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正确答案：
(d) (i) The main reason why it may not be possible to provide a high level of assurance is that the KPIs are not defined
precisely:
– The value of donated pharmaceutical products is compared to revenue to provide a percentage. However, it will be
difficult to accurately value the donated products – are they valued at cost, or at sales price? Are delivery costs
included in the valuation? The intrinsic value may be lower than sales value as Sci-Tech Co may decide to donate
products which are not useful or relevant to the charities they are donated to.
– The value of ‘cost of involvement with local charities’ is also not defined. If the donations are purely cash, then it
should be easy to verify donations using normal audit procedures to verify cash payments. However, the
‘involvement with local charities’ is not defined and will be difficult to quantify as a percentage of revenue. For
example, involvement may include:
? Time spent by Sci-Tech Co employees at local charity events
? Education and training provided to members of the local community in health care matters
– Number of serious accidents is also difficult to quantify as what constitutes a ‘serious’ accident is subjective. For
example, is an accident serious if it results in a hospitalisation of the employee? Or serious if it results in more than
five days absence from work while recovering?
In addition, the sufficiency of evidence available is doubtful, as such matters will not form. part of the accounting records
and thus there may be limited and possibly only unreliable sources of evidence available.
– Donated goods may not be separately recorded in inventory movement records. It may not be possible to
distinguish donated goods from sold or destroyed items.
– Unless time sheets are maintained, there is unlikely to be any detailed records of ‘involvement’ in local charities.

正确答案：
(c) Choo Wang’s remuneration package
Benefits of PRP
In general terms, performance-related pay serves to align directors’ and shareholders’ interests in that the performancerelated
element can be made to reflect those things held to be important to shareholders (such as financial targets). This, in
turn, serves to motivate directors, especially if they are directly responsible for a cost or revenue/profit budget or centre. The
possibility of additional income serves to motivate directors towards higher performance and this, in turn, can assist in
recruitment and retention. Finally, performance-related pay can increase the board’s control over strategic planning and
implementation by aligning rewards against strategic objectives.
Critical evaluation of Choo Wang’s package
Choo Wang’s package appears to have a number of advantages and shortcomings. It was strategically correct to include some
element of pay linked specifically to Southland success. This will increase Choo’s motivation to make it successful and indeed,
he has said as much – he appears to be highly motivated and aware that additional income rests upon its success. Against
these advantages, it appears that the performance-related component does not take account of, or discount in any way for,
the risk of the Southland investment. The bonus does not become payable on a sliding scale but only on a single payout basis
when the factory reaches an ‘ambitious’ level of output. Accordingly, Choo has more incentive to be accepting of risk with
decisions on the Southland investment than risk averse. This may be what was planned, but such a bias should be pointed
out. Clearly, the company should accept some risk but recklessness should be discouraged. In conclusion, Choo’s PRP
package could have been better designed, especially if the Southland investment is seen as strategically risky.

正确答案：
(ii) Tethys Ltd – Use of trading loss
– The two companies will not be in a group relief group as Saturn Ltd will not own 75% of Tethys Ltd.
– For a consortium to exist, 75% of the ordinary share capital of Tethys Ltd must be held by companies which each
hold at least 5%. Accordingly, Tethys Ltd will be a consortium company if the balance of its share capital is owned
by Clangers Ltd but not if it is owned by Edith Clanger.
– If Tethys Ltd qualifies as a consortium company: 65% of its trading losses in the period from 1 August 2008 to
31 December 2008 can be surrendered to Saturn Ltd, i.e. ￡21,667 (￡80,000 x 5/12 x 65%).
– If Tethys Ltd does not qualify as a consortium company: none of its loss can be surrendered to Saturn Ltd.
– The acquisition of 65% of Tethys Ltd is a change in ownership of the company. If there is a major change in the
nature or conduct of the trade of Tethys Ltd within three years of 1 August 2008, the loss arising prior to that date
cannot be carried forward for relief in the future.
Further information required:
– Ownership of the balance of the share capital of Tethys Ltd.