EXPLAIN THE IMPORTANCE OF BUSINESS RISK MANAGEMENT AND HOW A NEGLECTED APPROACH TO BUSINESS RISKS MANAGEMENT

13 Jun EXPLAIN THE IMPORTANCE OF BUSINESS RISK MANAGEMENT AND HOW A NEGLECTED APPROACH TO BUSINESS RISKS MANAGEMENT

QCF level 5: BTEC HND BUSINESS

UNIT OUTCOMES COVERED:

LO 1. Understand the importance of keeping effective accounting systems

within a business

LO 2. Be able to analyse the management control systems of a business

LO 3. Be able to contribute to the planning and conduct of an audit

assignment

LO 4. Be able to prepare audit reports

Tutor Notes

Key Points:

All sources of reference must be included.

You will be expected to check spelling mistakes and grammar.

Your name, student no and unit no should be in the footer of every page.

It should bear an appropriate report structure (such as a Table of Contents, Introduction, Discussion, Conclusion, References, and Appendix (if necessary)).

There should be clarity of expression

It should display relevant factual content and understanding of the subject, critical analysis, justifications, arguments and a coherent structure etc.

Wherever the use of software except Microsoft Word is required i.e. Microsoft Excel and Power point, you are required to screen shots and slides to be included in the final document file of your assignment.

Task 1

Learning outcome: Understand the importance of keeping effective accounting systems within a business

Assessment Scenario:

Senior management of Meijer is looking to expand business in the UK. Meijer stores are classified as supercentres or hypermarkets (a superstore that combines groceries and department store goods in the same store). They realised the importance of effective accounting systems to record financial transaction on day to day basis. The senior manager of Meijer recognises that he needs help from an experienced accountant who can assist him managing his business accounting systems and records.

You work as a professional accountant and you have been approached by the senior manager to prepare a report that includes an explanation of accounting records, concepts and the factors that need to be considered when designing an effective accounting and auditing system of a company.

Requirement:

(a) You are asked to write a report to the senior manager that includes the following:

 The description and purpose of different accounting records

The importance of accounting concepts

And the factors that will influence the structure of accounting systems adopted by a business

(This task covers learning outcomes 1.1, 1.2 and 1.3)

Task 2

Learning Outcome: Be able to analyse the management control systems of a business

Assessment Scenario

According to the BUSINESS RISK: A practical guide for board members (2012). The balance between risk and reward is the very essence of business: without taking risks companies cannot generate profits. In a world of increasing complexity and uncertainty, companies must build on this foundation to manage risk more rigorously than ever. Board members must satisfy themselves that effective risk management is being practised at all levels of their organisation

(A DIRECTOR’S GUIDE2014)

Requirement:

(a) Identify different components of business risk. Explain the importance of business risk management and how a neglected approach to business risks management; noncompliance with financial regulation and not being able to identify business risks can have strong implications on any business.

(b) Also critically analyse the control system that can be put in place within a business for the purpose of identification of risk of fraud and methods of detection.

(This task covers learning outcome 2.1, 2.2 and 2.3)

Task 3

Learning outcome :Be able to contribute to the planning and conduct of an audit assignment

Assessment Scenario:

Consider yourself an auditor; you have been assigned a task for the forthcoming audit event of a company in retail industry. The company had some issues with the accounting records and the lead auditor had to conduct extensive testing along with detailed auditing procedures in the past.

Requirement:

(a) You are required to write a report to your manager, explaining the factors that need to be considered to plan an audit with reference to scope, materiality and risk.

(b) Your report should include the description of appropriate audit tests and explain the record of audit process in an appropriate manner.

(This task covers learning outcome 3.1, 3.2 and 3.3)

Task 4

Learning Outcome: Be able to prepare audit reports

Assessment Scenario:

A Public Limited company must file and publish a set of financial statements every year that includes a management letter to meet legal requirements and to inform investors of the corporation’s activities.

An auditor’s report is a third party review of a company’s practices and financial position along with the preparation of financial statements, including a balance sheet, income statement, and statement of cash flows.

Requirement:

(a) Explain the purpose, types and contents of audit reports. You are required to present a draft template of an audit report.

(b) Discuss the purpose and content of management letters and draft suitable management letters in relation to a statutory audit.

(This task covers learning outcomes 4.1 and 4.2)