Delivery in day(s): 4
FN505 Internal Control Procedures in Business
Here students will find important information regarding their assignments.
This assignment has 3 tasks in total. Those are:
Task 1 (Questioning)
This task has five parts. In this task, you need to answer a series of questions that will give the theoretical knowledge to apply and maintain internal control processes in businesses.
1.1 Discuss ethical considerations and confidentiality that applies to management in the handling of files and records.
1.2 Outline at least six cash handling procedures and/or principles that an organization should incorporate as part of the process of maintaining internal control to prevent fraudulent activity.
Using the Australian Taxation Office (ATO) website, (www.ato.gov.au), answer the following questions regarding taxable income and deductions.
2.1 What is assessable income?
2.2 What are allowable deductions?
2.3 What needs to be reported in an annual company income tax return?
2.4 What needs to be reported in a business activity statement (BAS)?
2.5 Find out the due dates for lodging BASs quarterly.
3.1 What is internal control?
3.2 Explain the following methods of work practices and routines relevant to internal control procedures.
a. Establishing and implementing a control environment
b. Initiate control activities
c. Systematic approaches to communication monitoring
3.3 Identify and explain at least three key principles of auditing.
4.1 What is corporate governance?
4.2 Why would a company have policies and procedures that would institute and recommend corporate governance?
4.3 The Australian Stock Exchange has eight principles that promote good corporate governance.
Research, identify and explain these principles. Consider how companies could set policies and procedures aligned with these principles.
5.1 What is segregation of duties? Provide at least three examples of when duties should be segregated.
5.2 What authorities and recognized bodies exist to provide clarifications on the application of corporate governance requirements?
5.3 If you have a complex enquiry about your tax affairs, what are some ways you can access information from the ATO?
5.4 As part of your internal control procedure, it is important to cross check the authenticity of a vendor or supplier.
How can you ensure an ABN provided by the vendor or supplier is valid?
Task 2 (Scenario Analysis and Research)
In this task, you will be provided a case study where you will have to use the knowledge and skills you gained in Task 1 to respond to a case where procedures of internal control were not in place and have resulted in a range of corporate governance issues. You will need to identify the issues and provide solutions to resolve the problems and apply counteractive measures. In 2 replicated workplace scenarios you will require justifying your findings and proposed solutions to senior management.
Note:We provide BRB Pty Ltd case study for reference purpose only. You will find the actual case study in your assignments.
1.1Identify the errors in the policies and procedures of BRB Pty Ltd and table this in a report that you can forward to BRB management as your preliminary findings.
1.2(a) In Assessment One, Part 4.3, you looked at eight principles the ASX has to promote good corporate governance.
1.2(b) After investigating the situation and applying your knowledge of corporate governance requirements to the scenario, you know it is time to consult with BRB’s senior management and board members. You know they want to avoid a repeat of this situation at all costs.
Playing the role of the external auditor, and your assessor playing the role of one of the senior managers, you are to conduct a face-to-face consultation.
In this consultation, you need to:
a. Explain the errors that you have identified
b. Explain the corporate governance principles that should be applied with reasonable justifications
Ensure that you:
a. Elicit responses from the senior manager
b. Act appropriately and professionally in your consultation
c. Listen carefully to their responses, asking clarifying questions when appropriate
d. Conclude with a summary showing understanding of the discussion and way forward.
1.2(c) After identifying activities BRB could follow to implement the corporate government requirements; but prior to receiving the final proposal, your Trainer & Assessor who is playing the role of senior management at BRB would like you to discuss (Replicated workplace scenario) how the proposed changes would be implemented and the stages that would be in place with clearly defined timeframes. In order to elicit a response and seek clarification by your Trainer & Assessor, prepare a list of questions.
1.3 (a) Review the financial delegations and accountabilities of BRB Pty Ltd. From the scenario, do you believe the existing system is strong enough to maintain internal control? Why or why not?
1.3 (b) Develop a procedure that BRB Pty Ltd could implement to modify the existing system of financial delegations and accountabilities. Your proposal should ensure consistency and compliance with internal control procedures
1.3 (c) You will need to propose to BRB Pty Ltd a suggestion for how would you implement the suggested changes?
Using the suggested table below, prepare an outline of how you would implement the suggested changes that could be sent to senior management.
Actions to be taken
2.1. Refer back to the corporate governance principles provided by the ASX. Conduct additional online research and identify at least one application of them in accounting operations. Prepare a report that summarizes the principle and the application identified.
Refer to published sources and/or recognized practices in your research.
2.2. Refer to the following journal article and identify and evaluate variations in the adoption of corporate governance requirements in emerging markets and summarize the cultural influence on it.
Task 3 (Scenarios)
This assessment has two parts. In this last task, you will participate in another replicated workplace scenario. You will need to take on a series of activities and tasks that will develop an internal control manual. You will need to consider the development stages, corporate governance requirements, activities to be planned and SMART performance indicators. In the 2nd part, you will be needed to set up procedures for internal control for a financial department.
To take on the given project, you recognize different stages that need completion. These are the following stages and also provide an illustration of an activity at the step. Consider the project requirements and recognize additional activities you will need to assign responsibility for with the project’s team members.
Stage 1 (Plan) - Establish clear objectives and timelines for completion
Stage 2 (Review) - Review current documented policies and processes.
Stage 3 (Evaluate) – Identify existing internal controls in the ‘as is’ process
Stage 4 (Design) – Redesign the process with adequate and effective internal controls.
Stage 5 (Document) – Formally document the process and related internal controls
Stage 6 (Educate) – Roll-out the manual and train all affected employees.
1.2 With the stages identified, and activities planned and allocated to the team members, everyone goes about developing the Internal Control Manual.
As the CFO, you will need to look over the various parts to ensure the accuracy and reliability of the information.
The table below presents some of the sections the Internal Control Manual includes. Explain the sections below and what you would expect the team members would provide in these sections.
b. Internal Control Basics
c. Fraud Awareness
d. Control Activities
e.Information Systems and Security
1.3 Refer to http://www.woolworthslimited.com.au/ and review and summarise the key requirements of Woolworths’ policy and procedure relating to corporate governance requirements.
1.4 Develop at least three SMART performance indicators to be included to evaluate compliance with internal control procedures. Before documenting, you need to discuss your SMART performance indicators with your Trainer & Assessor who will be acting as senior management. The senior manager will give their recommendations. By asking the right questions, you will elicit responses, clarifying the SMART performance indicators that will need to be considered.
2.1 It is important for a small business owner to have a strong set of controls in place, especially when the business is growing and when it is hard to stay in touch with what is going on at the ground level. Effective controls and reporting of key financial information enable the owner to manage the business without getting caught up in the detail.
Imagine you now need to set up the internal control procedures for a finance department. Develop a checklist that includes 10 questions that would need to be considered to ensure the internal control procedure is well thought out and developed.
Some examples include:
Is a chart of accounts used?
Is a double entry bookkeeping system used? Who approves journal entries and credits?
Use the format in the table below to develop your checklist.
Finance Control Checklist
2.2 Using the table format below prepare a schedule that you would rely on to monitor any changes to financial policies and legislation.
An example is provided for you.
Actions to be taken
Subscriber with newsletter, review the web page, document if there are any changes and educate the changes
2.3 Imagine on 1st January 201X the Federal Government announced that the GST rate will change from the current 10% to the new applicable rate of 15%. The change will come into effect on the 1st of July, 201X.
You have a six month preparation period, from the 1st of July 201X, all of your company documents need to reflect this change.
a. Identify the financial statements that will be affected by this change
b. In Assessment 2, you developed an action plan to advise BRB Pty Ltd on how you would implement changes. Similarly, develop an action plan to be followed to ensure a company was compliant with the Federal Government’s announcement. Note: Keep in mind the transition period.
c. Identify the relevant stakeholders that will need to be informed of the changes.
You will be needed to complete all three tasks that relate to changes in financial policies and legislation and note the impact this will have on internal performance indicators.
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