SBL Notes

Chapter 1 - Strategy

Mission - long-term aim

Goals- open ended ways to achieve mission
Objectives- quantification of goals
Strategy- plans to achieve goals/missions/objectives
Strategic management- management of strategy

JS&W model-
1. Strategic position - Current position (External environment, internal environment),
future target
2. Strategy choice - Possible options for reaching target
1) Generate all possible options
2) Pros and cons
3) Select the option
3. Strategy into action
1) Implement
2) Monitor
3) Amend

External environment - External factors affecting or surrounding the business

Direct/Micro/Industry/Specific/Competitive- customers, suppliers, competitors
Indirect/Macro/Country/General- economy, laws, technology, social/cultural, exchange rates,
taxes

Uncertainty prediction-
1. Forecasting
2. Scenario building

Analysis of external environment-

I. PESTEL analysis
1. Political (government policies, political situations, government grant, government
approval, government additional taxes)
2. Economy (economic growth/recession, disposable income, inflation, exchange rates)
3. Social (standard of living, prosperous developed nations, well educated population,
unemployment, demographics, culture)
4. Technological (IT, internet, online, websites, plant and machinery, roads,
telecommunication, infrastructure, availability of skilled labour)
5. Ecological (eco friendly, carbon emissions, pollution, green and natural resources,
waste disposal, recycling)
6. Legal (patents, health and safety laws, minimum wages, maximum work hours,
customer privacy, data protection acts)
II. Porter’s 5 forces
1. Bargaining power of customers
i) how critical it is to the customer
 ii) size of customer
iii) standard or unique or branded or customised
iv) number of sellers in the market
v) switching cost
2. Bargaining power of suppliers
3. Threats of new entrants
i) barriers to entry (patents, copyrights)
ii) government approvals
iii) high capital requirements
4. Competition
5. Threat of substitute products

Porter diamond model-

1. Factor condition (land, skilled labour, machinery, roads, infrastructure, technology,
raw materials, electricity, IT)
2. Demand condition (economy, standard of living, disposable income)
3. Related and supporting industries
4. Firm strategy, structure and rivalry (government role/attitude, competition, capital
markets/stock exchanges)

Evaluation skills- write both pros and cons

Strategic drift- Scan environment and keep updating strategy

SFA framework- used for evaluating proposed strategy

S - suitability (external factors) - current country, target country, target company
F - feasibility (internal factors) - human resources/experience/expertise, financial resources,
IT, brand
A - acceptability (risk and return) - acceptable by shareholders, any cultural differences,
financial analysis of the target company

SWOT
S, W - internal
O, T - external

TOWS matrix-

Threats Use your strengths to Remove your weakness to

protect from threats protect from threats

Opportunities Use your strengths to avail Remove your weakness to

opportunities grab opportunities

Strengths Weaknesses

Market segmentation- breaking the market into smaller segments

4Ps/7Ps-
 1. Product - satisfies consumers’ needs (designing, quality, packaging, branding)
2. Promotion - marketing (advertising, sales promotion, personalised marketing)
3. Place - reaching the customer (delivery options, retail outlets)
4. Price - right pricing (discounts, payment plans)
5. Process - (fast, efficient, simple, easy)
6. People - (experience, knowledge, ability to solve problems)
7. Physical evidence - (token to psychologically satisfy the customer)

Pricing strategies-
1. Pricing objectives (competitive strategy of the organisation - differentiation/cost
leadership)
2. Cost and profitability analysis (costs, profit margin, proposed price)
3. Analysing demand and customers (disposable income, price sensitivity, affordability,
quality sensitivity)
4. Evaluate competitors (benchmark our price with competitors
5. Pricing strategies
1) Penetration
2) Skimming
3) Discrimination

CSF and KPIs-

Critical Success Factors due to which people opt for the product/service

Strategic capability - internal factors

1. Resources (HR, finance, IT, land, labour)
2. Competencies (knowledge, ability to use resources wisely)

Unique resources - highly motivated staff, goodwill/brand

Limiting factors - production capacity, financial resources

Data- raw facts and figures

Information- processed data
Knowledge- ability to understand, analyse and interpret information
Knowledge management
Knowledge management systems-
1. Office automation systems (excel, word, power point)
2. Groupwares (email, document management systems, conferencing)
3. Intranet/extranet
4. Expert systems (AI)
5. Data warehouse
6. Data mining (specialised softwares which look for hidden patterns or relationships)

Porter’s value chain analysis model-

Primary activities Secondary activities

Inbound logistics (transportation and Firm infrastructure (board of directors,

 storage of raw material) finance department)

Operations (manufacturing, packaging) Human resource

Outbound logistics (transportation and Technology

storage of finished goods, customer
ordering process)

Marketing and sales Procurement

After sales services

Upstream operations Downstream operations

Procurement Outbound logistics

Inbound logistics Marketing and sales

Operations After sale service

Corporate parenting/corporate portfolio-

1. Industry status (growth, maturity, decline)
2. Market share
3. GP/NP margin
4. BCG matrix
5. Reason for acquisition/strength/weakness

Industry growth High QUESTION MARK STARS

Harvest Build

Low DOG CASH COWS

Divest Hold

Low High

Market share

15% or more market share - high

Less than 15% market share - low

Industry growth - growth phase

Industry low - maturity, decline

Ansoff product market strategy

Market New Market development Diversification

 Existing Market penetration Product development

Existing New

Product

Diversification-
Advantages-
1. Higher revenue and profits
2. Risk spreading
3. Economies of scale
4. Synergies
Disadvantages-
1. High risk
2. Lack of experience
3. Management problems

International diversification-
Country factors - PESTEL
Industry factors - Porter’s 5 forces
Risks - country risk, currency risk
Internal factors - HR, finance, IT, brand
Advantages-
1. Cheap labour, raw material
2. Favourable laws, tax policies
Disadvantages-
1. Legal differences/complications
2. Cultural differences

Growth strategies-
1. Internal organic growth

Advantages Disadvantages

Less funds required Slow growth

Less risky Slow economies of scale

No management cultural issues Does not eliminate competitors

Not suited for entering foreign countries

2. Acquisition

Advantages Disadvantages

Quick rapid growth High funds required

 Quick economies of scale More risky

Eliminates competitors Management cultural issues

Well suited for entering foreign countries Skills required for acquisition

1. Joint venture
2. Strategic alliance
3. Franchising

Franchisor-

Advantages Disadvantages

Quick geographical growth High dependency

Less capital required Confidentiality

Availability of local expertise Quality might suffer

Low risk Reputational risk

Conflict of interest/dispute

May turn into a competitor

Franchisee-

Advantages Disadvantages

Associated with a global brand All investment is done by franchisee

Technical expertise available All risk is borne by franchisee

Less risky Follow strict guidelines

Geographical boundaries

Pay royalty on revenue

Franchisor may cancel agreement

General competitive strategies-

I. Cost leadership (no frill strategy)
II. Differentiation (niche)

Divestment-
Exit barriers-
1. Legal and contractual conditions
2. Heavy redundancy payments
3. No buyer
 4. Low offers
Methods-
1. Management buy outs
2. Competitors
3. Wind up

Turnaround strategies-
Steps-
1. Change senior management immediately
2. Eliminate the root cause
3. Extreme cost reductions
4. Try and gain support of key stakeholders
5. Financial restructuring

Types of benchmarking-
1. Internal benchmarks (historic performance)
2. Industry benchmarks (market leader)
3. World class benchmarks

Culture web model-

Steps for understanding culture-

1. Analyse the existing culture
2. Get friendly and win the confidence and support of existing power structure
3. Consult existing power structure for proposed strategies
4. Implement strategies slowly and gradually

Culture orientation-
1. Financial culture
2. Service culture
3. Role culture
 4. Task culture

Chapter 2 - Technology and Data Analytics

Advantages of e-business-
1. Higher revenues
2. Lower costs
3. Improved marketing
4. Customer convenience
Disadvantages of e-business-
1. Not all customers use internet
2. One time set up cost
3. Security and internet hazards
4. Legal complications
5. Requires technical capabilities and resources
6. Redundancy costs

Advantages of e-marketing-
1. Global reach
2. Lower cost
3. 24*7
4. Personalised marketing
5. Interactive campaigns
6. Cheap way of collecting customer data
Disadvantages of e-marketing-
1. Not all customers use internet

Advantages of e-procurement-
1. Global options
2. Lower stock levels
3. Faster
4. Cheaper
Disadvantages of e-procurement-
1. Limited suppliers using internet
2. Risk of unauthorised purchases
3. Risk of data security
4. Privacy, fraud, unreliable, quality issues

6 Is of e-marketing-
1. Independence of location
2. Interactivity
3. Intelligence
4. Integration
5. Industry
6. Individualisation

E-business and 7Ps-

 1. Promotion (websites, search engines, emails, social media, blogs, communities)
2. Product (creating e-product, customer needs, feedbacks and complaints, customised
product)
3. Place (counter mediation strategy - both offline and online, dis and re intermediation
strategy - shut all offline, reopen online)
4. Price (online discounts, differential pricing, secured payment options)
5. Process (online orders, 24*7 orders, real-time processing)
6. People (website - multi language, place orders, secure payment options, FAQs,
search options, site maps, links to useful websites, contact us, feedback, complaints)
7. Physical evidence (peep through options, customer reviews, virtual/3D movie, email
confirmations)

Customer relationship management (CRM) softwares-

1. Customer acquisition (new customers) - collect email data, marketing materials
2. Customer retention (existing customers) - order placing and tracking, reminders and
notifications, auto payments, reports and summary

Advantages of CRM-
1. Marketing
2. Sales management
3. After sales service
4. Analysis

3 Vs of big data-
1. Volume
2. Variety
3. Velocity

Advantages of big data-

1. Gives insight into data - trends, customer preferences
2. Increased revenues
Disadvantages of big data-
1. Storage of data
2. Data security
3. Costly

Cloud computing-
Advantages-
1. Flexibility
2. Saves investment in IT and infrastructure
3. Saving in operating costs and maintenance
4. Higher technical standards
5. Small organisations can benefit
Disadvantages-
1. High reliance on internet
2. High reliance on cloud provider
3. Provider has access to your data
4. Risk of hacking
 5. Regulatory requirements and legal complications

IT-
Risks for hardware-
1. Damage
2. Theft
3. Fire
4. Unauthorised access
5. Power failures

Risks for software/data-

1. Unauthorised access
2. Hacking
3. Virus
4. Cyber crime/frauds
5. Security breach
6. Data loss
7. Software malfunction
8. High dependence on IT provider

Importance of IT security-
1. Business disruption
2. Legal cases
3. Possible regulatory fines
4. Reputational loss
5. Loss of customers/reduction in market share

IT controls-
1. Physical access controls - safeguarding the hardware and data centre, controls over
laptops, USBs, protection against fire, floods, earthquakes, power backups
2. General controls - password management, backups, anti-viruses, audit trails,
firewalls (hackers), disaster recovery plans
3. Application controls - input controls, authorisation checks

Types of softwares-
1. Bespoke software - customised, time consuming, competitive edge
2. Off-the shelf - general, cheaper

Advantages of bespoke softwares-

1. 100% purpose fulfilment
2. Competitive edge

Process for selecting a software-

1. Decide between bespoke or package software
2. Business case
3. Alternate options (Invitation to tender)
4. Evaluate - functionality, usability, technical aspects, supplier evaluation, costs
5. Select best option
 6. Implementation - contract review, testing of three things- functionality, usability &
load/stress testing, data migration, training users, change over- direct change over &
parallel change over

Precaution if software vendor is weak - regularly review financial statements, acquire source
programming codes, acquire company, escrow agreement

Chapter 3 - Innovation, Performance and Change Management

Business process automation - manual tasks are automated

Business process rationalisation - continuous improvement
Business process re-engineering - current processes are demolished and new processes
are designed, high risk activity

Harmon’s process strategy matrix-

Complexity High ● Outsource to a specialist ● Automate

vendor ● Rationalisation
● Bespoke softwares
● Hire best resources

Low ● Outsource ● Automate

● Automate using ● Rationalisation
off-the-shelf ● Bespoke softwares

Low High

Strategic importance

Strategically important if directly affects-

1. Customers
2. Revenue
3. Market share
4. Competitive edge

Not strategically important-

1. Back office
2. Support functions

Project management-
1. Quality
2. Time
3. Cost
Project life-cycle-
1. Initiation
2. Planning
3. Execution
4. Completion
Initiation-
1. Scope and objective - clear and measurable
2. Cost benefit analysis - NPV/IRR
3. Key stakeholders - project sponsor, project manager, project team, users
4. Project duration - timelines
5. Risks and constraints - quality, time, cost
6. Key documents - project initiation document/business case, project charter, benefit
realisation plan
Contents of PID - all above points, current problem, project monitoring and reporting
procedure

Planning-
1. Tasks
2. Detailed technical planning - quality, time and cost

Execution-
1. Regular progress monitoring
2. Quick problem solving

Completion-
1. Handing over - testing, training, formal sign-offs
2. Post project review - project management steps
3. Post implementation review - benefit realisation review (monetary terms)

Steps for good project management-

1. Formal PID duly approved by the Board
2. Detailed planning (tasks, quality, time and cost)
3. Execution and timely problem solving
4. Regular progress monitoring
5. User testing and training
6. PPR
7. PIR

Change management-
Context of change model by Balugan and Hole Hailey-
1. Scope - size of change
2. Timing - speed of change
3. Reason - justification
4. Capacity - resources required to implement the change
5. Capability - past experience
6. Power - power that the change manager has
7. Preservation - save/retain good things from previous
8. Diversification - frequency of changes
9. Readiness - willingness to accept
10. Resistance - deal/address

Types of change model by Johnson and Scholes-

 Nature Incremental ● Adaptation ● Evolution
of
change Big bang ● Reconstruction ● Revolution

Reconstruction Transformational

Scope of change

Size of change is big if it directly affects-

1. Core business model
2. Core business strategies
3. Senior management
4. Culture

Organisational structures-
1. Tall structure- narrow span of control
2. Flat structure- wide span of control
3. Functional structure- departments like marketing, production, finance, HR, IT - silo
effect, conflict of interest
4. Divisional structure- different business units
5. Matrix structure- multiple branches or offices

Stereological configuration by Mintzberg-

1. Simple structure- owner managed businesses
2. Machine bureaucracy- manufacturing organisations, standardisation
3. Professional bureaucracy- professional/service organisations
4. Divisional structure- large variety of products
5. Adhocracy- project based organisations
6. Missionary structure- charitable organisations

Talent management-
1. Recruitment
2. Training and orientations
3. Performance management
4. Reward systems
5. Retention strategies
6. Career paths and succession planning
7. Intellectual growth and exposure

Outsourcing - getting things done from a third party

Advantages-
1. Specialisation
2. Organisation can focus on its core business
3. Cheaper
4. Easier to budget
Disadvantages-
1. High dependency
 2. Lose direct control
3. Confidentiality
4. Quality issues
5. Disputes

Shared services- centralising back office functions

Advantages-
1. Economies of scale
2. Cost savings
Disadvantages-
1. Redundancies

Collaborative working- Amazon

Disruptive technology- bringing a change to the way business is done

POPIT model-

Organisation Information and technology

● Business strategies ● Hardware
● MIS ● Software
● KPIs and performance management tools ● IT infrastructure

Process People
● Current processes ● IT department
● Changes ● Skills and competencies
● Automation/rationalisation ● Train
● Value chains ● Job descriptions
● Integration of processes

Multi-dimensional performance analysis-

Balanced scorecard-
1. Innovation
2. Business processes
3. Customer
4. Financials
Performance excellence model by Baldrigde-
1. Leadership
2. Strategy
3. Workforce
4. Operations
5. Customers
6. Performance management and analysis
7. Results
 Chapter 4 - Finance and Decision Making

Funding strategy-
1. Equity
2. Debt
3. Other options- selling investments, tighter working capital management

Factors to decide funding sources-

1. Purpose and amount
2. Duration
3. Legal status of the company
4. Debt- high cost, interest is not linked with business performance, collateral, gearing
levels
5. Equity- cost is linked with company’s profitability, dilutes existing ownership,
institutional investors
6. Business risk

Surplus funds-
1. Put funds in interest bearing bank accounts
2. Make short-term investments
3. Fixed deposit in bank

Changing role of finance and accountants-

1. Business partners
2. Participate in strategic management
3. Cost benefit analysis
4. In-depth analysis
5. Long-term planning
6. Support in complex decision making
7. Performance measurement/dashboards
8. Management accounts
9. Cost savings
10. Funding sources
11. Managing financial risks

Ratio analysis-
1. P&L ratios - sales trends, GP margin, NP margin, ROCE
2. Balance sheet ratios - current ratio, gearing, interest cover
3. Efficiency ratios - revenue per employee

Long-term decision making investment appraisal techniques-

1. Payback period - ignores profitability, time value of money
2. Discounted cash flows

Look for 3 factors-

1. Cash flow
2. Discounted
3. What if/sensitivity analysis
Disadvantages of decision tree-
1. Too many assumptions
2. Ignores qualitative aspects of decision making

Budget-
1. Master budget (combined for all departments, starting point- sales budget)
2. Flexed budget

Advantages of budgetary process-

1. Control and performance management tool
2. Promotes forward planning
3. Coordinates all departments
4. Targets motivated people
Disadvantages of budgetary process-
1. Target could be unrealistic
2. Short-term/annual focus

Forecasting techniques-
Qualitative-
1. Expert opinion
2. Sales force opinion
3. Market research
Quantitative-
1. Linear regression analysis - Y = a + bx
If the coefficient of determination is more than 70%, the analysis is more appropriate. It is
also more appropriate where business is not seasonal.
2. Time series
It is more appropriate where business is seasonal.

Chapter 5 - Leadership

Transformational leader Transactional leader

● Establishes mission and strategy ● Achieves mission and strategy

● Long term view ● Medium/short term view
● Focus on innovation and growth ● Focus on managing and controlling
● Chairman, BOD, CEO ● Managers, supervisors

Theory X manager Theory Y manager

● Lacks the expertise ● Team has the expertise

● Does not want to take responsibility ● Likes to take responsibility

Professional code of ethics-

 1. Integrity
2. Objectivity
3. Professional competence and due care
4. Confidentiality
5. Professional behaviour

Ethical threats-
1. Self interest
2. Self review
3. Familiarity
4. Advocacy
5. Intimidation

Benefits of code of ethics-

1. Establishes ethical values
2. Clear communication
3. Controls behaviours
4. Consistent issue resolution
5. Enhances public trust and reputation of the profession

Roles expected from a professional accountant in society-

1. High professional ethics
2. Factual and transparent reporting
3. Highlight fraud and corruption
4. Fair dealings with all stakeholders
5. Independent and reliable audits

Prevention of fraud-
1. Commitment of top management
2. Right culture
3. Policies and procedures
4. Risk assessment
5. Internal controls
6. Segregation of duties and staff rotations
7. Recruitment screening

Detection of fraud-
1. Internal audit
2. Surprise checks
3. Whistle blowing - encouragement by top management, confidentiality, protection

Response to fraud-
1. Legal proceedings
2. Strict disciplinary actions

Why organisations should avoid corruption-

1. Socially unethical
2. Against public interest
 3. Against corporate governance principle of probity
4. Against professional code of ethics
5. Loss of reputation
6. Legal penalties

Benefits of corporate code of ethics-

1. Establishes ethical values
2. Clear communication to employees
3. Directs and controls employee behaviour
4. Consistency in solving issues
5. Enhances company image
6. May lead to competitive edge
7. Reduce risk of fines and penalties

Steps to resolve ethical problems-

1. Refer to professional code of ethics document
2. Refer to corporate code of ethics document
3. Assess how general public will think if they find out
4. Tucker’s 5 question model

Tucker’s 5 question model-

1. Is it profitable
2. Is it legal
3. Is it fair to all stakeholders
4. Is it ethical as per corporate code of ethics
5. Is it sustainable and environmentally friendly

Chapter 6 - Governance: Shareholders

Agency theory- principal and agent relationship

Problem - conflict of interest, negligence, lack of transparency
Fiduciary duty- duty of utmost good faith
Cost of agency - monitoring cost, residual loss

Board of directors-
1. Size
2. Right knowledge, skills and experience
3. Independence (NEDs)

Communication with shareholders- completeness, accuracy, regularity, transparency

Split between chairman and CEO

Diversity

Chairman- runs BOD

CEO- runs company
Roles of NEDs-
1. Strategy
2. Performance
3. Risk
4. People
Advantages of NEDs-
1. Independence
2. External perspective
3. Listing and regulatory requirements

Board committees-
1. Nomination committee - majority NEDs, training and CPD, succession planning
2. Remuneration committee - 100% NEDs, attracting, retaining and motivating directors,
make remuneration policies, link remuneration with long term performance of
company
3. Risk committee - majority NEDs, risk management process, internal controls
4. Audit committee - 100% NEDs, at least 1 NED with expertise in financial
reporting/audit, internal audit, external audit, provide whistle blowing arrangement
Advantages-
1. More focused and specialised
2. More time
3. More involvement of NEDs
4. High shareholder confidence

Components of remuneration-
1. Basic pay
2. Retirement benefits
3. Performance related pays
4. Retention options

Factors affecting remuneration-

1. Size of the company
2. Public sector or private sector
3. Commercial or not-for-profit
4. Profile and experience
5. Company’s own performance
6. Market rates

Two-tier board-
Supervisory board Management board

● Appointed by shareholders ● Appointed by supervisory board

● Led by chairman ● Led by CEO
● NEDs ● Executive directors
● All voting rights ● Implementing strategies
● Supervise management board ● No voting rights

Advantages of diversity-
 1. Wider pool of talent
2. More representative
3. Complying with regulations

Appointment of directors-
1. Shareholders
2. Directors (temporary appointment)
3. Government

Leaving of directors-
1. Retirement when term ends (retirement by rotation)
2. Resignation
3. Disqualification
4. Removal by shareholders

Principles of corporate governance-

1. Independence - no conflict of interest
2. Probity - honesty and integrity
3. Transparency
4. Fairness
5. Reputation
6. Responsibility
7. Accountability
8. Judgement
9. Scepticism

Strong controls in a listed company-

1. Split in CEO and chairman
2. Sufficient number of NEDs
3. Formal board committees
4. High focus on risk management and internal controls
5. Rewards are linked with performance
6. Internal and external audits
7. Whistleblowing

Code of corporate governance-

1. Organisation for economic cooperation and development (OECD)
2. International Corporate Governance Network (ICGN)

Characteristics of institutional investors-

1. High power
2. More active
3. More intervention
 Chapter 7 - Governance: Stakeholders

Stakeholders mapping model by Mendelow-

Power High Keep satisfied Key players- Obtain consent

Low Minimum effort Keep informed- obtain views

Low High

Level of interest

Corporate social responsibility-

1. Employees
2. Customers and suppliers
3. Society
4. Environment
5. Long-term sustainability

Corporate citizenship- companies also consider social and environmental impact of their
decisions

Capital under Integrated Reporting-

1. Financial capital - sources of funds, financial performance
2. Manufacturing capital - physical capital, fixed assets, inventory, working capital
3. Intellectual capital - research and development, brand, highly skilled labour
4. Human capital - employees’ skills, knowledge, experience
5. Social capital - customers, suppliers, society
6. Natural capital - ecological environment, pollution, carbon footprint

Social footprint- impact on people and society - employees, customers, suppliers, society
Environmental footprint- impact on environment - depletion of scarce resources, disposal of
waste, emissions, pollution, etc.

Sustainability/Triple Bottom Line Framework-

1. Economic sustainability (profitability, ROI, ROCE)
2. Social sustainability (employees, customers and suppliers, society)
3. Environmental sustainability (depletion of scarce resources, disposal of waste,
emissions, pollution, etc.)

Differences between commercial and public sector organisations-

1. Mission
2. Measure of success
3. Sources of funds
4. Payscales
5. Principal and agent
6. Accountability

Value for money-

 1. Effectiveness
2. Efficiency
3. Economy

Chapter 8 - Risk Management

Risk varies from company to company-

1. Size of the company
2. Geographical location
3. Growth phase
4. Business model/strategy
5. Financing structure

Risk varies from industry to industry-

1. Regulations
2. Level of investment
3. Nature of product/industry
4. Ecological aspects
5. Technology

Types of risks-

Business risk Financial risk Credit risk

Liquidity risk Exchange rate risk Market risk

Investment risk Reputation risk Health & safety risk

Political risk Regulatory risk Legal & compliance risk

Technology risk Environmental risk Fraud risk

Entrepreneurial risk Probity risk Intellectual property risk

Risk diversification-
1. Product
2. Industry
3. Geographical

As low as reasonably practical (ALARP) principle - reduce risk down to a tolerable level

Risk mitigation techniques-

1. Embed in organisational culture - commitment from top level, create a risk focused
environment, formal risk committee, adopt COSO ERM framework, train employees,
include in job description, reward good behaviour
2. COSO ERM framework - make a list, impact and probability, decide action,
implement, training, monitoring
 1) Control environment
2) Objective setting
3) Event identification
4) Risk assessment
5) Risk response
6) Control activities
7) Information and communication
8) Monitoring
3. Risk management strategies (TARA framework)
1) Avoidance
2) Reduction
3) Transference
4) Acceptance

Probability High Reduce Avoid

Low Accept Transfer

Low High

Impact

Heat maps (Same as above with medium impact and medium probability)
4. Risk register - list of risks, impact and consequence, mitigation plans
5. Risk committee
6. Risk manager
7. Risk audit

Chapter 9 - Organisational Control and Audit

Purpose of internal control-

1. Achievement of organisation’s objectives
2. Conduct of business
3. Assures BOD
4. Minimises risk
5. Safeguarding of assets
6. Accounting records
7. Financial reporting
8. Prevention of fraud and error
9. Compliance with laws
10. Management information systems

COSO framework-
1. Control environment
2. Risk assessment
3. Control activities
4. Information and communication
 5. Monitoring

Role of internal control in financial reporting-

1. Formal allocation of responsibility
2. Collection of accurate information
3. Detect error/exceptions
4. Review and approval
5. Internal audit

Independence of internal audit-

1. Not get involved in operational activities
2. Audit committee
3. Professional code of ethics

Role of audit committee-

1. Financial statements and reporting
2. Monitoring of internal audit
3. Managing external audit
4. Whistleblowing

Formats
Report-

To:
From:
Subject:
Date:
Introduction
Conclusion (Write conclusion only if asked in the question)

Briefing paper-

FAO:
From:
Subject:
Date:
Opening paragraph

Presentation slide-

Slide #1
HR issues

● High turnover
● Low morale
● Salaries not aligned with market
Supporting notes
(Explain above headings in 5-7 lines)

Letter-

Sender’s designation
Sender’s address
Date
Addressee
Addressee address
Subject
Respected chairman,
Paragraph

Press release-

Press Release
Subject
From
Company name

Business case-

Current situation
Proposed option
Benefits of proposed option

Project Initiation Document-

Scope and objective:

Cost Benefit Analysis: Costs
Benefits
Project Sponsor
Project Manager
Project Team
Key Stakeholders
Duration
Key risks
Constraint
Governance/Reporting
Monitoring

Risk register-

Title
Likelihood
Impact
Risk owner
Date (identified and last considered)
Mitigating action