ALL FIVE QUESTIONS ARE

COMPULSORY AND MUST BE

ATTEMPTED
Question 1

Organisations operate within a regulatory framework set by government which

is very broad in scope and deals with a range of specific issues.

Required:

(a) Explain four principal aims of the government regulation of business. (8

marks)

(b) Identify and explain, with the use of examples, any four key areas in which an
organisation is affected by government legislation and regulation. (12 marks)

(20 marks)

Question 2

Cash is a significant asset for many businesses and the control of cash is of
prime importance.

Required:

(a) Outline three key objectives for the control of cash in any cash system. (6
marks)

(b) Identify any two types of cash system and in each case recommend three
forms of control that should be included in a detailed control procedure. (14
marks)

(20 marks)

Question 3

A leader is someone who exercises influence over other people. There are many
different leadership models and theories which try to explain the process of
leadership.

Required:
(a) Outline three classifications of the theories, or 'schools' of leadership. (9
marks)

(b) Explain the Hersey and Blanchard situational leadership model. Your
explanation should include a description of the four leadership styles identified
within the model. (11 marks)

(20 marks)

Question 4

The effective employee needs to know exactly what their job entails and needs
to be very familiar with the work methods and practices of their organisation.

Required:

(a) Explain the purpose of a job description and outline any four sections that
might be included within it.

(10 marks)

(b) Identify and briefly explain five factors that affect the work methods and
practices employed in an organisation. (10 marks)

(20 marks)

5 Required:

(a) Explain why emergency procedures are important and outline four key areas
that you would expect to see included in an organisation's emergency
procedures. (10 marks)

(b) Explain why accident reporting procedures are important and outline three
important steps that you would expect to see included in an organisation's
accident reporting procedures. (10 marks)

(20 marks)
ANSWERS
Answer 1

(a) The principal aims of government legislation are: (4 only required):

(i) To protect business entities, e.g. by enacting laws putting limits on market
dominance by acting against monopolies and restrictive practices and by
providing financial assistance to selected ailing industries and companies.

(ii) To protect consumers through consumer protection regulations covering

packaging, labelling, food hygiene and advertising.

(iii) To protect employees with laws governing the recruitment of staff and health
and safety legislation that regulates conditions of work.

(iv) To protect third parties such as shareholders, suppliers and creditors through
Companies Act regulation on capital maintenance and insolvency.

(v) To protect the interests of society at large against excessive business

behaviour, e.g. by acting to protect the environment.

(b) Organisations are affected by legislation and regulation in the following

areas (four only required).

(a) Health and safety at work

(b) Intellectual property and copyright

(c) Data protection

(d) Discrimination and equal opportunities

(e) Preparation of accounts

Health and safety at work. As an example of such legislation, the Health and
Safety at Work Act 1974 is a major piece of legislation in the UK. It provides the
legal framework to promote, stimulate and encourage high standards. The Act
sets out the general duties that employers have towards employees and
members of the public. It also sets out the general duties that employees have to
themselves and others. Organisations are affected in a number of areas
including (but not limited to) the following areas, which are included here as
examples. Organisations are required to have health and safety procedures
including emergency procedures, evacuation procedures and accident reporting
procedures. Employers are required to look after the health and safety of their
employees by ensuring that plant and equipment are safe and that articles and
substances are handled and stored safely. There is also a requirement to provide
appropriate information, instruction, training and supervision. A safe working
environment and adequate welfare facilities must be provided.
Intellectual property and copyright. This refers to the reproduction and use of
other people's work, including photocopying and recording. Copyright law covers
books of all kinds, sound recordings, film and broadcasts, computer programs,
dramatic and musical works. Modern technology enables the copying and
distribution of software packages or DVDs to be done relatively easily and
cheaply compared with the cost of developing and producing the original.
Manufacturers are increasingly bringing prosecutions to try and reduce the
number of pirate copies of their material.

Data protection. The underlying principles behind the legislation in this area are
openness, good practice in obtaining, using and securing data and an
opportunity for redress when an individual has cause for complaint. The
legislation (for example in the UK, the 1984 and 1998 Data Protection Acts)
places obligations on those who use personal data - they must be open about the
use of data and must follow a code of good practice. The requirements will cover
obtaining, storing, disclosing and using any personal data about individuals. The
need for privacy is recognised by the requirement that all data should be held for
clearly designated purposes. Accuracy and integrity must be maintained and
data must be open to inspection. Only legitimate parties can access data, and
information must be secured against alteration, accidental loss or deliberate
damage. Data must be obtained fairly, to precise specifications and must not be
kept for longer than is required. There may also be codes of practice around how
organisations respond to requests by individuals to access data held about them.

Discrimination and equal opportunities. Equal opportunities is a term describing

the belief that there should be an equal chance for all workers to apply to be
selected for jobs, to be trained and promoted in employment and have that
employment terminated fairly. Organisations are affected in a number of areas
including (but not limited to) the following areas, which are included here as
examples. The legislation covers specific issues like discrimination on the
grounds of race, ethnic origin, gender or marital status. There is also specific
legislation around equal pay for work of equal value and also disability. The
legislation includes the administration of recruitment, selection, promotion,
training and pay policies. It also includes interpersonal behaviours that imply
racial or sexual harassment.

Preparation of accounts. This includes keeping appropriate accounting records. It

also includes preparing and circulating annual reports and accounts and the
preparation of auditing and financial statements. Accounts of companies
prepared under the Companies Acts are affected in a number of areas including
the following which are included here as examples. Limited companies are
required to publish accounts annually for distribution to shareholders. Financial
statements of companies must show a 'true and fair view'. Prescribed formats for
income statements and the balance sheet must be used. Detailed disclosures of
information are required. A company is limited in the amount of profit it can
distribute to shareholders. Various provisions have to be satisfied if a company
wishes to increase or decrease its share capital. Company law also requires that
the accounts of a limited company must be audited. This means engaging a
chartered or certified accountant to conduct an examination of the financial
records of the company to ascertain that they present a 'true and fair view' and
comply with the relevant Companies Acts.

Answre 2

(a) The control of cash is of prime importance in any business. Key objectives
for the control of cash are to ensure that:

(i) All sums are received and subsequently accounted for.

(ii) No payments are made which should not be made.

(iii) All receipts and payments are promptly and accurately recorded.

(iv) As part of working capital management an organisation does not run out of
money.

(b) There is not one 'cash system' in the same way as there is a sales cycle for
example; there are a number of different types of cash system which each have
their own considerations as to the controls necessary. Cash systems also refer to
cheque receipts and payments. Controls over cheque transactions are easier to
establish and maintain and most organisations try to conduct all of their cash
transactions by means of cheques or other forms of bank transfers. The following
are types of cash systems (two only required):

(a) Cash (both cheques and paper money) receipts by post

(b) Cash (cheques and paper money) collected by sales people.

(c) Cash sales

(d) Controls over banking

(e) Cheque payments

(f) Petty cash

The forms of control, which should be included in a detailed control procedure,

are listed below (three only required for each cash system identified):

(a) Cash received by post

(i) There should be safeguards against possible interceptions between receiving

and opening the post, e.g. a locked mailbox and restricted access to keys.

(ii) The opening of post should be supervised.

(iii) All cheques and postal orders should be restrictively crossed 'Account payee
only, not negotiable' as soon as the post is opened.

(iv) Records should be made of cheques, postal orders and cash received at the
time of opening the post. This can be in the form of a cashbook, adding machine
list, or copies of remittance advices. It provides control over the eventual sums
banked and entered into the cashbook.

(v) The cashier and sales ledger personnel should not have access to the receipts
until the record has been made.

(vi) Post should be date stamped. It provides evidence of when remittances are
received and can be checked against the date of banking. This helps to prevent
cash received one day from being banked as representing different receipts on a
later day (teeming and lading).

(vii) All monies should be banked promptly.

(viii) The loss of receipts through theft or accident must be prevented.

(b) Cash collected by sales staff

(i) Authority to collect cash should be clearly defined.

(ii) Sales staff should be required to remit cash and report sales at regular
intervals.

(iii) There should be clearly specified follow up actions if sales staff do not submit
returns as required.

(iv) Collections should be recorded when received e.g. in a cashbook or by copies

of receipts, which should be given to the sales staff.

(v) The collector's cash received should be reconciled to the eventual banking.

(vi) The sales person's own receipt books should be checked against the
cashbook entries.

(vii) If sales staff hold stocks of goods, an independent reconciliation of stock

with sales and cash received should be made.

(c) Cash sales

(i) Cash sales should be recorded when the sale is made, normally by means of a
cash till or the use of cash sale invoices.

(ii) If cash sale invoices are used they should be pre-numbered, a register should
be maintained of cash sale invoice books and copies should be retained.

(iii) Cash received should be reconciled daily with either the till roll or the invoice
totals.

(iv) Someone independent of those receiving the cash and recording the sale
should carry out this reconciliation.

(v) Daily banking should be checked against the till roll or invoice total and
differences investigated.
(vi) A responsible official should sign cancelled cash sale invoices at the time of
cancellation. All such invoices should be checked periodically for the sequential
numbering.

(d) Controls over banking

(i) Monies received should be banked daily.

(ii) Each day's receipts should be recorded promptly in the cashbook.

(iii) Sales ledger personnel should have no access to the cash or the preparation
of the paying-in slip.

(iv) Periodic comparisons should be made between the split of cash and cheques:

(i) received (and recorded in the cashbook)

(ii) banked (and recorded on paying-in slip)

(e) Cheque payments

(i) Unused cheques should be kept securely and access to them restricted.

(ii) The person who prepares cheques should have no responsibility over
purchase ledger or sales ledger.

(iii) Cheques should be signed only when evidence of a properly approved

transaction is available. Such evidence may take the form of invoices, payroll,
petty cash book etc.

(iv) Two signatories at least should be required.

(v) The signing of blank cheques should be prohibited.

(vi) Cheques should be crossed before they are signed.

(vii) Supporting documents should be cancelled as paid to prevent their use to

support further cheque payments.

(viii) Returned cheques may be obtained from the bank and a sample checked
against cashbook entries and supporting documentation.

(f) Petty cash

(i) The level and location of cash floats should be formally laid down.

(ii) There should be restricted access to the petty cash float.

(iii) Cash should be held securely in a locked drawer or cupboard and access to
keys should be restricted.

(iv) All expenditure should require a voucher signed by a responsible officer, not
the petty cashier.
(v) Vouchers should be produced before a cheque is signed for reimbursement.

(vi) Vouchers should be cancelled once reimbursement has taken place.

(vii) A maximum amount should be placed on a petty cash payment to

discourage normal purchasing procedures being by-passed.

(viii) The petty cash should be reconciled by an independent person periodically.

(ix) Rules should exist preventing the issue of IOUs for the cashing of cheques.

Answer 3

(a) There are several classifications of the theories or 'schools' of leadership,

including:

(a) Trait theories - these are based on analysing the personality characteristics or
preferences of successful leaders and assume that leaders are born, not made.
Lists of traits included physical traits, personality traits and social traits.

(b) Style theories - these are based on the view that leadership is an
interpersonal process whereby different leadership behaviours influence people
in different ways. More or less effective patterns of behaviour (or styles) can
therefore be adopted.

(c) Contingency theories - these are based on the belief that there is no 'one best
way' of leading, but that effective leaders adapt their behaviour to the specific
and changing variables in the leadership context: the nature of the task, the
personalities of team members, the organisation culture etc.

(b) Hersey and Blanchard's model of situational leadership is based on the

amount of direction (task behaviour) and the amount of support (relationship
behaviour) a leader must provide given the situation and the 'level of maturity'
of the followers. Task behaviour is the extent to which the leader provides
directions for the actions of followers, sets goals for them, and defines their roles
and how to undertake them. Relationship behaviour is the extent to which the
leader engages in two way communication with followers, listens to them and
provides support and encouragement. The Hersey and Blanchard model also
considers the 'readiness' level of people the leader is seeking to influence.
Readiness is the extent to which followers have the ability and willingness to
accomplish a specific task. This notion of 'readiness' is divided into a continuum
of four stages from low to high. The four stages are described as R1 (low), R2
and R3 (moderate) and R4 (high). The 'level of maturity' is the extent to which
the people are willing and able to take responsibility for directing their own
behaviour. People tend to have varying degrees of maturity depending on the
specific task, function or objective that a leader is attempting to accomplish. To
determine the appropriate leadership style to use in a given situation, leaders
must first determine the maturity level of their followers in relation to the
specific task that they want to accomplish through the effort of the followers. As
the level of maturity increases leaders should begin to reduce their task
behaviour and increase their relationship behaviour. As the followers begin to
move into an above average level of maturity, leaders should decrease not only
task behaviour but also relationship behaviour. From the combination of task
behaviour and relationship behaviour, four leadership styles (S) emerge: telling
(S1), selling (S2), participating (S3) and delegating (S4).

S1 - telling - emphasises high amounts of guidance (task behaviour) but limited

supportive (relationship) behaviour. This leader provides clear instructions and
specific direction. This style is most appropriate for low follower readiness (R1).

S2 - selling - emphasises high amounts of both directive (task) and relationship

behaviours. The leader encourages two-way communication and helps build
confidence and motivation in followers. The leader retains responsibility and
controls decision-making. This style is most appropriate for low to moderate
follower readiness (R2).

S3 - participating - emphasises a high amount of two-way communication and

supportive (relationship) behaviour but low amounts of guidance (task
behaviour). The leader and the followers share decision making and no longer
need or expect the relationship to be directive. This style is most appropriate for
moderate to high follower readiness (R3).

S4 - delegating - emphasises little direction or support with low levels of both

task and relationship behaviours. This style is appropriate for leaders whose
followers are ready to accomplish a particular task and are both competent and
motivated to take full responsibility. This style is most appropriate for high
follower readiness.

Hersey and Blanchard suggest that the key to using situational leadership is that
any leader behaviour may be more or less effective according to the readiness of
the person the leader is attempting to influence. The model draws attention to
the importance of developing the ability, confidence and commitment of
subordinates. The leader should help followers to develop in readiness to the
extent that they are able and willing to successfully accomplish the task. This
development should take place by adjusting leadership behaviour through the
four styles of telling, selling, participating and delegating.

This can be summed up as follows:

 Answer 4

(a) A job description specifies and describes the role and responsibilities of a
particular job. It is a statement of the tasks, responsibilities and relationships
involved in a given job. All employees should have a job description that
specifies tasks, details responsibilities, sets authority limits, distinguishes
accountability and outlines the organisational relationships that the job entails.
The following sections should be included in a job description (four only
required):

(i) The identification of the job, including the job title, the department structure
and the number of people doing the job.

(ii) The purpose of the job - identifying its objectives in relationship to the overall
objectives, e.g. to manage the purchasing section responsible for buying raw
materials.

(iii) The position in the organisation - indicating the relationships with other jobs
and the lines of responsibility. Often an organisation chart is included here.

(iv) The principal duties to be performed, with emphasis on key tasks and limits
to the jobholder's authority. A more detailed breakdown might be included which
identifies specific tasks in terms of precisely what is to be done, with some
explanation, both in terms of quantity and quality.

(v) Responsibilities - a statement outlining any responsibilities for the resources

e.g. staff and budgets.
(vi) Job requirements and physical conditions - including details of noisy, dirty,
dangerous conditions or pleasant office conditions and also hours of work,
overtime, unsocial hours.

(vii) Grade and salary range - details of the rate for the grade, incremental
scales, piecework, bonuses and commissions. Additional benefits such as
pension schemes and the provision of a company car would also be included in
this section.

(viii) Reporting structure - to whom the job holder reports and at what level, with
possible indications about future succession, prospects of promotion or transfer.

(b) The work methods and practices of your department and organisation arise
from a number of factors (five only required):

(i) The nature of the specific task: i.e. what needs to be done, in what order and
in what manner, in order for the purpose of the task to be fulfilled.

(ii) The requirements of the relevant laws (e.g. Data Protection Acts, Companies
Acts), regulations and Codes of Practice established to ensure that tasks are
completed safely, fairly and in accordance with the rights of individuals and
society.

(iii) The requirements of organisational policy, formulated to reflect the

organisation's values, culture and intentions.

(iv) The requirements of the organisation's systems, procedures and rules

developed so that standard, safe, predictable and dependable methods are used
to encourage everyone to work together towards achieving the objectives of the
organisation.

(v) Formal instructions from people in positions of authority. Where there is no

set policy, procedure or legal constraint, a manager can largely determine how
things are done.

(vi) Informal ground rules or customs, developed over time by the work group or
the organisational culture.

(vii) Methods of communication and coordination in place within the structure of

the organisation - designed to ensure that all sections of the organisation are
pursuing common objectives and that duplication of effort is avoided.

Answer 5

(a) Emergency procedures are particularly important to ensure that people are
aware of the scope and limits of their responsibility.

Health emergencies may include any form of workplace injury (e.g. fractures,
burns, eye injuries etc), electric shock, fainting or collapse, allergic reactions to
toxic substances or manifestations of illness such as heart attacks or epileptic
fits. Procedures need to be in place so that these can be dealt with as quickly
and effectively as possible. Employers also need to plan for emergency situations
such as fire and bomb alerts, chemical spillage etc. The plan should be written
down and communicated to all employees and others who may be affected by it.
Specific employees with allocated duties within the plan should be given
appropriate, regular training in the correct procedures to follow. The purpose of
emergency procedures is to ensure that everyone is clear about what to do and
where to go in the event of an emergency. The following areas should be
included in an organisation's emergency procedures (four only required):

(i) How to raise the alarm - this includes ensuring that employees are aware of
the location of fire alarms and that the alarms are regularly tested so that
employees are able to recognise the sound.

(ii) What to do - i.e. how to call the emergency services and how to respond to a
fire or evacuation alarm. This is achieved by carrying out fire and evacuation
drills throughout the year.

(iii) Where to go to reach safety - this includes ensuring that employees are
aware of fire and emergency exits, that they are clearly marked and lead as
quickly as possible to a designated safe area and are kept clear at all times. This
may also include evacuation procedures.

(iv) Names of nominated first aiders in each department or area - with full
contact details.

(v) Essential actions such as emergency factory shutdown - locations of

adequate protective equipment (such as sprinklers and fire extinguishers) should
be in hand and regularly maintained.

(b) Accident reporting procedures are important to ensure that the

circumstances and facts are recorded accurately as soon as possible after an
accident. It may be necessary to refer to accident reports at a later date if
complications emerge some time later. An accident reporting procedure would
require the person reporting the accident to do the following:

(i) Report the accident to someone in authority as soon as possible. This can be
done informally, but in addition it is usual practice to complete an accident
report form.

(ii) Record the details of the accident in an accident book.

(iii) Get signed statements from any witnesses to the accident, including names
and addresses.