FINANCIAL MANAGEMENT: THEORY AND PRACT
15th Edition
ISBN: 9781305632455
Author: BRIGHAM E. F.
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Question
Chapter 23, Problem 3MC
Summary Introduction
Case summary: TSI, a mid-sized company has hired a financial analyst. The company creates the exotic sauces from imported fruits and vegetables. The CEO of the company has asked the financial analyst to prepare a report on enterprise risk management so that firm’s executive may gain knowledge about enterprise risk management as no one knows about it in the organization.
To determine: The COSO and also enterprise risk management defined by COSO.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
You are an independent consultant hired by Penmen Groceries, and they are exploring options to modernize their accounting information system (AIS). They are looking for an audit company to help them, so your manager has requested a client letter explaining how vulnerabilities can impact an organization's AIS and why an IT environment is crucial to financial reporting. Specifically, your manager is focused on phishing, malware, and ransomware, as your manager has been reading a lot in the news about these vulnerabilities causing problems for organizations.
This milestone will help you with Project One, where you will be required to determine the specific risks and efficiencies of an updated computerized accounting information system.
Directions
In this assignment, you will write a client letter that explains the impact of vulnerabilities on an organization 's AIS and the importance of strong technology controls in the IT environment.
Specifically, you must address the following rubric…
You are the chief information officer for a midsized organization that has decided to implement an ERP system. The CEO has met with a consulting ERP firm based on a recommendation from a personal friend at his club. At the interview, the president of the consulting firm introduced the chief consultant, who was charming, personable, and seemed very knowledgeable. The CEO’s first instinct was to sign a contract with the consultant, but he decided to hold off until he had received your input. Required Write a memo to the CEO presenting the issues and the risks associated with consultants. Also, outline a set of procedures that could be used as a guide in selecting a consultant.
You have recently become Head of Finance at Bhawan & Company, a company which provides catering services to the public sector. Your previous employer was Asama & Company where, as finance manager, you had the opportunity to work on areas relating to financial accounting, procurement, contracts, and bids. One of Company Bhawan & Company’s major contracts is with Asama & Company. The contract is now up for renewal, and Company Bhawan & Company is preparing a competitive bid for this contract. You have been asked to lead the team responsible for bidding for this contract. You also suspect that your knowledge and experience of Asama & Company were good reasons for appointing you to the position at Bhawan & Company. You do not want to let your new employer down. The loss of such a major contract would have a significant effect on the financial performance of Bhawan & Company and its performance-related bonus scheme for management.- Specify the threat…
Chapter 23 Solutions
FINANCIAL MANAGEMENT: THEORY AND PRACT
Knowledge Booster
Similar questions
- You have recently become Head of Finance at Bhawan & Company, a company which provides catering services to the public sector. Your previous employer was Asama & Company where, as finance manager, you had the opportunity to work on areas relating to financial accounting,procurement, contracts, and bids. One of Company Bhawan & Company’s major contracts is with Asama & Company. The contract is now up for renewal, and Company Bhawan & Company is preparing a competitive bid for this contract. You have been asked to lead the team responsiblefor bidding for this contract. You also suspect that your knowledge and experience of Asama & Company were good reasons for appointing you to the position at Bhawan & Company. You do not want to let your new employer down. The loss of such a major contract would have asignificant effect on the financial performance of Bhawan & Company and its performance-related bonus scheme for management. - How do you manage the…arrow_forwardYou have recently become Head of Finance at Bhawan & Company, a company which provides catering services to the public sector. Your previous employer was Asama & Company where, as finance manager, you had the opportunity to work on areas relating to financial accounting,procurement, contracts, and bids. One of Company Bhawan & Company’s major contracts is with Asama & Company. The contract is now up for renewal, and Company Bhawan & Company is preparing a competitive bid for this contract. You have been asked to lead the team responsiblefor bidding for this contract. You also suspect that your knowledge and experience of Asama & Company were good reasons for appointing you to the position at Bhawan & Company. You do not want to let your new employer down. The loss of such a major contract would have a significant effect on the financial performance of Bhawan & Company and its performance-related bonus scheme for management. - is there the professional…arrow_forwardYou have recently become Head of Finance at Bhawan & Company, a company which provides catering services to the public sector. Your previous employer was Asama & Company where, as finance manager, you had the opportunity to work on areas relating to financial accounting,procurement, contracts, and bids. One of Company Bhawan & Company’s major contracts is with Asama & Company. The contract is now up for renewal, and Company Bhawan & Company is preparing a competitive bid for this contract. You have been asked to lead the team responsiblefor bidding for this contract. You also suspect that your knowledge and experience of Asama & Company were good reasons for appointing you to the position at Bhawan & Company. You do not want to let your new employer down. The loss of such a major contract would have asignificant effect on the financial performance of Bhawan & Company and its performance-related bonus scheme for management. What is threat associated with…arrow_forward
- financial analyst by Tropical Sweets Inc., a midsized California company that specializes in creating exoticcandies from tropical fruits such as mangoes, papayas, and dates. The firm’s CEO, George Yamaguchi,recently returned from an industry corporate executive conference in San Francisco. One of the sessionshe attended was on the pressing need for smaller companies to institute corporate risk management programs.As no one at Tropical Sweets is familiar with the basics of derivatives and corporate risk management,Yamaguchi has asked you to prepare a brief report that the firm’s executives can use to gain at leasta cursory understanding of the topics.To begin, you gather some outside materials on derivatives and corporate risk management anduse those materials to draft a list of pertinent questions that need to be answered. In fact, one possibleapproach to the paper is to use a question-and-answer format. Now that the questions have been drafted,you must develop the answers.a. Why might…arrow_forwardAs a newly minted MBA, you’ve taken a management position with Exotic Cuisines, Inc., a restaurant chain that just went public last year. The company’s restaurants specialize in exotic main dishes, using ingredients such as alligator, buffalo, and ostrich. A concern you had going in was that the restaurant business is very risky. However, after some due diligence, you discovered a common misperception about the restaurant industry. It is widely thought that 90 percent of new restaurants close within three years; however, recent evidence suggests the failure rate is closer to 60 percent over three years. So, it is a risky business, although not as risky as you originally thought. During your interview process, one of the benefits mentioned was employee stock options. Upon signing your employment contract, you received options with a strike price of $40 for 10,000 shares of company stock. As is fairly common, your stock options have a 3-year vesting period and a 10-year expiration,…arrow_forwardYou have recently become Head of Finance at Bhawan & Company, a company which provides catering services to the public sector. Your previous employer was Asama & Company where, asfinance manager, you had the opportunity to work on areas relating to financial accounting,procurement, contracts, and bids. One of Company Bhawan & Company’s major contracts is with Asama & Company. The contract is now up for renewal, and Company Bhawan & Company is preparing a competitive bid for this contract. You have been asked to lead the team responsiblefor bidding for this contract. You also suspect that your knowledge and experience of Asama & Company were good reasons for appointing you to the position at Bhawan & Company. You do not want to let your new employer down. The loss of such a major contract would have a significant effect on the financial performance of Bhawan & Company and its performance-related bonus scheme for management.- Do you think there is a kind…arrow_forward
- You are an Acquisition Offer for an Investment Bank. You work in the High- Tech Investment Division of the Investment Bank. You understand high tech companies come and go very quickly. You also understand that the technology changes so quickly that a long-term forecast can be worthless very quickly. It is a changing market. You have been offered the opportunity to acquire a Silicon Valley based high tech company. You must decide if you recommend making the acquisition. You have been told that you must operate with a 6.0% WACC. You have decided that you will make your recommendation based upon a four-year forecast. The Company: The company, MERCO, makes processing chips for Intel. MERCO has signed two contracts with Intel. The first expires in two years and pays the company an annual amount of $1,924,261 and $2,212,900 for each year. The second contract was signed because Intel was happy with the work MERCO had done for it. The…arrow_forwardThe CFO of PKD Corporation is very uncomfortable with its current risk exposure related to the possibility of business disruptions. Specifically, PKD is heavily involved in E-business, and its internal information systems are tightly interlinked with its key customers’ systems. The CFO has estimated that every hour of system downtime will cost the company about $10,000 in sales. The CFO and CIO have further estimated that if the system were to fail, the average downtime would be one hour per incident. They have anticipated that PKD will likely experience 50 downtime incidents in a given year due to internal computer system problems and another 50 incidents per year due to external problems—specifically, system failures with the Internet service provider (ISP). Currently, PKD pays an annualized cost of $150,000 for redundant computer and communication systems, and $100,000 for ISP support just to keep the total expected number of incidents to 100 per year. Required: Given the…arrow_forwardImagine that your firm is looking to replace its AIS application. The AIS application has been around for 10+ years. You are a member of the team that will select the new AIS application. There is discussion among the team that the new AIS should only focus on producing financial statements while other reports should be designed and developed by the internal IT team. What are the advantages and disadvantages of following this advice?arrow_forward
- Assume that you have finished your MBA program and have applied for a position in the Financial Accounting Department of a large multinational company. The company is struggling with its accounting reporting matters and several accounting reports are under regulatory scrutiny. In the interview board, the recruitment committee members have asked you the following questions. What have you learnt in the BUS 505 course relating to financial accounting? How you can contribute the Financial Accounting Department of this company if you are recruited?arrow_forwardYou have been presented with the following draft financial information about Bata Ltd, a very successful company that develops and licenses specialist computer software and hardware. Its noncurrent assets mainly consist of property, computer hardware and investments, and there have been additions to these during the year. The company is experiencing increasing competition from rival companies, most of which specialize in hardware or software, but not both. There is pressure to advertise and to cut prices. You are the audit manager. You are planning the audit and are conducting a preliminary analytical review and associated risk analysis for this client for the year ended 31 July 2019. You have been provided with a summarized draft income statement which has been produced very quickly and certain accounting ratios and percentages. You have been informed that the company accounts for research and development costs in accordance with IAS 38 Intangible Assets. Required: (i) Based on the…arrow_forwardAfter finishing your accounting degree, you joined an accounting firm. This is a medium-size accountingfirm with a reasonable range of clients. You are in an engagement meeting with one of your clients, andyour client's management raises some concerns. In particular, the management is concerned that theaudit tests that you perform will disrupt operations. Your client has recently implemented a datawarehouse. The management suggests that you draw the data for analytical reviews and substantivetesting from the data warehouse instead of the operational database. Further, the management pointsout that operational data are copied weekly into the data warehouse, and all data you need are containedthere.Required: Based on the given scenario, outline your response to the management's proposal and mentionany concerns you might have.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning