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FNSACC506 Implement And Maintain Control Procedures

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FNSACC506 Implement And Maintain Control Procedures

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Course Code: FNSACC506
University: Sydney Metro College

MyAssignmentHelp.com is not sponsored or endorsed by this college or university

Country: Australia

Question:

Answer the following questions in writing.

What does the term ‘corporate governance’ refer to
What are the most important recognised and sanctioned authoritative bodies in the Australian financial services industry
What is internal control
What is an account manager responsible for
What is a balance sheet and what is its purpose
Briefly describe the term ‘stakeholder.’
What is an effective method of internal control procedures and why
What procedure would you use when monitoring a policy
What are the guidelines used for a corporate governance strategy for accuracy
What are key performance indicatorsBriefly describe the term.
What is and audit trial for accounting purposes
What reasons are there for a company to improve its corporate governance
Discuss ethical considerations and confidentiality for management and handling of files and records.
Identify and explain the key features of financial legislation relating to taxable transactions and reporting requirements.
Explain a range of methods of work practices and routines relevant to internal control procedures.
Organisational guidelines and procedures relating to:

Corporate governance
Financial delegations and accountabilities

Key principles of internal control and auditing 

Task 2: Case Study and Practical Assessment
Student Instructions

Type all the answers in a word document if required.
You can conduct internet research to answer these questions.
Provide explanation of 2-3 lines when answering ‘Describe’ questions.
Provide detailed workings for calculations questions.
Provide answers in table format wherever possible. 

Question 1 – Internal Control Requirements
Write a report detailing, how you would implement and maintain internal control procedures. Consider using the information provide in the links below:
 Your report must include details on the following: 

Ways that you would review corporate governance requirements
Processes you would use to implement operating procedures
How you would monitor policy? This may include developing an implementation strategy that contains:

Methods used to communicate the strategy to colleagues
Methods used to train colleagues
Development of the control/operating procedures.

Please ensure you provide the full strategy including but not limited to all points listed above in a professional manner. You must ensure you check for accuracy before submission. If you research any websites of books, please make sure your reference each site accurately. 
Question 2 – BRB Pty Ltd
Read the case study provided in Appendix and answers to the questions below.
Identify the errors in the policies and procedures of BRB Pty Ltd

Analysing corporate governance requirements

Identify which are the most suitable principles of corporate governance requirements given by ASX in this given scenario, and then provide a justification for each principle you have identified in order to develop the application of corporate governance requirements, to help the company to prevent such fraud happening again.
You have identified the corporate governance requirements for BRB Pty Ltd. Before you take any action, you need to consult with the senior management and board members. You are required to do a role-play to conduct the consultation. You will be playing the role of the auditor and your assessor will be one of the board members.

You are required to:

Explain the errors that you have identified
Explain the corporate governance principles that should be applied with reasonable justifications

While consulting with the stakeholders you should:

Effectively engage others in verbal exchanges
Use active listening and questioning
Clarify and convey information
Act in a professional manner

Senior management wants to know the deadline. Complete the Gantt chart provided in Appendix for implementation of the corporate governance requirements that you have identified in section (a).

Write each milestone task beginning with an action verb, e.g. prepare, establish, write etc. Use the shading function under the HOME tab to shade the appropriate fields.

Internal controls analysis

Review the financial delegations and accountabilities for BRB Pty Ltd. Is the existing system strong enough to maintain internal control? Why or why not?
Develop a procedure to modify the existing system of financial delegations and accountabilities. Your plan should ensure consistency and compliance with internal control procedure.
How would you implement the suggested changes? Your response should include actions to be taken, person responsible and timeframe.

Answer:

This refers to the system of rules, practices, and processes that are geared controlling and directing a firm. Corporate Governance primarily involves balancing the interests of different stakeholders of an organization, for instance, shareholders, debt owners, customers, supplier, and public among others. Different stakeholders have different interests which differ in intensity and urgency, thus corporate governance tend to balance such interest to those can be affected by an action taken by the organization. It involves setting have rules, controls, policies, and resolutions that that dictates the behavior of an organization.

Most important recognized and sanctioned authoritative bodies in the Australian financial service industry.

Australian financial regulatory framework consists of three agencies each with specific functional responsibilities. They are
The Australian Prudential Regulation Authority (APRA) which is responsible for deposit taking organizations, friendly societies life, and general insurance.
The Australian Securities and Investment Commission whose function is to enforce and administers roles and regulations relating to financial markets, financial products, and financial sector intermediaries
The Reserve Bank of Australia (RBA), whose functions relates to Monetary Policies and stabilization of the financial system. It has to deal with threats to the financial stability that could interfere with the confidence consumers and investors.

Internal Control

Refers to procedures and policies put into place to ensure there are Solid accounting system and continued reliability. Internal control is positioned to ensure the fraud are not committed and to direct any error before it causes an error.

Responsibilities of an Accounts Manager

Although the duties of the Accounts Manager differ from an organization to another, the common responsibilities include the following:
 To foster clients relationship through working with sales and marketing team to prepare presentations and sales pitches, design marketing strategies and mean of advertising, receive clients information, manage them, prepare clients report and communicate the clients’ agendas to other members of staff.
Monitoring budgets, spending, and revenue and also explaining the cost of managing clients
Identifying new potential customers and business opportunities in the market as well as coming up with the strategies to provide goods and services.

Balance Sheet and its Purpose

Balance is a snapshot of organization’s accounts at a specific date. It consists of assets, liabilities and shareholders’ equity. It portrays the financial position of an organization at a particular period.
What the purpose of the balance sheet also called the statement of financial position is revealing the financial status of an organization at a specific point in time. The statement shows the assets owned by the business and who finances the assets, that is shareholders or debt holders.
The current assets are compared with current liabilities to evaluate whether the firm is capable of meeting short-term obligations.
The long term debts are compared with shareholders’ equity to compute the gearing ratios for creditors to ascertain whether the further extension of credit might result in bad debts.

Stakeholder

A stakeholder refers to a person or an organization that has an interest or a concern in an organization. Different stakeholders are affected by the organization’s policies, objectives, and actions. Examples of stakeholders in an organization include the following; shareholders, creditors, management, employees, financial institutions, customers, etc. The organization does not give the same treatment to all stakeholders, but it entails to provide fair trading practices. Different stakeholders have a different interest in an organization.

The practical method of Internal Control Procedures

Duty separation- To make employees impossible to commit fraudulent acts, the organization should separate the responsibilities of auditing, bookkeeping, reporting, depositing and any other.
This is because each a transaction is passed through different independent before thus in case fraud is committed, it can be recognized in the course of the process.

Policy monitoring procedure

Identification of baseline policy issues by conducting situation analysis.
Engagement of stakeholders in developing a common policy agenda.
Develop policy.
Official government endorsement of the policy.
Implementation of policy.
Evaluation of policy implementation.

Corporate Governance Strategy guidelines

Strengthening management and supervisory functions of directors- Should discuss middle and long term strategies of the organization and draft relevant plan.
Emphasis on the characteristics of the directors but not their number
Increasing the objectivity and systematization of personal attitude towards the management position
Developing an environment that will facilitate the strengthening of CEOs leadership

Key performance indicators

These are measurable values that show how effectively the firm is achieving its key objectives. They include.

Profit
Cost of operations.
Comparison between projected and actual revenue
Customer satisfaction and retention
Sale volume

Audit trail for accounting purpose

Refers to all records that document every step made in business transactions. It is used to detect and analyze any error or fraud done in an organization book of records.

Reasons for the improvement of corporate governance

To increase transparency, this is facilitated by having the financial statements audited by the third party
To avoid market shock because of the insolvency of companies
Decrease the conflict of interest between various stakeholders of an organization.
Shareholders activism – Upon being transparent, this will motivate existing and potential investors.

Considerations and confidentiality for management and keeping of records and files

Controlled Access – The records must only be accessed authorized persons.
Security – Confidential and sensitive record should be stored safely.
Quality records – Calls for the preservation of quality records.
Responsibility and accountability – The responsible person of the records should be clearly stated.

Keys features of financial legislation relating to taxable transactions

It involves in those activities that have resulted in a gain in an organization. There must be a gain for taxation to be done.
Sale tax is computed for every transaction to increase the amount of tax.
Involves set guidelines known and understood across the jurisdiction.

 Methods of work practices and routines relevant to internal control

Adequate segregation of duties that is, separating the function of bookkeeping, authorization, and custody.
Proper authorization of transactions, and activities with defined policies.
Adequate documentation of accounting records, and recording of business transaction and events.
Physical control over assets and records to prevent physical access of assets, and also prevent accessing the system.
Independent check of performance by a third party, who didn’t take part in preparing record or doing the transaction.

Guidelines and procedures of 

Corporate governance
Strengthening management and supervisory functions of directors- Should discuss middle and long term strategies of the organization and draft relevant plan.
Emphasis on the characteristics of the directors but not their number
Increasing the objectivity and systematization of personal attitude towards the management position
Developing an environment that will facilitate the strengthening of CEOs leadership
Financial delegation and accountabilities
Guidelines

Purpose.
Scope
Policy statement.

Procedures

Maintaining appropriate records.
Approvals and delegations.
Preventing frauds and financial management.
Providing a documented procedure.

Principles of internal control and auditing

Responsibilities- an Entity must clearly outline responsibilities and who is responsible for each to ensure individuals understand their role in maintaining internal control.
Record keeping – to have an accurate history of all transactions
Insurance and bonding of employees against assets in case stolen
Assets records and custody to know who exactly are responsible for a given asset of the organization.
Technological controls such as electronic keypads, burglar alarms, etc.
Independent review of accounts by a person who has taken part in preparing them
How to implement and control internal control procedures, The process starts with reviewing corporate governance in the following way ;Determining whether the governance system adds any value or burden to the organization; Addressing specific issue of the current governance eg the composition of board committee; Alignment of existing governance and the new strategy; Documentation review that is adoption of leading practices and policies; Compliance with national and international standards.
Next step is to implement operating procedure which involves: Gathering the team which will assist in the collection of data, the definition of scope and the process to make it a single process to avoid confusion due to the interlinking of processes, documenting the procedure through the use of the checklist, flowchart diagram, process diagram, etc. Finally listing important information which is not captured in the documentation for instance methodology of carrying on a process, necessary tool, health and safety warnings among others.
Finally, it involves the evaluation and monitoring of policy. The is strategy implemented after ensuring that you have finalized the strategic plan, aligned your budget and annual goals,  produced various versions of program for each group, established your scorecard for tracking and monitoring the procedure, established the performance management and reward management systems, rolled out the plan to the entire organization, build out departmental plans upon entity’s plan, set out strategic monthly meeting to report to monitor progress, set up annual strategic review date.
The process involves communication with employees concerning the plan and progress of the procedure through: Sending weekly correspondences to all employees in the organization, creating a conducive environment for employees to air out what is working, holding town hall meeting with all employees from various branches, putting yearly conference for Senior officials and answering any employee email within 24 hours.
Also involves training the employees through off the job training, on the job training, vestibular training among other methods.
After the development of Operating procedure is complete, the employees are trained of the new control procedure, verify the procedure through regular monitoring, Evaluate it periodically to ensure it remains current and retire the control/operating procedure as the need for it change.
Errors in policies and procedures in BRB

They lacked to scrutiny the documents well that is why they end up employing wrong personnel.
Giving him a lot of responsibilities to undertake that is lack of proper segregation of job.
Lack of regular independent check-up of records and books of accounts.
Lack of proper authorization and approval of transactions and activities.  The fraud committed could have been realized early.

Suitable principles
There is a need to outline to the solid foundation of management and oversight to track any fraud committed.
This entity should act ethically to give all applicants the chance to compete fairly by not basing on academics only. BRB looked mainly on academic qualifications.
Remunerate fairly and in a responsible manner. BRB took advantage of paying a lesser salary to “highly qualified personnel” little did they know it would be better to spend more to acquire a genuinely qualified employee.
Recognize and manage risk. BRB should have identified the likelihood of risk emanating from new employees.
Make timely and balanced disclosures.  If this principle was put into practice, a lot of crime could not without being noticed.
Grant Chart

Milestones

Week ending

 

30/03

06/04

13/04

20/04

27/04

04/05

11/05

17/05

24/05

Lay the solid foundation of management and oversight

X

X

X

X

X

X

X

X

X

Remunerate fairly and responsibly.

 

 

 

X

X

X

X

X

X

Recognize and manage risk

 

 

X

X

X

X

X

X

X

Make timely and balanced disclosure.

 

 

 

 

X

X

X

X

X

Act ethically.

 

X

X

X

X

X

X

X

X

Internal Control analysis
Financial delegation and accountabilities of BRB
The internal control is not strong enough as they couldn’t track the fraud committed in time and this led to an adverse effect on the financial status of the company.
Procedure to modify existing financial delegation and accountability system
Identification of baseline policy issues by conducting situation analysis.

Engagement of stakeholders in developing a common policy agenda.
Develop policy.
Official government endorsement of the policy.
Implementation of policy.
Evaluation of policy implementation.

Implementation of change
Implementation of change will involve; Gathering the team which will assist in the collection of data about areas prone to frauds, and definition of the scope of the process to make it a single process. I will Document the procedure through the use of a checklist, flowchart diagram, process diagram among others. Finally, I list important information which is not captured in the documentation for example; methodology of carrying on a process, the necessary tool, health and safety warnings among others. 
References
M Feng, C Li, S McVay, (2009) Journal of Accounting and Economics, Internal control and management guidance
AM Costello… (2011)- Journal of accounting …, the impact of financial reporting quality on debt contracting: Evidence from internal control weakness reports.

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