(b) Identify and explain THREE approaches that the directors of Moffat Ltd might apply in assessing theQUALITATIVE benefits of the proposed investment in a new IT system. (6 marks)

正确答案：
(b) One approach that the directors of Moffat Ltd could adopt would be to ignore the qualitative benefits that may arise on the
basis that there is too much subjectivity involved in their assessment. The problem that this causes is that the investment will
probably look unattractive since all costs will be included in the evaluation whereas significant benefits and savings will have
been ignored. Hence such an approach is lacking in substance and is not recommended.
An alternative approach would involve attempting to attribute values to each of the identified benefits that are qualitative in
nature. Such an approach will necessitate the use of management estimates in order to derive the cash flows to be
incorporated in a cost benefit analysis. The problems inherent in this approach include gaining consensus among interested
parties regarding the footing of the assumptions from which estimated cash flows have been derived. Furthermore, if the
proposed investment does take place then it may well be impossible to prove that the claimed benefits of the new system
have actually been realised.
Perhaps the preferred approach is to acknowledge the existence of qualitative benefits and attempt to assess them in a
reasonable manner acceptable to all parties including the company’s bank. The financial evaluation would then not only
incorporate ‘hard’ facts relating to costs and benefits that are quantitative in nature, but also would include details of
qualitative benefits which management consider exist but have not attempted to assess in financial terms. Such benefits might
include, for example, the average time saved by location managers in analysing information during each operating period.
Alternatively the management of Moffat Ltd could attempt to express qualitative benefits in specific terms linked to a hierarchy
of organisational requirements. For example, qualitative benefits could be categorised as being:
(1) Essential to the business
(2) Very useful attributes
(3) Desirable, but not essential
(4) Possible, if funding is available
(5) Doubtful and difficult to justify.