Business Awareness Flashcards
Classification of Organisations: Trading Organisation
Businesses that trade to make a profit
Classification of Organisations: Charitable/Non-Profit
Business that raises money for a good cause
Classification of Organisations: Service Organisation
Business that provides an intangible service
Classification of Organisations: Manufacturing Organisation
Business that provides a tangible product
Key Characteristics of Services: Inseparability
Service is provided & consumed at the same time variability
Key Characteristics of Services: Variability
Service is tailored to you
Key Characteristics of Services: Perishability
Cannot be stored for later use
Key Characteristics of Services
Intangibility, Inseparability, Variability, Perishability, No Transfer Of Ownership
The Entity Concept
If a business is classed as a separate entity it will have the right to own its assets and is only partly liable for its debts.
ONLY BUSINESSES WITH LIMITED LIABILITY.
They are protected by the veil of incorporation.
Organisational Structures
Functional
Divisional
Matrix
Entrepreneurial
Organisational Structures: Functional
Split by departments
Organisational Structures: Divisional
Split by product / location (geographical)
Organisational Structures: Matrix
Mixed - Project Management / Cross Functional
Organisational Structures: Entrepreneurial
Small owner run businesses
Span of Control
Number of staff
Scalar Chain
Steps between lowest and highest in organisation
Corporate Governance
The system by which companies are directed and controlled
Corporate Governance Code
Risk Reduction, Improved Performance, Better Company Perception
Centralised Organisation
All power and decisions are at head office
Decentralised Organisation
The power is delegated to divisional heads
Levels of Management
Strategic
Managerial
Operational
Levels of Management: Strategic
To set the strategy
Levels of Management: Managerial
To convert strategy into actions and report back
Levels of Management: Operational
Where the work is done
Risk
The possibility that outcomes will be different to what is expected
Uncertainty
The inability to predict due to lack of information about inputs or the environment
Macro Environment
Impacts the whole economy (every business)
Fiscal Policy
Government spending and tax policies to influence levels of demand.
When? Government Budget
How? Reduce tax to increase spending
Impact? Increase consumer spending - More jobs created - More tax
PESTLE
Political
Economic
Social
Technological
Legal
Environmental
Micro Environment
The market of all the buyers & sellers of a good or service
Factors Impacting Demand
Price
Substitutes & Compliments (Products that go together)
Type of good - Normal / Inferior / Luxury
Fashions
Demand Curve
I *
I *
I *
I *
I_______________
Supply Curve
I *
I *
I *
I *
I_______________
Extension
Demand goes up as price goes down
Contraction
Demand goes down as price goes up
Factors Impacting Supply
Price
Price of alternative
Cost of making
Technology Changes
Tax
Equilibrium Price
Where the volume demanded and supplied is the same
Professional Ethics
The moral principles or standards that govern the conduct of the members of an organisation
Advantages of Principles
Flexible
Avoids people finding loopholes
Advantages of Rules
Certainty
No subjective interpretation
Fundamental Principles
Professional behaviour
Professional competence & due care
Confidentiality
Integrity
Objectivity
Fundamental Principles: Professional Behaviour
Not bringing the profession into disrepute
Breaking law / rules
Fundamental Principles: Professional Competence & Due Care
Knowledge
Skills
Experience
Time
Resources
Fundamental Principles: Confidentiality
Don’t share private information
EXEMPTIONS:
Required to by law
Have permission from the client
In public interest / professional duty
Fundamental Principles: Integrity
Honesty
Fundamental Principles: Objectivity
Avoid conflicts of interest
Independent of mind & Independent in appearance
Unbiased
Threats To Fundamental Principles
Self Review
Self Interest
Intimidation
Advocacy
Familiarity
Threats To Fundamental Principles: Self Review
Checking your own work
Threats To Fundamental Principles: Self Interest
Taking bribes
Bribery Act 2010
10 Years in prison & unlimited fine
Threats To Fundamental Principles: Intimidation
Actual or perceived threats
Threats To Fundamental Principles: Advocacy
Over promoting
Promoting something you have no expertise in
Threats To Fundamental Principles: Familiarity
Close relationships
Safeguards
Apply safeguards to eliminate threats or reduce them to an acceptable level
Apply them when threats are at a level where fundamental principles are compromised
CPD / Training / Using Policies & Procedures
What if you find an error?
Inform the client of the error
If they refuse to correct - Leave
Contact HMRC to say you have ceased acting for client due to concerns
Resolving Ethical Dilemmas
Check the facts
Identify fundamental principles that are threatened
Refer to policies & procedures
Seek advice - Contact AAT, speak to senior colleague
Implement safeguards - Quit job, don’t be associated with client
Disciplinary Process & Outcomes
Disciplinary Investigation
Decision & Recommendation
Members Response
Disciplinary Tribunal
Professional Scepticism
An attitude that includes a questioning mind, being alert to errors or fraud & critical assessment of evidence
Money Laundering
The process where proceeds of crime change ownership to appear to come from a legit source
Money Laundering Offences
Principle Money Laundering Offence
Failing to report suspected money laundering
Tipping off about money laundering
Sustainability
Meeting the needs of the present without compromising the ability of future generations to meet their own needs
“The ability to last”
Reporting Money Laundering Offences
Practice / Protected Company - Money Laundering Reporting Officer
Other Businesses - National Crime Agency
Complete a Suspicious Activity Report
1. Why you suspect
2. Who you suspect
3. Where the money is now
Protected Disclosure - Accountant
Authorised Disclosure - The Money Launderer (Usually someone who has made a mistake)
Triple Bottom Line
Planet - Environmental Protection
Profit - Economic Growth
People - Social Equality
Good Quality Information is ACCURATE
Accurate
Complete
Cost Effective
Understandable
Relevant
Accessible
Timely
Easy To Use
Blockchain
Stores transactional records (the block) of the public in several databases (the chain) in a network connected through peer to peer nodes.
Every transaction is authorised by the owner.
Anyone can see it but cannot be corrupted.
How does AI Impact Finance?
Forecasting
Detecting Fraud
Big Data
Large volumes of data captured from various sources that is analysed to predict trends.
System learns what you look at (cookies)
Data Analytics
Collection, management & analysis of large data sets
Characteristics of Big Data (5 V’s)
Volume
Value
Variety
Velocity
Veracity (Trustworthy)
Public Cloud
Everyone is able to buy a part (iCloud)
Private Cloud
Private network for a limited number of people (in an organisation)
Data Processor
People who use data
Data Subjects
Individuals that the data is about
Data Controllers
The business
Data Protection Rules
Fairly, transparently & lawfully processed
Processed for limited purposes
Data minimisation
Accurate
Storage limitation
Integrity & confidentiality
Accountability
Data Protection Prosecution
£18m fine or 4% of global turnover
72 hours to report a breach to the Information Commissioners Office
Cyber Security
Access Controls - Passwords, Physical Controls
Boundary Firewalls
Malware Protection
Patch Management - Security Updates, Encryption
Communicating Appropriately
Appropriate format - Email, Call, etc
Format - House Style
Present Professionally
Technically Correct
Understandable To Target Audience
Project The Corporate Image
Achieving Its Purpose
Data Visualisation
Using tables, graphs, charts
ADV - Easy to understand, can spot patterns, good for comparison
