Levers of Control, Balanced Scorecard 1, Non-Financial Performance Article

Levers of Control, Balanced Scorecard 1, Non-Financial Performance Measures - Article Example The writers say that there are still a lot of firms which do not realize the importance of nonfinancial performance measures and have no such procedures to measure them, on other hand there are many others which only use off the shelf procedures and frameworks for measuring it and do not dig deep to track the activities which actually affect the framework. Companies make many mistakes in using these off-the-shelf and even their own frameworks one of which is that they do not link the measures to the strategy and don’t know that which nonfinancial performance measure they should track. In their research they found that only 30% firms have developed their own causal models which develop cause-and-effect relationship between chosen drivers of strategic success and outcomes. Second mistakes the companies make is that even after developing causal models they do not validate the link between the selected measures and strategy, i.e. afterwards they do not examine the results to verif y that if their selected measure is actually contributing towards the goal or not, or to what extent it is effective for achieving goal, so that it may be weighed accordingly and thus they remain fail to determine the relative importance of each measure and resultantly they fail in proper allocation of resources. During their research they found that out the firms that develop causal models, only 21% of them validated the link between measures and strategy. The third mistake made by the firms is that they do not establish right performance targets. Because right performance is only beneficial or fruitful upto a certain extent and after that point it produces diminishing or even negative returns, so it’s very important to set a level for right performance so that resources are not wasted into non-productive or counterproductive activities and may be directed towards more productive factors. Fourthly, about 70% of the firms that build causal models and validate links between se lected measures and strategy and set right performance targets, adopt such metrics to measure the results which lack statistical validity and reliability. To solve the four problems discussed above writers have lined a six step procedure according to which; firstly, a causal model should be developed on the basis of the hypothesis in the strategic plan. Secondly, firm should pull up the useful data from already available data and by using all of the available data and systems of all of the departments. Thirdly, collected data should be turned into information by using different statistical tools and models. Fourthly, ongoing reassessment of results should be done regularly and causal model should be refined accordingly because effectiveness of different activities goes on changing with the passage of time and new activities/ factors keep on emerging. At fifth, results and conclusions of data analysis should be used in decision making and for future planning. Finally, results and out comes should be assessed to see the effectiveness of action plans. The writers are right in concluding that nonfinancial performance measures are more effective if they are based on more sophisticated qualitative and quantitative inquiries into the factors actually contributing to the economic results. The article â€Å"How new top managers use control systems as levers of strategic renewal†

Business research project Essay Example | Topics and Well Written Essays - 6500 words

Business research project - Essay Example Such a job is complicated poses several challenges for the employee when dealing with the difference in the countries like cultural differences, language, legal, political and economic scenarios that he needs to be accustomed to. MNCs of all sizes today counter the issues of facilitating the right type of training to their employees, selection of the employees for expatriate jobs and ensuring that these managers are integrated well in the new environment. Hill (2007) adds that even with such problems entailing such managers, businesses today are still venturing in international field experiences because such business setups across the global enables the firms to grow multi-dimensionally and form an important resource for the firm. Profits boom and the firm is not dependent on one market only. Especially in the case of economic downturns in the west, industries are now seeking businesses in China and India, which they are doing so by incorporating international field experiences for the employees in these markets. These employees give the firms valuable insight into the new markets and help the businesses decide whether they are prospective markets for future investments or not. Even though there may be demand for the product the firms may decide not to enter the market due to cultural barriers, legal issues and political scenarios, which may only be known, when employees are sent on international projects to test out the market prospects. International field experience is not a novel concept. It is when an employee of a firm is sent to work in another country to the firm’s subsidiary. Rowold (2007, 21-36) adds that these employees are expected to control and administer the business simultaneously syncing its operation with the centre of operations, which may be in his hometown. Such learning offers rare developmental chances for the individual by giving him more flexibility both at personal and

Subsidy in the Newspaper Industry Essay Example | Topics and Well Written Essays - 1750 words

Subsidy in the Newspaper Industry - Essay Example This very reason, a discussion and analysis of the way in which subsidies can and should be engaged is required so that the ultimate utility to follow society can be found. For purposes of this brief analysis, the author will focus upon necessity and/or exemptions from tax revenue with regards to print journalism. As a function of such a method of research, the possible benefits, it is, and drawbacks will be discussed as well as an analysis and discussion into these stakeholders with this particular debate and the means by which such a method of differs from many of the other approaches that have thus far been discussed within the course. The first and most obvious stakeholder with regards to this particular issue is the tax payer himself/herself. As the one who is most responsible for subsidizing the newsprint organization, this stakeholder is directly involved in any wealth redistribution that might take place in the form of a government subsidy. A secondary, and obvious, stakehold er is the newsprint organization itself. A third stakeholder can be determined as broader society as it would be the ones that would feel the positive secondary and tangential benefits and drawbacks of newsprint subsidization. Naturally, through such a group of stakeholders it must also be noted that the government itself can be considered a stakeholder as well.1 Through an examination of the utility and lack of utility that newsprint subsidization effects on each of these stakeholders, it it’s the hope of this author to paint a more broad and nuanced view of this very issue to the reader. Firstly, it must be understood that newsprint subsidization is ultimately a tool that the government can use to increase and retain a talent pool within a given economy. Ultimately, the reader does not need to go into a great level of research or detail to note the fact that newsprint organizations are rapidly losing market share to technology and the means through which news is succinctly and immediately represented via the Internet. However, even though technological change and the shift away from newsprint have a definitive advantage, it also comes at a definitive disadvantage for society. A litany of studies has noted the fact that individuals who consume the majority of their news from the Internet and/or TV outlets invariably spend much less of their time reading.2 Moreover, and integration with newsprint invariably increases the level of current affairs knowledge and effective communication skills that the individual who utilizes it represents. The core question with regards to this dynamic is whether or not subsidized nation of newsprint is in and of itself worth the expense. As the readership of newspapers in general has dropped precipitously over the past several years, the ultimate utility that can be gained by subsidizing newsprint must be weighed against the ultimate loss that would be incurred with regards to the subsidy/tax money that would be spent. An other important element of newspaper/newsprint subsidization is with regards to the historical preservation element. What is meant by this is the fact that many of the newspapers that currently exist throughout the developed world has been in existence for the better part of several centuries.3 Ultimately, some of the oldest newspapers in the world paid back to the very beginning of modern print journalism and/or the printing press. As a function of this, allowing newsprint to merely fold and shutter its doors would obviously have a negative impact with regards to the cultural and historical legacy that these could continue to promote. However, once again, the stakeholders in this issue must be weighed as compared to the

Levers of Control, Balanced Scorecard 1, Non-Financial Performance Article

Levers of Control, Balanced Scorecard 1, Non-Financial Performance Measures - Article Example The writers say that there are still a lot of firms which do not realize the importance of nonfinancial performance measures and have no such procedures to measure them, on other hand there are many others which only use off the shelf procedures and frameworks for measuring it and do not dig deep to track the activities which actually affect the framework. Companies make many mistakes in using these off-the-shelf and even their own frameworks one of which is that they do not link the measures to the strategy and don’t know that which nonfinancial performance measure they should track. In their research they found that only 30% firms have developed their own causal models which develop cause-and-effect relationship between chosen drivers of strategic success and outcomes. Second mistakes the companies make is that even after developing causal models they do not validate the link between the selected measures and strategy, i.e. afterwards they do not examine the results to verif y that if their selected measure is actually contributing towards the goal or not, or to what extent it is effective for achieving goal, so that it may be weighed accordingly and thus they remain fail to determine the relative importance of each measure and resultantly they fail in proper allocation of resources. During their research they found that out the firms that develop causal models, only 21% of them validated the link between measures and strategy. The third mistake made by the firms is that they do not establish right performance targets. Because right performance is only beneficial or fruitful upto a certain extent and after that point it produces diminishing or even negative returns, so it’s very important to set a level for right performance so that resources are not wasted into non-productive or counterproductive activities and may be directed towards more productive factors. Fourthly, about 70% of the firms that build causal models and validate links between se lected measures and strategy and set right performance targets, adopt such metrics to measure the results which lack statistical validity and reliability. To solve the four problems discussed above writers have lined a six step procedure according to which; firstly, a causal model should be developed on the basis of the hypothesis in the strategic plan. Secondly, firm should pull up the useful data from already available data and by using all of the available data and systems of all of the departments. Thirdly, collected data should be turned into information by using different statistical tools and models. Fourthly, ongoing reassessment of results should be done regularly and causal model should be refined accordingly because effectiveness of different activities goes on changing with the passage of time and new activities/ factors keep on emerging. At fifth, results and conclusions of data analysis should be used in decision making and for future planning. Finally, results and out comes should be assessed to see the effectiveness of action plans. The writers are right in concluding that nonfinancial performance measures are more effective if they are based on more sophisticated qualitative and quantitative inquiries into the factors actually contributing to the economic results. The article â€Å"How new top managers use control systems as levers of strategic renewal†

Subsidy in the Newspaper Industry Essay Example | Topics and Well Written Essays - 1750 words

Subsidy in the Newspaper Industry - Essay Example This very reason, a discussion and analysis of the way in which subsidies can and should be engaged is required so that the ultimate utility to follow society can be found. For purposes of this brief analysis, the author will focus upon necessity and/or exemptions from tax revenue with regards to print journalism. As a function of such a method of research, the possible benefits, it is, and drawbacks will be discussed as well as an analysis and discussion into these stakeholders with this particular debate and the means by which such a method of differs from many of the other approaches that have thus far been discussed within the course. The first and most obvious stakeholder with regards to this particular issue is the tax payer himself/herself. As the one who is most responsible for subsidizing the newsprint organization, this stakeholder is directly involved in any wealth redistribution that might take place in the form of a government subsidy. A secondary, and obvious, stakehold er is the newsprint organization itself. A third stakeholder can be determined as broader society as it would be the ones that would feel the positive secondary and tangential benefits and drawbacks of newsprint subsidization. Naturally, through such a group of stakeholders it must also be noted that the government itself can be considered a stakeholder as well.1 Through an examination of the utility and lack of utility that newsprint subsidization effects on each of these stakeholders, it it’s the hope of this author to paint a more broad and nuanced view of this very issue to the reader. Firstly, it must be understood that newsprint subsidization is ultimately a tool that the government can use to increase and retain a talent pool within a given economy. Ultimately, the reader does not need to go into a great level of research or detail to note the fact that newsprint organizations are rapidly losing market share to technology and the means through which news is succinctly and immediately represented via the Internet. However, even though technological change and the shift away from newsprint have a definitive advantage, it also comes at a definitive disadvantage for society. A litany of studies has noted the fact that individuals who consume the majority of their news from the Internet and/or TV outlets invariably spend much less of their time reading.2 Moreover, and integration with newsprint invariably increases the level of current affairs knowledge and effective communication skills that the individual who utilizes it represents. The core question with regards to this dynamic is whether or not subsidized nation of newsprint is in and of itself worth the expense. As the readership of newspapers in general has dropped precipitously over the past several years, the ultimate utility that can be gained by subsidizing newsprint must be weighed against the ultimate loss that would be incurred with regards to the subsidy/tax money that would be spent. An other important element of newspaper/newsprint subsidization is with regards to the historical preservation element. What is meant by this is the fact that many of the newspapers that currently exist throughout the developed world has been in existence for the better part of several centuries.3 Ultimately, some of the oldest newspapers in the world paid back to the very beginning of modern print journalism and/or the printing press. As a function of this, allowing newsprint to merely fold and shutter its doors would obviously have a negative impact with regards to the cultural and historical legacy that these could continue to promote. However, once again, the stakeholders in this issue must be weighed as compared to the

Who Killed the Electric Car Analysis Essay Example for Free

Who Killed the Electric Car Analysis Essay Who Killed the Electric Car? is a powerful tool pertinent to many academic disciplines and adaptable to a variety of abilities, learning styles, and classroom goals. This rich, self-contained film requires little or no additional research on the part of the instructor or the class, but can be used as the foundation for independent student research. The film divides neatly into two nearly equal and independent segments that can be shown on successive days or at different points in a unit. Both segments offer excellent discussion opportunities. The classroom experience of students taking courses on environmental science or offerings that include a unit on air quality or environmental concerns would be enriched by viewing Who Killed the Electric Car?. Courses that encourage interest in engineering and practical math applications would also benefit. The ethical and civic questions that the film explores offer a natural connection for teachers working in the area of civics, government, ethics, and business ethics. In many of these courses the film could be treated as a case study. The ethical questions raised are nearly unlimited and a large variety of higher-level-thinking activities can be developed from the film. Included in this packet are discussion prompts, class activities, and research suggestions. 1 FILM SUMMARY included, the General Motors electric vehicle is featured. As this segment concludes, the success of the industry’s legal strategy is symbolized by a celebrity-studded funeral for the electric car. This segment is filled with factual analysis that examines conflicting claims about emissions, practicality, costs of various fuels, and consumer demand. Who Killed the Electric Car? is presented as a whodone-it mystery. Staying true to this genre, the film opens with necessary background information, describes the crime committed, answering all of the what, where, and when questions, and then in the style of Sir Arthur Conan Doyle gathers the suspects for close scrutiny, coming to a conclusion on the guilt or innocence of each. The second half of Who Killed the Electric Car? is Sherlock Holmes at his best. The seven suspects identified in the first half of the film are scrutinized. One by one, consumers, batteries, oil companies, auto manufacturers, the U. S. government, the California Air Resources Board, and the newest villain, the hydrogen car, pass under the bare bulb in the inspector’s interrogation room in an attempt to answer the question asked in the film’s title: Who Killed the Electric Car? At the end of each segment the featured suspect is judged as guilty or innocent. Opening with a bit of automotive history that establishes the electric car as a competitive alternative to the internal combustion engine, Who Killed the Electric Car? takes the viewer back to the beginning of the twentieth century and the dawn of the automotive age. A straightforward explanation of why gasoline beats out electricity as the fuel of choice and how the internal combustion engine wins dominance concludes the broad overview. The film then moves to the recent past with the introduction of the California Air Resources Board and their 1990 decision to require that ten percent of all cars sold in California by each car manufacturer be zero-emission vehicles by the year 2003. The Dr. Jekyll and Mr. Hyde response of automotive companies is revealed; production and marketing of zero-emission cars is detailed, a period during which the legal and political teams of the same manufacturers work to defeat the law that gave birth to modern electric vehicles. While several manufacturers are The film ends on a positive note, recognizing a grassroots movement that envisions cleaner air and energy independence. In a John Kennedy-style appeal, the film claims that those who solve our energy conundrum will be those that â€Å"change the world. † 2 SELECTED SCENES FOR CLASSROOM REVIEW 1:19 19:40 Two million new cars are sold in Television advertisement for G. M. ’s California each year. electric car. 2:55 21:21 Cheap oil supports the combustion Introduce Dr. Alan Lloyd of C. A. R. B. engine over the electric car. 3:35 22:10 Air quality in California: Manufacturer’s lawsuit to â€Å"Black cloud of death. † overturn emissions standards. 4:32 22:30 Each gallon of gasoline burned yields President Bush endorsing hydrogen 19 pounds of carbon dioxide. technology in the State of the Union. 4:55 22:43 Introduce S. David Freeman. Hydrogen Hummer and the hydrogen highway. 7:40 23:20 Creating demand for electric cars. C. A. R. B. hearing on the emissions standards. 8:50 25:30 C. A. R. B. and California’s C. A. R. B. vote to kill the standards. zero-emission policy. 12:40 26:15 Cost to run an electric car equals Manufacturers start to collect gasoline when gas is 60 cents per gallon. the electric cars. 14:10 27:35 Californians Against Utility â€Å"Save the electric car† campaign, Company Abuse including the mock funeral. 16:10 29:30 G. M. claims to have built electric cars Last EV1 collected. according to demand. 19:10 31:20 Marketing; How far, how fast, EV1s in a G. M. lot. how much? 3 33:20 50:36 G. M. spokesperson explains the Suspect: Car Manufacturers fate of the collected EV1s. 35:30 56:20 PBS at the car crusher. Suspect: Government 36:58 1:03:57 S. David Freeman, â€Å"We’re up against Suspect: C. A. R. B. most of the money in the world. † 37:15 1:07:02 Vigil for the EV1s. Suspect: Hydrogen Fuel Cell 38:40 1:11:08 Would you buy one of these electric President Bush at a hydrogen cars? Display check for 1. 9 million filling station. dollars offered to G. M. 39:20 1:15:05 â€Å"Who controls the future? Last cars moved. He who has the biggest club. † 1:18:52 39:34 1 Scene from Naked Gun 2 /2: Automotive Museum The Smell of Fear. 40:25 1:20:30 List of suspects. Verdicts. 40:58 1:22:32 Suspect: Consumers â€Å"The fight about the electric car was quite simply a fight about the future. † 43:20 1:23:58 Suspect: Batteries Introduce James Woolsey and Plug In America. 1:27:19 46:38 â€Å"The one group of people that steps Suspect: Oil Companies up to take it on is the group that will change the world. † 4 DISCUSSION PROMPTS. These prompts can be used for full-class discussion, small group conversations, or adapted for use as writing assignments of varying length and detail. †¢ What compromises related to cars and transportation are you willing to make to preserve and improve air quality? Brainstorm possibilities and then discuss each one, focusing on the average consumer. †¢ What one assertion in the film do you disagree with? Why? †¢ What one assertion in the film troubles you the most? Why? †¢ In your own words, explain why the car manufacturers collected and destroyed the electric vehicles. †¢ Did government serve the people in the case of electric cars? Why? †¢ Does government have the right to tell companies what to manufacture? Why? †¢ How important an issue is our nation’s dependence on oil? Explain. †¢ Do you agree that those who solve the energy question will change the world? Explain. †¢ Should the world oil supply be divided evenly according to population, given to those able to pay the highest price, or reserved for developing nations? Explain your opinion. †¢ Is it acceptable for a nation to use oil as a weapon? Why/why not? †¢ Would you characterize each of the following as a good citizen or a bad citizen? Why? -The oil companies -The automobile companies -U. S.consumers -Scientists researching hydrogen fuel -The citizens trying to save the electric car †¢ Is energy a national security issue? Why/how? Explain. †¢ How is the use of hydrogen as a fuel related to the reemergence of nuclear power? †¢ Does drilling for more oil in the pristine wilderness make sense? Why/why not? †¢ Given the information provided in the film, do you believe electric cars are a reasonable alternative to combustion engines? Why/why not? †¢ Given the information provided in the film, do you believe you will be able to buy a hydrogen-powered car in the next 10 years? 20 years? Ever? Why/why not? 5 MOCK COURT Choose defense and prosecution teams for each of the seven defendants identified in the film. Have the teams prepare for a mock trial using the information in the film and if desired, additional research. Stage a trial with a jury that has not seen the film. Roles: Judge: Acts as presiding officer maintaining order, resolving conflicts, and charging the jury. Prosecution team: Presents evidence against the named defendant using witnesses, charts, graphs, and physical evidence. The team would also cross-examine defense witnesses. The prosecution’s job is to prove beyond a reasonable doubt the guilt of the defendant. Defense team: Presents evidence that rebuts the prosecution’s view and may suggest alternative perpetrators. The defense may use witnesses, charts, graphs, and physical evidence. The team would also cross-examine prosecution witnesses. The defense’s job is to create reasonable doubt as to the guilt of the defendant. This activity can be used as an alternative assessment of student knowledge while also building critical thinking and oral presentation skills. 6 COMMON GOOD Open the activity by reading the paragraph below. Allow for a few minutes of general comment on the concept of the â€Å"common good† and the claim by then G. M. president Charles E. Wilson: What’s good for the country is good for General Motors and vice versa. The preamble to the United States Constitution opens with the words: â€Å"We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America. † These words imply a common interest that is shared by citizens and government, a concept often referred to as the â€Å"common good. † In 1953, the then president of General Motors, Charles E. Wilson, was nominated by President Dwight Eisenhower to serve as his Secretary of Defense. During Wilson’s confirmation hearings, senators were concerned that he would have difficulty making a decision that could hurt General Motors, a major defense contractor, even if the decision was in the best interest of the United States. When asked this question, Wilson assured senators that he could make such a decision but that he could not imagine such a situation, â€Å"because for years I thought what was good for the country was good for General Motors and vice versa. † Student instruction Who Killed the Electric Car? implies that the â€Å"common good† is not being served by the decision to abandon electric vehicles and embrace hydrogen technology. Write your own definition of the â€Å"common good. † Make groups of 3 to 5 and share these definitions. Try to agree on a group definition. Evaluate General Motors’ decision to kill the electric car program in light of your group’s definition. Be ready to report your findings to the class. Do Mr. Wilson’s thoughts from 1953 reflect the General Motors Corporation that is presented in the film? If the Senate called the current president of G. M. to explain the death of the electric car, imagine what he might say that would be quoted more than 50 years later. 7 HIDDEN AGENDA Teacher introduction As a class, brainstorm about the term â€Å"hidden agenda. † When you get all the ideas on the board, make groups of 3 to 5. In groups, have the class discuss the ideas on the board and then write a definition of â€Å"hidden agenda† that the group can agree on. As a class, share these definitions and create one working definition for the whole class. Have students return to their groups and discuss what â€Å"hidden agenda(s)† the following may have had. To make a claim, the group must have at least one piece of solid evidence from the film. Each group should decide which three of their claims are the strongest and prepare to present them to the class. Present and discuss: Automobile companies: Hidden agenda: _____________________________________________________________________________________ Evidence: Oil companies: Hidden agenda: _____________________________________________________________________________________ Evidence: Filmmakers: Hidden agenda: _____________________________________________________________________________________ Evidence: Car companies: Hidden agenda: _____________________________________________________________________________________ Evidence: Federal government: Hidden agenda: _____________________________________________________________________________________ Evidence: Fans of the electric car: Hidden agenda: _____________________________________________________________________________________ Evidence: C. A. R. B. : Hidden agenda: _____________________________________________________________________________________ Evidence: 8 WHAT IS THE ROLE OF BUSINESS? What is the role of business in a democratic/capitalist society? The complex interaction between business, government, and consumers is presented as a case study in Who Killed the Electric Car?. After viewing the film, clarify your own attitude toward the role of business, before any discussion, by using the prompts that follow. Prioritize the entire list from 1, most important, to 10, least important, and then write just a sentence or two that explains each ranking. Using your results, make groups that include individuals with different attitudes. While you discuss the movie, analyze how different views of business influence opinions about the film. ______ The role of business is to make a profit. ______ The role of business is to make a good product. ______ The role of business is to serve the consumer. ______ The role of business is to support government. ______ The role of business is to educate government. ______ The role of business is to educate consumers. ______ The role of business is to improve life. ______ The role of business is to protect the environment. ______ The role of business is to provide consumers with choice. ______ The role of business is to invent solutions to society’s problems. 9 WHAT IS THE ROLE OF GOVERNMENT? What is the role of government in a democratic/capitalist society? The complex interaction between business, government, and citizens is presented as a case study in Who Killed the Electric Car?. After viewing the film, clarify your own attitude toward the role of government, before any discussion, by using the prompts that follow. Prioritize the entire list from 1, most important, to 10, least important, and then write just a sentence or two that explains each ranking. Using your results, make groups that include individuals with different attitudes. While you discuss the movie, analyze how different views of government influence opinions about the film. ______ The role of government is to defend the nation. ______ The role of government is to create a just society. ______ The role of government is to protect the consumer. ______ The role of government is to protect business. ______ The role of government is to regulate business. ______ The role of government is to educate consumers. ______ The role of government is to improve life for all citizens. ______ The role of government is to protect the environment. ______ The role of government is to provide consumers with choice. ______ The role of government is to invent solutions to society’s problems. 10 MAKING THE CASE. In the second half of Who Killed the Electric Car? , each of the suspects in this mystery is held up to scrutiny. Acting as an unbiased detective, develop a list of the evidence offered for guilt and the evidence that indicates innocence. In groups or as a class, use these evidence lists as the basis for a debate that leads to a vote on each suspect. The suspect___________________________________________________ Evidence to convict Evidence to acquit 11 BRIAN DANIELS teaches history and ethics at Hudson High School, Hudson, Massachusetts. He is the school facilitator for the democratic school initiative at. Hudson High and an active member of the school’s First Amendment Schools team. He has been teaching for thirty years and holds bachelor’s degrees in history and psychology from Boston College and a master’s degree in critical and creative thinking from the University of Massachusetts at Boston. He will become the Curriculum Director for English and Social Studies grades 6-12 in the Hudson school district in the summer of 2006. He has been published several times in the Boston Globe and has an article slated for publication in October of 2006 in the National Social Studies. Supervisors Association magazine. A SONY PICTURES CLASSICS RELEASE ELECTRIC ENTERTAINMENT PRESENTS A DEAN DEVLIN/PLINYMINOR PRODUCTION A FILM BY CHRIS PAINE â€Å"WHO KILLED THE ELECTRIC CAR? † NARRATED BY MARTIN SHEEN EDITED BY MICHAEL KOVALENKO CHRIS A. PETERSON DIRECTOR OF PHOTOGRAPHY THADDEUS WADLEIGH ORIGINAL MUSIC BY MICHAEL BROOK CONSULTING PRODUCER ALEX GIBNEY EXECUTIVE PRODUCERS DEAN DEVLIN TAVIN MARIN TITUS RICHARD D. TITUS PRODUCED BY JESSIE DEETER WRITTEN AND DIRECTED BY CHRIS PAINE FOR BRIEF MILD LANGUAGE. WWW. WHOKILLEDTHEELECTRICCARMOVIE. COM WWW. SONYCLASSICS. COM.

An analysis of internal controls

An analysis of internal controls Internal control as a process, effected by an entitys board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in Three categories: 1. Effectiveness and efficiency of operations 2. Reliability of financial reporting, and 3. Compliance with applicable laws and regulations 1.Internal control our EDP System Internal controls are a vigorous part of accounting and data processing systems. It is important that the auditor be aware with the functions and uses of internal controls with respect to both manual and automatic systems. The controls of an electronic data processing system (EDP) and their identification, evaluation, and importance to the external auditor 1.1.1. Importance of Internal Control Internal controls are a important part of accounting and data processing systems. It is important that the auditor be familiar with the functions and uses of internal controls with respect to both manual and automatic systems. 1.1.2. What are Internal Controls? In a broad sense, internal control comprises controls which embrace the organizational plan and the methods used to protection the assets, create the dependability of financial data and records, endorse working efficacy and loyalty to managerial policies. Internal control is categorized by independence between departments and lines of vicarious duty and authority. It is important that these internal controls verify the dependability and correctness of the data supportive all transactions using control total techniques, sanctions and approvals, contrasts, and other tests of data accuracy. Committee on Auditing Procedure. Auditing Standards and Procedures, Statements on Auditing Procedure No. 33. New York: American Institute of Certified Public Accountants, 2008, p. 27. 1.1.3. Why Internal Controls are Important? Before management can make judgments to maximize the long run profit of a firm, it must first have dependable accounting data on which to base these decisions. This info should be timely, accurate, complete, and reliable. The protection of the assets of the firm against losses from misappropriation, robbery, failure to take discounts, inadequacy, and unjustified delays of credit are some functions of internal control that should be sufficiently interweaved in any good accounting system. These controls are necessary to assure management that the agreed procedures and orders are obeyed to since the management of large companies are not usually involved in personal supervision of their employees. Therefore, controls add reliability to accounting and financial data. Internal controls are important to deliver appropriate segregation of functional responsibilities and to create a system of authorization and sanction to provide reasonable safety over these assets, liabilities, revenues, and expenses. Sound practices shadowed in the performance of duties with in the organization and the allocations of persons of a quality appropriate with responsibilities are two additional necessary and correct functions of internal controls in any system. 1.1.4. Why the Auditor is Concerned with Internal Controls? Management identifies the needs and importance of internal controls as valuable tools to assure that events and transactions are properly carried out. The use and attendance of sufficient internal controls loans reliance and credibility to accounting records and consequently, reduces the length and detail of the audit. These internal controls reduce monotonous, routine, mechanical checks and verifications of bookkeeping accuracy, authorizing replacement of less time consuming approaches that involve judgment, reasoning, and common sense. 1.2. Internal Control Over Financial Reporting The internal control system of an entity is severely interconnected to the structure used by management to supervise the activities of the organization, or to what is defined as the entitys corporate governance. Good corporate governance should deliver proper inducements for the board and management to follow purposes that are in the interest of the company and shareholders and should ease effective monitoring, thereby encouraged firms to use resources more proficiently (OECD Principles of Corporate Governance). The Board of Directors is thus accountable for providing governance, supervision and oversight for senior management and guaranteeing that a suitable internal control system is in place and effective, meaning it ensure that foreseeable objectives are attained. Financial reporting is the connection between the company and its external environment. One of the main features which contributed to these failures relate to the internal control system established around the disclosure of information to stakeholders. It seemed that not attaining the objective of effective internal control system over financial reporting demoralizes the status of a company, even at the attendance of many other control components, making it problematic or impossible for a company to be dependable on the market, to be able to collect financing resources, to be believable to shareholders and stakeholders in general. 1.2.1. Role of the Internal Auditor in Evaluating Internal Controls The Internal auditor should scrutinize and contribute to the continuing effectiveness of the internal control system through evaluation and commendations. Though, the internal auditor is not lodged with managements primary obligation for designing, applying, maintaining and documenting internal control. Internal audit functions add value to an organizations internal control system by transporting an orderly, disciplined approach to the evaluation of risk and by making commendations to strengthen the effectiveness of risk management struggles. The internal auditor should emphasis towards improving the internal control structure and promoting better corporate governance. The role of the internal auditor consists of: Evaluation of the efficiency and effectiveness of internal control à ¢Ã¢â€š ¬Ã‚ ¢ Commending new controls where essential or stopping unnecessary controls à ¢Ã¢â€š ¬Ã‚ ¢ Using control framework à ¢Ã¢â€š ¬Ã‚ ¢ Developing Control self-valuation The internal auditors assessment of internal control includes: Æ’ËÅ"â‚ ¬Ã‚  Determining the significance and the compassion of the risk for which controls are being measured; Æ’ËÅ"â‚ ¬Ã‚  Measuring the vulnerability to misuse of resources, failure to reach objectives concerning moralities, economy, efficiency and effectiveness, or failure to accomplish accountability obligations, and non-obedience with laws and regulations. Æ’ËÅ"â‚ ¬Ã‚  Identifying and understanding the design and operation of related controls. Æ’ËÅ"â‚ ¬Ã‚  Determining the grade of control effectiveness through testing of controls. Æ’ËÅ"â‚ ¬Ã‚  Measuring the sufficiency of the control design. Æ’ËÅ"â‚ ¬Ã‚  Reporting on the internal control evaluation and debating the essential corrective actions. The comprehensive areas of review by the internal auditor in assessing the internal control System are: Æ’ËÅ"â‚ ¬Ã‚  Mission, vision, ethical and organizational worth system of the entity. Æ’ËÅ"â‚ ¬Ã‚  Personnel allocation, evaluation system, and growth policies Æ’ËÅ"â‚ ¬Ã‚  Accounting and financial reporting policies and obedience with applicable legal and regulatory standards Æ’ËÅ"â‚ ¬Ã‚  Objective of dimension and key performance pointers Æ’ËÅ"â‚ ¬Ã‚  Documentation standards Æ’ËÅ"â‚ ¬Ã‚  Risk management structure Æ’ËÅ"â‚ ¬Ã‚  Operational framework Æ’ËÅ"â‚ ¬Ã‚  Processes and procedures followed Æ’ËÅ"â‚ ¬Ã‚  Degree of management administration Æ’ËÅ"â‚ ¬Ã‚  Information systems, communication channels Æ’ËÅ"â‚ ¬Ã‚  Business Continuousness and Disaster Recovery Procedures The internal auditor should get an understanding of the important processes and internal control systems adequate to plan the internal audit engagement and develop an effective audit tactic. The internal auditor should use professional finding to assess and evaluate the adulthood of the entitys internal control. The auditor should obtain an understanding of the control environment sufficient to evaluate managements attitudes, consciousness and actions regarding internal controls and their importance in the entity. Such an understanding would also help the internal auditor to make an initial assessment of the sufficiency of the accounting and internal control systems as a basis for the preparation of the financial statements, and of the likely nature, timing and magnitude of internal audit procedures. The internal auditors measures the as is internal control system within the organization. The internal auditor should become an understanding of the internal control. Procedures adequate to develop the audit plan. In obtaining that understanding, the internal auditor would consider knowledge about the attendance or absence of control procedures obtained from the understanding of the control environment, business processes and accounting system in determining whether any additional understanding of control procedures is essential. The internal auditor should document and understand the design and operations of internal controls to assess the effectiveness of the control environment. When attaining an understanding of the business processes, accounting and internal control systems to plan the audit, the internal auditor obtains information of the design of the internal control systems and their operation. For example, an internal auditor may perform a walk-through test that is; present a few transactions through the accounting system. When the transactions selected are typical of those transactions that pass through the system, this procedure may be treated as part of the tests of control. The internal auditor should deliberate the following aspects in the evaluation of internal control system in an entity: Æ’ËÅ"â‚ ¬Ã‚  Discovering the entity has a mission statement and written goals and objectives. Æ’ËÅ"â‚ ¬Ã‚  Evaluating risks at the activity (or process) level. Æ’ËÅ"â‚ ¬Ã‚  Completing a Business Controls worksheet for each important activity (or process) in each function or department with documentation of the attendant controls and their degree of effectiveness (partial or full); arranging those activities (or processes) which are most critical to the success of the function or department Æ’ËÅ"â‚ ¬Ã‚  Ensuring that all risks identified at the entity and function or department level are addressed in the Business Controls worksheet along with the combined documentation of the operating controls. Æ’ËÅ"â‚ ¬Ã‚  Discovering from the Business Controls worksheet, those risks for which no controls exist or existing controls are insufficient. 1.2.2. The assessment of internal control over financial reporting The total assessment gives a complete opinion of the effectiveness of entitys internal control system across internal control components. To facilitate the comparability with other entities and give complete assessment of the effectiveness of an entitys internal control system as such, universal system for evaluations is needed. Assessments and audits of internal control system should be tailor-made to the size, business, operations, risks, and procedures of each company, not directed by standardized lists (Heuberger 2009). This should more exactly identify possible problems, promote more efficient allocation of resources to higher-risk areas, and encourages a focus on outcomes rather than on processes. Internal control over financial reporting can be judged effective when reasonable assurance subsists that financial statements are being prepared reliably. Quantitative assessments are intended to measure the level of confidence that can be placed on the internal control systems ability to perform effectively (Perry 2010). Perry and Warner (Ibid: 52-55) have suggested a five-step model for quantitative assessment of internal control system, which is described on figure 1.1. The most important feature to note in this framework is scoring individual control objectives against the selected model. Using a suitable framework as a basis of the evaluation helps to attain a complete and structured assessment without missing important features of internal control. Figure 1.1. Quantitative assessment of internal controls. Perry 2010: 52-55. A framework can be deemed suitable as the fundamental for evaluation, when it is free from bias; it permits reasonably consistent qualitative and quantitative measurements; it is adequately complete so that those related factors that would modify a conclusion about the effectiveness of a companys internal control over financial reporting are not mislaid; and it is related to the evaluation (PCAOB 2009: 11). There are two key components of quantitative scoring: establishing how the maximum score will be assigned within the model and determining what percentage of the total allotted score to award to each control components. The initial COSO cube provides insight into the importance of the five internal control components in relative to each other, emphasizing the great importance of control environment and observing. However, Perry. (2010:54) note that those performing the assessment should apply their own experience with and information of internal controls and use this in combining with COSO guidance. COB IT model describes numerous different levels of dependability or maturity of an internal control system. Levels may range from initial, the lowest level of dependability, to optimized, the highest. COBIT Internal control reliability model is drawing the evaluators consideration to different features of the effectiveness of internal control, which would otherwise go unobserved, e.g. documentation and perceived value of controls. At the same time, this model is incomplete with respect to COSO internal control framework, because control environment and risk assessment are not comprised. Also, difficulties may arise greatly in small and medium-sized enterprises, where documentation regarding internal control system is limited and control procedures informal, but consciousness, communication and observing functioning might still be at high level. The Internal Control Institute in the US features six categories in rating internal control components. Groups range from reactive controls to world class system pronounced in table 1.3. Each category is worth a percentage that is proportionate with the attained level of control (Perry 2005: 54). Specifically, category 1 is worth 162/3 percent (1/6) and category 6 is the highest level of maturity and is worth100 percent. The points for each control principle should be assigned according to the evaluated percentage of proposed maximum score, then concise and an assessment report prepared. In this system, the evaluators score the internal control over financial reporting according to the fulfillment of the principles of internal control through numerous criteria. The total evaluation of internal control is attained through summarizing the scores across objectives and components. Perrys model allows giving an total numerical opinion of the effectiveness of the internal control system, taking into account the distinct features of every organization by assigning different percentages for different control principles and components according to the entitys size, ownership and business activities. The assessment of the efficiency of internal control over financial reporting in an entity is closely associated to the concept of fraud. The Chartered Institute of Public Finance and Accountancy (CIPFA) defines fraud as those intentional misrepresentations of financial statements and other records which are carried out to conceal the misappropriation of assets or otherwise for gain (Pickett 2000: 550). For a person to commit fraud, three factors need to be in place: incentive or burden, chance and rationalization (Rittenberg 2005: 301; Pickett 2000: 550).