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Appendix 2

C: A pension is unlikely to incentivise directors since it is payable regardless of
performance.

D: An annual bonus (for achieving a certain profit level) represents a short term
incentive rather than medium to long term.

E: Share Options which can be exercised after a number of years enable
directors to benefit directly from increases in share value.

15 B

A – The new system would not help in the physical count .e.g. it cannot unroll
curtain material, etc.

B – EPOS systems are not as expensive as they once were. RTF loses $10,000
per annum through theft but in the long term the new system might be
beneficial.

C – Just because another company already has the same system does not
mean you should implement it.

D – There might still be errors if the computerised price lists are entered
incorrectly.

16 A, B, C

A: The criteria seem to be driven by price rather than quality. The lack of
government control in Country Y should have highlighted potential problems
with Country Y.

B: There does not appear to be any full examination of foodstuffs coming into
the supermarkets.

C: The food has caused illness in H’s customers so almost certainly there has
been a lack of control over food hygiene.

D: Whilst the low prices paid to suppliers would appear to have contributed to
the current situation, they do not represent a control failure at H. The control
failure is not ensuring an ethical and good quality product could be sourced for
the price paid.

E: Whilst this may have occurred, it is a failure of controls within the supplier,
not H Co.

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