FNSACC604: Monitor Corporate Governance Activities Report Writing

Instructions

Once you feel confident that you have covered the learning materials for this unit, you are ready to attempt this assessment. Write your assessment in a commonly used software program such as Microsoft Word, or you can download a Microsoft Word copy of this assessment from the relevant Study Period of your course in OpenSpace. 

To help Open Colleges manage your assessment, please use the following file naming convention when you save your Microsoft Word document. 

Your file should be named and saved to your computer's hard drive using your [student number]_[assessment number].doc. For example 12345678_22129_01.doc 

Assessment Description 

By completing this assessment the learner will gather evidence of the knowledge and skills required to: 

• review corporate governance requirements, implement operating procedures and monitor policy 
• research corporate governance reporting trends 
• examine corporate governance standards and practices 
• review compliance to develop and implement processes and procedures for meeting corporate governance obligations. 

Written Report 

Instructions: 

The Board of Ethical Trading Group is committed to excellence in its corporate governance standards and practices. 

In order to ensure the best practice in its corporate governance activities, it has asked you (a key member of its financial management team) to research contemporary developments in corporate governance. 

Once this broad review is completed, it has also requested that you respond to a number of issues arising from a recent report (and associated data) complied by the Internal Auditor. 

In so doing, it has asked you to recommend how the standards and practices of Ethical Trading Group can incorporate these contemporary developments and correct the issues highlighted by the Internal Auditor. 

The analysis and advice is to be formulated into a written report and is to be split into two parts (please see the ensuing pages). 

In addition, please refer to Attachments 1, 2, 3 and 4, in this document for internal audit reports and associated data. These files are also available in the Additional Resources for this course. 

Part 1: Report requirements (contemporary developments) 

1. Provide a review of salient best practice points from the ASX Corporate Governance  Council Guidelines 2014. 

http://www.asx.com.au/documents/asx-compliance/cgc-principles-and- 

recommendations-3rd-edn.pdf 

2. Research KPMG Changes in Corporate Reporting dated 3 March 2015 for recommendations on current best reporting practice 

https://www.kpmg.com/AU/en/IssuesAnd Insights/Articles Publications/accounting- 

reporting-webinar/Documents/changes-in-corporate-reporting-3-march-2015-slides.pdf 

3. Compare ASX and KPMG documentation for assessing how well Ethical Trading Group  is meeting its corporate governance obligations and performance 

4. Recommend further enhancements in internal control process consistent with best  practice in Corporate Governance. 

To do so, please review the Ethical Trading Group Policies and Procedures manual in light of the ASX and KPMG documentation in Step 3 above. 

5. As a result of your review, suggest a shortcoming that can be remedied in line with  improved corporate governance requirements. 

Part 2: Report requirements (governance response to internal audit report) 

6. Based on this internal audit report in Attachment 1, assess current methodologies  within the policies and procedures of ETG and recommend how these deviations can be corrected in the forthcoming trading period. 

Specifically address each of the following four areas: 

• Issuing Petty Cash and Reconciling Petty Cash 
• Use of business credit cards 
• Customer credit limit policy 
• Customer debt collection policy 

7. Based on the recommendations above, suggest changes in internal control procedures to ensure that non-compliance in each of the following four areas is mitigated in the future. 

• Issuing Petty Cash and Reconciling Petty Cash 
• Use of business credit cards 
• Customer credit limit policy 
• Customer debt collection policy 

8. Refer to the further adjunct to the internal audit report for environmental policy in Attachment 2. 

Re-write the environmental policy of ETG to ensure there are well defined Key Result Areas (KRAs) from which KPIs can be derived. To do this re-write, assume the KRAS are based on an overall improvement of 1% per annum for each of the environmental metrics included in the triple bottom line scorecard in the ETG case study data. 

9. Refer to the performance of ETG on its triple bottom line scores for the use of recycled  material and landfill waste from 2010 to 2014, as outlined in Attachment 3. 

Now that you have re-written the environmental policy for ETG so that it includes KRAS, the next task is to set quarterly key performance indicators (KPIs) for 2015 for use of recycled material and landfill waste, based on an improvement of 1% p.a. In so doing, enter these quarterly targets in the Excel sheet in Attachment 3 for 2015. 

Present these quarterly targets in a way that is visually engaging by including charts within the Excel file in Attachment 3. 

10. Now refer to Attachment 4. This attachment provides actual data that was collected  during 2015 for the performance of ETG on use of recycled material and landfill waste (after your quarterly KPI targets have been set). 

Graph this actual data and highlight the shortfalls that have occurred on each of these 2 environmental performance metrics when compared to the quarterly KPIs you set for 2015. 

Write a brief reporting plan outlining the following; 

• What types of management processes and controls should be considered for correcting these shortfalls? 
• Note who should be responsible for signing-off and authorising new processes and controls 
• Note proposed timeframes for implementing new process and controls within a scheduled timeframe (for example, 1 week, 1 month, 3 months. The length of time can vary and will depend on the complexity of the proposed control and process changes). 

11. The excerpt of the policy of the Ethical Trading Group in Attachment 5 in bold italics states "engage employees in the delivery of its environmental strategic agenda and support them in practical ways so they can reduce their own environmental footprints”. The shortfall in the two environmental performance metrics (use of recycled material and landfill waste) indicates there is now a prima facie case that employees have not been supported in practical ways to reduce environmental footprints. 

Suggest how you would monitor the communication (and regular updates) of the Ethical Trading Group strategic agenda to staff. Also how you would monitor practical ways that staff have been resourced to reduce their environmental footprint. 

Attachment 1 

Internal Audit Report 

The Internal Audit function of Ethical Trading Groupl has produced the following report in relation to contraventions in Corporate Governance practices and internal controls for the year ended 30 June 2014 

Issuing Petty Cash and Reconciling Petty Cash 

Page 57 Policies and procedures. 

The requirement for all petty cash vouchers issued to be approved by the Financial Controller has been contravened. 

In addition, amounts between $100 and $500 are being dispersed by the financial clerk 

Moreover, when reconciling petty cash, the balance of monies and vouchers is not equaling the petty cash float. 

Use of business credit cards 

Page 58 Policies and procedures. 

The requirement that business cards can only be used for travel, authorized entertainment and purchases of small value expenses or equipment up to the value of $1000 is being contravened. 

Business credit cards are being used to pay for expenses up to $3,000 and cash advances are also being taken to this amount. These expenses are not being well-described, so the nature of the actual business expense is unclear. 

Customer credit limit policy 

Page 84 Policies and procedures. 

Despite individual customer credit limits being in place, they are at times during the period being exceeded by up to 100% for some customers. 

Customer debt collection policy 

Page 86 Policies and procedures. 

There were several instances where customer sales have been accepted despite an earlier history of bad debts. Whilst these instances are relatively few in frequency, the internal audit detected sales to some customers in the range $1000 to $5000 who had previously incurred bad debts that had been written off. In each of these subsequent instances, the outstanding monies had been collect4ed within 3 months. However there is no record of a formal approval to do so from the Financial Controller. 

Environmental policy 

Page 93 Policies and procedures. 

The environmental policy presents as being generic, with no metrics provided for addressing Key Result Areas. 

The lack of defined metrics means there are no targets set for lifting the level of environmental responsibility within ETG. 

This is of concern as continuous improvement in addressing environmental issues is core to the values of ETG. 

Attachment 2 

Adjunct Internal audit report on environmental policy 

The environmental policy can be upgraded to achieve real improvements rather than a generic wish list as expressed currently. 

In particular, the action taken to minimse environmental impact needs to be more specific so as to encourage tangible initiatives. 

Environmental targets and objectives need to be specifically referred to in the policy so that KPIs can then be developed around these objectives. 

The criteria currently incorporated in the Triple Bottom Line Scorecard are seen as a firm basis for upgrading this policy document. 

We recommend the policy be upgraded to include more specific reference to each of these triple bottom line parameters, namely greenhouse gas emissions, energy use, water use, use of recycled material, landfill waste, community contributions and safety incidents. 

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