To: Mr. Al Fedoruk, Baltimore Home Investments Ltd.
Date: July 12, 2014
Subject: Controls issues, analysis, and recommendations for your business.
With reference to our meeting of July 6th, based upon the information you provided regarding Baltimore Home Investments Ltd. (BHIL), and in light of the analysis to follow, it is evident that a myriad of control deficiencies was the root cause that enabled unscrupulous individuals to unlawfully wrest control of BHIL from you. In order to aid in the prevention of such a disaster occurring in the future, this memo will focus on detailing the control deficiencies, generating alternatives for future application, and evaluating the alternatives in preparation for providing…show more content… Compounding matters, proper tone at the top, which helps shape organizational culture, was lost after your departure, with managers failing to serve as role models and the corporate belief system destroyed, the result of employees being led by unethical individuals unwilling to uphold key values (and causing employees confusion as to what values were important).
Alternatives and Decision Criterion
Solutions to these problems, not surprisingly, would involve strengthening company controls, primarily action, personnel, and cultural controls, and alternatives are plenty. Action control alternatives include:
1) implementing electronic links to processors’ files; 2) enforcing segregation of duties; 3) improving physical and administrative constraints; 4) creating and communicating a more detailed set of policies and procedures; 5) requiring two signatures on all checks;
6) obtaining more timely and extensive legal advice and strengthening any partnership and licensing agreements.
Regarding personnel controls, consideration should be given to hiring a human resources specialist, and in order to affect results control, the hiring of an accounting professional as a controller should be considered.
With respect to cultural controls, options include:
1) creating formal written codes of conduct and statements of mission and vision; 2) establishing a system of group rewards; 3) creating an