BEC初级report写作范例

Assessment of Suitability for Home-based Working

Introduction

The purpose of this report is to assess the suitability of my position as Resource Planning Manager for home-based working.

Findings

My working pattern and that of my colleagues vary from week to week. During certain periods a large proportion of my time is spent doing fieldwork. This is followed by office-based work collating and recording the data collected. Once the results have been recorded, I proofread the colour copies of all reports and maps.

As regards communication with colleagues, department meetings are held once a fortnight. At all other times, the individual members of the team communicate either face-to-face or by phone, depending on their location. Apart from official meetings, the same results can be achieved whether I am in the office or working elsewhere.

Conclusion

It is clear that I would be able to undertake the same duties while working from home for a large proportion of my time. Clearly, some days would be spent in the office for face-to-face communication with colleagues. It would also be necessary to use the technical facilities of the office at times. However, in order to be able to work effectively from home, I would need to be provided with a networked computer and printer.

Recommendations

I would suggest that I should be given the necessary equipment to work

partially from home for a trial period. After this time, further consultation should take place in order to reassess the situation.

Notes:

home-based working: working at home，在家办公

a large proportion of my time: 我的大部分时间

undertake my duties: 旅行我的（工作）职责

第二篇：BEC 写作范例

目录

Topic 1: BOD Oversight .................................................................................................................................................... 3

Topic 2: Disaster Recovery Plan ....................................................................................................................................... 4

Topic 3: NPV vs. IRR .......................................................................................................................................................... 5

Topic 4: Revenue .............................................................................................................................................................. 6

Topic 5: Segregation of Duties ......................................................................................................................................... 6

Topic 6: Limitation of an Enterprise Risk Management ................................................................................................... 7

Topic 7: Risks in the Company’s Compensation System .................................................................................................. 8

Topic 8: Audit Committee ................................................................................................................................................ 8

Topic 9: Data Security and Accessibility ........................................................................................................................... 9

Option 1 .................................................................................................................................................................... 9

Option 2 .................................................................................................................................................................. 10

Topic 10: Internal Control – Segregation of dutie .......................................................................................................... 10

Option 1 .................................................................................................................................................................. 11

Option 2 .................................................................................................................................................................. 11

Topic 11: Pension Plan ................................................................................................................................................... 12

Topic 12: Advantages of Adoption of Management Assessment of I/C ........................................................................ 13

Topic 13: Sarbanes-Oxley Act ......................................................................................................................................... 13

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Topice 14: Methods to Calculate the Allowance for Doubtful Accounts ....................................................................... 14

Topic 15: Online Real-Time Processing System .............................................................................................................. 15

Topic 16: Product Differentiation Strategy .................................................................................................................... 16

Topic 17: Investment Evaluation – Capital Budgeting ................................................................................................... 17

Topic 18: Pro. & Con. Of Going Public ............................................................................................................................ 17

Topic 19: Balanced Scorcard .......................................................................................................................................... 18

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Topic 1: BOD Oversight

The Chairman of the BOD is worried about the upcoming audit. Specifically, he is concerned about how he will prove to the auditors that the BOD has fulfilled its oversight function in accordance with the COSO Internal Control-Integrated Framework. As the CFO, draft a memo to the Chairman describing what the auditors might look for in regards to the following board attributes:

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?

?

? Operates independently Monitors risk Retains financial reporting expertise Oversees audit activities

To: Chairman, BOD

Subject: Board Oversight

The purpose of this memo is to identify and explain the kinds of activities that will enable the auditors to conclude that the BOD is fulfilling its oversight function in accordance with the COSO Internal Control-Integrated Framework.

One of the characteristics of an effective board is the ability of each member to provide independent advice to our company. You may recall, annually our company requires each board member to disclose in writing any personal relationship and material direct or indirect financial transactions with our company. In addition to this, we have a process in place where the Vice President of the board reviews these disclosures and evidences his review via signature on the certification statement. Before any vote is taken, the VP verbally reminds board members to vote independently and, if applicable, has the power to ask board members to recuse themselves from the vote in the event that they are not entirely independent on the issue at hand. While our by-laws document the responsibilities of the Vice President, the board minutes document the actions of the board and VP, consistent with the policy defined in the by-laws. Rest assured that the auditors will review both of these documents and find the evidence to support a conclusion on board oversight.

We also have a separate nominating committee that identifies and screens potential board members. Evidence that the nominating committee has performed their duties includes a review of background checks performed as well as the written recommendation made by this committee.

Another attribute that the auditor will assess is the board’s ability to monitor risk. One of the most powerful ways to demonstrate effective board oversight is to establish an empowered audit committee with the authority and responsibility to meet privately with internal and external auditors and respond directly to significant audit findings. Staffing the audit committee with knowledgeable financial professional such as CPAs provides additional comfort to auditors that the board has the capacity to understand the gravity of the issues put before them. While the auditors have both charter and by-laws to support the creation and empowerment of the audit committee, their selection and retention provides further support that the audit committee is actually performing the responsibilities assigned to it.

Further proof of effective oversight can be obtained by reviewing the certification statements made by the audit committee, which attest to review activities performed and decisions made. In addition, the board minutes document the adoption of new accounting policies and procedures. Lastly, the auditors can examine whistle-blower logs to determine how complaints were handled and the timeliness of the board response.

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As you can see, we have a number of mechanisms already in place that will objectively demonstrate the effectiveness of our board.

Feel free to contact me should you need anything further regarding this matter

Sincerely,

Chief Financial Officer

Topic 2: Disaster Recovery Plan

Prime FL, Inc, is a Florida-based company currently working on its disaster recovery plan. John Gordon, the company controller, has been given a large budget for this project, but he is unclear whether a cold, hot, or warm site is the right decision for his environment. As the Disaster Recovery Specialist, draft a memo to John Gordon discussing the benefits of each site in order to assist him with his decision.

To: John Gordon, Controller

Subject: Backup Solution

The purpose of this memo is to provide you with information regarding disaster recovery offsite location options and how they would be advantageous to Prime Fl, Inc.

Disaster recovery and offsite locations consist of plans for continuing operations in the event of destruction of program and date files, as well as processing capability, small outages should be reestablished at the original site; however, you should plan for an offsite location should Prime FL not be available due to a disaster.

Along with the cost involved, in order to make the right decision on which site is correct for Prime FL, you will have to decide how urgently you will need to get your date, network, and users up and running.

A hot site is the most complete offsite option as well as the most costly. It would be fully equipped and would be ready to take over Prime FL’s data processing in a matter of hours, as the backup copies of your essential data files would also be maintained at the same location. This would be the best option for a quicker recovery.

A cold site would have all the electrical connections and other physical requirements for data processing, but it would not the actual equipment. Could sites usually require one to three days to be made operational because equipment would have to be acquired. This would be the cheapest option for an offsite location.

A warm site is a combination between a hot site and a cold site. A warm site facility would already be stocked with all the hardware it takes to create a reasonable duplicate of what you have in your primary data center. The difference is that is that it would not maintain a copy of your data backup and it would have to be shipped to the offsite location. A restoration would be accomplished in a reasonable amount of time. Prime FL would stll have a continued cost because a maintenance contract would have to be kept with the facility to keep hardward up-to-date.

In today’s world, for a substantial organization not to have an offsite location as part of your disaster recovery plan is very risky. As budget does not seem to be an obstacle for Prime FL, Inc., I would suggest an implementation of a hot site.

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I hope I have provided you with enough information to make an educated decision regarding which option would be best suited for Prime FL, Inc.

Sincerely,

Disaster Recovery Specialist

Topic 3: NPV vs. IRR

The new staff member at your company is confused about the underlying assumptions of net present value and internal rate of return calculations. As the manager, write a memo to the staff member describing the difference between the two techniques, as well as the advantages and disadvantages.

To: Staff Member

Subject: NPV vs. IRR

Net present value and internal rate of return are two techniques that can be used to evaluate investment opportunities. The net preent value method is generally considered to be superior to the internal rate of return method. However, each method has its advantages and disadvantages.

Net present value compares the present value of the cash inflows and outflows from an investment decision. Present value is calculated using a discount rate or hurdle rate chosen by management. An investement with a positive net present value should be accepted and an investment with a negative present value should be rejected. This method provides an estimate of investment return in dollars and assumes that the cash flows from an investment are reinvested at the discount rate used in the analysis.

The net present value method is superior to the internal rate of return method because it is flexible. Net present value can handle uneven cash flows and the discount rate used to calculate present value can be adjusted for risk. Risk adjustments include assigning higher discount rates to higher risk investments and assigning different discount rate to each period of an investment based on relative risk. The limitation of the net present value method is that it does not provide the true rate of return on an investement.

An investment’s internal rate of return is the discount rate that equates the present value of the investment’s each inflows and cash outflows. In other words, internal rate of return is the discount rate that?? yields a net present value of zero. An investment with an internal rate of return in excess of the hurle rate should be accepted and an investment with an internal rate of return below the hurdle rate should be rejected

The primary advantage of the internal rate of return method is that it measures return as a percentage that can be compared to the hurdle rate. However, internal rate of return has several limitations. This method assumes that the cash flows from the investment are reinvested at the internal rate of return. This is an unreasonable assumption if the internal rate of return is unrealstically high or low. In addition, internal rate of return is less reliable when investment cash flows are uneven and does not consider the total profitability of an investment.

Because of the relative advantages and disadvantages of these methods, our company generally evaluates potential investmens using both mehtods. If the two methods result in conflicting investment decisions, we use the result of the net present value method to make the final decision

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Sincerely,

Manger

Topic 4: Revenue

The owner of a private school is trying to increase its revenues to meet rising costs. Capacity is limited and you have been asked to comment on the ways in which revenue can be increased.

Prepare a memorandum to the owner describing why pure price increases may result in increased revenue.

To: Private School Owner

Subject: Price Increases

Increasing tuiton may be a highly effetive method of increasing revenue. Although increases in tuition may result in decreased enrollment, if the percentage increase in revenue exceeds the percentage dexrease in enrollment, total revenue will increase.

The inelasticity of demand (the idea that demand will remain relatively unchanged in responses to changes in price) is generally equated with essential items for survival like water, or food or even fuel. However the quality of education of our children has a strong perceived value to the families already enrolled. Clearly the faimilies y

U serve have elected to use yur school rather than to rely on pblic schools that are “free”.

As you review your strategy for the coming year, recognize you are electing to differentiate yourself from the competition as a premier choie in education that is worth the price, not as a cost leader that undersells other options.

Revenue can increase purely based on tuition increases but you will need to insure that the demand for your school’s service is differentiated from the competition and remains an alternative that cannot be duplicated by your competition.

Let me know if you need further assistance on this issue.

Topic 5: Segregation of Duties

Skyview, Inc., a small start-up company, has hired you as a consultant to assess its financial systems and related processes. During your review, you learned that the company accountant is responsible for providing general ledger access to others in the company, processing of transactions in the general ledger, and printing checks. The president of the company must authorize write-offs in the system, but the accountant has access to the president’s user name and password.

Prepare a memorandum to Skyview’s president assessing these responsibilities in the context of segregation of duties. Also assess the possibility of the accountant committing fraud.

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To: Skyview President

Re: Segregation of duties and potential fraud

You have requrested that I perform an indepenent assessment of Skyview’s financial systems and related processes. In a properly controlled financial system the duties of authorizations, approval of transactions, custody of assets, and record keeping should be segregated. In other words, these functions should all be performed by different individuals. Your current financial system and processes do not include this proper segregation of duties. Skyview’s accountant has incompatible duties that would allow him to make an error or perpetrate a fraud and prevent its detection. He processes transactions and has access to assets (printed checks). As an example, he could process fictitious purchase transactions to his own shell companies and cause payments to be made for goods or services that were not received by Skyview.

In addition, the fact that the accountant has acces to your user name and password allows him to circumvent the control provided by your being the only individual authorized to write off accounts. This would allow the accountant to process an unauthorized sales transaction to his own shell company and use your user name and password to write off the account.

I would recommend that you develop a new financial system that would include appropriate segregation of duties to ensure that no individual in the organization has the ability to perpetrate errors or fraud without it being detected in the normal course of operations. In addition, you should establish polices regarding the maintenance and confidentiality of user names and passwords to ensure that the controls cannot be circumvented.

If you have any questions, please contact me.

Topic 6: Limitation of an Enterprise Risk Management

Assume that you are acting as a consultant for Winston Co. The president of the company is considering implementing an enterprise risk management system. To evaluate whether to go forward with the project, the president has asked you to describe the limitations of an enterprise risk management system.

Prepare a memorandum to Winston’s president describing the purpose and limitations of an enterprise risk management system.

To: Winston Co. President

Re: Limitations of an enterprise risk management system

You have requrested that I provide you with information about an enterprie risk management sytem. You are particularly concerned with the limitations of such a system. The primary purpose of an enterprise risk management system is to provide processess to identify potential risks to achieving a company’s objectives and to manage those risks to be within the company’s risk appetite.

In considering implementation of an enterprise risk management system, it is important to recognize that these systems have limitations. All enterprise risk management systems rely on judgments about future events that may or may not occur. Also, while an enterprise risk management system provides information about risks to achieving the company’s objectives, it does not even provide reasonable asurance that the ovjectives will be

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achieved. The company may have a well-established enterprise risk management system and still fail. Finally, as with all control systems, an enterprise risk management system can break down for a number of reasons, including had judgments about risks and their impacts, collusion among two or more individuals, or override by management. Also, due to cost-benefit constraints, no enterprise risk management system can be perfect. If you have any additional questions about enterprise risk management systems, please contact me. Topic 7: Risks in the Company’s Compensation System

Caroly Johnson, the chairman of the compensation committee of the board of directors of York Corporation, is concerned about the incentives that exist in the current compensation system for management of the company. Currently, the compensation system provides for a base salary plus a bonus that may amount to as much as 100% of the executive’s base salary. The bonus is based on accounting net income.

Prepare a memorandum explaining the risks in the company’s compensation system and describing one or more other systems that might be better.

To: Ms. Carolyn Johnson, Chairman

Compensation Committee

York Corporation

From: CPA Candidate

This memorandum is designed to dscribe the factors that should be considered in evaluating and selecting a management compensation system.

Effective management compensation systems are those that are successful at aligning management behavior with the objectives of the shareholders. Your current compensation provides for a base salary plus a large potential bonus based on accounting income. This motivates managers to attempt to maximize accounting income. While this may result in behavior that also benefits the shareholders, it may not. Accounting income can be manipulated in the short run by making uneconomic decisions, such as postponing research and development and maintenance projects. In additions, such a compensation system provides management with an incentive to manipulate accounting income and perhaps even commit fraud.

Compensation systems that are tied to the long-term value of the company’s stock tend to be more effective. They clearly align management’s incentives with those of the shareholders of the firm. I would suggest that the compensation committee consider creating a compensation system that includes deferred stock options or stock grants. Such a system should motivate management to maximize the long-term stock price of the corporation.

I believe that a management compensation system that is tied to long-term stock price would be superior to the company’s current method. I would be delightd to assist in your discussions regarding the selection of an appropriate method.

Topic 8: Audit Committee

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The chairman of the board of Hanover Corporation, Jack Vu, is in the process of evaluating the effectiveness of the board’s audit committee. Prepare a memorandum to explain the nature and responsibilities of an effective audit committee.

To: Mr. Jack Vu. Chairman of the Board

Hanover Corporation

From: CPA Candidate

This memorandum is designed to provide you with information about the role and responsibilities of an effective audit committee of the board of directors. The audti committee plays a critical role in corporate governance of a corporation. A major responsibility of the audit committee is the appointment, compensation and oversight of the corporation’s external auditor, including the resolution of any disagreements between manageent and the external auditor. Other responsibilities include interaction with the internal auditors, receipt and treatment of complaints regarding accounting or auditing matters, and investigation of issues that impact reliable financial reporting and internal control. To be effective, it is important that the audit committee actively question management and the auditors about the reliability of the financial reporting process and the effectiveness of internal controls. In addition, it is important that the members of the audit committee are independent and competent. In fact, the Sarbanes-Oxley Act provides that at least one member should be a “financial expert”. Be effectively discharging these responsibilities, the audit committee can help ensure the reliability of the financial reporting process and prevent management graud. I am available to help you develop criteria to be used to evaluate the effectiveness of Hanover’s audit committee.

Topic 9: Data Security and Accessibility

3WAT, Inc. is discussing the data-storage possibilities for their highly mobile workforce. Currently, data is stored on laptop hard drives and is not certainly available. Management is concerned about data security, accessibility and costs.

Prepare a memo to management discussing warious options for data storage for a highly mobile workforce including advantages, disadvantages, and costs.

To: Management

Re: Data security and accessibility for a mobile workforce

Option 1

The following memorandum is intended to outline various options for data storage for 3WAT, Inc.’s mobile workforce and address data safety, data integrity, and data access issues.

The company’s current approach allows for storage of data on the individual laptops of 3WAT’s highly mobile worforce. The somewhat obvious weaknesses in doing business this way include compromised data safeguarding, loose controls over data, and uneven access to information.

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Data safegarding issues should be initially addressed with a mobile device security policy specifically addressing handheld devices. Information technology policies should include an educational component and be joined with companion human resources policies that address the consequences of noncompliance with the mobile devie security policy.

Effective policies will mirror controls that remove users from security decisions. Users must, for example, be required to use passwords for access to company networks, be limited to using only company-owned devices for company data, and take responsibility for assigned hardware.

Improved controls and uniform access to data can be accomplished in a range of ways. Connections to company networks may take the form of virtual private networks (VPNs) that connect to 3WAT’s internal network or the use of cloud computing. VPNs are more secure but more expensive. The cloud will be less expensive; however, the company’s security requirements may require more rigourous controls than thos afforded by the cloud.

The mobile workforce is an important tactic in modern business. An enterprise architecture that addresses data safet, data integrity, and data access issues is vitally important. I have outlined a few issues and solutions or action steps in the preceding memorandum and look forward to the opportunity to assist in the revisions to the company’s infrastructure and to incorporate these approaches into a revised policy.

Option 2

You have requested that I provide an analysis of the options for storing information needed by the mobile workfore of he company. There are several options available for storage of data for a mobile workforce other than the current method of storage on laptop hand drives.

The first major option available for mobile storage and access is a wide area network (WAN). A WAN is method of interconnecting computers over a wide area to allow them to share a common database. The computers may be connected privately over dedicated phone lines or publicly over the Internet. The advantage of a WAN is it is generally secure and flexible. Also, if the network is over private phone lines, performance may be better than on public connections. Disadvantages of a WAN are that the company needs to ensure the security of the database and establish appropriate procedures for continuity of service and backup. In additons, a WAN can be costly.

The second major option available for mobile storage and access is cloud storage. Cloud storage involves the use of a third party to provide and manage remote storage of data using a series of servers over the Internet. The advantages of cloud storage include cost effectivenss, and the ability to access dat over a range of mobile devices including laptops, tablets, and smart phones. However, the company must rely on the third-party provided to ensure security and privacy of the data and continuity of service. Also, it may be difficult to change providers because there are no data standards for cloud computing.

I am available to discuss the advantages and disadvantages of these options for mobile storage and access and assist you in making the decision.

Topic 10: Internal Control – Segregation of dutie

Following are selected tasks from the job description of a staff accountant at Purfit, Inc.:

? Endorsement, coding, and recording of checks received for deposit

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?

?

?

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? Reconciliation of the accounts receivable subledger to the general ledger Reconciliation of the accounts payable subledger to the general ledger Reconciliation of investment and borrowing subledgers to the general ledger Mailing of checks to vendors Recording of fixed asset transactions, including updates to the asset master file

You have been asked to prepare a memorandum discussing the internal control issues relating the selected tasks from the job description.

Option 1

To: Management of Purft, Inc.

Re: Segregation of duties – Accountant

The following memorandum has been prepared in response to your request that I discuss the internal control issues related to the tasks assigned to the staff accountant in his job description.

The control weaknesses are significant.

Internal controls rely heavily on segregation of incompatible duties that could potentially allow an employee to process a transaction from beginning to end without any effective oversight.segregation of duties helps prevent fraud by requiring that multiple parties collude in order to process transactions either incorrectly (commit errors) or fraudulently (commit irregularities).

Generally speaking, transaction authorization should be segregated from transaction recordkeeping. And the underlying custody of assets associated with authorization and record keeping should be segregated from both. In multiple instances, the job description of the staff accountant combines incompatible functions. For example, the endorsement, coding, and recording of checks received for deposit should not be combined with accounts receivable subledger reconciliations. The opportunity for misapplicaiton of receipts to incorrect accounts increases as one person handles the custody (coding) and record keeping (recording and reconciliation) of this end of the revenue cycle. In addition, the custody of accounts paybable checks mailed vendors should not be combined with the recordkeeping function associated with reconciliation of accounts payable and various asset (fixed asset and investment) subsidiaries. Falsified transactions could go undetected for significant periods if checks are handled inappropriately and no adjustment is made to the underlying accounting records.

The discussion above is not exhaustive; however, the job description of the staff accountant includes a number of incompatible duties that compromise and weaken internal controls. I would be delighted to meet with you further and discuss options to separate duties more effectively among members of your finance group. Option 2

Your have requested that I review the attached proposed staff accountant job description from the standpoint of effective internal control. A primary tenet of internal control is segregation of duties such that no individual or department is in a position to perpetrate an error or fraud and to also cover up the error or fraud in the normal course of performing duties. Specifically the functions of authorization, approval, execution, and recordkeeping should be segregated for each major type of transaction.

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Examination of the proposed job description reveals several violations of ths tenet. First, the accountant is responsibe for endorsing and recording checks received. This would allow the accountant to divert checks received and cover up the theft by altering the accounting records. To prevent this possibility, an individual not involved in accounting should be responsible for endorsing and depositing the checks.

A second violation of the tenet of segregation of duties results from the fact that the accountant would be responsible for both mailing checks to vendors and reconciling the accounts payable subledger to the general ledger. This would allow the accountant to divert checks to other individuals and cover up the theft by altering reconciliation of the accounts payable subledger. Therefore, duties of the staff accountant should not include signing or mailing vendor checks. These functions should be performed by someone in the Treasurer’s office. If you have any other questions about these suggestions, please contact me.

Topic 11: Pension Plan

A recent statistical analysis by the human resources department of XYZ, Iinc, has revealed that the average age of its employees is over 40. Management is concerned about the potential impact of this fact on the company’s pension plan. The human resources manager wants a defined benefit plan that awards employees retirement compensation based on the highest 10 years’ earnings, exluding bonuses. As CFO, prepare a memo to the management team explaining the advantages and risks associated with the proposed pension plan and what alternatives might be available.

To: Management team

Re: Advantages and risks of the proposed pension plan

The chanllenges of an aging workforce to both our company’s institutional knowledge base as well as our financial stability require careful planning. The proposal by our human resources director that we adopt a defined benefit plan that pays out based on the highest ten year’s of earnings has both advantages and risks. Clearly the advantage of a defined benefit plan is the loyalty it will encourage for our aging work force. Individuals over 40 will likely stay with us if there is a retirement benefit that accrues with each passing year. A plan of this type gives our work force the incentive to stay for the foreseeable future, preserving their institutional knowledge.

The financial risks of the plan, however, are significant. Rewarding workers with a pension pay out based on their highest 10 yeares of compensation as they approach their highest earning years and also near retirement will creat signigicant liabilities tat could damage our balance sheet and earnings, as well as creat cash flow issues. The costs of a pension plan are far less for younger employees whose tenure is questionable, earnings are lower and time horizons (for investment earnings on contributions) are longer.

A number of alternatives exist that could make this plan less risky financially or could even replace this plan altogether. The proposed plan excludes bonuses from the pension benefit base. Our compensation could become more heavily weighted toward bonuses to reduce the ultimate defined benefit liability. In addition, our plan could include a deferred compensation program or 401(K) plan that might allow either woluntary or automatic deferred of the bonus. The plan would serve to involve the employee in their own retirement, demonstrate the company’s ongoing commitment to the post employment welfare of employees, reduce cost and the company’s financial risk.

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Topic 12: Advantages of Adoption of Management Assessment of I/C

Your client, a nonissuer, is considering voluntary adoption of Section 404 of the Sarbanes Oxley Act, which involves management assessment of internal controls and independent attestation. The client’s CFO has asked you for advice regarding the benefits of voluntary compliance with the requirements of Section 404. Write a memo to the CFO discussing the benefits of adopting these requirements.

To: CFO

Subject: Voluntary Section 404 compliance

I am delighted to hear of you are considering voluntary compliance with Section 404 of the Sarbanes-Oxley Act. As you likely know, the Act requires a comprehensive self assessment of your entity’s internal control over financial reporting, representations by management regarding the effectiveness of controls, and attestation by an independent public accountant regarding te fairness of your assessment. All of these requirements have benefits to you.

The comprehensive review of internal control over financial reporting has a number of benefits because it requires exectives and managers to consider the effectiveness of multiple dimensions of internal control. We recommend that your company undertake a comprehensive review of internal control using an established criteria, such as the Committee of Sponsoring Organizations (COSO) Internal Control Framework. Using the COSO framework, your company will be able to evaluate your control environment as well as evaluate risk assessment techniques, information and communication procedures, monitoring procedures and existing control procedures at the transaction, account and financial statement levels. The review will highlight an existing weaknesses in your internal controls and will also promote an entity wide understanding of controls. In addition, management’s assertion regarding the effectiveness of internal control is beneficial because it communicates, in a very visible way, management’s commitment to strong internal controls.

The engagement of an suditor to provide an opinion regarding management’s assertion will not only provide confirmation of management’s assertion, but will also provide you with a critique of your internal controls. The extra set of eyes provides a useful fresh perspective. Ulltimately, if you decide to go public, a major hurdle of public filing, compliance with Sarbanes-Oxley requirement, will have already been addresed.

There are many advantages to vluntarily complying with Sarbanes-Oxley requirements, including the self discovery of your own evaluation, the communication of management’s commitment and the review by outside parties. We are delighted that your are giving this serious consideration.

If we can do anything to help in this ongoing effort, please do not hesitate to call.

Topic 13: Sarbanes-Oxley Act

With the passage of the Sarbanes-Oxley Act in 2002, the securities and Exchange Commission (SEC) asked the Ne York Stock Exchange (NYSE) and the National Association of Securities Dealers (NASD) to develop additional guidance to companies on the role and membership of audit committees so as to improve the effectiveness and ndependence of audit commitees. Inresponse to an inquiry from a senior manager of a

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company that is considering going public, write a memo discussiong the expanded role of a copany’s audit committee in light of the provisions of the Sarbanes-Oxley Act.

To: Senior manager

Subeject: Sarbanes-Oxley Act

The following memorandum fomallyreponds to your inquiry regarding the changing roles and responsibilities of audit committees since the passage of Sarbanes-Oxley Act in 2002.

The establishment of an audit committee as a subcommittee of the board of directors has long been regarded as a “best practice” for corporate governance. Typically audit committees are composed of outside directors (non-employees) who act as a liaison between the board of director and the auditors. The audit committee is meant to enhance internal control by ensuring auditor independence, moderating disputes between the auditor and management, and evaluating internal controls.

The Sarbanes-Oxley Act does not change the long-established best practice idea of the audit committee, but does make the existence of a committee a legal requirement and makes qualification for membership on the committee and the minimum activities of the committee more specific and a matter of law and regulation.

Under Sarbanes-Oxley, publically traded companies are required to maintain an audit committee that is directly responsible for the appointment, compensation and oversight of the auditor engaged by the publically traded company. Audit committee members must meet independence standards established by the law and at leat one member of the committee must be a financial expert within the meaning of the law. Failure to include a financial expert requires self-disclosure by the audit committee. Audit committes must also develop whistleblower procedures to ensure opportunities for communication of audit abuses to the committee for evaluation and possible action.

In addition, the audit committee is recipient of numerours disclosures from management and the external auditor and is responsible for specific reporting. The various sections of the Sarbanes-Oxley Act are rigorous and place significant reporting burdens on management and the board of directos in the name of improved internal control. The existence of the audit committee is meant to serve as tangibe evidence that those charged with governance are actively engaged in monitoring internal controls and the audit of their company’s financial statement.

I would be glad to discuss the specific requirements of the Sarbanes-Oxley Act at any time convenient to you. Topice 14: Methods to Calculate the Allowance for Doubtful Accounts

Gold, Inc. changed its credit policy several months ago in hopes of increasing sales. Since then, there has been a dramatic increase in the number of accounts receivable that are past due.

Currently, the company calculates the allowance for doubtful accounts based on a percentage of the ending receivables balance. The company’s controller now thinks it is more appropriate to use a percentage of sales method to calculate the allowance for doubtful accounts.

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Write a memorandum to the controller comparing and contrasing the two methods (percentage of accounts receivable balance vs. percentage-of-sales). Recommend the method you think Gold should use, and give reasons to support your conclusion.

To: Controller

Subject: Percentage of accounts receivable balance vs. percentage of sales

The following communication has been prepared to assist you in evaluating the percentage of accounts receivable and percentage of sales methods of computing the annual provision for bad debts. It will also provide support for my recommendation that your change to the percentage of sales method.

Computation of the allowance and expense for bad debts can either emphasize the fair presentation of the balance sheet or emphasize the fair presentation of the income statement.

The percentage of account receivable method emphasizes the balance sheet. Using this approach, periodic bad debt expense is the amount needed to adjust accounts receivable to its appropriate net realizable valude through the allowance for doubtful accounts.the bad debt expense is the amount needed to adjust the allowance. The approach assues a stable volume of transactions and predictable allowance requirements . this is the approach currently used and, until the recent change in credit policy, was ideal.

The precentage of sales approach emphasizes the income statement and the appropriate matching of bad debt expense. Using this approach, bad debts is computed and recorded based upon a percentage of credit sales. The bad debt expense recognized is adjusted for any change in the estimated net realizable value of the trade peceivables. The approach is better suited for chaning sales volumes and less predictable changes in the allowance for doubtful accounts.

The the past year, the company has elected to make a significant change in its credit policy that has both increased sales volume and increased the number and amount of uncollected accounts. The importance of matching bad debt expense with sales revenue has never been more important and the associated evaluation of the net realizable value of receivables has become increasing more subjective as the volume of bad debts inceases.

The differences between the two methods are very clear. Estimating bad debt through accounts receivable and estimating bad debt as a percentage of credit sales are equally acceptable methods. However, the enhanced matching features of the percentage of the percentage of credit sales method is the most logical fit with the increased sales and bad debt volume that the company has experienced since adopting a more liberal credit policy.

I am available to discuss this issue with you at your convenience.

Topic 15: Online Real-Time Processing System

Tintco. Inc. is a distributor of auto supplies. Currently, the corporation has a batch processing system for processing all transactions and maintaining its inventory records. Batches are processd monthly. George Wilson, the chief information officer for the corporation, is considering adopting an online, real-time processing system. He has asked you (a consultant) to prepare a memorandum describing the advantages of adopting such a system for the corporation

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To: Mr. George Wilson, CIO

From: CPA Candidate

As your requested, this memorandom describes the advantages of implementing an online, real-time processing system for inventory. As you are aware, the firm currently uses a batch processing system that processes transactions monthly. The primary advantage of an online, real-time processing system is that it provides timely information for decision making. With your batch system you have current and accurate information about inventory only monthly when the records are updated. Therefore, decisions about ordering inventory, valuation of inventory, and company profitability are not based on timely information. As a result, management cannot do a very good job of managing inventory. If the company implements an online, real-time system, information about inventory levels, inventory investment, and cost of goods sold would be available on a continuous basis. As a result, business decisions will be based on accurate and timely information. This should result in much better dicisions and better financial performance.

It is clear that an online, real-time inventory system is superior to your current batch processing system. If you would like to have additional information about implementation of a new inventory processing system, please contact me.

Topic 16: Product Differentiation Strategy

The chief executive officer of Urton Corp., Geroge Jones, is preparing for a strategic planning session with the corporation’s board of directors. The company has pursured a product differentiation strategy in the past but is having difficulty maintaining margins due to significant competitor from domestic and foreign competitors. Write a memorandum describing the product differentiation strategy that might be pursued if product differentiation is not working.

To: Mr. George Jones, CEO, Urton Corp.

From: CPA Candidate

As you requested, this memorandum is designed to discuss some strategies that may be implemented by Urton Corp, Historically, Urton has implemented a product differentiation strategy. This strategy involves providing products that have superior physical characteristics, perceived differences, or support service differences, which alows the products to command higher prices in the market. When effective, this strategy allows the company to effectively compete with companies that sell lower priced products.

For a product differentiation strategy to be successful, the company must continue to invest in the differentiating factor. Since Urton is no longer effectively competing using a product differentiating strategy, the management should consider whether additional investment in product innovation, support services, or brand identity might allow the company to review the strategy.

On the other hand, if management believes that pursuing a differentiation strategy is no longer feasible, consideration should be given to a cost leadership strategy. Pursuing a cost leadership strategy would involve cutting costs and improving efficiency to allow the company to offer products at lower prices.

To be competitive, it is essential that the company select a strategy and begin to align management’s decisions with that strategy. If you need any additional information, please contact me.

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Topic 17: Investment Evaluation – Capital Budgeting

Yeager Company is consiering several alternative capital investments. In evaluating the investments, management of the company has used the payback and accounting rate of return methods. Prepare a memorandum to Linda Gordon, the chief financial officer, describing the limitations of these two methods for evaluating investments and suggesting other methods that might be more appropriate.

To: Ms. Linda Gordon, CFO, Yeager Company

From: CPA Candidate

You have requested that I provide an evaluation of the two methods that Yeager Company uses for capital budgeting: the payback and the accounting rate of return mehtods.

As you know, the payback method evaluates investments based on the length of time it takes to recapture the initial investment. The payback mehtod has two major limitations. First, it ignores the overall profitability of the investment. Second, it does not take into account the time value of money. These are major limitaions which can result in selecting inestments that are not consistent with maximizaiton of the company’s return on investement.

The accounting rate of return method evaluates investment alternatives based on their rate of accounting return. Like the payback method, the accounting rate of return method ignores the time value of money. As a result, it too can result in choosing investments that may not result in maximization of the company’s return on investment.

The most effective capital budgeting techniques are those that consider the time value of money. As an examle, the net present value method evaluates investment alternatives based on the present values of the fture cash flows of the investments. It considers both the total profitability of the investment and the time value of money. Another technique, the internal rate of return method, evaluates investment alternatves based on their time-adjustd rates of return. This technique also considers the total profitability of the investment and adjusts for the time value of money.

I would suggest that you consider replacing your current techniques for capital budgeting with a technique or techniques that are superior, such as the present value and the internal rate of return techniques. If you have any other questions about capital budgeting, please contact me.

Topic 18: Pro. & Con. Of Going Public

Talon. Inc. is a private held manufacturing copany. Management of the company is consiering taking the company public through the issuance of common stock.

Terry Savage, the president of the company, has asked you prepare a memorandum describing the advantages and disadvantages of going public.

To: Mr. Terry Savage, President, Talon, Inc.

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From: CPA Candidate

As you requested, this memorandum describes the advantages and disadvantages of taking your company, Talon. Inc., public. A primary advantage of going public is that Talon will have access to a much larger pool of equity capital. The company’s stock will trade on an organized market. Therefore, the company can more easily issue additional stock. Because the stock of the company is publicly traded, it can be used for business acquisitions, and the company can offer stock-based compensation to Talon’s employees. Finally, the owners of Talon are afforded the opportunity to readily sell all, or a portion, of their investment in the company. Therefore, the owners’ investments become liquid.

The primary disadvantage of going public is the cost. There are significant costs involved in the initial public offering of stock, and the continuing costs of compliance with SEC laws and regulations, including the Sarbanes-Oxley Act. Being a public company necessarily causes management to focus on maximizing stock price, which may not be in the best long-term interest of Talon. Finally, public companies must disclose significant amounts of information that becomes available to competitors, customers, and potential corporate raiders.

Because of these significant costs and benefits, it is important that the board of directors of Talon carefully evaluate the dicision about whether or not to go public. If you need any additional information, llease contact me.

Topic 19: Balanced Scorcard

The management of Hewitt Company is considering adopting a balanced scorecard to measure performance. Karen Wells, the chief financial officer for the company, has asked you to prepare a memorandum describing a balanced scorecard and the advantages of adopting such a system.

To: Ms. Karen Wells, CFO, Hewitt Company

From: CPA candidate

I understand that your are considering implementing a balanced scorecard performance measurement system at Hewitt Company. This memorandum explains the nature and benefits of such a system.

The balanced scorecard is a performance measurement system that includes both financial and nonfinancial measures. It includes measures in the four perspectives of financial, customer, internal business processes, and learning and growth. By measuring performance with multiple measures across these four perspectives, a balanced scorecard is more strategic than other systems that rely primarily on financial measures. It aids in communicating the company’s strategy to all members of the organization and helps insure that they work to achieve the organization’s strategic goals.

I suggest that you continue with your plan to implement a balanced scorecard system because I believe that it is superior to other single-dimensional systems.

If you have any questions, please contact me.

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Topic 20: Performance Measures

The management of Taylor Corporation is attempting to adopt new performance measures. Henry Warren, the chief executive officer, has asked your to prepare a memorandum describing how management should choose between alternative measures.

To: Mr. Henry Warren, CEO, Talyor Corporation

From: CPA Candidate

This memorandum is designed to assist you in deciding how to select among different performance measures for Taylor Corporation.

Selecting among different performane measures requires an understanding how the measures will be uses. Possible uses include for compensation, resource allocation, and business unit performance. Different measures are more appropriate for different purposes.

It is important that all performance measures reflect the strategy of the company. Measures that are strategically communicate the goals of the organization and motivate management to pursue those goals. Performance measures must also represent economic reality. They should provide a clear and accurate measure of relative performance. Finally, if the measures are used to evaluate and compensate managers, they should be sensitive to factors that are in the manager’s control and not sensitie to factors beyond the manager’s control. The measures should be clearly controllable by the manager being evaluated.

As you can see, selection of appropriate performance measures is a complex process. If you would like to discuss your selection of measures in more detail, please contact me.

Topic 21: Enterprise Resource Planning

Assume that your are a consultant providing services for Webster Corp. Webster is performing a significant project based implementation of a new enterprise resource system. The company is concerned about the difficulties in performing the project. Compose a memorandum to management discribing the risks involved in executing a project that is cross-dunctional in nature.

To: Webster Corp. President

Re: ERP project management

You have requested that we provide information about the issues involved in executing a project to implement an enterprise resource management system. In particular, you are concerned that the cross-functional nature of the project will be difficult to manage.

You should understand that the cross-functional nature of this project creates additional risk of failure that must be controlled. The most important requirement for success of a cross-functional project is full support by top management. The team must have this support to get adequate cooperation from the various functional managers of the organization. This also means that the relationships between the project manager and various

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functional managers must be clearly defined to avoid conflict. Finally, senior management must support the project manager’s decisions, recognizing that these decisions must be made quickly and with limited information to ensure that the project remains on schedule. If senior management recognizes and resolves these issues, the risk of failure will be significantly reduced.

If you have any additional questions about the issues regarding completing the project, please contact me.

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