Contemporary Business Issues

Accountants are expected to transition from a focus on recording transactions and focusing on past activity towards dealing with items in real-time and having a focus on the future. Key drivers of change include the need to support entrepreneurs with new business models, a changing workforce and a broader focus on environmental sustainability.

According to Warawa, which of the following best describes the proportion of accountants who see themselves in a particular perspective?

• Over 50% of accountants see themselves as focused on traditional activity.

• 
  More than half of accountants are future-focused and acting in a business advisory role.

• Over one-third of accountants have moved beyond traditional accounting to deal with real-time issues.

• Less than 20% of accountants perceive themselves as acting strategically and demonstrating a future focus.

Answer explanation

C is correct because 22% of accountants in the survey describes themselves as strategic, while 43% stated they were traditional. This left 36% of accountants who were more focused on real-time issues and acting more like a CFO.

A is incorrect because less than 50% (43%) described themselves as traditional.

B is incorrect because only 22% are future-focused or strategic (not more than one-third).

D is incorrect because 22% described themselves as strategic (not less than 20%).

Module: 1 > Part: A > Introduction > Page: 3

Professional accountants are often required to provide strategic advice to an organisation about the organisation’s customers.

Which of the following correctly matches the characteristics of customers and the advisory needs of different-sized organisations?

• Small enterprise: stabilise its list of customers | support in setting up its systems

• Mid-size enterprise: growing its customer base | moving from closer relationships to authentication processes.

• Mid-size enterprise: detailed knowledge of its customers and their business plans | verification of its current methods.

• 
  Large enterprise: few customers that generate the majority of the turnover | detailed knowledge of its customers business plans.

Answer explanation

B is correct because mid-sized enterprises should be looking to grow their customer base but can't necessarily do that with very close and time-consuming customer relationships. Therefore they need to move towards more of an authentication process with customers. See Table 1.1 for more information.

A is incorrect because small businesses often don't have the time or resource to be setting up new systems.

C is incorrect because mid-sized companies are unlikely to have detailed knowledge of their customers' business plans.

D is incorrect because large companies are going to have a lot more customers generating their revenue, and it is not feasible for them to have knowledge of the customers' business plans.

Module: 1 > Part: A > 1.2 The accountant as strategic adviser > Organisational fit > Page: 8-9

Oliver Ma has been engaged to provide business advice to Aeromatics Ltd as the entity has been experiencing a downturn in profits. Oliver has concerns about the decision-making behaviour of the senior management team.

When Oliver provides strategic advice, which of the following client behaviours correctly matches the potential approach?

• Client behaviour: Seemingly unable to make a decision even with information available to do so. | Potential approach: Not discussing opinions or suggestions but instead focusing on the technical analysis of the financial results, indicators and factors.

• Client behaviour: Only focusing on the positive outcomes and ignoring potential issues that are occurring in the business | Potential approach: Clearly identifying any sunk costs, removing them from the decision making process and highlighting the importance of innovation as a competitive advantage.

• Client behaviour: Decision making that is passive and sluggish when definitive decision making is required | Potential approach: Conducting and presenting what if and scenario analysis that clearly details expected outcomes of the different implementation plans.

• Client behaviour: Lack of availability of financial or technical resources resulting in stagnation in decision making | Potential approach: Working with the client to go through step-by-step the process that needs to be followed.

Answer explanation

C is correct because this is the correct potential approach for the client behaviour which exhibits a lack of urgency. You present them with a scenario analysis that helps them move forward with a decision.

A is incorrect because the potential approach is for the behaviour of denial and avoidance rather than a paralysis leading to not decisions being made.

B is incorrect because this approach is useful for the behaviour related to sacred cows, not the behaviour of only focusing on the positive.

D is incorrect because working with clients to use a step by step process is useful for where the client is paralysed and unable to make a decision. It is not associated with the issue of a lack of available financial or technical resources.

Module: 1 > Part: A > 1.3 Transforming the client relationship > Aligning strategic advice to client behaviour > Page: 17-18

When an SME (Small-Medium Enterprise) contacts an accountant and asks for help there is a chain of activity or events that describes the sequence from initially raising the issue right through to implementation and review of the outcomes. The accountant needs to display both technical skill as well as business, behaviour and leadership skills.

At which point in the process is are behavioural skills most relevant?

• 
  Review

• Investigation

• 
  Implementation

• Decision-making

Answer explanation

D is correct according to Figure 1.4. This indicates that it is important to have behavioural skills to influence the decision making process (along the advice step where the recommended course of action is provided). It is more than just being 'technically correct', but also involves helping the client make decisions that may be difficult or uncomfortable.

A is incorrect because the review stage is likely to be more technical and factual.

B is incorrect because investigation needs to combine technical ability and knowledge along with ethical considerations. There is no discussion in Figure 1.2 about the role of behavioural skills here.

C is incorrect because implementation task is performed by the client not the accountant, and there is no discussion in Figure 1.2 about relevant skills required here.

Module: 1 > Part: A > 1.2 The accountant as strategic adviser > Providing and implementing advice > Page: 10-12

According to Brownlow and Vetter there are four important steps that can help an accountant understand their customer’s needs.

I Creating a service plan

II Meeting regularly with the client

III Having a formal feedback mechanism

IV Developing your skills and networking

The calculation of the Net Promoter Score is based on asking if a customer is willing to recommend you to a friend, family or colleague on a scale of 1 to 10.

Which step does this align with?

• 
  I Creating a service plan

• 
  II Meeting regularly with the client

• III Having a formal feedback mechanism

• 
  IV Developing your skills and networking

Answer explanation

C is correct because calculating a score on customer satisfaction is linked to obtaining feedback in a formal manner. The other options describe different steps that are not as relevant here.

Module: 1 > Part: B > 1.5 Customer focus > Page: 25

Queensland Health experienced a 1,200% cost blowout as part of their attempts to move from the LATTICE payroll system to a new system based on WorkBrain/SAP. Despite warnings that testing had not been adequate the system as launched and it led to significant anomalies in the salary that employees received.

An official inquiry found that there was poor governance and poor decision making and that the complexity of payroll requirements was underestimated. Only two weeks was allocated to determine the business requirements and solution scope to evaluate the 80,000 employees with almost 25,000 pay combinations.

Based on the traditional project management process, which of the following describes the stage that was not completed effectively and had the greatest impact on the failure of this project?

• Stage 1: Initiation

• Stage 2: Planning

• Stage 3: Execution

• Stage 4: Control

Answer explanation

B is correct because the planning stage was far to short and failed to consider all the requirements that would need to be organised and executed for the successful implementation of the payroll system. Further discussion in Example 1.13 indicates that a private hospital also doing a payroll system spent 12 months defining requirements (as opposed to 2 weeks spent here).

A is incorrect because the project itself appears clear in that one payroll system needed to be designed to replace another one.

C is incorrect because although the execution was not effective, this was linked to poor planning at the earlier stage. There are no case facts to support this being the most troubling component.

D is incorrect because the control stage of the project is not outlined as a cause of concern.

Module: 1 > Part: B > 1.9 Project management > Project methodologies > Page: 33-34

In a traditional model of communication there are creators, consumers, channels, messages, coding and decoding, and external noise can cause trouble and make communication difficult.

Which of the following best describes the sequence of steps?

• Creator | Message | Encode | Channel | Decode | Consumer

• Creator | Encode| Message | Channel | Decode | Consumer

• Consumer | Creator | Channel | Encode | Message | Decode

• Consumer | Encode | Message | Noise | Channel | Decode

Answer explanation

A is correct based on the information below Figure 1.13 which outlines a basic model for understanding the communication process. However, Figure 1.13 can be confusing. The issue stems from the order we perceive encoding and the message are placed. How do we encode a message before we have the message?

The best explanation is that we have a message, a piece of communication in our heads, in notes from a meeting, or another way, and we want to communicate this to others, most likely a group. We may not have written the broader message but we have the information we want to communicate. So we must next encode that message, using the right language, tone, even the way we use fonts, colours in a written message.

Therefore the correct order in the model is not exactly reading left to right in Figure 1.13. It is Creator, Message, Encode that message, Use a channel to send it, the receiver decodes that message, who is the Consumer.

Module: 1 > Part: C > 1.13 Communication > A model for understanding communication > Page: 48-49

You received a poor score on your 360-degree review. Your team members said they didn’t feel you appreciated how tired everyone is given the extra hours they have put in over the past two months. Your senior leadership team colleagues noted that in meetings you tend to start arguments with others because you speak before you have thought through your reasoning.

Which of the following do you need to address to improve your next 360 review score?

• How to better show empathy and increase your self-regulation.

• Improve your team working skills with higher motivation and creativity.

• 
  Work on your communication skills to deliver greater team collaboration.

• Improve your social and interpersonal skills to build rapport with team members.

Answer explanation

A is correct because the parts of information are referring to aspects of emotional intelligence - empathy and self-regulation.

B is incorrect because the feedback does not relate to teamwork and creativity issues.

C is incorrect because you might need to work on your communication skills but this isn't discussing emotional intelligence.

D is incorrect because, although social skills and interpersonal skills are important, these are not directly addressing the feedback information.

Module: 1 > Part: C > 1.14 Collaboration > Managing relationships > Page: 57-58

Your newly appointed CFO is working well to transition two finance teams into one as part of a merger with another company. One of the things employees have noticed is she acts upon what she says and doesn’t shy aware from holding others to account if they are not seen to be acting honestly. She promotes and motivates others to take control of their areas and own their outcomes.

Which of the following is most likely correct about the CFO and her approach to leadership?

• She uses full range leadership to deliver a harmonious approach to change.

• She uses a mix of rewards and legitimacy power to get change projects through.

• 
  She is an innovation leader who promotes ideas and new structures to develop the right projects.

• She is a transformational leader who utilises empowerment and integrity to bring employees on board.

Answer explanation

D is correct because she is empowering others to act and take control, and also displays high integrity - both of which are aligned with transformational leadership.

A is incorrect because full range leadership can't be linked to this question.

B is incorrect because the question stem is not discussing rewards or legitimacy, which are examples of position power.

C is incorrect because the question doesn't discuss idea creation or innovation.

Module: 2 > Part: D > 1.17 Leadership approaches > Transactional and transformational leadership > Page: 67-71

A leader who spends considerable time ensuring team members’ needs are being considered, and that relationships with other teams are strong, sometimes misses on key targets and outcomes.

This type of leader is often described as which of the following?

• Team manager

• Transactional leader

• Country club manager

• Impoverished manager

Answer explanation

C is correct because a country club manager has high conern for people but low concern for production or output.

A is incorrect because a team manager has high concern for production.

B is incorrect because this is not describing a transactional leader.

D is incorrect because an impoverished manager as a low concern for people.

Module: 1 > Part: D > 1.16 Leadership concepts > Leadership traits and behaviours > Page: 65-66

Also see: Figure 1.19