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ACCA Applied Knowledge · Business and Technology · Consequences of ineffectiveness at work

A finance department suffers from ineffective supervision: reconciliations are not reviewed, and staff are overloaded and poorly trained. Which consequence is MOST likely to affect the organisation's external stakeholders?

Errors in financial reporting that reduce the reliability of published information. Weak supervision, overload and poor training make misstatements more likely to go undetected, and external users such as investors, lenders and regulators rely on those figures, so they are the ones harmed.

  1. AErrors in financial reporting that reduce reliability of published informationCorrect
  2. BA reduction in the number of internal meetings held
  3. CLower expectations from the department's own staff

Explanation

Unreviewed work by overloaded, untrained staff raises the risk of errors and fraud going undetected. Misstated financial information affects investors, lenders and regulators who rely on it. The other options are internal and not concerned with external stakeholders.

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