Useful Mnemonics for ACCA P1 Governance, ethics and risks

Preparing for exams, I have noticed that such enormous amount of new information is not able to be retained in my mind (!) How to improve the memory? The answer of this question is given by mnemonics. Many of teachers at Opentuition, BPP & LSBF use this technique in their lectures to improve the memorizing of their students.

I have collected some useful mnemonics for ACCA P1 Governance, ethics and risks. Hope it facilitates you to remember the relevant. :)

Ethical principles
PrOFIT

Probity
Openness
Fairness
Integrity
Transparency


Internal controls - categorisation
OPA SPAMS

Organisational Controls

• Control over the organisation structure including managers having specific responsibilities and delegations tasks.

Authorisation

• Controls to ensure that transactions do not proceed until an appropriate individual has given approval.

Physical

• Protection of assets against theft, unauthorised access or use.

Supervision

• Oversight of work of other individuals to ensure tasks are carried out correctly.

Personnel

• Controls in place to ensure the suitable people are employed.

Arithmetic Accounting

• Checking accounting transactions for accuracy, includes use of accounts and reconciliations (e.g. bank reconciliation).

Segregation/rotation

• Different people for each transaction to – Authorise, Record, Maintain physical custody of any assets (i.e. petty cash), pay for it.

Management Controls

• Control actions taken by management depending on the contents of reports received. Managers should be involved in the day to day supervision of staff.

Internal control - objectives

SCARE

Safegard Assets

Comply with Laws&Regulation

Accurate Financial Information

Reduce Fraud

Efficient Business

Corporate governance - concepts

HAIR DRIFT



Honesty / probity
Accountability
Independence
Responsibility

Decision taking / judgement
Reputation
Integrity
Fairness
Transparency / openness

Corporate governance - purposes
PIGCREW

Practice methods - governance provides practice methods to aid those who are managing a company
Investment - governance creates assurity and trust thereby attracting investment
Growth - governance creates conditions for growth of the economy
Control - it is set in place to control excessive behaviour in the organisation
Rules - it creates rules within which the organisation is operated
Employment - it creates employment as well as deals with several employment issues
Wealth - it supports a wealth creating capitalist system

Audit committee - role and function
CLARISSA

Creat a climate of discipline and control
Lend credibility in financial statements
Assist CFO providing a forum
Review financial statements to improve quality
Independent judgement
Strengthen position of the internal auditor
Strengthen position of the external auditor
Assist in the resolution of disputes between external auditor and the board

Types of Stakeholdres
PINK LAVR

Primary or second
Internal or external
Narrow or wide
Known or unknown

Legitimate or illegitimate
Active or passive
Voluntary or involuntary
Recognised or unrecognised

Role of Non-executive Diretors (NEDs) (in accordance with Higgs report)
StRiP Performance

Strategic roles

Risk assessment roles
People’s role
Performance role

Role of Chairman (in accordance with Higgs report)
RAISE DIP

Run the board

Active engagement by board members
Induction programme
Sufficient time for complex decision
Effective communication with shareholders

Development needs of directors
Information provided accurately and timely
Performance evaluation

American Accounting Association approach to ethical issues (AAA model)
FEN ABCD

Fact
Ethic (Independence, Obedience, Confidentiality)
Norm (Objectivity, Governance, Independence, Transparency)
Alternative Course of action.
Best Course of action.
Consequences of each action
Decision

Corporate Social Responsibility (CSR)
PELE

Philanthropic    - what is desirable?
Ethics               - what is right?
Legal                - compliance with law
Economy          - focus on profitability

Approaches to CSR
PRAD

Proactive
Reactive
Accomodative
Defensive

Gray, Owen and Adams seven position on SR

PRESSSD

or

Please Eat Salad Soup Sandwitch Regularly Dad

Pristine Capitalist
Radical Feminist
Expedients
Social Contract
Social Ecologist
Socialist
Deep Ecologist

Quality characteristics of good information 

ACCURATE

Accurate
Complete
Cost beneficial
User targeted
Relevant
Authoritative
Timely
Easy to use

Corporate code of Ethics 

SPICES S

Social
Position
Implementation
Customer relations
Employees
Suppliers
Shareholders

Tucker ethic decision making question

Please Look For Red Shoes
Profit ?
Legal ?
Fair?
Right?
Sustainable or environmental?

Risk framework 

ALARM

Appetite
List (risk register)
Assess (TARA)
Response
Monitor

General Guide to some risks 

FROP LIFE

Financial risk
Reputation risk
Operational risk
Product risk
Legal & political risk
Information technology risk
Fraud risk

Entrepreneurial risk or economic risk

Macro-environmental factors analysis 

PESTEL

Political  -  tax policy, labour law, environmental law, trade restrictions, tariffs, and political stability
Economic -  economic growth, interest rates, exchange rates and the inflation rate
Social -  health, population growth rate, age distribution, career attitudes and emphasis on safety
Technological -  R&D activity, automation, technology incentives and the rate of technological change
Environmental - weather, climate, and climate change
Legal -  discrimination law, consumer law, antitrust law, employment law, and health and safety law

Please, add your mnemonics in the comments ))