV CODE ISSUES
OPERATIONAL PERFORMANCE POOR
REMUNERATION OF EXEC ISSUE
NEDS FAILING TO HOLD EXEC TO ACCOUNT.
GUIDELINE PRINCIPALS FOR INTEGRATED REPORTING
FIRMCC
FOCUS AND FUTURE
INFORMATION
RELATIONS WITH STAKEHOLDERS
MATERIALITY
CONCISENESS
COMPLETENESS

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