Easy Clean 2006

2. Prepare a list of the controls described in the case. What control problems are they designed to address? Are the managers interviewed for the case justified in being proud of their company’s control system? Why or why not?

“The control environment sets the tone of an organization, influencing the control consciousness of its people. It is the foundation for all other components of internal control, providing discipline and structure.” The Committee of Sponsoring Organizations of the Treadway Commission (COSO) published the Internal Control–Integrated Framework in 1992. As summarized above one can see the importance of the implementation of an effective control environment, as it sets the foundation for the other 4 components of internal control. The control environment is made up fundamental smaller components. The ones that were particularly relevant to BMIS are the use of board of directors and audit committee, management philosophy and operating style, and human resource policies and practices. If management doesn’t prioritize control, then the rest of the organization will not put precedence on following policies and procedures either. This was clearly evident at Bernard L. Madoff Investment Securities LLC (BMIS), and ultimately led to their downfall.

Interviews Four Broad Types of Internal Moves  Concept: Requirements of Effective Appraisal Systems Mastery 100% Questions 1 2 3 1.

The Degree of oversight related to the company’s control structure exercised by the management: Section 4, under topic Assignment of Authority and responsibility, of the questionnaire suggests that the Supervisors have broad levels of authority and the responsibility of day-to-day decisions lies on the shoulders of the supervisors and

The second aspect of management used to investigate the issue is Controlling. Control is a concern that is facing every manager in every organisation today. Many businesses continually look to improve relationships between all levels of staff in order for a healthy working environment. To effectively control a business the organisation requires information about

i. You must make judgement about the value of monitoring and managing employees. The benefits of performance management should be contrasted with the consequences of failing to manage performance

In the last three years the CEO and COO have hired two employees transferring from another state facility because of an agreement made with the other facilities CEO to help get the problem employee out of their hands. Both of the employees hired in this way have performed unsatisfactorily, displayed poor student boundaries and were ultimately fired. The UC’s noted that they were not good candidates for the position based on answering the boundary scenarios poorly. They both answered they would meet with a student in private outside the facility, give them their personal cell phone numbers and keep secrets. In regards to performance appraisals, there are few positive motivators to improve staff

Chern’s needs to complete an internal assessment of the organizations current employees for training, reassignment, promotion and dismissal purposes. The internal assessment can help Chern’s determine if their employees fit the requirements for the managerial positions within the organization. By assessing their current employees’ abilities, willingness to learn and ability to adapt to new situations along with

A qualified auditor should make wise judgment when planning an audit. The auditor should be inquisitive and should be quick to notice some irregularity in the financial statements. This inquisitiveness should have guided the auditor to understand why Leslie Fay sales increasing while sales in the overall garment industry had been going down. This would have led to the querying by the auditors as to how Leslie Fay was the only garment industry that had not suffered a decline in sales during the late 1980s and early 1990s recessionary period. This in turn would have led to a need to plan an audit on the revenue cycle and tests on the internal controls in relation to the revenue cycle.

1. What are some of the reasons that staff may be resistant to or even fearful of evaluation?

● Monitoring — Internal control systems need to be monitored–a process that assesses the quality of the system’s performance over time. This is accomplished through ongoing monitoring activities, separate evaluations or a combination of the two. Ongoing monitoring occurs in the course of operations. It includes regular management and supervisory activities, and other actions personnel take in performing their duties. The scope and frequency of separate evaluations will depend primarily on an assessment of risks and the effectiveness of ongoing monitoring procedures. Internal control deficiencies should be reported upstream, with serious matters reported to top management and the board.

Internal controls, no matter how well designed and operated, provide only reasonable assurance to management regarding the achievement of a department’s objectives. Certain limitations are inherent in all internal control systems. Despite these limitations, the reasonable assurance that internal control does provide enables a department to focus on reaching its objectives while minimizing undesirable events. Managers can start by analyzing the two circumstances most likely to threaten the achievement of objectives, change and inherent risk. The examples listed below are not all-inclusive, nor will every item apply to every department. The risk to accomplishing objectives increases dramatically during a time of change. Because any change increases risk, managers must diligently monitor and assess all significant changes within their departments. Some examples of change that expose a department to increased risk are: Changes in personnel. Changes in the regulatory environment. New or revamped information systems and technology. Rapid growth or expansion of operations Moving to a new location. New programs or services. Reorganizations within or between

Auditors should always evaluate the design and test the operating effectiveness of a company’s internal control. The key procedures of the evaluation of design are fulfilled by inquires, observations, and inspections. The same procedures can be used to test the operating effectiveness as well.

Good performance review techniques and methods come in a variety of forms ranging from the use of management coaches to the establishment and distribution of written evaluations. Evaluations should include all direct reports from those employees who work within the department; from beginning to end, the process of using a questionnaire benefits gloriously to a manager and their employees. Discovering what employees genuinely think of a manager’s work and leadership abilities proves crucial as it becomes an essential step in maintaining strengths and improving weaknesses. The use of a hired management coach can help during the performance reviews immensely; as their job is to aide in the facilitation of meetings, coaches can assist in assuring that the review

COSO cites the control environment of the organization as the foundation of any internal control structure. The control environment reflects the overall attitude or actions of the board of directors, management, and others concerning the importance of internal controls in the organization. This overall attitude of upper management sends a message to the rest of the organization referred to as the “tone at the top.”For example, if upper management stresses high-quality products, a strong positive message is sent to the organization. This would create a strong internal control environment. On the other hand, if upper management has a reputation of looking the other way regarding policy violations, a negative message is