(c) Advise Alan on the proposed disposal of the shares in Mobile Ltd. Your answer should include calculations

of the potential capital gain, and explain any options available to Alan to reduce this tax liability. (7 marks)

(c) Discuss the ethical responsibility of the company accountant in ensuring that manipulation of the statement

of cash flows, such as that suggested by the directors, does not occur. (5 marks)

Note: requirements (b) and (c) include 2 professional marks in total for the quality of the discussion.

(iii) How items not dealt with by an IFRS for SMEs should be treated. (5 marks)

(c) mandatory continuing professional development (CPD) requirements. (5 marks)

(b) Briefly describe the way in which a ‘person specification’ differs from a ‘job description’. (3 marks)

(ii) analytical procedures, (6 marks)

might appropriately be used in the due diligence review of MCM.

3 The Global Hotel Group (GHG) operates hotels in most of the developed countries throughout the world. The directors

of GHG are committed to a policy of achieving ‘growth’ in terms of geographical coverage and are now considering

building and operating another hotel in Tomorrowland. Tomorrowland is a developing country which is situated 3,000

kilometres from the country in which GHG’s nearest hotel is located.

The managing director of GHG recently attended a seminar on ‘the use of strategic and economic information in

planning organisational performance’.

He has called a board meeting to discuss the strategic and economic factors which should be considered before a

decision is made to build the hotel in Tomorrowland.

Required:

(a) Discuss the strategic and economic factors which should be considered before a decision is made to build

the hotel. (14 marks)

2 David Gould set up his accounting firm, providing accounting services to small businesses, in 2001. Within three

years his fee income was in excess of ￡100K a year and he had nearly 100 clients most of whom had been gained

through word of mouth. David recognised that these small or micro businesses, typically employing ten or fewer

people, were receiving less than satisfactory service from their current accountants. These accounting firms typically

had between five and ten partners and operated regionally and not nationally. Evidence of poor service included

limited access to their particular accountant, poor response time to clients’ enquiries and failure to identify

opportunities to save clients money. In addition bad advice, lack of interest in business development opportunities for

the client and poor internal communication between the partners and their staff contributed to client dissatisfaction.

David has deliberately kept the costs of the business down by employing three part-time accountants and relying on

his wife to run the office.

David had recently met Ian King who ran a similar sized accounting firm. The personal chemistry between the two

and complementary skills led to a partnership being proposed. Gould and King Associates, subject to securing the

necessary funding, is to be launched in September 2006. David is to focus on the business development side of the

partnership and Ian on the core services provided. Indicative of their creative thinking is David’s conviction that

accounting services are promoted very inadequately with little attempt to communicate with clients using the Internet.

He is also convinced that there are real opportunities for the partnership to move into new areas such as providing

accountancy services for property developers, both at home and abroad. Ian feels that the partnership should set up

its own subsidiary in India, enjoying the benefits of much cheaper accountancy staff and avoiding the costs and

complications of outsourcing their core accounting services. Ian sees fee income growing to ￡2 million in five years’

time.

David has been asked by his bank to provide it with a business plan setting out how the partnership intends to grow

and develop.

Required:

(a) Write a short report for David giving the key features that you consider to be important and that you would

expect to see in the business plan for the Gould and King partnership that David has to present to his bank.

(12 marks)

(b) Draft a report suitable for inclusion in a Management Commentary for Jones and Cousin which deals with:

(i) the key risks and relationships of the business (9 marks)