BESY Workbook 2023.24 B

1
The Business Environment Workbook Part 2 Student name:

2. Understand the external business environment
2.1 The economic environment
Learners need to understand:
2.1.1 the micro-economic environment: - the forces of supply and demand on pricing and output
2.1.2 the profit motive of business
2.1.3 that businesses face uncertainty and risk.
2.1.4 that businesses operate in a global business environment
2.2 Government control of the economy
2.2.1 how government controls the economy
2.2.2 the key principles of an effective tax system: - equity - certainty - convenience - economy - fairness -
transparency 2.2.3 how government raises finances through the tax system from: - individuals - businesses -
indirect taxes
2.2.4 the impact of government on interest rates, levels of employment and consumer spending.
2.3 The competitive environment
2.3.1 how the competitive global market may affect a business
2.3.2 how changes in exchange rates may change business costs
2.3.3 the uncertainty and risks faced by business in the global market
2.3.4 the benefits and disadvantages to a business of trading internationally.
The Micro-economic environment- Demand, Supply, Price and Market.

Brainstorming/Discussion
• What is meant by “demand” for goods and services?
• What does the law of demand state?
Two process related to demand

• Substitution effect
• Income effect
Compiled by Daniel Pratt

2
Illustration of a demand curve
Page 16 Pink booklet

• Expansion of demand
• Contraction of demand
• Shift in demand

3
List some of the conditions that you think may affect the demand for a product/service
TYU 1. What do you think determines the demand for hot chocolate?
TYU 2 Which one of the following would NOT lead to a shift in the demand curve for overseas holidays?
A An advertising campaign by holiday-tour operators
B A fall in the disposable income of consumers
C A rise in the price of domestic holidays
D A rise in the exchange rate for the domestic currency

4
To do in your group/table and compare your answers

Q1. Which one of the following statements explains the demand for inferior goods?
A Demand for inferior goods is unaffected by changes in income
B Demand for inferior goods will rise as income falls
C Demand for inferior goods will rise as income rises
D Demand for inferior goods will remain unchanged when income rises
Q2. Identify whether each of the following statements relating to substitute goods is true or false.
Statement True False
If product A regarded as a substitute for product B, and the price of product B falls,
there will be less demand for product A
If products D and E are regarded as substitutes for each other, an increase in the
price of product E will result in increase in demand for both products
Q3. If products S and T are complementary goods, which one of the following statements is true?
A If the price of product S falls, demand for product T will fall
B If the price of product S rises, demand for product T will fall
C If the price of product S rises, demand for product T will rise
D If the price of product S rises, demand for product T will be unaffected
Q4.
Which ONE of the following is a complementary product for a bicycle?
A. A mobile phone
B. A safety helmet
C. A lightweight jacket
D. A pair of training shoes
Q5.
Which of the following statements correctly explains the income effect relating to the demand for goods?
Statement 
A. If a supplier increases prices, consumers may switch to lower‐priced products if one supplier increases
prices, leading to a fall in demand
B. For expensive items, if a supplier increases prices, consumers may not be able to purchase the product,
leading to a fall in demand

5
• What is meant by “supply” for goods and services?
• What does the law of supply state?
Two processes related to supply
• Decrease in supply
•
• Increase in supply
•
Illustration of a supply curve
• Expansion of supply
• Contraction of supply
• Shift in supply

6
List some of the conditions that you think may affect the supply for a product/service
TYU 3 L makes a variety of different products, including windows.

Which TWO of the following would cause a decrease in the level of supply of L’s windows?
A An increase in the level of VAT charged by the government on windows
B A new automated assembly system for L’s products that reduces L’s window manufacturing overheads
C Staff negotiations, leading to window production staff adopting a shift‐work approach which makes better use
of L’s production facilities
D Staff negotiations, leading to a slight rise in the hourly rate paid to window production workers

7
TYU 4. When the price of a good is held above the equilibrium price, the result will be:
A excess demand for the good
B a shortage of supply of the good
C a surplus of supply of the good
D an increase in demand for the good
Q5.
• What will happen to the price when there is a shortage?
• What will happen to the price when there is a surplus?
1-minute paper
Summarise what you have learnt in this session
List areas you still need to work on

8
Answers
TYU 1 You should have come up with several factors. All of the following are likely to be relevant:
• the price of hot chocolate as the higher the price the less will be demanded.
• the price of substitutes such as other hot drinks.
• the price of complementary goods such as biscuits.
• the level of income as the more people earn the more they will be able to spend.
• external factors e.g. if the weather is cold, demand for hot chocolate is likely to increase.
TYU 2. The correct answer is D

Correct answer is D since a change in exchange rates effectively changes the price of foreign holidays and
leads to a movement along the demand curve, not a shift in the curve itself.
An advertising campaign should stimulate demand at the existing price and lead to the curve shifting to the
right (A). A fall in disposable income would reduce demand at the existing price point and should lead to a shift
of the curve to the left (B). A rise in the price for domestic holidays could cause consumers to switch away from
foreign holidays to domestic ones, reducing demand for foreign holidays even though their price hasn’t
changed and leading to a leftward shift of the curve (C).
TYU 3. The correct answers are A and D

Decreases in supply (leftwards or upwards shifts in the supply curve) are caused by increases in the costs of
making and/or selling the product.
This means that, even if the selling price stays constant, the profitability of the product will fall, meaning that
suppliers like L will not wish to produce as many units of the product as they are less profitable.
In order to avoid raising prices and deGisenang customers, suppliers may absorb the change in VAT, leading
to lower sales revenues for the product. This will make the product less profitable. This leads to a decrease in
supply (A).
There is a similar effect for option (D); costs rise, making the product less profitable.
TYU 4 The correct answer is C

When the price of a good is held above the equilibrium price suppliers will be willing to supply more at this
higher price. However, consumers will demand less. The combined effect of this is to create a surplus of
supply of the goods.

9
What role does the government have in the economy?

A key objective for any government is to maintain a steady economy
Government influence
Fiscal policy
Fiscal policy
Expansionary
Contractionary
Read and underline key points
Government use of fiscal policy to change the level of demand in the economy
Policy: Increase aggregate demand Policy: Reduce aggregate demand

10
Q6. Which one of the following is the correct definition of fiscal policy?
A Fiscal policy is the manner in which government chooses to spend cash
B Fiscal policy is the manner of how a government chooses impose and collect taxes
C Fiscal policy is the use of government spending to influence the economy
D Fiscal policy is the use of taxation and government spending to influence the economy
Money supply and quantitative easing

Instruments of monetary policy Explanation
Interest rates
Reserve requirements
Exchange rates
Activity 2. Think > Ink > Share

How are businesses affected by Fiscal and monetary policy

11
TYU 2
a) What is the effect on the economy if there is an increase in government spending?
(b) What is the effect on the economy if there is an increase in tax?
1-minute paper
What are the main purposes (reasons) for the tax system of a government?
Reasons Explanation
Principles of taxation. The key principles to be considered when creating a tax system.
Principle Explanation
Tax can be direct or indirect, revenue or capital and suffered by individuals, partnerships, companies
Complete the table below for the main types of tax
Tax Suffered by Revenue or Direct or
Capita tax indirect tax
Income tax
National Insurance
Corporation tax
Capital gains tax
Inheritance tax
Value Added (VAT)

12
Effective tax system

Governments need tax revenues to finance expenditure on public services such as hospitals, schools, policing,
retirement pensions, social benefits and to finance government borrowing
In Wealth of Nations, Adam Smith proposed that a good tax should have three f characteristics:
1.
2.
3.
4.
The 3 major principles of good tax policy are as follows:
• Equity –
• Efficiency –
• Economic effects –
Rates of taxation
There are three types of taxes:
• Progressive taxes:
• Proportional taxes:
• Regressive taxes:
A tariff is a tax that the government charges on imported goods and services
To do in your group/table and compare your answers

Q7. Which TWO of the taxes from the following list are indirect taxes?
A Corporation tax B Value Added Tax (VAT) C Income tax D Import duties
Q8. Which TWO of the following are taxes imposed on an individual, rather than a business?
A Corporation tax B Import duties C Income tax D Capital gains tax
Q9. Match the type of tax with the definition stated.

Definition Type of tax
A tax which takes an increasing proportion of income as income increases
A tax which takes a fixed proportion of income, irrespective of how high or low
that income is
A tax that takes an increasing proportion of income as it decreases
Picklist: Progressive tax, proportional tax, regressive tax
Q10. Identify which TWO items from the following list are characteristics of a good tax?
• Simple to understand • Arbitrary • Effective to maximise tax collected
• Convenient • Fair • Arbitrary
Q11. The UK income tax system taxes individuals with a higher income at a higher rate that those
with a lower income. What type of tax is this?
A An indirect tax B A proportional tax C A progressive tax D A regressive tax
1-minute paper

13
Answers TYU 2
(a) If government spending is increased, there will be an increase of cash in the economy. This will cause an
increase in demand for goods and services which will result in greater expenditure in the economy.
(b) If tax is increased this will have the opposite effect. There will be a decrease in demand as people will have
less money to spend which will result in less expenditure in the economy.
Answers to tasks
Q1.INFERIOR GOODS B Demand for inferior goods will rise as income falls
Q2. SUBSTITUTE GOODS

If product A regarded as a substitute for product B, and the price of product B falls, there will be less demand
for product A. True
If products D and E are regarded as substitutes for each other, an increase in the price of product E will result
in increase in demand for both products. False
Q3. B If the price of product S rises, demand for product T will fall
Q4. A mobile phone; A safety helmet (correct); A lightweight jacket; A pair of training shoes
Q5. If a supplier increases prices, consumers may switch to lower‐priced products if one supplier increases
prices, leading to a fall in demand,
For expensive items, if a supplier increases prices, consumers may not be able to purchase the product,
leading to a fall in demand Correct
Q6. D Fiscal policy is the use of taxation and government spending to influence the economy
Q7. B Value Added Tax (VAT) and D Import duties

Q8. C Income tax and D Capital gains tax
Q9. A tax which takes an increasing proportion of income as income increases- Progressive tax
A tax which takes a fixed proportion of income, irrespective of how high or low that income is - Proportional tax
A tax that takes an increasing proportion of income as it decreases Regressive tax
Q10. CHARACTERISTICS OF A GOOD TAX

• Convenient – easy to pay
• Fair – reflect ability to pay
Q11. C A progressive tax
Pink Booklet
Further practice/ Self-study/Independent work
Page 13 Task 2.1, 2.2, 2.3, 2.4 and 2.5
Page 14 Task 2.6, 2.7. 2.8, 2.9 and 2.10
Page 17 Summary; Page 18 Key Terms

Page 19 Tasks 2.1, 2.2, 2.3 and 2.4
Page 20 tasks 2.5, 2.6, 2.7. 2.8 and 2.9
Page 21 Task 2.10 to 2.12

14
• What is meant by globalisation?

• What issues have given rise to globalisation?
• How has globalisation affected business competition?
• What are the advantages and disadvantages of globalisation ?

Globalisation is the process by which businesses and countries around the world become more connected. It
has resulted in single businesses operating in lots of countries.
• Technological advances
• Developments in manufacturing techniques
• Competition also fuels globalisation.
Globalisation has advantages and disadvantages.

One of the big advantages is that globalisation creates jobs, both domestically and abroad. Globalisation can
also result in lower prices for the consumer. There will be improved access to technology and improved
productivity.
In terms of disadvantages, globalisation is said to create inequality, particularly between countries. The carbon
footprint of transporting goods long distances is detrimental to the environment
Benefits of trading internationally
Benefits of trading internationally Explanation
Disadvantages of trading internationally

Disadvantages of trading Explanation
internationally

15
Uncertainty and risk factors- PESTEL model to identify sources of business risks
PESTLE FACTOR Examples of risks and uncertainties
Political
Economic
Social
Technological
Environmental
Legal

16
Risk and uncertainties in the global market

Uncertainties and risks Explanation
Exchange rate risk
Shipping risk
Credit risk
Global economy
International laws and

agreements
Lack of knowledge
1-minute paper
Pink Booklet. Further practice/ Self-study/Independent work

Page 13 Task 2.1, 2.2, 2.3, 2.4 and 2.5; Page 14 Task 2.6, 2.7. 2.8, 2.9 and 2.10
Page 19 Tasks 2.1, 2.2, 2.3 and 2.4; Page 20 tasks 2.5, 2.6, 2.7. 2.8 and 2.9
Page 21 Task 2.10 to 2.12

17
3. Understand key principles of corporate social responsibility (CSR), ethics and sustainability
3.1 Corporate social responsibilities of a business
3.1.1 the objective of CSR
3.1.2 the involvement of internal and external stakeholders
3.1.3 how CSR responsibilities change over time.
3.2 Sustainability and the environment
3.2.1 the responsibility of business with respect to sustainability
3.2.2 the principles of triple bottom line reporting
3.2.3 there may be a trade-off between sustainability and profit
3.2.4 how businesses respond to changes in the environment to succeed in the long term
3.3 The fundamental principles of ethics for accounting technicians
Learners need to know:
3.3.1 the five fundamental principles of ethics: - confidentiality - professional behaviour - professional
competence and due care - integrity - objectivity.
3.4 The need to act ethically
3.4.1 why it is important to act ethically: - the difference between acting professionally and being a member
of a professional body - the importance of accounting technicians complying with AAT’s Code of
Professional Ethics - the accounting technician’s public interest duty to society as well as to the client or
employer - the legal and professional nature of the accountant’s obligation of compliance with the ethical
code - when disciplinary action by AAT or internal disciplinary procedures may be brought against
accounting technicians for unethical behaviour
- fines or reputational damage suffered by organisations as a result of unethical behaviour and non-
compliance with values, codes and regulations
3.4.2 the actions accounting technicians may have to take to act ethically: - specific actions that accounting
technicians may have to take in order to behave ethically - why simply complying with regulations may not
constitute ethical behaviour.

18

19
Business stakeholders;
1. Who are stakeholders?
2. Examples of primary stakeholders
3. Examples of secondary stakeholders
4. Examples of internal stakeholders
5. Example of connected stakeholders
6. Example of external stakeholders
Stakeholders
Primary stakeholders What is at stake? Expectation?
Secondary stakeholders
Business stakeholders What is at stake? Typical expectation??
Internal. Connected and external stakeholders

Internal Connected External
Identify which TWO of the following stakeholders a trainee in the finance function is most likely to
communicate with.
• People living in houses close to the organisation’s Head Office
• The local MP • H M Revenue & Customs • The Head teacher of the local school
• Receivables • An AAT examiner

20
TYU 1 Which of the following statements is/are correct?

(i) Internal stakeholders have little influence over the way an organisation is run.
(ii) The needs and expectations of managers and employees will always tend to be the same as they are
both internal stakeholders.
A (i) only B (ii) only C Neither D Both
TYU 2. Employees are _____________ stakeholders, while finance providers are ______________
stakeholders.
Which two words fill the gaps in the above sentence?
A Internal, connected B External, internal C Connected, outsiders D Internal, suppliers
CSR and sustainability

1. What is meant by “Sustainability”
2. Give some examples of sustainability initiative

3. What does corporate social responsibility means?
4. What actions does an organisation need to take to support CSR?
5. What responsibilities do finance professionals have towards sustainability?
6. What is meant by Triple-bottom-line reporting?
Sustainability and the Environment
What is sustainability? Think about shopping and shopping bags?
Three aspects of sustainability are:

21
Examples of sustainable initiatives

22
Which THREE of the following initiatives will improve the welfare of employees in an organisation?
• Introducing flexible working conditions for staff
• Ensuring all staff complete at least 8 hours overtime per week
• Offering all staff training and support to those who wish to gain further qualifications
• Opening the office at weekends to allow staff to work on Saturdays and Sundays
• Providing an onsite gym for all staff to use
• Offering bonuses to senior management staff only
Kapfin is looking to become more sustainable and a manager believes that she has come up with a few
amazing suggestions.
Which ONE of these suggestions relates to sustainability?
A Encourage all staff and students to use their own cars to travel to and from Kapfin.
B Ensure all lights and computers are left on in the evening to prevent break‐ins.
C Encourage all students and staff to throw paper in the normal waste bin.
D Encourage all AAT Kaplan staff to work through their lunch.
E To look into the possibility of providing the AAT textbook via e‐books instead of providing a paper copy to
students.

23
What is meant by Corporate social responsibility (CSR)?
Corporate Social Responsibility (CSR) Report

An organisation’s CSR report shows their commitment to sustainability and may contain:
1. An Introduction
2. Support to employees
3. Support to the environment
4. Support to local community
5. Support to Wider community
Task 1
b) (a) Identify TWO benefits to the community from the list below if an organisation introduces corporate
social responsibility policies.
A Employee absence from work
B Use of corporate resources to benefit the community
C Employees using voluntary days of absence from work to support charitable activities.
D Greater use of recycled materials
(b) Identify TWO benefits to the environment from the list below if an organisation introduces corporate
social responsibility policies.
A Employee absence from work
B Greater use of renewable resources to reduce waste
C Employees using voluntary days of absence from work to support charitable activities.
D Greater use of recycled materials

24
Task 2
Task 3
Which THREE of the following initiatives will minimise the environmental impact of an organisation’s
business activities?
• Ensuring company cars purchased have high CO2 emissions
• Offering free membership at a local gym
• Encouraging staff travel to work using public transport rather than using their cars
• Ensuring machines maximise energy consumption
• Installing energy saving production equipment
• Asking staff to leave their computers on overnight
• Installing motion sensor lights which turn off when rooms are empty
Responsibilities of finance professionals

Responsibilities of finance professionals Explanation
Creating and promoting a sustainability
culture
Championing the aims of sustainability
Evaluating and quantifying reputational and

other ethical risks
Taking social, environmental and ethical
factors into account when making decisions
Promoting sustainable practices
Raising awareness of social responsibility

25
Your friend is being encouraged to make a suggestion of how to improve sustainability within his/her
workplace.
Which ONE of the following suggestions should he/she put forward to his/her manager?
A Encourage all staff to print their work and maintain in lever arch files for audit trail purposes.
B Look at installing motion sensor lights into the office block.
C Encourage the Financial Accountant to replace his/her 2.0L Diesel BMW with a 3.5L Petrol BMW.
D Suggest that all Monthly regional meetings should be done in the most central regional office.
E Ensure all trainee accountants complete their CPD
What is meant by Triple bottom-line reporting

26
Pink Booklet Further practice/ Self-study/Independent work
Page 79 Tasks 8.1, 8.2, 8.3, and 8.4; Page 80 Tasks 8.5 and 8.6,
Page 81 Summary; Page 82 Key Terms ; Page 84 Tasks 8.3 and 8.4; Page 85 Task 8.5
1 minute paper

27
Research work
E Ethical Business Practices. Write notes on the following

1. What is ethics (Professional)?
2. List and explain the 6 fundamental ethical principles
3. What is meant by conflict of interests?
4. Give four (4) examples of conflict of interests
Fundamental Ethical principles

28

29

30

31
Class illustrative examples

While at a party recently, you met a client of yours who is clearly very concerned about some VAT issues.
Your daily work consists of some VAT related work but you have no expertise in the specific area that
your client is asking for advice on.
Which fundamental principle would be breached if you gave advice? What would the appropriate course of
action be?
Review each of the practical situations below, and match each situation with the ethical principle from the
drop-down menu choices that relate to it. You may use an ethical principle more than once.
Practical situation Ethical principle
1 A family member has advised you that they will purchase goods from the
organisation you work for only if you obtain a discounted price for them. You are
unsure whether or not to try to arrange this.
2 You have been asked by your manager to calculate depreciation on motor
vehicles for the year, and then to reduce the calculated amount by 10% to reduce
the expense and increase profit for the year.
3 Your supervisor has asked that you resolve any payroll queries from other
employees that arise during the week ahead, in the absence of the payroll clerk.
Whilst you are willing to help, you have no experience of dealing with accounting
for payroll or dealing with payroll queries from other employees.
4 A friend has asked you to disclose salary details of a mutual friend who also
works with you as they believe the friend is living beyond their means and wants
to try to help them if possible
5 A work colleague arrived late on the first day of a course and didn’t bother to
apologise to the course leader, and nor did they engage in the course activities
during the day, explaining to you, “It’s not really important and it’s better than
being in work for the day”.
6 You are reconciling the receivables ledger control account balance with the total
of the receivables ledger account balances as at 30 June 20X5 and are having
problems agreeing the totals. You have experience of preparing this reconciliation
on numerous occasions, and any previous problems have
related to discounts allowed not being included in the relevant receivables ledger
accounts. As it is nearly the end of the working day and your manager needs the
completed reconciliation before you finish work, you intend to pass the
reconciliation to your manager which includes the statement “reconciliation
complete, except for inclusion of discounts allowed in receivables ledger
accounts,” without actually confirming that is the case.
Drop-down menu choices:

• Competence and due care • Integrity • Professional behaviour
• Objectivity • Confidentiality

32
Reading task

33
To attempt in your table/group and compare your answers afterwards

Q1. The fundamental code of ethics set out five principles that a professional accountant is required to
comply with. Two principles are objectivity and professional competence/due care.
Select TWO other ethical principles from the list below.
A Confidence B Integrity C Truthfulness D Confidentiality
Q2. Your father owns some shares in a company which your company audits. You have recently
found out that the company is struggling. This is going to be announced publicly shortly and
will have an adverse effect on the share price.
Which TWO fundamental ethical principles prevent you from telling your father about this?
A Confidentiality B Objectivity C Professional Behaviour
D Professional competence and due care E Integrity
Q3. Your best friend has recently started up in business and really needs some tax advice.
Because they know you are training to be an accountant they have automatically assumed you are the
right person to give advice.
Which fundamental ethical principle prevents you from advising your best friend particularly regarding the
fact that it is tax advice that he/she is seeking?
Q4. You and a work colleague decide to go out for dinner after work. Whilst in the restaurant you start to
discuss a client and the issues which this client is currently facing. Unbeknown to you the CEO of their
major supplier is sat at the next table and hears everything which you have discussed.
Which fundamental ethical principle prevents you and your colleague from discussing this in public?
Q5. Your work colleague has decided not to comply with the relevant accounting legislation when
preparing a client’s account as they ‘can’t be bothered’.
Which TWO fundamental ethical principles is your colleague in breach of?
1 minute paper
Page 81 Summary ; Page 82 Key Terms
Page 80 Tasks, 8-8 to 8.11
Page 83 Task 8.2

34
• What is meant by Conflict of interest

• What are the different ethical threats that are available?
Q6. You have recently discovered that your manager is committing fraud. Your manager suspects that you
know, and have threatened you with termination of your contract if you decide to whistle blow him.
Which threat to fundamental principles are you faced with?
A Self Interest B Self Review C Familiarity D Advocacy E Intimidation
Q7. Your company has recently taken on a new client and you have been asked to prepare the monthly
management accounts. As soon as you start work on the accounts you realise that it is your aunt’s
company. Which threat to principles are you faced with?
A Self Interest B Self Review C Familiarity D Advocacy E Intimidation

35

36

37
5. Understand the finance function within an organisation

5.1 The different functions of a business
5.1.1 the different functions of a business: - operations/production - sales and marketing - finance - human
resources - information technology - distribution and logistics
5.1.2 the role each function plays in contributing to business success
5.1.3 the interconnected nature of technology to support each function
5.1.4 that these functions may be combined in smaller organisations.
5.2 The role of the finance function
5.2.1 the role of the finance function: - responsibility for the production of statutory financial statements -
providing a service (information, support, advice and guidance) to both internal and external stakeholders
5.2.2 the relationship and interaction between finance and other functions of a business
5.2.3 how processes within the finance function may be outsourced (e.g. payroll).
5.3 How the finance team contributes to the success of an organisation
5.3.1 the importance of establishing effective business relationships
5.3.2 the principles of effective communication: - content is written clearly, complete, accurate, timely and
concise - meets the needs of the recipient - appropriate medium is used in a suitable environment
5.3.3 how actions of finance staff support efficient working practices, solvency and long-term financial stability,
legal and regulatory compliance
5.3.4 the importance to an organisation’s survival of remaining solvent and managing funds effectively
5.3.5 the different types of policies and procedures affecting finance staff:
- finance function-specific - organisation-wide
5.3.6 the role of finance in CSR reporting.

38

39
Consider what you have been studying in ITBK, POBC and POCN
1. Give example of some activities done in finance function
2. Give some departments relate to finance function
Write a brief overview of what you think is the role of each function
How the finance team contributes to the success of the business
Function Role in business Contribution in business

40
The functions of a business

It is important to appreciate the different functions that a business may have. These functions will vary from
business to business dependent upon what the businesses do. A manufacturing business is likely to have a
production department, as well as an inventory management function.
A service provider is unlikely to have these functions as it does not need to produce goods or manage its
inventory to the same extent. Depending upon the size and complexity of a particular business, some
functions noted below may have different titles or be combined with other functions
Business functions
Operations/Production could be regarded as ‘what the business does’ on a day to day basis to make its
sales. For a manufacturer, typical operational activities include the acquisition of raw materials, their
conversion into finished products and the supply of that finished product to the customer. Other activities
performed by an operations function include the service operations.
Operations/Production
• Obtain input
• Add value (process)
• Create outputs
• Responsible for quality
• Responsible for the cost of product/service

41
Sales and marketing

Marketing is the promotion and selling of products and services, including market research and advertising
activities.
Sales and marketing

Sales support
Marketing communications
Operational marketing
Strategic marketing
Finance Function
Primary roles of the finance function
1.
2.
3.
4.
Human resources management and development comprises all aspects of recruitment, selection, training
and development of employees.
Main roles
1.
2.
3.

42
Information technology comprises the use of computers and telecommunications to store, retrieve and send
information.
• Support all other business function
• How business processes can be improved
• How product and service can be improved
• Better use of resources
Distribution and logistics

Distribution is the provision of goods and services to the customer. Logistics may be thought of as the overall
planning and organisation of distribution, including factors such as storage and inventory control.
In effect, distribution and logistics can be considered as doing whatever is required to ensure that the right
goods and services are delivered to the right customers in the right location
• Inbound logistics
• Outbound logistics
• Operations function
• Store finished goods
• Delivery to customer

43
1 minute paper
Attempt tasks below and compare your answers afterwards

Q1.
Q2. Which of the following documents received by the finance function, can be used to match cash receipts
from customers against the sales invoices to which they relate? Select from the list below:
• Purchase order form • Sales order form • Despatch note
• Sales invoice • Statement of account • Remittance advice
Q3. The preparation of budgetary information is a responsibility of the finance function.

What purpose does budgetary information serve?
Select from the list below:
• To provide financial information to shareholders about the company’s performance.
• To assist managers in decision making and control.
• To satisfy the requirements of the Companies Act.
• To provide information to the tax authorities.
Q4. The management of Cumulonimbus Ltd are considering investing a cloud accounting system.
Which of the following are advantages of such a system? Select from the list below:
• It is unaffected by internet connectivity issues.
• Data can be accessed at any time, from any location, on a variety of devices.
• The accounting information is updated in real‐time.
• The data is automatically backed‐up by the cloud accounting service provider.
Q5, Identify which department will make use of information supplied by the finance function.
Information supplied Production Payroll
National insurance rates
Raw materials cost per unit
Employee PAYE codes
Q6. Identify whether the following statements are true or false.

Statement True False
Pre‐set passwords set by the manufacturer must be changed to
individually selected, unique passwords as soon as possible.
The purpose of air‐conditioning in the computer environment is solely
for the comfort of those working in that environment.

44
Q7. Maria, the Finance Director at Sports Shorts Ltd wants to encourage staff in the warehouse to maintain
inventory levels within a pre‐determined range that minimises inventory holding costs whilst also ensuring that
inventory is always on hand for customer orders. She intends to set target quantities for each inventory line
held.
Identify which TWO of the following sources of information would be most useful to Maria in setting these
targets. Select from the list below:
• Inventory movement records • Sales records by inventory line
• Payroll information • Customer contact details

45
1. ROLES AND BENEFITS OF FINANCE FUNCTION

Task 1.
Task 2

46
Q3.
(Answers: Q1. Options 1, 3, 6 and 7; Q2. Option 1, 3, 5 and 7; Q3. Option 2

and 4)
• Distinguish between policies and procedures in an organisation for a finance professional/accounts
assistant in
• What is meant by “Legal Compliance”? Give examples of issues accountants/accounts assistant has
to legally comply with
• How does a finance professional contribution to the success of the business
• What is solvency? What can accountants/accounts assistants do to ensure solvency?

47
Effective communication
Finance staff supporting efficient working practices

Policies and procedures affecting finance staff
Businesses normally have a range of policies and procedures that affect all staff and others relevant for
finance staff only.
* A policy sets out the parameters or extent of what is or is not permitted e.g. the annual leave policy may
specify how many days of paid leave an employee is entitled to, depending upon their grade and years of
service.
* A procedure sets out the steps required to perform a particular task or activity, or how a policy is applied. For
example, if an employee wants to request annual leave, a written request form may need to be authorised by
the employee’s line manager in advance

48
POLICIES AND PROCEDURES

Task 1.

49
Task 2
Task 3
(Answers Task 1a Option 3; b) Option 2 and 5; Task 2a Option 3 b) Option 3 and 5;

Task 3 Option 1, 4, 7 and 8)

50
Solvency and long-term financial stability

Contributions of the finance function to the organisation
• What is solvency
• How does the finance function help an organisation to achieve solvency
Solvency refers to the financial ability of a business to pay its debts as they fall due (such as paying payables
on time). Therefore, the business must ensure that it has cash available to meet these obligations.
Two components of the finance function must therefore cooperate to help ensure the solvency and financial
stability of the business.
* Management accounting is concerned with the allocation and control of resources.
* Financial accounting is concerned with the classification and recording of transactions, maintaining
accounting records and ledgers and producing the annual financial statement
• Solvency- ability of an entity or an individual to pay its way i.e.to meet it’s long-term obligations
(debts).
• Cashflow of an organisation
• Solvency- closely monitoring cash balances; ability to meet obligations (make payments) as they fall
due:
• Collect your money quickly from your customers whilst paying your suppliers late
• Availability of cash to cover payables when they fall due
Ways to ensure and improve financial solvency

• Regular reconciliation of bank balances e.g. to highlight bank charges, interest (both paid and received),
direct debits going out and BACS receipts from customers.
• Awareness of the current position of the bank balances e.g. you know if you are likely to go overdrawn and
can therefore plan for any charges, or find other ways to avoid an overdraft.
• Regular checks of how much is owed to the business e.g. Sales Ledger Control Account.
• Credit control measures e.g. chasing amounts overdue from customers.
• Monitoring of amounts owing e.g. long-term obligations (loans or mortgages) and when they are due for
repayment.
• Review of payments to suppliers e.g. current liabilities and when due.
• Completing weekly payments to suppliers e.g. taking advantage of credit terms and ensuring that the
company is making full use of free credit and discounts available.
• Awareness of forward planning e.g. cash flow statements – ask suppliers to extend credit terms if you know
you cannot pay in time and/or renegotiate bank loans and overdraft facilities if you expect to have difficulties
paying liabilities in time.
• Consider delaying payments which are not essential, such as the purchase of non-current assets or dividend
payments
• Negotiate payment to supplier as late as possible
• Awareness of payments to suppliers e.g. current liabilities and when due.

51
SOLVENCY
Task 1
Task 2
Task 3

52
Task 4
(Answers Task 1 a) Option 2 and 4; b) True and False Task 2 Options 2, 4, 5 and 7; Task 3Option 1 and
7. b.
Task 4 Smooth running: Staff procedure handbook in use; ensure sufficient stock available.
Solvency: Effective credit control; Perform regular bank reconciliations
Legal compliance: Procedure for managing visitors
Further Practice (Homework)
Q1. What is one of the most important ways of maintaining good solvency within a business?
1. Pay suppliers as soon as possible after receiving their invoices

2. Bank takings once every fortnight
3. Keep inventory in good order
4. Maintain a strong credit control function
Q2. Which of the following would NOT improve the solvency of an organisation?
1. Ensure that the credit control procedure is available to all staff that work in the credit control
department so they are clear on the process.
2. Paying payables quicker.
3. Encouraging customers to pay more quickly by sending out monthly statements of account to all
customers.
4. Asking payables if payment terms can be extended to 60 days.

53
Legal and regulatory compliance

Examples of legal and regulatory compliance, which the finance function is likely to have direct involvement
in, include:
• Preparation of annual financial statements for shareholders within a specified timescale (if the business is a
limited company).
• Submission of regular VAT returns, along with any payment required, within specified timescales (assuming
the business is required to account for VAT).
• Submission of an annual tax return, together with any payment required, within specified timescales.
• Submission of regular returns to account for tax and national insurance deductions from employees’ pay.
• Businesses in some industries, such as banking and insurance, are subject to additional regulations that
require the preparation and submission of additional information to comply with relevant regulations.
Q1. Select THREE policies and procedures from the following list which are likely to apply to the finance
function:
A Data Protection Act B Health and Safety at Work C Curriculum policy
D Authorised signatory procedure E Kitchen Hygiene policy F Administration of substances policy
Q2. Which TWO of the following services are staff in the finance function most likely to provide to staff in the
sales department?
• Conducting job interviews • Preparing sales brochures • Budget report analysis
• Photocopier servicing • Marketing new products • Payment of sales commission
1 minute paper
Page 33 Tasks 4.1, 4,2 and 4,3; Page 34 Tasks 4,4, 4.5 and 4.6;
Pages 35-36 Solvency case study
Page 37-38 Summary; Page 39 Key terms
Page 40 Tasks 4,1, 4,2 and 4.3; Page 41 Tasks 4.4, 4.5. 4.6, 4.7 and 4.8;
Page 42 Tasks 4.9, 4.10 and 4.11

54
How might a business protect itself from computer viruses?

55
6. Produce work in appropriate formats and communicate effectively

6.1 Sources of information
6.1.1 the difference between valid and invalid sources of information
6.1.2 the difference between primary and secondary sources
6.1.3 the benefits of obtaining information from more than one source
6.1.4 the importance of recognising sources when producing information.
Learners need to be able to:
6.1.5 choose information for a specific purpose.
6.2 Communicate information
6.2.1 the importance of effective note-taking and documenting key pieces of information: - when dealing with
customers - during meetings (one-to-ones with line manager; team)
6.2.2 the features of business communications: - business letters - emails - formal business reports -
spreadsheets - social media communications - intranet
6.2.3 the influence and impact of inappropriate social media postings
6.2.4 the consequences of inappropriate information sharing.
Learners need to be able to:
6.2.5 produce written communication using acceptable business language that is clear, structured and follows a
logical progression: - business letters - emails
6.2.6 recognise the impact and consequences of ineffective or inappropriate communication
.

56
Data vs Information
Data is unorganised or unstructured facts or statistics. Data has no meaning unless it is arranged, structured or
refined into information. An example of data would be a list of exam marks.
Information is data that is organised or structured, therefore providing context for understanding and decision-
making. Using the example of a list of exam marks, that data may be converted into information by matching
marks against student names and/or dividing the marks achieved into ‘pass’ or ‘fail’ grades.
Valid information is information that is reliable or credible. This could be in terms of accuracy or
reasonableness when based upon assumptions or estimates. For example, a set of exam marks matched
against student names, with each graded as ‘pass’ or ‘fail’ and reviewed to ensure that there are no errors.
Knowledge is the ability to use information to achieve objectives
Sources of information
Data may be obtained from either primary or secondary sources; internal or external sources
Primary sources
Advantages Disadvantages
Secondary sources.
Advantages Disadvantages
Sources of information
Internal sources External sources

57
Effective note taking.

• What situations would you be required to take notes at work?
• What would you do to ensure the note taking is effective?
What is the purpose of business communication?

1.
2.
3.
4.
5.

58
Brainstorming/Discussion Communication methods

• Internal vs external communication; Informal vs formal communication
• Structure and content of a letter/ Structure of an email/ Structure and content of a report
• Oral communication- Face-to-face, telephone, meetings
• Written communication: Letters, Memos, Emails, Bulletins, Newsletters, files, Notes, circulars, Reports,
Word-processed documents, spreadsheets
• Electronic communication: Fax, email, Skype, Video conferencing
Writing Letter
1. Greeting/salutation
2. Subject Heading
3. Opening paragraph
4. Main Body
5. Closing paragraph
6. Complimentary close

59

60

61
Writing emails
• Less formal than letters; Faster and cheaper

• To: daniel.pratt@cnwl.ac.uk From: dpratt214@gmail.com
Same as letter but a bit informal
1. Greeting/salutation
2. Subject Heading
3. Opening paragraph
4. Main Body
5. Closing paragraph
6. Complimentary close

62
Formal business report

63
To do

64
Today's date is the 31st January 2023. Cristina Feven, the Finance Manager, has asked you to draft a letter for
her to sign, to Miss Radhika, a credit customer whose account is now overdue.
Miss Radhika has an outstanding balance of £1,754.33, which relates to an invoice dated 17th December
2022. All customers are given 30 day credit terms and the balance due has been outstanding for over 45 days.
Draft the letter to Miss Radhika

65
Today's date is the 17th February 2023. Fredrich Da Oskar, the Finance Manager, has asked you to draft a
letter for her to sign, to Vinnie Tomas, a credit customer, declining an increase in his credit limit.
Vinnie Tomas currently has a credit limit of £2,500 and has requested for it to be increased to £5,000.
The company has a policy of not increasing credit terms to any customer unless the customer ensures that
invoices are consistently paid within the agreed payment terms for a minimum period of six months. Vinnie
Tomas regularly exceeds the company's standard payment terms of 30 days.
Draft the letter to Vinnie Tomas.
Check the following letters

Write a letter to a customer Mr Daniel Pratt who has complained about not receiving his order in time.
`1. Dear Mr Daniel Prattx Dear Mr Pratt or Dear Daniel
2. RE: NOT RECEIVING ORDER IN TIME COMPLAINT
3. We are sorry to know that you have not received. I hope this letter find you wellx
4. We look into your complaint and will able to tell you the order is on its way, however, we discover that there
are some issue with the transport delivery.
5. We offer discount. Goodwill gesture x
6. Yours faithfully x Yours sincerely. Kind regards,
1. Dear Mr Pratt (Mr Daniel Pratt x) Dear Daniel
2. RE: ORDER COMPLAINT APOLOGISE X
3. I am writing this letter to…… We have receive your….
4. Explanation/apologise
5. Promise it will never happen again
6. Many thanks/ Kind regards/ Yours sincerely, cordially
1. Dear Mr Pratt (Mr Daniel Pratt Never) Note Use Surname or First Name
2. RE: ORDER NOT RECEIVED ON TIME (Purpose of the letter)
3. I am writing you this letter to respond to your complaint about not receiving your order in time
4. I am sorry to know your in not been able to get your order to you in time and will take the necessary to
ensure your order is delivered as soon as possible.
5. If you require any further information please do not hesitate to contact me. Or Looking forward to
complete your order in due course
6. Yours Sincerely
Page 53 Tasks 6.1, 6.2 and 6.3; Page 54 Tasks 6.4, 6.5 (proof-reading); Page 55 Tasks 6.6, 6.7 and 6.8
Page 58 Summary; Page 59 Key terms Page 60 Tasks 6,1, 6,2 and 6.3; Page 61 Tasks 6.4, 6.5. and 6..6,
Page 62 Task 6.7; Page 63 Task 6.8; Page 64 Tasks 6.9 and 6.10

66
Examination style tasks

67
1 minute paper

68
Answers
31st January 2023

69
Dear Miss Radhika
RE: OUTSTANDING BALANCE/ OVERDUE ACCOUNT
I am writing this letter to inform you about an overdue outstanding balance that needs your attention.
You currently have a balance of £1754.33 due, for the invoice dated from the 17th December 2022. As you
may or may not be aware there is a 30 day credit term for your invoice which is now unfortunately overdue by
45 days.
Can you please settle this outstanding balance as soon as possible as we would not want this to affect our
business relationship.
I Look forward to hearing from you soon.
Yours sincerely
Cristina Feven; Finance Manager
To: DuncanDobbs@Iankap.co.uk Subject: meeting with Finance Director; Hi Duncan;

Required to attend with the Finance Director Kind regards
b) True or false It is important…. True; When Signing off a letter…. False

70
The following information is in respect of questions 1 to 7.

Suela’s Muffins provide cakes for weddings and corporate events. The company has grown significantly in
recent years and has thirty employees, working in administration, production, business development, marketing
and accounts. Their customers include hotels and venues, events companies, corporate clients and couples
soon to marry.
Q1. The Managing Director of Suela’s Muffins, Silva, is keen to promote the products and services she can
offer to local businesses.
Which of the following would be the most appropriate way to communicate with potential
business clients who Silva has not met previously? Tick the best option.
A memo A business report An e‐mail A mobile phone text message
Q2. Silva is keen to attend a local wedding exhibition to promote the cakes and novelty services her company,
Suela’s Muffins, can offer to couples getting married. She has been asked to provide some text about the
company for use in a brochure to be given to all attendees at the exhibition.
Which of the following should Silva include in the brochure? Tick the most appropriate option.
a) An outline of the company and what it does
b) The full financial statements of the company
c) A business report analysing other companies providing wedding services
d) Her personal CV, including her education and past work experience
Q3. The wedding exhibition has gone well and Silva needs to get in touch with the contacts she has made. A
local businessman, Kidbroom Mayank of Bahar Events, is keen for Suela’s Muffins to attend a caravan
exhibition in Birmingham he is co‐ordinating and asks Silva to send him a proposal in writing. How should Silva
start the letter? Tick the best option from those provided.
Hi Kidbroom Hello Events Dear Mr Mayank Dear Bahar
Q4. How should Silva end her letter to Kidbroom Mayank of Bahar Events regarding the caravan exhibition?
Tick the best option from those provided.
Thanks for everything, Silva Best wishes, Silva Yours faithfully, Silva Yours sincerely, Silva
Q5. At the wedding exhibition, Silva meets several couples who are soon to be married. She
decides to send them all an e‐mail the following week to remind them about Suela’s Muffins.
Which of the following would the most appropriate way for her to end her e‐mail to the members of the public?
Tick the most appropriate answer.
See you later, Silva Kind regards, Silva Yours faithfully, Silva Yours sincerely, Silva
Q6. Having received communication from one of the couples looking to use her cake‐making
services for their wedding, Silva is asked to provide a quote for making 100 muffins for use
throughout the day. Which of the following would NOT be required as part of this quote?
A Quantity of muffins required B Price per muffin
C Payment terms D The actual cost of production of the muffins
Q7. As a result of an enquiry from the website, Suela’s Muffins has been asked to provide Christmas‐themed
muffins at a Winter Wonderland event in Bristol. Silva needs to inform all of her staff of the timings, location and
agreed terms of their attendance at the event.
Which is the best form of business communication for Silva to inform her colleagues of the key facts?
A A memo B A letter C A business report D Phone calls

71

72
6.3 Plan workload to meet the needs of the organisation

6.3.1 the importance of communicating with others whilst undertaking a task or if deadlines may not be met
6.3.2 how to prioritise workloads based on urgency and importance
6.3.3 the importance of meeting agreed deadlines and adhering to working practices
6.3.4 the impact on others of not completing specified tasks.
Research and write short notes on the following:
https://lms.aws.aat.org.uk/courses/work-effectively-in-finance/playlist#object/594
• Assuming you are working as either a Sales Ledger Clerk; A Purchases Ledger Clerk or an accounts
assistant.
• List all of the routine tasks you will be doing daily
• List any non-routine tasks that may arise and state why they arise.
• Research on job roles/descriptions for various accounting & finance worker: (www.reed.co.uk)
• Make a note of Key responsibilities/duties you find.
• Research online on the job descriptions and tasks performed by:
• Sales Ledger Clerk; Purchases Ledger Clerk’ Payroll clerk/Assistant
• Accounts Assistant; Cashier; Petty Cashier

73
https://lms.aws.aat.org.uk/courses/work-effectively-in-finance/playlist#object/594
Brainstorming/discussion
In accounting & finance roles, what is meant by:
1. Task?
2. Routine task?
3. Non-routine task?
4. Urgent task?
5. Important task?
6. Checklist?
7. Diary?
8. “To do” List
9. Timetable
10. Task Management
11. Prioritisation?
12. How do we prioritise task?

74
• What is meant by prioritisation?
• How do we prioritise task?

• Prioritising task- deciding order of tasks i.e. which one first? Last? Matter? Does not matter so much?
• Two main factors: Urgency and Importance
Order of priority:
1. Urgent and important tasks e.g. producing sales figures for line manager for a meeting at 11am
today/tomorrow.
2. Urgent but less important tasks e.g. replenishing milk for tea
3. Important but not urgent task e.g. producing sales figures for line manager for a meeting at the end of
the week.
4. Neither important nor urgent tasks e.g. archiving old files

75
The following planning methods and systems are the most common:
(a) checklists
(b) bar charts
(c) bring-forward, bring-up and follow-up systems
(d) activity scheduling and time scheduling
(e) action sheets
(f) other systems, including planning charts and boards, and diaries

76
Pink Booklet Page 68-71 Illustrative example
Today is Friday.
Gisena has three tasks to complete, each of which will take two hours.
Gisena’s supervisor expects that all tasks will be completed by 10.00am on Monday.
Gisena was unable to perform any of the tasks on Friday morning because the computer was not working. It
is now 2.00pm on Friday. Gisena’s working day normally finishes at 5.00pm.
What should Gisena do in these circumstances?
A Complete one of the tasks and start one of the others. Gisena should be able to complete all of them by
noon on Monday.
B Complete the most urgent task and take home the other two tasks. Gisena is bound to be able to find time
to finish them over the weekend.
C Contact the supervisor immediately and explain the problem. Gisena should suggest that the most urgent
task should be completed first before starting one of the others.
D Start all of the tasks and do parts of each of them. This way Gisena has at least done something towards
each of them before the end of the working day.
Answer C
Contact the supervisor immediately and explain the problem. Gisena should suggest that the most urgent task
is completed first before starting one of the others.

77

78

79
Plan workload to meet the needs of the organisation

Task 1. Assume that normal working day starts at 09:00
(c)

80
Task 2
1 minute paper
Page 65 Tasks 7.1, 7.2,. 7.3 and 7.4; Page 66 Tasks 7.5, 7.6 and 7.7
Page 67 Task 7.8 Illustrative example page 68-71
Page 72 Summary Page 73 Key Terms
Page 74 Tasks 7,1, 7,2 and 7.3; Page 75 Task 7.4, Page 76-77 Task 7.5

81
Answer
Task 1
b) Option 2 B and D
c) Option D Tell your manager …
Task 2
Task Time (a)
(i) Mail opening distribution 09:00-10:00
(iii) Reconcile Bank Statement 10:00-12:00
Lunch 12:00-13:00
iv) Print off debtors 13:00-14:00
ii) Supplier cheque Run 14:00-15:00
v) Departmental Meeting 15:00-16:00
ii) Supplier Cheque Run 16:00-17:00

b. Option 3 B and C

82

83
7. Understand the importance of information to business operations

7.1 The role of information in the work of the finance function
7.1.1 the importance of providing useful information
7.1.2 the characteristics of useful information: - comparable - consistent - understandable - relevant and
reliable - timely 7.1.3 the use of digital technologies for financial data collection, processing and disseminating
information
7.1.4 the information and documentation received by the finance function: - budgetary - inventory control and
costing information - information from suppliers and customers - purchase orders - remittance advice -
statements
supplier invoices - credit notes
7.1.5 the information and documentation produced by the finance function: - information to help management
decision making - budgetary information - cash information - taxation information - information for suppliers
and customers - sales invoices - credit notes - statements.
7.2 The importance of data and information security
7.2.1 why it is important to ensure the security of data and information
7.2.2 why it is important to maintain privacy and confidentiality
7.2.3 the implications for the organisation if data and information is not secure
7.2.4 how data and information is retained securely: using passwords, archiving, backups and restricting
access
7.2.5 the importance of cybersecurity.

84
Information and documentation received by the finance function

Budgetary information
Inventory control
Costing information
Information from suppliers
Information from customers

85
Information and documentation produced by the finance function

Budgetary information
Inventory control
Costing information
Information produced for suppliers
Information produced for customers
Other information (Think ITBK and POBC)

86
Communication of information includes both receiving and transmitting information.

the volume of information
the amount of detail or complexity in the information
• the period of time over which the information needs to be retained and accessed
The role of information in the work of the finance function

The characteristics of useful information are:
• comparable –
• consistent –
• understandable –
• relevant and reliable –
• timely
Q1.(a) Identify the FIVE key characteristics of useful information from the list below:
• understandable • relevant and reliable • legible • consistent
• timely • credible • fit for purpose • comparable
(b) Identify whether each of the following statements is TRUE or FALSE.

• Only information stated in monetary terms is useful to accountants
• Non‐financial information is useful information to individuals who make decisions –
Q2. Cool Bearings Ltd is a manufacturer. They recently offered 90 days credit to a new customer.
The balance remains unpaid and is currently 92 days old. Cool Bearings Ltd is considering whether to
recognise this as a bad debt in the financial statements.
The finance director, Vanilda, wants a decision made quickly so that the financial statements can be
completed and issued soon.
However, the financial controller, Amanda, argues that because the customer is new and only a little overdue,
it would be better to wait a month in order to see whether the customer pays – he says ‘it’s better to be right,
than quick’.
Identify which characteristics of useful information are being applied by Vanilda and Amanda.
Characteristic
Vanilda
Amanda
• Comparable • Consistent • Understandable • Relevant and reliable • Timely
Consequences of providing information that is not useful

1.
2.
3.
4.
5.
• Big data
• Data analytics
• Block chain
• Cloud computing
• Cloud accounting

87
Sources and origins of big data

1.
2.
3.
4.
Five characteristics of Big Data

1. V
2. V
3. V
4. V
5. V

88
The use of digital technologies

The use of digital technologies to collect, process and disseminate data and information is increasingly
common in most organisations, irrespective of their size.
The advantages of digital capture, processing, storage and dissemination of data include:
• reduced operational costs
• human error is reduced, improving the quality of data
• rapid and easy capture of data
• improved security of data
• improved ease of access to those requiring the data, including multiple or remote users
• improved ability to track and analyse data resulting in improved management and control
• environmental and commercial benefits from using less paper,
The disadvantages of digital data capture include:

• the capital cost of acquiring or developing the software, apps or acquiring the licences required.
• staff training costs and competencies required to use and understand the processes involved
• reliance upon systems that may crash or be unavailable for any reason
• security of data may be compromised by e.g. hackers or corrupted software
• loss or inadequacy of tracking and analytical capability to meet user needs
Digital technology is used by a range of organisations in a number of ways. ‘

• M&S in-queue checkout with a member of staff using a hand-held device to scan purchases and take card
payment
• Ikea has in-store touchscreens for customers to access product details, availability and ordering.
• Nike’s ‘Speed Shop’ which enables online ordering and reserving, accessing the product via an in-store
locker

89
• Ocado’s business model fundamentally depends upon customers being able to order goods online, make
payment, have delivery to a nominated address and book a delivery slot.
• Amazon Fresh in high street locations enables users of the Amazon app to select goods off-the-shelf and
payment
* Audi has a ‘build your car’ facility within its website that customers can use to review
• Many service providers, such as dentists, opticians and general practitioners have online booking and
treatment recording services.
• Accountants use ‘data analytic’ software, allowing them to import data from a client’s finance system and
analyse it
Cloud accounting is an accounting system that is accessed through the internet. This contrasts with
desktop-based systems which require regular software updates and back-up procedures.
Advantages of cloud accounting include:
• the ability to access data anywhere and at any time from multiple locations
• access to real-time information, rather than having to wait for processing and output
• always uses the latest version of software
• the functionality to use analytical tools, either within the cloud accounting software itself, or provided via third
party apps and tools
• the ability to grant secure access to data and information to trusted third parties e.g. the organisation’s
auditor or financial advisor
• connection to bank accounts to enable payments to be made e.g. periodic VAT payments, or to enable
customers to pay for goods and services.
Disadvantages of cloud accounting include:

• reliance upon the speed and reliability of internet connections
• lack of customisation software so that only ‘standard’ packages are available which may not precisely meet
the needs of the organisation
• lack of data security, particularly if it contains information that is regarded as confidential or sensitive, such
as the personal details of customers and bank account information
• ‘lock-in’ to one system which may prevent or deter transfer to another provider of cloud accounting services.
Artificial intelligence

90
Automation
Cyber risks, cyber-attack and cybersecurity

• Cyber risk
• Cyber-attack
• Cybersecurity

91
Key cyber risks

1.
2.
3.
4.
Types of cyber-attack
1.
2.
3.
4.
5.
6.
7.
8.
9.
Cybersecurity methods
1.
2.
3.
4.
5.
1 minute paper
Pink Booklet
Further practice/ Self-study/Independent work
Page 43 Tasks 5.1 and 5.2; Page 44 Tasks 5.3, 5.4. 5.5 and 5.6
Page 45 Tasks 5.7, 5.8. 5.9 and 5.10
Page 46 Summary Page 47 Key terms
Page 48 Tasks 5.1, 5.2 and 5.3 Page 49 Tasks 5.4, 5.5 and 5.6
Page 50 Tasks 5.7, 5.8, 5.9 and 5.10 Page 51 Task 5.11

92

93
Pepper & Mint Ltd are an online clothes retailer. Customers have to set‐up an account on the website before
they can purchase from the company. The company has decided not to offer a ‘guest’ option where
customers can purchase without setting up an account.
What are the advantages and disadvantages of this approach?
INVENTORY
The finance function have been tasked with ensuring that suppliers are only paid for goods actually received
and accepted into inventory.
Which document will need to be received by the finance function so that they can confirm this?
• Purchase requisition form • Purchase order form • Supplier’s despatch note
• Goods received note • Purchase invoice • Supplier statement
FIRE!
Flint Ltd maintains its accounting records on a computerised system. It recently suffered a fire caused by a
faulty electrical circuit in its offices. As a result, it has lost all of the data in its finance function and has had to
suspend trading.
What measures could Flint Ltd have taken to address the risk that it would be unable to recover data as a
result of a fire?
• What is security?
• List 5 basic types of security risk to an organisation
• List 4 software security risks
• List 5 ways of protecting data from risks
• List some rules for using password by a finance assistant in an organisation
The importance of data and information security

Security, privacy and confidentiality of information
Cybersecurity is the application of processes, systems and controls to protect systems, networks, programs,
devices and data from cyberattacks.
A cyberattack is an attempt to damage or destroy a computer network or system.
Risks associated with data and information security?
Basic types of security risk:

• Physical Intrusion;
• Physical damage;
• Damage to data
• Organisational mistakes;
• Industrial espionage/fraud
To ensure compliance with legal and regulatory requirements regarding data handling, storage, use and
transfer to others, such as the following UK examples:
– General Data Protection Regulation (GDPR) 2016
– Computer Misuse Act 1990 dealing with inappropriate use of computers

94
– Data Protection Act 2018 dealing with how personal data is stored, protected, amended or deleted.
In doing so, fines, penalties and adverse publicity are avoided
Security measures- Data security functions

• Threat avoidance
• Prevention
• Deterrence
• Detection
• Recovery
• Correction
Software security risks:

1. Deliberate physical attacks- Theft, piracy, vandalism
2. Malicious damage- hackers
3. Fraudulent attacks- fraud or sabotage system
4. Loss of confidentiality- breach of data protection
Hacking is an attempt to exploit a computer network or private network.
It represents unauthorised access to a system for an illicit purpose. It may be done with the intention of
committing fraud or another illegal activity, or perhaps only for the ‘challenge’ of being able to do it; in either
situation, the consequences can be just as damaging
Controls
• Authorisation
• Passwords
• Physical security
• Data encryption
• System logs
• Random checks
• Shielding of (Video Display Units) VDUs
Physical security- burglary alarms; security guards, CCTV
Rules for using passwords:

• Must not be easy/possible to guess DOB
• Contain Letters: Lower & Uppercase; Numbers and symbols
• Must be kept secret
• Must be changed regularly
• Re-used of previous password not allowed
• Should be altered/changed if know by unauthorised person
Backup
How frequent should a business backup?
• When data is updated or changed

• At least twice a day
• End of the day
• Weekly
• Periodically
Ways to backup
• Computer storage
• USB/ External storage
• Cloud/Online
• Another location

95
Francisco is the payables ledger clerk at Angeles Ltd where he has worked for 4 years. A
password is needed in order for anyone to log on to a PC in the office.
Francisco’s password grants him access to the general ledger, payroll, bank and cash ledger, receivables
ledger and payables ledger.
His password is QWERTY which he has used since he joined the company – in fact he uses the same
password for everything as it is easy to remember. He also keeps a post‐it note in his top drawer that says
‘Password QWERTY’ so that his colleagues can log on to his PC if they need to when he is not in the office.
What are the data security weaknesses in the above scenario?
To do
Q1.

96
Answers
a. Option 2 (b) Option 1 (c) Option 1 archiving (d) See notes and select 3 rules (e) Option 3 Passwords
Q2.

97

98

BESY Workbook 2023.24 B

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

BESY Workbook 2023.24 B

Uploaded by

Copyright:

Available Formats

1

The Business Environment Workbook Part 2 Student name:

The Micro-economic environment- Demand, Supply, Price and Market.

Two process related to demand

Compiled by Daniel Pratt

Illustration of a demand curve

Page 16 Pink booklet

Compiled by Daniel Pratt

Compiled by Daniel Pratt

To do in your group/table and compare your answers

Compiled by Daniel Pratt

Illustration of a supply curve

Compiled by Daniel Pratt

TYU 3 L makes a variety of different products, including windows.

Compiled by Daniel Pratt

• What will happen to the price when there is a surplus?

List areas you still need to work on

Compiled by Daniel Pratt

TYU 2. The correct answer is D

TYU 3. The correct answers are A and D

TYU 4 The correct answer is C

Compiled by Daniel Pratt

What role does the government have in the economy?

Read and underline key points

Compiled by Daniel Pratt

Money supply and quantitative easing

Activity 2. Think > Ink > Share

Compiled by Daniel Pratt

(b) What is the effect on the economy if there is an increase in tax?

List areas you still need to work on

Capital gains tax

Value Added (VAT)

Compiled by Daniel Pratt

Effective tax system

To do in your group/table and compare your answers

Q9. Match the type of tax with the definition stated.

List areas you still need to work on

Compiled by Daniel Pratt

Q2. SUBSTITUTE GOODS

Q7. B Value Added Tax (VAT) and D Import duties

Q10. CHARACTERISTICS OF A GOOD TAX

Q11. C A progressive tax

Page 17 Summary; Page 18 Key Terms

Compiled by Daniel Pratt

• What is meant by globalisation?

• What are the advantages and disadvantages of globalisation ?

• Developments in manufacturing techniques

• Competition also fuels globalisation.

Globalisation has advantages and disadvantages.

Disadvantages of trading internationally

Compiled by Daniel Pratt

Compiled by Daniel Pratt

Risk and uncertainties in the global market

International laws and

List areas you still need to work on

Pink Booklet. Further practice/ Self-study/Independent work

Compiled by Daniel Pratt

Compiled by Daniel Pratt

Compiled by Daniel Pratt

2. Examples of primary stakeholders

3. Examples of secondary stakeholders

4. Examples of internal stakeholders

5. Example of connected stakeholders