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ACCOUNTANT IN BUSINESS
BPP Learning Media is the sole ACCA Platinum Approved Learning Partner –
content for the FIA and ACCA qualifications. In this, the only FAB/F1 study text to
be reviewed by the examiner:
 We highlight the most important elements in the syllabus and the key skills
you will need
 We signpost how each chapter links to the syllabus and the study guide
 We provide lots of exam focus points demonstrating what the examiner will
want you to do
 We emphasise key points in regular fast forward summaries
 We test your knowledge of what you’ve studied in quick quizzes
 We examine your understanding in our exam question bank

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organisations that do. If they act illegally and unethically in
one area, can you really trust them?
CONTENTS

iii
Contents
Page
Introduction
Helping you to pass – the ONLY FAB/F1 study text reviewed by the examiner! v
Chapter features vi
Studying FAB/F1 vii
The Computer Based Examination xxiii
Tackling Multiple Choice Questions xxiv
Part A The business organisation, its stakeholders and the external environment
1 Business organisations and their stakeholders 3
2 The business environment 17
3 The macro-economic environment 55
4 Micro economic factors 83
Part B Business organisation structure, functions and governance
5 Business organisation, structure and strategy 119
6 Organisational culture and committees 141
7 Corporate governance and social responsibility 173
Part C Accounting and reporting systems, controls and compliance
8 The role of accounting 195
9 Control, security and audit 231
10 Identifying and preventing fraud 257
Part D Leading and managing individuals and teams
11 Leading and managing people 283
12 Recruitment and selection 309
13 Diversity and equal opportunities 333


v
Helping you to pass – the ONLY FAB/F1study text reviewed by the
examiner!
BPP Learning Media – the sole Platinum Approved Learning Partner -
content
As ACCA’s sole Platinum Approved Learning Partner – content, BPP Learning Media gives you the
unique opportunity to use examiner-reviewed study materials for exams from February 2013 to January
2014. By incorporating the examiner’s comments and suggestions regarding the depth and breadth of
syllabus coverage, the BPP Learning Media Interactive Text provides excellent, ACCA-approved support
for your studies.
The PER alert!
To become a Certified Accounting Technician or qualify as an ACCA member, you not only have to pass
all your exams but also fulfil a practical experience requirement (PER).To help you to recognise areas of
the syllabus that you might be able to apply in the workplace to achieve different performance
objectives, we have introduced the ‘PER alert’ feature. You will find this feature throughout the
Interactive Text to remind you that what you are learning in order to pass your FIA and ACCA exams is
equally useful to the fulfilment of the PER requirement.
Tackling studying
Studying can be a daunting prospect, particularly when you have lots of other commitments. The
different features of the Text, the purposes of which are explained fully on the Chapter features page,
will help you whilst studying and improve your chances of exam success.
Developing exam awareness
Our Texts are completely focused on helping you pass your exam.
Our advice on Studying FAB/F1 outlines the content of the paper, the recommended approach to
studying and any brought forward knowledge you are expected to have.
Exam focus points are included within the chapters to highlight when and how specific topics might be
examined.
Using the Syllabus and Study Guide
You can find the Syllabus and Study Guide on page viii of this Interactive Text.


Key Term

Definitions of important concepts that can often earn you
easy marks in exams.

Exam Focus
Point

Tell you how specific topics may be examined.

Formula

Formulae which have to be learnt.

PER Alert

This feature gives you a useful indication of syllabus areas
that closely relate to performance objectives in your
Practical Experience Requirement (PER).

Question

Gives you essential practice of techniques covered in the
chapter.
Chapter Roundup
A full list of the Fast Forwards included in the chapter,
providing an easy source of review.
Quick Quiz
A quick test of your knowledge of the main topics in the

Remember this is a practical course.
(a) Try to relate the material to your experience in the workplace or any other work experience you
may have had.
(b) Try to make as many links as you can to other papers at the Introductory and Intermediate levels.

What FAB/F1 is about
The overall aim of the Accountant in Business syllabus is to introduce accountancy firmly in its context
as a central business function. This encompasses:
 Business organisation, stakeholders and the business environment
 Business structure, functions and governance, including social responsibility
 Accounting and its relationship with other business functions
 Audit and internal control
 People management issues
 Effectiveness and communications
 Professional ethics in the business environment
For practice and revision use BPP Learning Media’s Practice and Revision Kit, iPass and Passcards.
To provide the knowledge and practice to help you succeed in the examination for Paper FAB/F1
Accountant in Business.
FAB/F1 ACCOUNTANT IN BUSINESS

viii

Brought forward knowledge
There is no assumed brought forward knowledge for this paper.
Approach to examining the syllabus
Paper FAB/F1 is a two-hour paper. It can be taken as a written paper or a computer based examination.
The questions in the computer based examination are objective test questions – multiple choice, number
entry and multiple response. (See page xxiii for frequently asked questions about computer based
examinations.)
The written examination is structured as follows:

the external environment.
B Understand business organisation structure, functions and the role of corporate governance.
C Recognise the function of accountancy and audit in communicating, reporting and assuring
financial information and in effective financial control and compliance.
D Recognise the principles of authority and leadership and how teams and individuals are recruited,
managed, motivated and developed.
E Understand the importance of personal effectiveness as the basis for effective team and
organisational behaviour.
F Recognise that all aspects of business and finance should be conducted in a manner which
complies with and is in the spirit of accepting professional ethics and professional values.
INTRODUCTION

ix
RELATIONAL DIAGRAM OF MAIN CAPABILITIES
The business organisation, its stakeholders and the external environment (A)
Business organisation structure,
functions and governance (B)
Accounting and reporting
systems, controls and compliance (C)
Personal effectiveness
and communication (E)
Leading and
managing
individuals

7. Technological factors
8. Environmental factors
9. Competitive factorsB
Business organisational structure, functions and governance
1. The formal and informal business organisation
2. Business organisational structure and design
3. Organisational culture in business5. Financial systems, procedures and related IT applications FAB/F1 ACCOUNTANT IN BUSINESS

x6. Internal controls, authorisation security of data and compliance
within business
7. Fraud and fraudulent behaviour and their prevention in business,
including money launderingD
Leading and managing individuals and teams
1. Leadership, management and supervision
2. Recruitment and selection of employees

4. Sources of conflicts and techniques for conflict resolution and
referral 5. Communicating in business

F
Professional ethics in accounting and business 1. Fundamental principles of ethical behaviour 2. The role of regulatory and professional bodies in promoting
ethical and professional standards in the accountancy profession 3. Corporate codes of ethics 4. Ethical conflicts and dilemmas APPROACH TO EXAMINING THE SYLLABUS
The syllabus is assessed by a two hour paper-based or computer-based examination. Questions will
assess all parts of the syllabus and will test knowledge and some comprehension or application of this
knowledge. The examination will consist of 50 two mark questions.
INTRODUCTION

k

(e) Identify the different types of business organisations
k

(i) Commercial
(ii) Not-for-profit
(iii) Public sector
(iv) Non-governmental organisations
(v) Co-operatives

2.
Stakeholders in business organisations
(a) Define stakeholders and explain the agency relationship in
business and how it may vary in different types of business
organisation.
k

(b) Define internal, connected and external stakeholders and explain
their impact on the organisation.
k

(c) Identify the main stakeholder groups and the objectives of each
group.
k

(d) Explain how the different stakeholder groups interact and how

k

(f) Recognise the responsibility of the individual and organisation for
compliance with laws on data protection, security and health and
safety.
k (g) Outline principles of consumer protection such as sale of goods
and simple contract.
k
FAB/F1 ACCOUNTANT IN BUSINESS

xiiStudy guide
Intellectual
level

4.
Macro-economic factors
(a) Define macro-economic policy.
k

(b) Explain the main determinants of the level of business activity in
the economy and how variations in the level of business activity


(b) Explain elasticity of demand and the impact of substitute and
complementary goods.
k

(c) Explain the economic behaviour of costs in the short and long
term.
k

(d) Define perfect, imperfect and monopolistic markets.
k
6.
Social and demographic factors
(a) Explain the medium and long-term effects of social and
demographic trends on business outcomes and the economy.
k

(b) Describe the impact of changes in social structure, values,
attitudes and tastes on the organisation.
k

(c) Identify and explain the measures that governments may take in
response to the medium and long-term impact of demographic
change.
k
7.
Technological factors

k

(b) Describe ways in which businesses can operate more efficiently
and effectively to limit damage to the environment.
k

(c) Identify the benefits of economic sustainability to a range of
stakeholders.
k
9.
Competitive factors
(a) Identify a business’s strengths, weaknesses opportunities and
threats (SWOT) in a market and the main sources of competitive
advantage.
k

(b) Describe the activities of an organisation that affect its
competitiveness.
k

(i) purchasing
(ii) production
(iii) marketing
(iv) service (c) Explain the factors or forces that influence the level of


(b) Explain basic organisational structure concepts:
k

(i) separation of direction and management
(ii) span of control and scalar chain
(iii) tall and flat organisations
(c) Explain the characteristics of the strategic, tactical and
operational levels in the organisation in the context of the
Anthony hierarchy.
k (d) Explain centralisation and decentralisation and list their
advantages and disadvantages.
k

FAB/F1 ACCOUNTANT IN BUSINESS

xivStudy guide
Intellectual
level

(b) Describe the factors that shape the culture of the organisation.
k

(c) Explain the contribution made by writers on culture:
k

(i) Schein – determinants of organisational culture
(ii) Handy – four cultural stereotypes
(iii) Hofstede – international perspectives on culture 4.
Committees in business organisations
(a) Explain the purposes of committees.
k

(b) Describe the types of committee used by business
organisations.
k

(c) List the advantages and disadvantages of committees.
k

(d) Explain the roles of the Chair and Secretary of a committee.
k
5.


INTRODUCTION

xv

Study guide
Intellectual
level (e) Explain how organisations take account of their social
responsibility objectives through analysis of the needs of
internal, connected and external stakeholders.
k (f) Identify the social and environmental responsibilities of business
organisations to internal, connected and external stakeholders.
k

C
Accounting and reporting systems, controls and compliance 1.
The relationship between accounting and other business functions
(a) Explain the relationship between accounting and other key

k (i) recording financial information
(ii) codifying and processing financial information
(iii) preparing financial statements (c) Identify and describe the main management accounting and
performance management functions in business:
k (i) recording and analysing costs and revenues
(ii) providing management accounting information for decision-
making
(iii) planning and preparing budgets and exercising budgetary
control (d) Identify and describe the main finance and treasury functions.
k

(i) calculating and mitigating business tax liabilities
(ii) evaluating and obtaining finance
(iii) managing working capital
(iv) treasury and risk management

k (b) Explain the broad consequences of failing to comply with the legal
requirements for maintaining and filing accounting records.
k (c) Explain how the international accountancy profession regulates
itself through the establishment of reporting standard and their
monitoring.
k

4.
The sources and purpose of internal and external financial
information provided by business
(a) Explain the various business purposes for which the following
financial information is required:
k (i) The income statement
(ii) The statement of cash flows
(iii) The statement of financial position (b) Describe the main purposes of the following types of


(d) Identify weaknesses, potential for error and inefficiencies in
accounting systems.
s (e) Recommend improvements to accounting systems to prevent
error and fraud and to improve overall efficiency.
s (f) Explain why appropriate controls are necessary in relation to
business and IT systems and procedures.
s

INTRODUCTION

xvii

Study guide
Intellectual
level (g) Identify business uses of computers and IT software
applications.
s (i) Spreadsheet applications

k (e) Identify and describe the types of information technology and
information systems used by the business organisation for
internal control.
s (f) Identify and describe features for protecting the security of IT
systems and software within business.
s (g) Describe general and application systems controls in business.
k
7.
Fraud and fraudulent behaviour and their prevention in business
(a) Explain the circumstances under which fraud is likely to arise.
k

(b) Identify different types of fraud in the organisation.
k

(c) Explain the implications of fraud for the organisation.
k


distinction between these terms.
k

FAB/F1 ACCOUNTANT IN BUSINESS

xviiiStudy guide
Intellectual
level (b) Explain the nature of management:
k

(i) scientific/classical theories of management Fayol, Taylor
(ii) the human relations school - Mayo
(iii) the functions of a manager – Mintzberg Drucker (c) Explain the areas of managerial authority and responsibility.
k

(d) Explain the situational, functional and contingency approaches to
leadership with references to the theories of Adair, Fiedler,
Bennis, Kotter and Heifetz.
k
k (f) Explain the purposes of a diversity policy within the human
resources plan.
k (g) Explain the purpose and benefits of an equal opportunities policy
within human resource planning.
k

(h) Explain the practical steps that an organisation may take to
ensure the effectiveness of its diversity and equal opportunities
policy.
k

3.
Individual and group behaviour in business organisations
(a) Describe the main characteristics of individual and group
behaviour.
k (b) Outline the contributions of individuals and teams to
organisational success.
k
(d) List the characteristics of effective and ineffective teams.
k

(e) Describe tools and techniques that can be used to build the
team and improve team effectiveness.
k

5.
Motivating individuals and groups
(a) Define motivation and explain its importance to the organisation,
teams and individuals.
k (b) Explain content and process theories of motivation: Maslow,
Herzberg, McGregor, and Vroom.
k

(c) Explain and identify types of intrinsic and extrinsic reward.
k

(d) Explain how reward systems can be designed and implemented
to motive teams and individuals.
k


k

7.
Review and appraisal of individual performance
(a) Explain the importance of performance assessment.
k

(b) Explain how organisation assess the performance of human
resources.
k (c) Define performance appraisal and describe its purposes.
k

(d) Describe the performance appraisal process.
k

(e) Explain the benefits of effective appraisal.
k

(f) Identify the barriers to effective appraisal and how these may be
overcome.
k
FAB/F1 ACCOUNTANT IN BUSINESS

xx

s

2.
Consequences of ineffectiveness at work
(a) Indentify the main ways in which people and terms can be
ineffective at work.
s

(b) Explain how individual or team ineffectiveness can affect
organisations performance.
k
3.
Competence frameworks and personal development
(a) Describe the features of a ‘competence framework’.
s

(b) Explain how a competence framework underpins professional
development needs.
s (c) Explain how personal and continuous professional development
can increase personal effectiveness at work.
s

Communicating in business
(a) Define communications.
k

(b) Identify methods of communication used in the organisation and
how they are used.
k

INTRODUCTION

xxi

Study guide
Intellectual
level (c) Explain how the type of information differs and the purposes for
which it is applied at different levels of the organisation:
strategic, tactical and operational.
k (d) List the attributes of good quality information.
k

(e) Explain a simple communication model: sender, message,


(a) Define business ethics and explain the importance of ethics to
the organisation and to the individual.
k (b) Describe and demonstrate the following principles from the
IESBA (IFAC) code of ethics, using examples.
k

(i) Integrity
(ii) Objectivity
(iii) Professional competence
(iv) Confidentiality
(v) Professional behaviour
(c) Describe organisational values which promote ethical behaviour
using examples.
k (i) Openness
(ii) Trust
(iii) Honesty
(iv) Respect
(v) Empowerment
(vi) Accountability


level (d) Explain the role of the accountant in promoting ethical behaviour.
k

(e) Recognise when and to whom illegal, or unethical conduct by
anyone within or connected to the organisation should be
reported.
k

3.
Corporate codes of ethics
(a) Define corporate codes of ethics.
k

(b) Describe the typical contents of a corporate code of ethics.
k

(c) Explain the benefits of a corporate code of ethics to the
organisation and its employees.
k

4.
Ethical conflicts and dilemmas

Candidates are provided with a Provisional Result Notification showing their results before leaving
the examination room

The CBE Licensed Centre uploads the results to the ACCA (as proof of the candidate's
performance) within 72 hours
 Candidates can check their exam status on the ACCA website by logging into myACCA
Benefits

Flexibility as a CBE can be sat at any time

Resits can also be taken at any time and there is no restriction on the number of times a
candidate can sit a CBE

Instant feedback as the computer displays the results at the end of the CBE

Results are notified to ACCA within 72 hours
CBE question types

Multiple choice – choose one answer from four options

Multiple response – select more than one response by clicking the appropriate tick boxes

Multiple response matching – select a response to a number of related statements by choosing
one option from a number of drop down menus

Number entry – key in a numerical response to a question

The January 2012 issue of ACCA Student Accountant magazine contains an article on CBEs. Ensure
that you are familiar with this article.

You may find that none of the options matches your answer.
 Re-read the question to ensure that you understand it and are answering the
requirement
 Eliminate any obviously wrong answers
 Consider which of the remaining answers is the most likely to be correct and
select the option
Step 5
If you are still unsure make a note and continue to the next question
Step 6
Revisit unanswered questions. When you come back to a question after a break you
often find you are able to answer it correctly straight away. If you are still unsure have
a guess. You are not penalised for incorrect answers, so never leave a question
unanswered!
After extensive practice and revision of MCQs, you may find that you recognise a question when you sit
the exam. Be aware that the detail and/or requirement may be different. If the question seems familiar
read the requirement and options carefully – do not assume that it is identical.
The January 2012 issue of ACCA Student Accountant magazine contains an article on how to answer
MCQs. Ensure that you are familiar with this article.
http://www.accaglobal.com/content/dam/acca/global/PDF-students/2012s/sa_jan12_mcq.pdf