In today's APC preparation segment, we will be looking at which indicators and news you need to be tracking in order to illustrate your competence. The task: PA(C) 1: Identifies and evaluates critical factors in the economic, social, legislative, regulatory and political environment that impact on business and the financial decisions of an entity describes how broad your knowledge of South Africa and the world should be.
All business decisions should be made with the best information available at that point in time. Therefore, when evaluating or preparing forecasted information or figures you should be able to assess the reasonability of these items. Based on your knowledge you should comment on:
• Growth rates (Their reasonability and sustainability)
• Inflation rates and their impact on interest rates
• Utilities and future price increases (Water and Electricity)
• The availability of raw materials and utilities needed per the project
• Salary and wage increases
• The availability and cost of skills
• Exchange rate forecasts
• Commodity prices (In particular oil and gold)
• The impact of the drought on the availability of water and food prices
• Political instability (The influence on exchange and growth rates)
• Supply and demand of items sold / produced in the relevant industry
• Relevant news such as the impact of the #feesmustfall campaign and the finance minister being accused of fraud
• Whether the product / service being sold is considered a luxury or a basic service
• Other similar and relevant data and information
Informed decisions in the business world can translate into the difference between an idea succeeding or failing. An informed decision requires that apart from the idea having adequate demand, it is also feasible at that point in time based on all the factors noted above. As a future CA (SA) you will be required to illustrate your ability to make informed decisions. These decisions will require that you conduct research in an industry that you know little about. Thus your ability to conduct research, apply logic and bringing the factors noted above into your suggested solution will ensure that your recommendation is as accurate as it could be at that point in time.
So follow the news and ensure that you understand how the supply, demand, the costing of utilities and raw material work. Ensure that you illustrate this knowledge on the day of the exam. We will be posting relevant content on our page but try to read at least one article every day as preparation for the exam. It will start your journey of life-long learning and ensure that you are able to make the informed decisions that are expected of a Chartered Accountant.
You could also add:
Social media sites such as Facebook,Twitter and LinkedIn have become such useful sources of information. Some sources are credible, others not. Learn to distinguish between credible sources and those you can discard. You can follow Atcor’s social media sites for useful daily business articles but you could also follow and “like” the following pages:
• SAICA’s page
• The Economist
• Financial Mail
• Financial Times
• Success Magazine
• Entrepreneur Magazine
• Harvard Business Review
• World Economic Forum
Reading well-written, well researched articles will also assist in improving your business writing skills.