EAST AFRICA COLLEGE

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OCCUPATIONAL STANDARD: BASIC ACCOUNT WORKS

LEVEL II: MODULE ONE

2023 G.C

ADAMA ETHIOPIA

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Competency 1-7
Occupational Standard: Basic Account Works Level II
Unit Title: Work Effectively in the Financial Services Sector
Unit Code: EIS BAW2 01 0812 You must provide a safe and healthy environment for all
your workers and take their welfare needs into account. However, this doesn’t have to be
complicated or time-consuming. This applies to a very wide range of workplaces – not only
factories, shops and offices but also schools, hospitals, hotels and places of entertainment
etc.
What does the workplace cover?
Workplace means any premises or part of a premises which are made available to any person as
a place of work. It does not cover domestic premises.
The term workplace also includes the common parts of shared buildings, private roads and paths
on industrial estates and business parks.
You must consider, for example, lighting, ventilation, temperature, toilets and washing facilities.
You must also consider the needs of people with disabilities who may have specific needs, for
example adapted toilet and washing facilities, wide doorways and gangways.
A safe place of work
You must:
 make sure your buildings are in good repair
 maintain the workplace and any equipment so that it is safe and works efficiently
 put right any dangerous defects immediately, or take steps to protect anyone at risk
 take precautions to prevent people or materials falling from open edges, eg fencing or
guard rails
 fence or cover floor openings, e.g. vehicle examination pits, when not in use
 have enough space for safe movement and access
 provide safety glass, if necessary
 make sure floors, corridors and stairs etc are free of obstructions, eg trailing cables
 provide good drainage in wet processes
 make sure any windows capable of being opened can be opened, closed or adjusted safely
 make sure all windows and skylights are designed and constructed so that they may be
cleaned safely (you may also need to fit anchor points if window cleaners have to use
harnesses)
 minimize risks caused by snow and ice on outdoor routes, eg use salt or sand and sweep
them
Lighting
You must provide:
 good light – use natural light where possible but try to avoid glare
 a good level of local lighting at workstations where necessary
 suitable forms of emergency lighting
 well-lit stairs and corridors
 well-lit outside areas – for pedestrians and to help with work activities such as
loading/unloading at night

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Moving around the premises
You must have:
 safe passage for pedestrians and vehicles – separate routes may be necessary
 level, even floors and surfaces without holes or broken boards
 hand-rails on stairs and ramps where necessary
 safely constructed doors and gates
 floors and surfaces which are not slippery
Cleanliness
You must:
 provide clean floors and stairs, with effective drainage where necessary
 provide clean premises, furniture and fittings
 provide containers for waste materials
 remove dirt, refuse and trade waste regularly
 clear up spillages promptly
 keep internal walls or ceilings clean
Hygiene and welfare
You must provide:
 clean toilets and hand basins, with running hot and cold or warm water, soap and towels
or another suitable means of drying
 drinking water
 somewhere to rest and eat meals, including facilities for eating food which would
otherwise become contaminated
 showers for dirty work or emergencies
 drying facilities for wet work clothes, if practical and necessary
 accommodation or hanging space for personal clothing not worn at work (and somewhere
to change if special clothing is worn for work)
 rest facilities for pregnant women and nursing mothers
In some circumstances your risk assessment will highlight the need to provide additional specific
controls, for example:
 skin cleansers, with nail brushes
 barrier cream and skin-conditioning cream where necessary
 certain facilities for workers working away from base, eg chemical toilets in some
circumstances
Comfortable conditions
You must provide:
 a reasonable working temperature within workplaces inside buildings (usually at least 16
°C, or 13 °C for strenuous work, unless it is impractical to do so, eg in the food industry)
 local heating or cooling where a comfortable temperature cannot be maintained
throughout each workroom (eg hot and cold processes)
 good ventilation – a sufficient supply of fresh, clean air drawn from outside or a
ventilation system
 heating systems which do not give off dangerous or offensive levels of fume into the
workplace
 enough workspace, including suitable workstations and seating

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3. How to Work Effectively in a Team Environment
Working effectively in a team environment is crucial for many small businesses. It requires skills
in effective communication, collaboration, time management, and business acumen. On a team,
members share the ownership of meeting the defined objective. By establishing a responsibility
matrix, you define who is responsible, accountable, consulted, and informed for each task you
complete. Working with a diverse group of people, sometimes in different locations, presents
many challenges. Learning to work together effectively in a team environment enables everyone
involved to achieve their personal and professional goals.

Communication
Effective communication ensures that all team members know what is required of them. By
conducting regular meetings and sharing information, the project team manager creates an
environment where team members can demonstrate their individual contributions to the effort, as
well as ask clarifying questions. This minimizes ambiguity and prevents misunderstandings and
conflict. To build rapport, an effective project leader conducts team-building exercises to foster
good communication. For example, play a survival game by asking your team to identify 12
items they would need to survive on a desert island. This exercise helps the group come up with
strategies for conducting productive discussions and making decisions.
Collaboration
Working in a team environment typically involves collaborating with others to solve problems
and develop innovative solutions. Behaving collaboratively includes valuing the contributions of
others, brainstorming ideas with team members, and sharing tasks to get work done efficiently.
For example, using social media technology, team members can debate alternatives to problems
by contributing to wikis, blogs or forums.
Time Management
Team members depend on each other to complete tasks according to the plan so that work flows
smoothly from one process or task to the next. Effective time management involves prioritizing,
scheduling and focusing on work to maintain productivity. For example, to operate efficiently,
team members should assess each task as important or urgent. Important activities typically lead
to personal achievement. Urgent activities require immediate attention and may be associated
with demands from superiors. By categorizing activities, you can identify distractions and
interruptions, and minimize them in your schedule in the future. This helps you focus on work
that truly contributes to the overall team’s goal as well as your personal career objectives.
Business Acumen
To work effectively on a team, members need to know their role and the overall project
objective. Then, they can analyze situations that arise, diagnose the problem, and propose
solutions that help the collective team work more effectively towards reaching the goal. This
might involve managing a budget, handling risks, making policy decisions, or managing change.
To develop skills in business acumen, conduct team-building exercises that present scenarios to
your team members, and give them the opportunity to participate in role-playing activities. For
example, divide your team into pairs. Present a challenge relevant to your business, such as
dealing with an angry project sponsor who provides funding to the project. Have one person play
the role of the sponsor and explain his concerns over an issue, such as a cost overrun. Instruct the
other person to play the role of an employee and respond to the issue, such as why the project
requires additional resources and funding. This exercise helps employees practice
communicating clearly to demonstrate that they truly understand how the business works.

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5. Work in a team environment
Definition of a Team
Management research has found more than 100 models of how teams function, and there are a
slew of definitions for what constitutes a 'team'. Booz and Co. partner Jon Katzenbach and
McKinsey partner Douglas K. Smith provided one of the most commonly-used definitions of a
'team' in their 1993 book, The Wisdom of Teams:
'A team is a small number of people with complementary skills who are committed to a common
purpose, performance goals, and approach for which they are mutually accountable.'
Conditions for Effective Teams
While there are a host of major scholars on teamwork, two of the most notable are Tulane
professor Greg Oldham and Harvard professor J.R. Hackman. Both have done significant work
with Harvard professor Ruth Wageman, and together they have determined that there are five
major criteria for an effective team.
1) Clear definition and purpose -- the team has a clear definition of who is a member of the
team, the team has a common goal for which its interdependent members are mutually
accountable, and membership is relatively stable.
2) Compelling goal -- the team's goal is clear, compelling, and impactful.
3) Complete skill set -- the team has a full set of the knowledge and skills needed to complete the
task, and each member of the team has the authority to decide how (s)he will accomplish the
task.
4) Relevant resources -- the organization in which the team operates provides the team with the
resources it needs and a reward for successfully completing the task.
5) Available advice -- there are high-level people available to coach and advise the team, as
needed.
This leaves only to define what is meant by an effective team.
4. Use workplace technology
As technology has become an inescapable part of most workplaces, it has become ever more
important to understand its impact on employees. Using data from two surveys of U.S. workers,
Noelle Chesley examines the effects of both personal and job-related technology use. She finds
that increased technology use, especially when it extends work into personal life, is linked with
higher levels of worker distress. However, it is also associated with gains in productivity, and
personal technology use at work may help employees to manage work-related stress.

It is not news that communication technology—and the social practices we have built around
it—fuels a 24/7 lifestyle. However, that does not stop us from debating the effects of technology
use on our health and sanity, particularly when we consider its role in the workplace. To further
understand how technology is shaping today’s work environments, I analyzed two key surveys of
workers in the United States. What I found is a picture of contemporary employment in which
our devices are fueling work that, while more intense and demanding, is probably more
productive.

There is a well-developed line of research that documents the symptoms of a stressful work
setting. These include an ever-increasing work pace and greater levels of interruptions and
multitasking. The pacing of work is important because a faster pace can reduce workers’
flexibility to cope with shifting demands, which is part of what can make these difficult settings
for employees. While interruptions are not always bad, a key factor concerns workers’ ability to

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control them. Previousstudies show that many interruptions are unexpected, and the
unpredictability of interruptions in the face of greater work demands can contribute to worker
distress. In fact, some research shows that workers compensate for more interruptions by
working faster. Finally, we know that technology use encourages and supports multitasking
behaviors. We also know that multitasking is cognitively inefficient and may lead to job strain in
some settings.

Indeed, when I analyzed data from the 2002 National Study of the Changing Workforce, which
draws on survey responses gathered at one point in time from a representative sample of U.S.
workers, I found clear connections between greater work-related technology use and fast-paced
work environments with more interruptions and multitasking. Since these job conditions are
often associated with stressful work environments, it should be no surprise that I documented
higher levels of worker strain and distress when employees use more technology.

Drawing on previous research that illustrates technology’s role in supporting greater flexibility, I
also investigated the role that personal technology use can play in shaping work outcomes. Here,
my research points to the important role that such uses of technology can play in alleviating
employee’s work strain. While I am not able to use these data to understand exactly how that is
happening, plenty of research already shows that we increasingly use our devices to maintain and
strengthen our personal connections with friends and family. The same tools that fuel more
stressful job conditions also instantly connect us to our personal networks in ways that can foster
greater levels of support, provide needed information (‘Can you pick up the kids—I’m running
late’), or even just give us a break from work to check in on things that personally interest us
(status update, anyone?).

I should emphasize that, statistically, the effects of technology use on levels of worker distress
were small. To the extent that technology use is contributing to a more stressful work
environment, its impact is minimal across a diverse sample of employees. Similarly, the
influence of personal technology use in alleviating worker strain is also very small.

As a follow up to this work, my colleague Britta Johnson and I turned to more recent survey data
which draws from a national sample of employees) to better understand the costs and benefits of
technology use for U.S. workers. Here we wanted to know more about how both work-related
and personal forms of technology use affected employee assessments of distress and
productivity. These data show that about a third of employees report that technology use is a
factor shaping a more stressful work experience. Many more employees (69%) report that use is
enhancing employee productivity on the job.

The data also document that technology use is extending work into personal life. Employees
report using both email and phones to attend to work after hours, on weekends, when they are
sick, on vacation, or while running errands. This extension, which is linked to longer work hours
in some cases, is one of the factors fueling increases in both self-reported employee distress and
productivity.

We also analyzed relationships among technology use, increases in the size of communication
networks, and employee distress and productivity. One of the much-touted benefits of the

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“network society” is expanded communication networks, which have generally been found to be
beneficial for users. To the extent that workers find that their technology use has greatly
expanded these networks, this expansion is also connected to increases in employee distress.
However, it is also linked to gains in productivity.

Both patterns are consistent with what we already know about social networks. While a large
network can provide greater access to information and social support, it can also expose us to
more interpersonal conflict and greater demands. We suspect that access to more and better
information and greater demands produced by these networks underlie linkages among increased
network size in employment settings and increases in employee distress and productivity.
However, the costs of expanded social networks have been under-researched.

What should the public take away from this research? First, given the prevalence of technology
in our work and personal lives, everyone needs to cultivate the skills and techniques necessary to
use technology effectively. We need to shift the focus from discussion of whether to use it, to
one in which both employees and employers work together to figure out what sorts of
technology-based practices are effective and which ones are not worth the trouble.

The problem is that most employees and employers are not on equal footing in this conversation.
Instant connectivity means that bosses (and clients) can rely on ‘just in time’ communication
practices to reach needed employees anytime, anywhere. Research also documents that the
current technology-based work environment pushes conscientious employees to stay online and
responsive well beyond the ‘normal’ work day. Thus, the onus is on employers to think carefully
about what sorts of communication practices will enhance productivity without causing undue
harm to employees and take steps to see that these are established through organizational
policies.

Second, organizations need to be aware of the important role that technology use is playing in
their employees’ personal life. Expectations about staying connected to family and friends are
firmly entrenched. Some of the research I have described illustrates that personal technology use
has the potential to enhance work outcomes that matter to employees and employers. Employers
should embrace personal technology use at work as such use may help employees manage work-
related stress, perhaps through better integration of their work and personal lives.

Third, while communication devices can be used in numerous ways, our social practices around
technology appear to favor increased access and rapid response times. Restricting access (to
employees, or to work) or slowing down responses will not feel like the natural order of things,
even if organizations find it necessary. As a result, both workers and employers will need to be
proactive and deliberate about technology use if they determine that non-normative practices are
good for business.

2. Communicate in the workplace

Communication is the sending and receiving of messages. Therefore, almost anything that takes
place in work and personal life involves communication. The steps involved in communication
are encoding, transmission over a communication medium, and decoding. Nonverbal

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communication, or silent messages, are important parts of everyday communication. Nonverbal
communication includes the environment or setting in which the message is sent, distance from
the other person, posture, hand gestures, facial expressions and eye contact, voice quality, and
personal appearance. Lying can often be detected by a person's nonverbal communication, such
as a rapid shift in facial expression. An advanced application of nonverbal communication is to
help combat drug trafficking and terrorism by spotting nervous or threatening behavior.

Despite its many advantages, information technology can create communication problems. The
widespread use of e-mail and instant messaging creates some problems. One problem is that it
encourages indiscriminate sending of messages. (Nevertheless, one study showed that managers
and professionals have e-mail under control.) Many workers develop poor written
communication habits because e-mail and instant messaging are so informal. E-mail is also used
for such negative purposes as making yourself look good and others look bad. Some managers
and other workers use e-mail to avoid direct contact with people, including discipline. Some
people find it difficult to handle harsh messages sent over e-mail. Another problem with e-mail is
that it can breed indecisiveness because a worker can readily ask the boss to choose an
alternative decision.

Telecommuters can communicate abundantly via electronic devices, but they miss out on the
face-to-face interactions so vital for dealing with complex problems. Telecommuters can also
face the problem of having so little face-to-face communication with people in the office that
they are passed over for promotion.

Many potential roadblocks or barriers to communication exist. These roadblocks are most likely
to occur when messages are complex or emotional or clash with the receiver's mental set.
Communication roadblocks include limited understanding of people, one-way communication,
semantics, credibility of the sender and mixed signals, distortion of information, different
perspectives and experiences, emotions and attitudes, communication overload, improper timing,
and poor communication skills.

Strategies to overcome communication roadblocks include appealing to human need and timing
your messages, repeating your message using more than one channel, having an empowered
attitude and being persuasive, discussing differences in paradigms, checking for comprehension
and feelings, minimizing defensive communication, combating communication overload, using
mirroring to establish rapport, and engaging in small talk and constructive gossip. Also, a direct
way of overcoming communication barriers is to use effective telephone, voice-mail, and
speakerphone communication skills because these media often create communication problems.
For example, vary your voice tone and inflection to avoid sounding bored or uninterested in your
job and the company. When using presentation technology, it is important to maintain eye
contact.
Improving your receiving of messages is another part of developing better communication skills.
Unless you receive messages as intended, you cannot perform your job properly or be a good
companion. A major component of effective listening is to be an active listener. The active
listener uses empathy and can feed back to the speaker what he or she thinks the speaker meant.
Active listening also involves paraphrasing what the speaker says, feels, and means. Another
major technique of active listening is to ask questions rather than making conclusive statements.

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Some opinion and evidence exists about gender differences in communication style. For
example, women prefer to use conversation for rapport building, and men prefer to use talk
primarily as a means to preserve independence and status by displaying knowledge and skill.
Understanding gender differences will help you interpret the communication behavior of people.
How you combine verbal and nonverbal communication becomes your personal communication
style.
6. Develop effective work habits
People with good work habits tend to be more successful in their careers than poorly organized
individuals, and they tend to have more time to spend on personal life. Good work habits are
more important than ever because of today's emphasis on productivity and quality.

Procrastination is the leading cause of poor productivity and career self-sabotage. People
procrastinate for many reasons, including their perception that a task is unpleasant, is
overwhelming, or may lead to negative consequences. Fear of success can also lead to
procrastination. Awareness of procrastination can lead to its control.
Eight other techniques for reducing procrastination are
(1) Calculating the cost of procrastination;
(2) Counterattacking the burdensome task;
(3) Jump-starting yourself;
(4) Pecking away at an overwhelming task;
(5) Motivating you with rewards and punishments;
(6) Following the WIFO principle;
(7) Making a commitment to other people; and
(8) Expressing a more positive attitude about your intentions.
Developing good work habits and time management practices is often a matter of developing
proper attitudes toward work and time. Seven such attitudes and values are
(1) Developing a mission, goals, and a strong work ethic;
(2) Valuing good attendance and punctuality;
(3) Valuing your time;
(4) Valuing neatness, orderliness, and speed;
(5) Working smarter, not harder;
(6) becoming self-employed psychologically;
(7) playing the inner game of working, and
(8) appreciating the importance of rest and relaxation.
Eleven skills and techniques to help you become more productive are
(1) Cleaning up and getting organized;
(2) Planning your activities;
(3) Getting off to a good start;
(4) Making good use of office technology;
(5) Concentrating on one key task at a time;
(6) Streamlining your work and emphasizing important tasks;
(7) Working at a steady pace;
(8) Creating some quiet, uninterrupted time;
(9) Making use of bits of time;
(10) Staying in control of paperwork, the in-basket, and e-mail; and
(11) Using multitasking for routine tasks.

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Seven suggestions for overcoming time wasting are
(1) minimizing day dreaming;
(2) preparing a time log and evaluating your use of time;
(3) avoiding being a computer goof-off or cyberloafer;
(4) keeping track of important names, places, and things;
(5) setting a time limit for certain tasks and projects;
(6) scheduling similar tasks together;
(7) bouncing quickly from task to task, and
(8) being decisive and finishing things.
Work Effectively with Others

Unit introduction

This unit covers the performance outcomes, skills and knowledge required to work in a group
environment promoting team commitment and cooperation, supporting team members and
dealing effectively with issues, problems and conflict.

Key terms and concepts

Term Definition

Conflict Team members may display differing opinions and behaviour that may not
support the team goals.

Cooperative An enjoyable working environment where individuals undertake activities in

working a manner that promotes cooperation and good relationships.
environment Mutual respect is developed.

Feedback Comments used to develop and refine new ideas and approaches. It can be
verbal or non-verbal; positive or negative

Groups/teams A team is a group of people who work together to complete certain tasks or
goals.

Individual roles These can be identified through:

and
responsibilities  job description/role statement
 manager/supervisor/team leader
 experienced colleagues.
Problem-solving A strategy for handling conflict. It uses a conflict resolution technique of
‘win-win’.

Team members A group of people belonging to a team; each person can be given their own
area of responsibility.

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Resource Quantity of resources is set or limited.
constraints

Time constraint A time constraint is the timeframe a worker has been given to complete a
task.

Workplace Sources of workplace information include:

information
 workplace policy and procedure manuals
 manager/supervisor/team leader
 colleagues
 seminars and training courses
 industry associations
 job/position description
 duty statement
 roster

Develop effective workplace relationships

1. Teamwork

A team is a group of people who are working together for a specific

purpose. Often each person has a different skill which they bring to the group, so that they
complement each other and are able to complete a wide range of tasks.
The team may consist of:
 the entire business organization
 a department or section
 a specific purpose group which then disbands when the task is complete
 an ad hoc committee that meets every now and again.
People are often members of a number of different teams at the same time.
For a team to be successful, responsibilities and duties must be undertaken in a positive manner
to promote co-operation and good relationships. This can be achieved by adhering to:

 safety procedures
 the directions from a supervisor
 workplace policies and procedures

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  maintaining personal work space
 accepting responsibility for own work and assisting co-workers as required
 checking that required materials and equipment are available and meet requirements of
the task
 seeking advice/obtaining information as required
 industry Code of Conduct
 the requirements of your job description
 Legal requirements, such as anti-discrimination legislation and OHS regulations.
Successful teams
Features and characteristics of successful teamwork include:
 all members being committed to the goals of the team
 effective communication between team members so that each person understands what is
expected of them
 each member co-operating and assisting others when they need help
 team members being flexible with respect to the tasks they complete – the more multi-
skilled a team, the more work will be completed within the designated time frames
 sharing of ideas and team members contributing to brainstorming activities, especially
when problem solving
 everyone adopting a positive attitude
 people respecting differences in personal values and beliefs related to culture, religion
and language
 attending team meetings regularly.

2. Stages in the development of a team

The four stages in the formation of a team are:
 forming
 storming
 norming
 performing

Team forming occurs when a team is

established, the goals are identified and members begin to develop interpersonal relationships.

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Team storming occurs when conflict arises. This conflict may develop through
misunderstandings regarding roles and responsibilities, poor communication or concern over the
goals and the way they are/are not being met.

Team norming is when cohesion develops among members and the achievement of goals begins.
Problem-solving and decision-making occur. Roles and responsibilities are clarified and
communication improves acknowledging individual differences.

Team perfoming occurs when the members have a shared commitment on the achievement of the
established goals. Members identify with the team and there is commitment to performing
delegated tasks. The team works harmoniously and productively resolving conflict and problems
within the team. The team has a high degree of autonomy.
3. Work sequencing
Take time and resource constraints into consideration when planning the steps involved in
completing tasks.
Resource constraints are the physical limits that have been placed on business resources.
Business resources include human resources, facilities, software, raw materials and stock and
supplies.
A time constraint is the timeframe a worker has been given to complete a task.
An important element of time management is prioritising tasks. Prioritising is planning to do
tasks in order of most important to least important. Completing tasks in a logical sequence
ensures workplace efficiency.

There are four steps in

work sequencing:

1. Receive instructions and clarify to ensure the instructions are understood. This is done
effectively by asking open and closed questions and paraphrasing to ensure correct
meaning.
2. Organize for the task. This involves selecting the business resources required and
locating those resources. For instance a staff training day requires human resources of

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 staff both as participants and organizers, facilities such as the conference room, software
like a PowerPoint presentation and supplies such as paper and toner for photocopied
handouts.
3. Complete the task. The to-do list should be prioritized in a logical order which meets the
timeframes. Meeting quality assurance standards in the delivery of your work is also
important. An aspect of quality assurance is to proofread your written communication to
ensure correct spelling, grammar and punctuation.
4. Clean-up after the task has been completed. This involves returning the physical
resources to the correct location for other team members to locate efficiently.
Seeking assistance from workgroup members
There are many times when a problem arises that you cannot solve by yourself. If you cannot
finish a task, then you slow down the whole group. It is then necessary to ask for assistance, by
approaching others, for example:
 your supervisor
 your coach or mentor
 your colleagues or other members of the team
 another member of the organization.
It is important to work together. This can happen in either a meeting, teleconference, face-to-face
or online via the Internet.

 Feedback
Feedback
It is important that your work performance is monitored and that you receive feedback which is
constructive and encourages you to strive for improvement.

Feedback can be:

 positive
 negative
 constructive

Positive feedback indicates that tasks were carried out well. It acknowledges personal efforts and
the good cooperation among team members. It encourages all members to continue to strive for
excellence.

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Negative feedback informs team members that tasks were not completed well. It analyses the
reasons for the problems encountered and proposes ideas for improvement.
Constructive feedback encourages and acknowledges good job performance. It also suggests
areas for improvement and strategies for achieving this improvement.
Sources of feedback on performance
Feedback on performance may be formal or informal.
 Formal performance appraisals generally occur on a regular basis. The first appraisal
usually takes place three months after an employee starts a job then every six or twelve
months thereafter. These appraisals allow for a formal method of feedback which can
lead to modification of a job description, further training and re-evaluation of
performance.
 Feedback from supervisors and colleagues. This is mainly in the form of informal
comments on a job well done or suggestions of how to complete a task.
 Feedback from customers giving positive comment and praise for good customer service.
 Personal reflection. This involves thinking about what you have done and how you can
improve on it next time.
 Routine organizational methods for monitoring service. These include customer
complaint or satisfaction forms, and surveys that are completed at the end of a task or a
job for a customer.
Value of feedback
Feedback is valuable to a workplace as it can:
 improve business relationships
 identify and overcome existing problems
 eliminate entrenched work practices
 improve productivity
 enhance output quality
 Contribute to the future development of the workplace.
Contribute to workgroup activities
1. Supporting team members
It is important to provide support to team members to ensure that workgroup goals are met.
Providing support to team members may take the form of:

 explaining or clarifying policies, procedures, instructions etc

 helping colleagues to complete tasks on time, especially if you have completed your own
tasks ahead of schedule
 assisting with solving problems
 providing encouragement in order to foster a positive attitude,
 providing feedback to another team member, and
 Undertaking extra tasks if necessary.
The value of sharing and updating information
The sharing and updating of information with the workgroup ensures:
 designated goals are met
 professionalism is maintenance
 products and services are promoted
 customer service is improved
 Positive workplace relationships are developed.

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The information to be shared may include:
 acknowledging satisfactory performance
 acknowledging unsatisfactory performance
 assisting a colleague
 clarifying the organization’s preferred task completion methods
 encouraging colleagues
 open communication channels
 Workplace hazards, risks and controls.
2. Strategies and opportunities for improvement
It is important that strategies and opportunities for improvement of the workgroup and/or
individual are identified and planned in liaison with the workgroup.

Some strategies or opportunities may include

 Career planning and development: to have a plan for the future, which can benefit the
team.
 coaching, mentoring or supervision: enables more experienced personnel to help the less
experienced in order to improve the latter’s efficiency and performance.
 formal and informal training provisions: formal includes attending courses whereas
informal is often one colleague helping another, which will improve the performance of
the person receiving the training.
 internal and external training provisions: internal training occurs on site whereas external
is held at a TAFE College or other business premises, depending on the size and
resources of the business. All training would result in improvements in awareness,
performance and efficiency of the workgroup.
 performance appraisals: will identify the need for further training.
 Personal study: to improve knowledge and performance, which can then be shared with
other team members?
 Work experience or exchange opportunities: allows a worker to see what is occurring in
other work venues and can share ideas with team members to improve work performance
of team.
 Work shadowing: partnering with a work colleague for a time period to learn about the
attributes of their job position.
 Brainstorming: many people are able to contribute ideas, particularly when trying to
solve a problem, so that the best alternative is adopted.
 Recognition of current competence (RCC): workplace skills assessment to determine
what skills the members of a particular workplace have so that workgroups can be chosen
with the knowledge that the best people for a certain task will be chosen to maximise the
outcomes.
 Recognition of prior learning (RPL): to ensure that the most experienced or the person
with the most training will be chosen for each task to ensure that tasks are completed on
time.
Deal effectively with issues, problems and conflict
1. Respecting individual differences
Respecting differences in personal values and beliefs has an important impact in the
development of relationships.

16 | P a g e
To deal effectively with issues, problems and conflict it is important as a team member to:
 demonstrate respect and empathy when working with others
 be sensitive when dealing with other points of view
 constructively raise and discuss ideas
 be cooperative and establish good working relationships
 have knowledge of work group member’s responsibilities.
Causes of cross-cultural misunderstanding
Common causes of misunderstanding between different cultural groups include:
 the understanding and interpretations of nonverbal behavior
 religion
 customs, beliefs and values
 dress and personal grooming
 product/service preference
 levels of formality
 family obligations.
Strategies to deal with misunderstandings
Strategies to deal with cross-cultural misunderstandings in the workplace can come from across
the workplace/organisation itself or be implemented by individuals.
Strategies that can be implemented across the workplace/ organization include:
 staff training
 using staff cultural skills
 providing written communication and signs in various languages
 promoting cultural celebrations
 using a variety of communication methods
 fostering a knowledge of cultural support agencies
Strategies that can be implemented by individuals include:
 learning basic terms in another language
 developing an understanding of and tolerance for cultural diversity
 overcoming prejudice and assumption
 using nonverbal communication skills
 actively seeking to breakdown barriers.
2. Workplace conflict
Causes of potential conflict in the workplace include:
 poor customer service
 variation in colleagues’ work practices/methods
 cultural misunderstanding
 poor communication - this can involve speaking too quickly or quietly; giving no visual
clues; having inadequate language skills; not clarifying or asking questions and using
inappropriate body language.
 barriers to communication
 aggressive behavior
 personal animosity
 Misunderstandings regarding roles and responsibilities.
When issues, problems and conflicts arise seek assistance from workgroup members in
suggesting possible ways of dealing with the conflict.

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Conflict resolution techniques

When conflict arises in the

team, use the following conflict resolution techniques:
 eliminate adversarial contests
 promote the concept of a ‘win-win’ resolution
 allow for solutions that meet all parties’ needs
 follow due process.
A ‘win-win’ resolution to handling conflict uses problem solving as a strategy. It finds an
acceptable solution that acknowledges all team members concerns, knowledge and skills. Follow
due process in the resolution process.
Using the ‘win-win’ approach will appease team members with differing viewpoints as each will
have their viewpoint considered in the formation of the solutions. Accepting compromise by
team members is part of this process.

Due process is followed when we listen to all

viewpoints, acknowledge the value of each view point, respond appropriately and with empathy,

18 | P a g e
report the outcomes, solutions and compromises that have been made and follow up on measures
identified to resolve issues, problems and conflict.

3. Problem-solving strategies

There are four steps in problem solving which can be

appled to both the individual and team situations. They are:

 identify the problem

 consider solutions
 take action
 follow-up.

Brainstorm with colleagues to identify the problem and discuss solutions.

From the brainstorming meeting decide which solutions are the most suitable.

Take action by implementing the solutions and follow-up by evaluating the solution over time.

4. Lines of communication

Lines of communication with supervisors and peers within the workplace can be viewed as a
management pyramid. This shows the chain of command.

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The management pyramid showing
lines of communication MANAGEMENT LEVEL RESPONSIBILITIES

There are clear lines of Top management CEO/ Establishes operating

communication for reporting and 1
Director policies
working. Employees know to whom
and for what duties they are
responsible and they speak directly to Directs activities of
the first-line managers. Middle 2 Middle management first-line managers and
managers have the authority to direct implements policy
first line managers and take
responsibility for the direction and
First-line Directs activities of
operations of the organisation. They 3
receive direction for the operating management/supervisors employees
policies of the organisation from the
directors in top management. Implements policies of
4 Employees
management

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BSBWOR204A
Use business technology
This unit describes the performance outcomes, skills and knowledge required to select, use and
maintain a range of business technology. This technology includes the effective use of computer
software to organise information and data.

Key terms and concepts

Term Definition
Amendment A change or improvement in a document.
Back-up system A system used to store information for security purposes
in case the computer system crashes.
CD-ROM Compact Disc Read Only Memory, which enables the
storage of large amounts of text or data.
Database A computer software program used to store and organise
a range of records or data.
Data storage The saving of data to a device such as a floppy disk, CD-
ROM, hard drive or a back-up system.
Digital camera A camera that converts photos into digital images that
can be loaded directly into a computer.
Directories Tables that contain file information such as name, file,
size, time and date of last modification.
Ergonomics The study of the environment and conditions of work, in
order to achieve maximum efficiency; and tailoring the
physical environment to individual requirements.
File generation Creation of a new file for information, either on the
computer or in a filing cabinet.
Floppy-disk drive The drive into which a floppy disk may be placed to
either save information or read the information stored on
it.
Hard drive The drive within a computer that stores information and
enables the computer to run.
Keyboard An input device with a set of keys used to enter
information into a computer.
Log-on The use of a password to open or access files on a

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 computer system.
Manufacturer’s A booklet setting out the manufacturer’s conditions of
guidelines use for a piece of equipment.
Modem A piece of equipment that enables the transfer of
information from one computer to another via a
telephone line or communications cable.
Numerical key Set of number keys on the keyboard.
pad
Printer A device that prints text or graphics on paper or other
media.
Routine Ensuring that computers and other equipment are looked
maintenance after, for example by replacing consumables, clearing
paper jams etc.
Scanner A piece of equipment that copies a document or image
directly into a computer.
Spreadsheet A computer software program used to store and calculate
lists of numbers or statistics.
Sub-directories Directories located within another directory.
Technology Paper, toner, bulbs and other items that must be
consumables constantly replaced as they are used or consumed by
office equipment.
Zip drive A high-capacity disk drive, similar to a floppy drive.

1. Selecting the right technology and software

In order to select the right technology and software to complete a task, it is important to
understand the functions of each piece of technology and each type of software. When starting a
new job or when a new piece of equipment is purchased, staff should be trained in the main
functions of the equipment: how to operate the equipment; Occupational Health and Safety
issues; routine maintenance; and the procedures for reporting major faults.

The technology available may include:

 computers, including laptops

 digital cameras
 Zip drives
 modems
 scanners

22 | P a g e
  printers

Software applications may include:

 email and Internet browsers

 word processing
 spreadsheets
 databases
 accounting packages
 presentation packages

In order to use computer technology correctly, it is important to know the manufacturer’s

instructions, as well as the organisation’s policies and procedures regarding:

 booting up, logging on and logging off (eg is a password needed?)

 correctly identifying and opening files (eg understanding the file management program)
 modifying files (eg does the file need to be saved with a different file name?)
 saving and closing files, (eg understanding the electronic filing system)
 printing files
2. Storage of data
Most data is stored on a computer’s hard drive. It is important to understand a computer’s file
management system in order to save work in the right place. Data is stored in folders (or
directories) and sub-folders (or sub-directories), similar to a paper-based filing cabinet.
Below are examples of how Microsoft Windows Explorer organises its directory:
This is a section of Windows Explorer showing how the files are organised into a multi-level
filing system.
The “+” signs to the left of some folders indicates that there are further sub-folders located in
these folders.

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By clicking on a folder with a “+” sign to its left, all the sub-folders within that folder can be
seen, as in the example to the right, under the Lotus folder.

A “-” sign to the left of a folder indicates that all sub-folders are showing

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25 | P a g e
Other than on the hard drive, data may also be stored on:

 floppy disks: remember that a limited amount of information can be stored here, so it is a
good idea to compress the file to accommodate large amounts of data
 CD-ROMs: suitable for large amounts of data
 back-up system: particularly important in case of computer failure to safeguard large
amounts of information
3. Retrieving documents
Documents can be opened from:
 a software program (eg Word)
 a file management program (eg Windows Explorer)
If a document cannot be found, it is possible to do a search by clicking on “Start”, then “Search”,
then “All files and folders”, and by filling in the information that is known, as shown below.

4. Technology consumables
In the course of completing work tasks, it is important that employees know how to identify and
replace technology consumables, including:

 printer ribbons and cartridges

 CD-ROMs
 floppy disks
 toner cartridges
 back-up tapes
 Zip disks

There should always be an adequate supply of these consumables. Supplies should be checked
on a regular basis, the timing of which would vary according to the size of the organisation and
the rate of use of these items.

26 | P a g e
The ordering of these consumables may involve filling out a requisition form or an order form or
arranging for a tender or contract for their supply.
5. Routine maintenance
It is important that routine maintenance of business technology is carried out on a regular basis to
ensure minimal breakdowns. Equipment should be cleaned regularly by using a damp cloth or
other approved cleaning materials. Consumables should be checked to monitor their rate of use,
and replaced when needed. Regular servicing by qualified or manufacturer-approved technicians
will ensure that all equipment is in the best condition possible to minimise breakdowns.
All employees should receive training to solve common faults, like paper jams, system failures
and low ink or toner cartridges. However, more complex problems should be reported
immediately to the person in charge of maintenance, to the manufacturer or to the service
company. A logbook of service visits must be kept.
It is a good idea to have all equipment checked regularly as part of the Occupational Health and
Safety inspections.
Selecting appropriate technology and
Software
Before you can select the appropriate technology for your work, you need to understand
how business technology functions.
Selecting technology
Technology varies from organization to organization. All operators should receive
training in the technology they need to use. Organizations should have training manuals
specific to the equipment used. If you are unsure, ask your manager or work colleagues
to tell you where manuals are stored.
The following sections discuss technology commonly used in the workplace.
Personal computers and laptops
A computer is an electronic device for storing and processing information. A personal
computer has a separate hard drive and monitor that are attached to other equipment
such as a keyboard and mouse. A laptop is a small, portable computer that has its hard
drive, screen and keyboard within the same piece of equipment. Personal computers
are used in all organizations to carry out many different tasks. Organizational data is
usually processed using a computer and different software applications.
When you start work, you need to find out what kind of software your organization
uses and request training if you don’t know how to use it. Laptops are popular in
the workplace as they are portable, lightweight and don’t solely rely on a plug-in
power supply (they have rechargeable batteries that last for a certain amount of time).
However, laptops have disadvantages. Their small size makes them easy to steal and,
more importantly, they are not adjustable and, therefore; not as comfortable to use
(ergonomic) as a personal computer.
Practice task 1
List two advantages and two disadvantages of using a laptop computer instead of a
personal computer.
Digital cameras
A digital camera takes photographs using an electronic imaging sensor rather than film.
Digital photos can be downloaded directly to a computer and the image can be altered
or enhanced before being used. Organizations frequently use digital cameras to quickly

27 | P a g e
record images and insert them into documents such as newsletters and reports. Some mobile
phones also have digital camera capabilities.
Zip drives
A zip drive is a removable disk storage system. It is used mainly for backing up and
archiving personal computer files. Each disk can hold between 100 to 250 megabytes
(a megabyte is a unit of storage). Zip drives have become less popular as other storage
equipment, such as CD burners and USB drives, have been developed. A USB drive is
a small electronic storage device that fits in the palm of your hand.
© Aspire Training & Consulting 3
Chapter 1: Selecting and using business technology
When storing or sending large files, it is a good idea to ‘zip’ the files beforehand, which
means reducing the file size so they are easier to store or send as an email attachment.
In Microsoft Windows, WinZip is used to zip and unzip a file. The following is an

example of a WinZip screen.

Chapter summary
ƒ. Organizations need to create, update and store their files in suitable locations so
they can be easily accessed and maintained.
ƒ. If you are naming a new file, you must consider the names of files that already exist
to ensure consistency and prevent duplication.
ƒ. Updating a file might mean renaming it or inserting new records.
ƒ. The keyboard, mouse and scanner are the main input devices used in office
environments.
ƒ. Most organizations store data using both digital and paper-based storage
methods.
ƒ. All methods of storing data have folder structures and naming standards to enable

staff to find and set up folders quickly and easily.

Complete these activities before you look up the Answers

1. List three advantages and three disadvantages of using a laptop instead of a desktop
computer.
a. Advantages
i. ______________________________
ii. ______________________________
iii. ______________________________
b. Disadvantages
i. ______________________________
ii. ______________________________
iii. ______________________________

2. Name the software you would use to complete the following tasks

28 | P a g e
 a. Type up a newsletter ____________________________________________
b. Prepare a budget for next year _____________________________________
c. Create a list of clients ____________________________________________
d. Create a slide show for a board meeting ______________________________
e. Communicate with head office _____________________________________
f. Manage files on the computer ______________________________________

3. Explain what you would use the following computer technology for
a. Digital camera
____________________________________________________________
__________________________________________________________________
_____
b. Zip drive
________________________________________________________________
__________________________________________________________________
_____
c. Modem
________________________________________________________________
__________________________________________________________________
_____
d. Scanner
________________________________________________________________
__________________________________________________________________
_____

Test your knowledge?

Select the most correct answer for the following:

1. Which of the following would be the best software to use to produce a newsletter?
a. MS Publisher
b. MS Office
c. FileMaker Pro
d. ClarisWorks
2. What is a fast and efficient way to send personally addressed form letters to a large
number of people?
a. Via the Internet
b. Using mailing labels
c. By word processing
d. Using mail merge

29 | P a g e
 3. Which of the following file extensions indicates that the document has been saved as a
Microsoft Excel spreadsheet?
a. .doc
b. .xls
c. .pub
d. .gif
4. What does the term “log on” mean?
a. To boot up the computer
b. To open a Word document
c. To type in a password to get access to a computer
d. To connect to the Internet
5. The height of the computer screen should be positioned so that the centre of the screen is
approximately 15 degrees below eye level.
a. True
b. False
6. Disk degragmenter checks the C drive for errors and repairs them.
a. True
b. False

7. A scanner is an input device.

a. True
b. False
8. A footrest is helpful when a desk or chair at a workstation cannot be adjusted.
a. True
b. False
9. A cold start for a computer is achieved by pushing the reset button.
a. True
b. False

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Occupational Standard: Basic Account Works Level II
Unit Title: Process Customer Accounts
Unit Code: EIS BAW2 04 0812

Customer Accounts - Introduction

At the most basic level, the customer account serves as a place where the owner holds cash and
securities; it is also a record of all customer investment activity. The type of account the
customer owns will be determined by his or her investment objectives, level of trading authority,
and personal or professional requirements, because each account type has its own recordkeeping
needs and functions. Moreover, proper compliance with securities industry rules begins with the
collection and documentation of customer information when a new account is opened.

General Guide to Account Opening and Customer Identification

1. The Basel Committee on Banking Supervision in its paper on Customer Due Diligence for
Banks published in October 2001 referred to the intention of the Working Group on Cross-border
Banking 1to develop guidance on customer identification. Customer identification is an essential
element of an effective customer due diligence programme which banks need to put in place to
guard against reputational, operational, legal and concentration risks. It is also necessary in order
to comply with anti-money laundering legal requirements and a prerequisite for the identification
of bank accounts related to terrorism.

2. What follows is account opening and customer identification guidelines and a general guide to
good practice based on the principles of the Basel Committee's Customer due diligence for banks
paper. This document, which has been developed by the Working Group on Cross-border
Banking, does not cover every eventuality, but instead focuses on some of the mechanisms that
banks can use in developing an effective customer identification programme.

3. These guidelines represent a starting point for supervisors and banks in the area of customer
identification. This document does not address the other elements of the Customer Due Diligence
for banks paper, such as the ongoing monitoring of accounts. However, these elements should be
considered in the development of effective customer due diligence, anti-money laundering and
combating the financing of terrorism procedures.

4. These guidelines may be adapted for use by national supervisors who are seeking to develop
or enhance customer identification programmes. However, supervisors should recognize that any
customer identification programme should reflect the different types of customers (individual vs.
institution) and the different levels of risk resulting from a customer's relationship with a bank.
Higher risk transactions and relationships, such as those with politically exposed persons or
organisations, will clearly require greater scrutiny than lower risk transactions and accounts.

5. Guidelines and best practices created by national supervisors should also reflect the various
types of transactions that are most prevalent in the national banking system. For example, non-

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face-to-face opening of accounts may be more prevalent in one country than another. For this
reason the customer identification procedures may differ between countries.

6. Some identification documents are more vulnerable to fraud than others. For those that are
most susceptible to fraud, or where there is uncertainty concerning the validity of the
document(s) presented, the bank should verify the information provided by the customer through
additional inquiries or other sources of information.

7. Customer identification documents should be retained for at least five years after an account is
closed. All financial transaction records should be retained for at least five years after the
transaction has taken place.

8. These guidelines are divided into two sections covering different aspects of customer
identification. Section A describes what types of information should be collected and verified for
natural persons seeking to open accounts or perform transactions. Section B describes what types
of information should be collected and verified for institutions and is in two parts, the first
relating to corporate vehicles and the second to other types of institutions.

9. All the terms used in these guidelines have the same meaning as in the Customer due diligence
for banks paper.

A. Natural Persons

10. For natural persons the following information should be obtained, where applicable:

 legal name and any other names used (such as maiden name);
 correct permanent address (the full address should be obtained; a Post Office box number
is not sufficient);
 telephone number, fax number, and e-mail address;
 date and place of birth;
 nationality;
 occupation, public position held and/or name of employer;
 an official personal identification number or other unique identifier contained in an
unexpired official document (e.g. passport, identification card, residence permit, social
security records, driving licence) that bears a photograph of the customer;
 type of account and nature of the banking relationship;
 signature.

11. The bank should verify this information by at least one of the following methods:

 confirming the date of birth from an official document (e.g. birth certificate, passport,
identity card, social security records);
 confirming the permanent address (e.g. utility bill, tax assessment, bank statement, a
letter from a public authority);

32 | P a g e
  contacting the customer by telephone, by letter or by e-mail to confirm the information
supplied after an account has been opened (e.g. a disconnected phone, returned mail, or
incorrect e-mail address should warrant further investigation);
 confirming the validity of the official documentation provided through certification by an
authorised person (e.g. embassy official, notary public).

12. The examples quoted above are not the only possibilities. In particular jurisdictions there
may be other documents of an equivalent nature which may be produced as satisfactory evidence
of customers' identity.

13. Financial institutions should apply equally effective customer identification procedures for
non-face-to-face customers as for those available for interview.

14. From the information provided in paragraph 10, financial institutions should be able to make
an initial assessment of a customer's risk profile. Particular attention needs to be focused on
those customers identified thereby as having a higher risk profile and additional inquiries made
or information obtained in respect of those customers to include the following:

 evidence of an individual's permanent address sought through a credit reference agency

search, or through independent verification by home visits;
 personal reference (i.e. by an existing customer of the same institution);
 prior bank reference and contact with the bank regarding the customer;
 source of wealth;
 verification of employment, public position held (where appropriate).

15. For one-off or occasional transactions where the amount of the transaction or series of
linked transactions does not exceed an established minimum monetary value, it might be
sufficient to require and record only name and address.

16. It is important that the customer acceptance policy is not so restrictive that it results in
a denial of access by the general public to banking services, especially for people who are
financially or socially disadvantaged.

B. Institutions

17. The underlying principles of customer identification for natural persons have equal
application to customer identification for all institutions. Where in the following the
identification and verification of natural persons is involved, the foregoing guidance in
respect of such persons should have equal application.

18. The term institution includes any entity that is not a natural person. In considering the
customer identification guidance for the different types of institutions, particular attention
should be given to the different levels of risk involved.

I. Corporate Entities

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 19. For corporate entities (i.e. corporations and partnerships), the following information
should be obtained:

o name of institution;
o principal place of institution's business operations;
o mailing address of institution;
o contact telephone and fax numbers;
o some form of official identification number, if available (e.g. tax identification
number);
o the original or certified copy of the Certificate of Incorporation and Memorandum
and Articles of Association;
o the resolution of the Board of Directors to open an account and identification of
those who have authority to operate the account;
o nature and purpose of business and its legitimacy.

20. The bank should verify this information by at least one of the following methods:

o for established corporate entities - reviewing a copy of the latest report and
accounts (audited, if available);
o conducting an enquiry by a business information service, or an undertaking from
a reputable and known firm of lawyers or accountants confirming the documents
submitted;
o undertaking a company search and/or other commercial enquiries to see that the
institution has not been, or is not in the process of being, dissolved, struck off,
wound up or terminated;
o utilising an independent information verification process, such as by accessing
public and private databases;
o obtaining prior bank references;
o visiting the corporate entity, where practical;
o contacting the corporate entity by telephone, mail or e-mail.

21. The bank should also take reasonable steps to verify the identity and reputation of any
agent that opens an account on behalf of a corporate customer, if that agent is not an
officer of the corporate customer.

Corporations/Partnerships

22. For corporations/partnerships, the principal guidance is to look behind the institution
to identify those who have control over the business and the company's/partnership's
assets, including those who have ultimate control. For corporations, particular attention
should be paid to shareholders, signatories, or others who inject a significant proportion
of the capital or financial support or otherwise exercise control. Where the owner is
another corporate entity or trust, the objective is to undertake reasonable measures to look
behind that company or entity and to verify the identity of the principals. What
constitutes control for this purpose will depend on the nature of a company, and may rest
in those who are mandated to manage funds, accounts or investments without requiring

34 | P a g e
 further authorization, and who would be in a position to override internal procedures and
control mechanisms. For partnerships, each partner should be identified and it is also
important to identify immediate family members that have ownership control.

23. Where a company is listed on a recognized stock exchange or is a subsidiary of such a

company then the company itself may be considered to be the principal to be identified.
However, consideration should be given to whether there is effective control of a listed
company by an individual, small group of individuals or another corporate entity or trust.
If this is the case then those controllers should also be considered to be principals and
identified accordingly.

II. Other Types of Institution

24. For the account categories referred to paragraphs 26 to 34, the following information
should be obtained in addition to that required to verify the identity of the principals:

o name of account;
o mailing address;
o contact telephone and fax numbers;
o some form of official identification number, if available (e.g. tax identification
number);
o description of the purpose/activities of the account holder (e.g. in a formal
constitution);
o copy of documentation confirming the legal existence of the account holder (e.g.
register of charities).

25. The bank should verify this information by at least one of the following:

o obtaining an independent undertaking from a reputable and known firm of

lawyers or accountants confirming the documents submitted;
o obtaining prior bank references;
o accessing public and private databases or official sources.

Retirement Benefit Programmes

26. Where an occupational pension programme, employee benefit trust or share option
plan is an applicant for an account the trustee and any other person who has control over
the relationship (e.g. administrator, programme manager, and account signatories) should
be considered as principals and the bank should take steps to verify their identities.

Mutuals/Friendly Societies, Cooperatives and Provident Societies

27. Where these entities are an applicant for an account, the principals to be identified
should be considered to be those persons exercising control or significant influence over
the organisation's assets. This will often include board members plus executives and
account signatories.

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 Charities, Clubs and Associations

28. In the case of accounts to be opened for charities, clubs, and societies, the bank
should take reasonable steps to identify and verify at least two signatories along with the
institution itself. The principals who should be identified should be considered to be those
persons exercising control or significant influence over the organisation's assets. This will
often include members of a governing body or committee, the President, any board
members, the treasurer, and all signatories.

29. In all cases independent verification should be obtained that the persons involved are
true representatives of the institution. Independent confirmation should also be obtained
of the purpose of the institution.

Trusts and Foundations

30. When opening an account for a trust, the bank should take reasonable steps to verify
the trustee(s), the settlor(s) of the trust (including any persons settling assets into the
trust) any protector(s), beneficiary(ies), and signatories. Beneficiaries should be identified
when they are defined. In the case of a foundation, steps should be taken to verify the
founder, the managers/directors and the beneficiaries.

Professional Intermediaries

31. When a professional intermediary opens a client account on behalf of a single client
that client must be identified. Professional intermediaries will often open "pooled"
accounts on behalf of a number of entities. Where funds held by the intermediary are not
co-mingled but where there are "sub-accounts" which can be attributable to each
beneficial owner, all beneficial owners of the account held by the intermediary should be
identified. Where the funds are co-mingled, the bank should look through to the
beneficial owners; however, there may be circumstances which should be set out in
supervisory guidance where the bank may not need to look beyond the intermediary (e.g.
when the intermediary is subject to the same due diligence standards in respect of its
client base as the bank).

32. Where such circumstances apply and an account is opened for an open or closed
ended investment company, unit trust or limited partnership which is also subject to the
same due diligence standards in respect of its client base as the bank, the following
should be considered as principals and the bank should take steps to identify:

o the fund itself;

o its directors or any controlling board where it is a company;
o its trustee where it is a unit trust;
o its managing (general) partner where it is a limited partnership;
o account signatories;
o any other person who has control over the relationship e.g. fund administrator or
manager.

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 33. Where other investment vehicles are involved, the same steps should be taken as in
paragraph 32 where it is appropriate to do so. In addition all reasonable steps should be
taken to verify the identity of the beneficial owners of the funds and of those who have
control of the funds.

34. Intermediaries should be treated as individual customers of the bank and the standing
of the intermediary should be separately verified by obtaining the appropriate information
drawn from the itemised lists included in paragraphs 19-20 above.

1
The Working Group on Cross-border Banking is a joint group consisting of members of
the Basel Committee and of the Offshore Group of Banking Supervisors.

Customer Accounts - Opening a New Account

Every new account requires a new account form. This is one of the most important documents
you will encounter as a registered representative. The function of the new account form is two-
fold: it helps the registered representative establish a trusting relationship with the client, plus it
fulfills a number of regulatory requirements.

Despite differences from firm to firm in the content or format of the new account form, the basic
customer information that must be collected before an order is placed remains the same. Lack of
proper documentation may result in disciplinary action, including fines, dismissal and
injunctions against performing securities transactions.

Information Required
The FINRA requires the registered representative to provide the following information when
opening a new account for a customer:

 Customer's name and residence

 if Customer' is of legal age
 The signature of the registered representative opening the account
 The signature of the principal approving the account
 Whether distributions should be reinvested or paid out as cash
 Customer's occupation, and name and address of the employer
 Whether or not the customer is affiliated with another FINRA member
 Citizenship
 Name of any person with authority to make transactions in the account

Furthermore, according to NYSE Rule 405, the registered rep should have a basic understanding
of the customer's present financial situation, risk tolerance, investment objectives, current
income, investment holdings and net worth, tax status and financial needs.

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Customer Accounts - Classification of Accounts

The principal types of account ownership are the following:

 Individual
 Joint
 Corporate
 Partnership
 Fiduciary or Custodial

Individual Accounts
An individual account has one beneficial owner, who is the only person who can control
investments within the account and request distributions or cash or securities from the account.

Joint Accounts
Two or more adults may act as co-owners of a joint account, with each allowed some form of
control over the account. Joint accounts may be designated as Tenants in Common (TIC), Joint
Tenants with Right of Survivorship (JTWROS) or Tenants by Entirety (TBE).

 When one owner in a Tenants in Common account dies, the remaining interest passes to
the decedent's estate in a proportion that matches the proportion of his or her ownership
while alive. The percentage of ownership is not passed to the surviving account co-
owner(s).
 This is not the case with a Joint Tenants with Right of Survivorship account, in which
case the remaining rights are passed in equal amounts to the surviving account co-
owner(s).
 Finally, Tenants by Entirety accounts may only be established by married couples. When
one spouse dies, the surviving spouse simply retains ownership of the account.

Corporate Accounts
The corporate resolution will specify which officers may trade in the corporation's account. In
addition, a certified copy of the corporate charter and the company's bylaws are required to open
a margin account.

Partnership Accounts
A partnership account differs from a corporate account in that it is the unincorporated association
of two or more individuals. The partnership account agreement will specify which partners can
make transactions for the account. Partnerships can open cash, margin or retirement accounts,
provided all investment limitations are disclosed.

Fiduciary or Custodial Accounts

A fiduciary is a person other than the owner who is legally appointed and authorized to act in the
stead of a beneficiary. In most cases, the fiduciary should provide documentation of his or her
authority. The fiduciary initiates trades, manages the account, approves distributions and makes
whatever other decisions may be necessary to maintain the fiduciary account. Investments are
made in the owner's best interests, but the owner does not have legal control over them.

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The fiduciary is bound by Prudent Man Rules (also known as Prudent Person Rules) - that is, he
or she must make decisions that are compatible with the account's investment objectives and that
are in the best interests of the beneficiary. The fiduciary may not use the account for his or her
own benefit; he or she can charge a reasonable fee for services, but cannot share in the account's
profits. In some states, fiduciaries are also bound by the legal list of investments permitted by the
state.

Fiduciaries include but are not limited to people performing the following roles:

 Trustee - administers a trust

 Custodian - manages a UGMA or UTMA account (discussed below)
 Guardian - handles a minor's affairs until the minor reaches the age of majority or an
incompetent person's affairs
 Executor - manages the affairs of an estate
 Administrator - liquidates the estate of a person who dies without a will
 Conservator - acts for an incompetent person
 Receiver - handles the details of bankruptcies

Customer Accounts - A Closer Look at Custodial Accounts

Accounts for Minors

Member firms will not allow minors to open accounts in their own name, as they are not
considered legally responsible and may void contracts at their discretion as a result. However,
you will come across many accounts for minors as a registered representative, so you should
understand them thoroughly.

There are two approaches to opening accounts for minors: UGMA/UTMA accounts and trust
accounts. Accounts for minors are usually opened under the Uniform Gifts to Minors Act
(UGMA) or the newer version of this law, the Uniform Transfers to Minors Act (UTMA), so we
will focus on these.

Under the UGMA, an adult donor gifts an irrevocable sum of cash or securities to a minor and
appoints an adult to act as custodian for the minor. There are no limitations to the amount of the
gifts given; however, once they are assigned to the minor's account, they cannot be revoked and
become the full property of the minor.

There can only be one custodian and one minor per UGMA or UTMA account. The donor may
act as the custodian if he or she so chooses. In any case, the account is registered in the name of
the custodian as custodian for the benefit of the minor, but the account is opened under the
minor's Social Security number. As such, the minor is responsible for income taxes generated
from the account. The custodian is responsible for maintaining prudent investment standards.

The custodial relationship is terminated when the minor reaches the age of majority - an age that
is determined by individual state law. At that time, the custodian transfers the securities to the
beneficial owner's individual name.

Power of Attorney
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To allow a person not named on an account to have trading authority, the customer must file
written authorization with the broker-dealer that gives the person access to the account. The
degree of access will determine whether a full or limited power of attorney is necessary.

 Full Power of Attorney: Full power of attorney allows the non-owner of an account to
make investment decisions for the account owner and to deposit and withdraw cash and
securities. Trustees, guardians and custodians will often be given full power of attorney.
 Limited Power of Attorney: A limited power of attorney grants partial, not total, control
over an account. The document itself will specify the level of access accorded to the non-
owner of the account.

Discretionary Accounts
A discretionary account gives trading authority to the registered representative. For the purposes
of this study guide, discretion is the authority to decide what security to buy or sell, and how
many units or shares. This authority is granted only after the customer has assigned written
authority or a limited power of attorney with the broker-dealer. Once authorization has been
approved, the rep may enter trades without consulting the account owner. The customer is legally
bound to any trading decisions made by the registered representative.

Customer Accounts - Maintaining Customer Accounts

Financial Background
A client's financial situation may change, so it is important for representatives to verify
periodically that the customer's information is still accurate. Clients may not be forthcoming with
such changes, but clues such as changes in purchases and sales may indicate otherwise.

Objectives
As an investor ages, his or her risk tolerance, investment time horizon and goals change. All
clients will modify their investment objectives to match changes during their lifetime.

Address Changes
A change in address may affect the ability of a registered rep or broker-dealer firm to serve a
client. If a broker-dealer or rep is not registered in the state in which a client now lives, no
business may be transacted until the registration is updated.

Transferring Accounts
When a customer wishes to transfer an account from one broker-dealer to another, the customer
must sign a transfer request with the new member firm, which is mailed to the carrying firm.

Both member firms must coordinate their activities to expedite the transfer:

 the client's new firm must immediately submit the transfer request to the carrying firm,
and
 the carrying firm must either validate the instructions or take exception within three (3)
business days.
 Any exceptions must be resolved in an expeditious manner by the two firms.
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  Causes for exceptions to the transfer include incomplete or improperly signed transfer
instructions or having no record of the account. Otherwise, the carrying firm is obligated
to make the transfer as quickly as possible.

Upon receiving the transfer instructions, the carrying firm must cancel all open orders and not
accept new orders. It must return the transfer instructions to the new member firm with a list of
securities positions and any money balance in the account. It has four (4) days to complete the
account transfer to the new member firm following the validation of the transfer instructions.
Most firms today use the automated customer securities account transfer services of the National
Securities Clearing Corporation's Automated Customer Account Transfer Service, or ACATS.

Account Statements
Broker-dealers are required to provide customers with a statement at least quarterly, although if
any activity has occurred in the account, the usual practice is to provide a statement for the
month in which the activity has occurred. The account statement contains the following
information:

 Cash balances
 All security positions
 Activity in the account since the last statement

You will often need to explain to your clients when and why they will receive statements. Some
clients dislike receiving statements on a monthly basis because they don't like the extra paper, so
you must explain to them why your firm is obligated to send a statement when there is activity in
the account.

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 Occupational Standard: Basic Account Works Level II

Unit Title: Develop Understanding of Taxation

Unit Code: EIS BAW2 07 0812

TAXATION
INTRODUCTION
This paper is designed to develop an understanding among candidates of the concepts and
principles of personal, business and corporate income taxation, taxation of specialized entities,
withholding taxes, etc. Besides these, legislation relating to real property gains tax and
investment incentives will also be covered. Candidates are expected to display an understanding
of the impact of all major taxes on the transactions of individuals, companies and special
undertakings and be able to identify and discuss the tax issues in a particular situation as well as
planning opportunities. Income taxation can have a significant impact on your client's portfolio
and financial plans.

1. Federal Income Tax Regulations

2. Tax Consequences of the Investment Company's Activities
3. Tax Consequences of an Investor's Activities
4. Calculating Gains and Losses
5. Tax Treatment of Variable Annuity Contracts

Taxation Issues - Federal Income Tax Regulations

An individual may be subject to one of these four types of income tax:

 Ordinary income - this includes all income earned from salary, commission, and
business income. Some investment gains, such as bond interest and withdrawals from
traditional IRAs and company retirement plans, are taxed at "ordinary income" rates.
 Capital gains - this refers to income resulting from the appreciation of a capital asset
(e.g. stocks, real estate, coins). Capital gains are not realized until the asset is sold.
Capital gains are classified as short-term or long-term:
o Short-term - assets held for 12 months or less are considered short-term capital
gains and are taxed at ordinary income rates.
o Long-term - assets held for longer than 12 months benefit from reduced tax rates
(based on your marginal tax bracket). Ordinary income earners pay a capital gains
tax rate of 15%, while those in who are considered to be high income earners pay
20%.
 Dividends - prior to 2003, dividends were taxed at ordinary income rates along with
bond interest. Due to a change in tax law, "qualified" stock dividends (common and
preferred) are now taxed like capital gains, with a maximum income tax rate of 15%.
REIT dividends do not qualify for this special treatment.
 Passive income - income from sources such as real estate limited partnerships or directly
owned (but professionally managed) real estate is taxable at ordinary income rates and
can only be reduced by passive losses, not by capital gain losses.

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Taxation Issues - Tax Consequences of the Investment Company's Activities

Mutual funds are regulated investment companies under Internal Revenue Code Subchapter M.
Under this subchapter, the mutual fund itself does not pay taxes on investment income, dividends
and capital gains. Instead, the mutual fund serves as a conduit - or pass-through - to the mutual
fund investors.

In order to qualify, the investment company must register under the Investment Company Act of
1940 and must distribute all, or substantially all (90% or more) of net investment income to the
shareholders. Also, 90% of the fund's income must derive from income from dividends, interest
and capital gains from the portfolio's securities. Finally, at least 50% of the fund must be
invested in diversified securities.

Capital gains distributions may be made only once a year and at least 98% of capital gain net
income must be distributed. Failure to do so results in a 4% excise tax on the undistributed
income. These distributions are typically long-term capital gains only (from sales of securities
held for longer than a year). Short-term capital gains (from sales of securities held less than a
year) are distributed along with dividends.

Gross investment income is the total amount of dividend and interest income earned by the
securities in the fund. Net investment income is calculated by deducting operating expenses
(such as management fees, taxes, legal and fees) from gross investment income.

An important concept to know for the exam is net dividend income, which is calculated by
subtracting the mutual fund's expenses from the investment income received. Dividends based on
net investment income may be distributed as often as the fund company determines is
appropriate. Many fund companies designed to provide income to investors distribute diividends

Taxation Issues - Tax Consequences of an Investor's Activities

Mutual Fund Distributions and Taxation

Investors receive two types of earnings from investment company shares: dividends and interest
from the securities held in the fund portfolio, or investment income, and capital gains that result
from the sale of securities in the portfolio for a profit.

Investment income can be reinvested in the fund or paid in cash to the investor. Either way, it is
taxable as ordinary income, depending on the investor's marginal tax bracket, except for
qualified dividends, which are taxable at a maximum rate of 15% for ordinary income earners.

Capital gains are paid out when the portfolio manager makes sales in the fund portfolio or when
the investor redeems shares of the fund at a capital gain, just as they would be incurred by selling
a stock for a profit, for example.

 Long-term capital gains result from the sale of assets that have been held for more than a
year and are taxed at 15%.

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  Short-term capital gains are realized with the sale of assets held for one year or less; they
are taxed as ordinary income - that is, at the percentage of the investor's marginal tax
bracket.

Look Out!
Any dividends or capital gain distributions are generally taxable when made, regardless of
whether the investor reinvests dividends or capital gain distributions or receives them in
cash.

It is the investor's responsibility to report mutual fund dividends and capital gains to federal and
state tax purposes. Typically the mutual fund will provide informational reporting on a form
1099, which can be used to complete the taxpayer's return.

Selling Mutual Fund Shares

The following information details all of the issues that must be taken into account for calculating
the tax impact of selling mutual fund shares.

Tax Rates

 Capital gains - this refers to income resulting from the appreciation of a capital asset
(such as mutual funds and stocks). Capital gains are not realized until the asset is sold.
Capital gains are classified as short-term or long-term:
o Short-term - assets held for 12 months or less are considered short-term capital
gains and are taxed at ordinary income rates.
o Long-term - assets held for longer than 12 months benefit from reduced tax rates
(based on your marginal tax bracket). Ordinary income earners pay a capital gains
tax rate of 15%, while those in who are considered to be high income earners pay
20%.
 Dividends - prior to 2003, dividends were taxed at ordinary income rates along with
bond interest. Due to a change in tax law, "qualified" stock dividends (common and
preferred) are now taxed like capital gains, with a maximum income tax rate of 15%.
REIT dividends do not qualify for this special treatment.

Holding Period
Since the difference between short-term capital gains and long-term capital gains taxation rates is
so significant, it is crucial to understand exactly when a security is considered purchased and
when it is considered sold.

The holding period begins the day after the security is purchased (not the settlement date). The
holding period ends the day of the sale. It is important to keep detailed records of these dates, to
ensure that a security is not sold too soon.

If mutual shares were purchased on more than one date, there are several ways to calculate the
cost basis of the shares sold:

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  Specific identification - the investor may choose to sell specific shares in order to
minimize or maximize cost basis and therefore capital gains (or losses).
 First-in/first-out - if the investor did not specify which shares were sold, the IRS
presumes that the shares held longest were sold first.
 Average share cost - this is the method used when selling all shares at once.

Taxation Issues - Calculating Gains and Losses

Cost Basis
A key concept to understand in computing gains and losses is cost basis, since the amount of
capital gains to be taxed is calculated by subtracting the investor's cost from the sales proceeds.
To determine the cost basis of an investment, start with the original price (plus any transaction
costs). Next, add the dollar value of dividends that were reinvested. This would apply to both
stocks in a dividend-reinvestment program and mutual funds where dividends are automatically
reinvested. Reinvested capital gains are also added to the cost basis for mutual funds.
If you inherit an investment, your cost basis is the value of the asset as of the decedent's date of
death. This is known as a stepped-up cost basis. Also, the holding period is always considered
long-term, even if the deceased hadn't owned the investment for 12 months before death.

If you receive an investment as a gift, there are actually two different cost bases that apply: the
actual cost basis of the giver and the market value on the date of the gift. The best way to explain
how this works is to use an example. Let's say you are given shares of a mutual fund, and the
original owner's cost basis was $70 a share. On the date of the gift, the shares are trading at $60.
If you sell the shares in the future, the basis for a gain is $70 a share, and the basis for a loss is
$60. If you sell the shares for a price between $60 and $70, you have neither a taxable gain nor a
taxable loss.

Netting Capital Gains and Losses

If an investor makes a number of trades in a particular year, the end result could be a mix of
long-term and short-term capital gains and capital losses. The IRS is specific as to how these
gains and losses are to be netted against each other. Here are the steps:

 Net short-term gains against short-term losses

 Net long-term gains against long-term losses.
 If both holding periods result in gains (or both in losses), they are reported separately on
Schedule D.
 If one holding period results in a gain and the other in a loss, they are then netted against
each other.
 If capital losses exceed capital gains, up to $3,000 can be deducted against ordinary
income in any one year.
 Unused capital losses can be carried forward indefinitely to future years - each year,
unused capital losses will first be netted against the current year's capital gains, followed
by the $3,000 deduction against ordinary income.

Exchanges
There are a number of occasions that may result in an investor moving shares of one mutual fund
to another. If done within the same mutual fund family, this is known as an exchange. From the
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investor's point of view, a sale has not occurred - but the IRS does consider this a sale.
Therefore, capital gains must be calculated and taxes paid. As a result, the cost basis in the new
shares is simply the net asset value of the shares that were purchased.

Wash Sales
If you own mutual fund shares (or other securities) that have gone down in value, but you believe
will rise significantly in the future, it could be tempting to sell the shares and enjoy the resulting
capital loss and then buy it back so you can enjoy the future capital gain. But the IRS does not
permit you to take the loss if you buy the same (or similar) security back within 30 days of the
sale. This is known as awash sale.

There are several ways to avoid the wash sale rule and still take advantage of the underlying
strategy:

 Wait more than 30 days to buy back the security

 Buy a security with similar characteristics (e.g. sell shares of ABC growth mutual fund
and buy shares of XYZ growth mutual fund)

The wash rule applies to transactions before and after the sell date. For example, you cannot buy
additional shares of the security on October 1, sell the original shares on October 20 and then
buy more shares of the same security on November 10. In essence, the wash sale rule covers a
period of 61 days: the sell date plus 30 days before and 30 days after that date.

Taxation Issues - Tax Treatment of Variable Annuity Contracts

Tax-Deferred Earnings
While annuities are in the accumulation phase, no taxes are due on the earnings. So, all
dividends, interest and capital gains are automatically reinvested without incurring local, state or
federal taxes. However, once withdrawn, all earnings are taxed as ordinary income

Annuity Withdrawal Taxation

If investors withdraw from an annuity prior to age 59 ½ a 10% tax penalty on the earnings is
imposed. There are exceptions to this penalty, similar to those for IRAs, for withdrawals due to
death, disability, etc.

Annuity withdrawals are taxed on a last in, first out (LIFO) basis, so earnings are taxed first as
ordinary income, while any amount in excess of earnings is taken from the principal amount and
is nontaxable. This applies when withdrawing lump sum amounts. However, if you take one of
the lifetime payouts, or payout over a specific number of years, the withdrawals are taxed
differently.

 Each payment is considered one part principal (non-taxable) and one part rate of interest
(taxable).
 Each payment is adjusted by an exclusion ratio, which is a ratio that describes the
relationship between the invested amount and the total expected return under the annuity
contract.

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Tax-Free "1035" Exchanges
Section 1035 of the U.S. tax code allows the owner of an annuity to exchange an existing
variable annuity contract for a new annuity contract without paying any tax on the income and
investment gains in the current variable annuity account. The process is similar to a direct
transfer from one IRA custodian to another. Section 1035 tax-free exchanges are permitted for
life insurance policies as well as annuities.

Variable Life Insurance Taxation

Earnings from a variable life policy are tax-deferred until withdrawn. The earnings are then
taxed only to the extent that they exceed the premiums paid into the policy. However, if death
benefits are paid out upon the death of the policyholder, the cash value is included in the owner's
gross estate and is not taxed as ordinary income.

Policy loans are permitted from variable life insurance policies. Such loans represent a way to
withdraw money from the contract without triggering income taxes on the policy earnings.

Below are three excise taxes designed to influence the behavior of taxpayers. All are direct tax.

A sin tax is a significant tax on a product or service that is unhealthy. The tax is used to
discourage the purchase and use of products that pose a risk to health, such as tobacco and
alcohol.

Puritan founders of the New England colonies used the earliest sin taxes, called sumptuary taxes.
High taxes were levied on certain foods, items of clothing, tobacco, and alcohol. Early governors
used the tax to discourage conspicuous consumption and what was considered unsuitable
behavior.

The gasoline excise tax is not meant to discourage use of gasoline. It is a user tax. People who
use gasoline pay taxes on it. In turn, the government spends the tax revenues on maintaining and
building roads and highways and regulating underground pollution caused by gas storage. Since
1982, funds also have been used to develop and maintain mass transportation in urban areas.

The gasoline tax was first proposed in 1914 as a federal tax but was not instituted until 1932.
(State governments first implemented gasoline taxes in 1919.)

Luxury taxes tax expensive, nonessential items. The tax requires those who buy luxury goods
such as luxury cars to pay more for the goods. Revenue is then redistributed to benefit all citizens
through government programs. The luxury tax is a progressive tax--it takes more from the
wealthy than from the poor.

The luxury tax can make certain products and services more desirable--there is a prestige in
owning an item that is considered a luxury. A downside to luxury taxes is that they can be too
effective. When luxury taxes become too steep, people may choose to stop purchasing a
particular product.

Key Terms

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direct tax

A tax that cannot be shifted to others, such as the federal income tax.

excise tax

A tax on the sale or use of specific products or transactions.

gasoline excise tax

An excise tax paid by consumers when they purchase gasoline. The tax covers the manufacture,
sale, and use of gasoline.

luxury tax

A tax paid on expensive goods and services considered by the government to be nonessential.

sin tax

A tax on goods such as tobacco and alcohol.

user tax

A tax that is paid directly by the consumer of a good, product, or service.

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