ACCA and IMA: Preparing Your Company for Change and Disruption

According to a new report from ACCA (Association of Chartered Certified Accountants) and IMA (Institute of Management Accountants)), companies must regularly and systematically to include emerging risks to stimulate innovation. More information about the report, "Innovation and ERM: partners in managing shock waves"

The traditional thinking about strategy has become less relevant as a disturbance wave accelerates the pace of business. The report, written by Dr. Paul L. Walker, Ph.D., CPA, highlights the main ways in which enterprise risk management (ERM) can be linked successfully for strategy and innovation, including:

• Interpretation of disturbing waves: By integrating risk detection tools, companies can anticipate and respond to disturbances waves more easily.
• Rethinking the strategy and tools: With the tools that improve understanding of the risks, companies can develop and modify the key assets to combat changes in the external environment.
• Innovate business models: In response to the risk, it is important for companies to innovate not only in their fields but also consider the innovatios business model.

In accounting and finance profession specifically, understanding the risks is a key to successfully hijack the failure of a company to success. Consequently, there is increasing pressure for accountants to develop a keen sense of business risk on your financial experience.

"Financial professionals are generally risk averse, but need to expand your comfort level to become true strategic partners," said Raef Lawson, Ph.D., CMA, CPA, Vice President of Research and Policy at the IMA. "CFOs and finance future professionals need a change of mentality of accounting and control to focus on value factors in the company."

ERM not only allows a company to innovate but can also protect the decline in innovation. Companies that are new and strategic things to create their own wave of unrest must also manage risk and uncertainty. This requires a different approach to capturing new ideas and new tools for risk.
"Innovation without knowing the risk is the main reason for failure," said Faye Chua, Managing Director of Business Insights at ACCA. "Being proactive in planning against unforeseen challenges paves the way for success in times of uncertainty."

This report is a product of the strategic alliance between ACCA and IMA, focusing on research to study the future of global accounting profession.

Cima P2 Exam Question 47

Question No 47:

A company is considering investing $680,000 in a machine to manufacture a new product. A consultant has been appointed to advise on the investment and the company is committed to paying $10,000 to the consultant in year 1, even if the project does not go ahead.

300,000 units of the new product will be produced and sold each year. Unit cost and revenue information based on this level of output is as follows.

60% of the overhead cost is variable. Of the remainder, 10% consists of allocated head office overheads.

The selling price will increase by 2% each year in line with inflation, beginning in year 2. Fixed price contracts mean that all unit costs will remain unaltered.

Taxation information:

• 100% first year allowance will be available for the purchase of the machinery.
• The taxation rate is 30% of taxable profits, payable in the year after that in which the liability arises.

For the purpose of deciding whether to proceed with the investment, what is the relevant cash flow in year 2?

A. $1,102,320
B. $1,099,320
C. $1,326,960
D. $1,288,800

Answer: A

Cima P2 Exam Question 46

Question No 46:

SQ has the opportunity to invest in project X. The net present value for project X is $12,600.  Cash inflows occur in years 1, 2 and 3. The company's cost of capital is 14%.

Calculate the annualized equivalent annuity of project X.

Give your answer to the nearest whole $.
 
Answer: $5429
 

Cima P2 Exam Question 45

Question No 45:

A large company that sells a single product has many customers. The contribution per unit of the product is $40. Data for the company as a whole are given below.
 

 

Using customer profitability analysis, what is the total annual profit for this customer?

A. $1,660,000
B. $1,780,000
C. $1,460,000
D. $2,340,000

Answer: A