Forum Replies Created
- Posts
No idea if I understood the questions well. Probably a lot of mistakes as well.
Q1 Change in governance structure (18 marks)
New gov structure is more centralised
The previous structure had 12 partners (stated in the introduction exhibit) whereas the new one have 5 partners only with key roles.
As per the new gov structure, there were too many responsibilities such as remuneration, risk, internal controls and quality, and appointment of partners. So, there needed to be seperate committees for each.
Decisions would take longer to be made under new structure because too many responsiblities and lack of focus.
Slow decisions making evidenced by only 1 full partners meeting in the year (but this related to current gov structure) !?!?
Need for HR partner in gov body because higher number of staffs
Q2 Proposed sale of consultancy firm (17 marks)
Small offices has lower operating margins so it is ok to sell to improve total operating margins
Small offices represent 8% total revenue, so they must be able to cover lost revenue
Small offices more focused on tax compliance which is 15% total revenue, so they will lose more in this market.
Redundant employees joined competitors and shared trade secrets
Redundant disgruntled employees lead to reputational issues
Labour laws consideration for redundant employees
More resources to focus on medium and large offices (Barely talked about the positive points)
Q3 Email about conduct of Audit Partner (24 marks)
Ethical: self interest in property development, familiarity with Dominic, lack of prof competence due to poor review and lack of understanding of audit process by Senior partner, lack of integrity because deliberate attempt to provide only clean audit files to quality control reviewers.
Business problems: Affect audit planning because Senior Partner did not use centralised system, miss client deadline due to understaff, low quality work due to poor planning leading to reputation issues. Fail to comply with standards and regulations if no proper review is done leading to legal and reputational issues. If the three payments to property development are fraudulous, could lead to reputation issues
Recommendations: engage seperate team to investigate, check payment of holidays are not excessive gifts from Dominic, check that three payments to property are really consultancy services, quality control reviewers should select files at random.
Q4 Automation, Internal Audit (28 marks)
Pros: capitalise on growing market for data analytics, analyse huge amount of data, analyse complex transactions, better quality audit
Cons: may lack resources to implement for large operations like bigger firms,
may need to reallocate resources from other dept to implement data analytics,
difficulty implementing because lack of training?!?Q4(b) Audit approach: not compatible with smaller firms in Ray Farr. Need to change approach to accommodate small, medium, and large size firms
Q5 Slides about rival firms, opportunities and changing culture (13 marks)
Decreased profitability, increasing costs. Need for more effort
Need to implement data analytics to compete
Employees leaving to join competitors!?!?
