SEM1 REMEMBER Flashcards
(14 cards)
Internal Auditing Full
An internal audit includes:
a
Reviews the efficiency of the internal control system—rules designed to protect assets and prevent fraud
● Assesses the effectiveness of other systems (e.g. supply chain)
● Checks compliance with policies and legal requirements
● Detects errors in the accounting system
What is internal auditing
a
Internal auditing is the checking of the operating system of a business to ensure they are working properly.
How is internal auditor chosen
a
The internal auditor is an employee of the business and may carry out other duties assigned by management
External Auditing Full
External Auditing def
a
checking of accounting reports of a business to ensure reports correct or operating system and policies are efficient
How is external auditor chosen
a
The external auditor is appointed by the shareholders and is re-appointed at the annual general meeting
What are the 7 ethical dilemmas facing business managers (EOIGCFC)
a
Exploitation of employees – e.g. unpaid overtime
Exploitation of overseas workers – taking advantage of low-paid labor in developing countries
Exploitation of investors – encouraging high-risk investments
Acceptance of gifts from suppliers – potential ethical breach
Breaches of confidentiality – mishandling sensitive information
Exploitation of foreign customers – selling products without disclosing risks or concerns
Conflicts of interest – personal interests interfering with professional duties
What is CSR
Corporate social responsibility (CSR) exists when a business builds a concern for the protection of the environment and of the good of society into its activities
Voluntary Administration
Appointed by directors or unpaid secured creditors if insolvency is likely.
● Administrator assesses finances and advises creditors on liquidation or returning control to directors.
● Pauses debt recovery without court/administrator approval.
● Provides time to decide the company’s future.
Insolvency defined by Coporations Act 2001
means a person (including a company) is unable to pay their debts as and when they become due and payable
Receivership
A receiver is appointed by a secured creditor when payment is overdue.
● Their role is to sell secured assets to repay the creditor
● Receivership ends once the debt is fully repaid
What is liquidation
An external party is appointed to manage the liquidation of an insolvent company.
● Collects and sells assets
● Distributes funds to creditors and shareholders
● Investigates directors’ conduct
● Closes the company
FACTORS AFFECTING CAPITAL INVESTMENTS DECISIONS
a
Customer Preferences
● Understand consumer needs before developing new products.
Competitors
● Know competitors’ strengths/weaknesses.
● Anticipate their reaction to investments.
Government Regulation
● Consider costs of complying with regulations.
4 types of business strategies
cost leadership
product differentiation
strategic initiatives
performance management
What is cost leadership
Cost Leadership
● Business has lower costs than competitors.
● Can sell products at lower prices.
● Achieved by:
– Large retail chains
– Bulk buying at low prices
– Cost-focused management
Product Differentiation
Occurs when a business offers customers a product that has superior benefits to competing products
Strategic Initiatives
A major plan of a business, that once implemented, is likely to have a significant impact on the future of the business
Performance Management
a
The process in which the employees of a business are made aware of the level of performance expected of them and involves the periodic review of their performance
