Exam 5: Management Concepts

Miguel and Rafaela were developing a risk management plan for their company following the COSO framework.One of the company's goals is to have sufficient cash available for operations; that goal had been difficult to achieve due to seasonal fluctuations in sales.To reduce that risk, Miguel and Rafaela recommended their company invest some cash in short-term securities that could be liquidated quickly and easily.Which element of the COSO framework is most related to their recommendation?

"Control activities" are one element of the COSO ERM framework.To develop control activities, organizations may need to apply: (i) the FASB Conceptual Framework, (ii) expectancy theory, (iii) the generalized model of business process management.

Nestor and Maureen are partners in a small consulting firm located in the Republic of Bufflufia; the firm has six employees.For the last five years, the firm has focused on tax planning and tax return preparation.But, Nestor and Maureen are now interested in expanding the firm's scope of services.They are considering risk management consulting, fraud examination and business valuation as potential areas to expand the firm.They are sure at least three of their six employees would put effort into at least one of those three areas, but expanding the firm's services would require additional training for everyone.Based on the short case above, which of the following statements is most true?

Consider the following statements as you respond to the question: i.Ask managers to think of one hundred uses for a brick, other than for building things.ii.Assess the educational background and organizational experience of employees.iii.Conduct a one-day seminar on how business processes can create value in the marketplace.iv.Encourage managers to suggest ideas, even if they are impractical.v.Hold weekly meetings to update interested parties on the BPM project; ensure at least one member of top management attends each meeting.vi.Ignore opinions and insights from people not directly involved with a business process.The text discussed seven basic principles of business process management.Which one is not illustrated by any of the six statements?

Because of the relationship between the variables in expectancy theory:

In the COSO enterprise risk management framework, an organization's overall tone relates most closely to:

Casa Ruiz is a Mexican restaurant in southern California.Its inventory purchasing process involved several steps.On a weekly basis, the head chef estimated the total supplies needed in the kitchen; the head waiter estimated the total supplies needed for the dining room.The head waiter summarized all the information and prepared a list of needed supplies for Mr.Ruiz, the owner.Mr.Ruiz kept an alphabetized list of potential suppliers; each week, he would contact one supplier from the list to place the restaurant's order.The order was placed over the phone; the salesperson quoted the total price for the order to Mr.Ruiz.When the goods arrived, Mr.Ruiz would check the total order price against the supplier's catalog.If the prices matched, Mr.Ruiz received the inventory and paid the delivery person in cash.If the prices did not match, Mr.Ruiz sent the entire order back and called the next supplier on the list.You have been hired to develop a better inventory purchasing process for Casa Ruiz following the generalized model of business process management discussed in the text.Fill in each blank below with one action you would take to achieve that goal; the first two steps have been completed as an example.Do not list the steps in the model; rather, explain what you would do for each step.1) This project will analyze the inventory purchasing project, beginning with initial needs identification and ending with paying for delivered inventory.2) You have interviewed Casa Ruiz employees and observed the process from start to finish, yielding the description above.3) _______________________________________________________________ 4) ________________________________________________________________ 5) ________________________________________________________________ 6) ________________________________________________________________ 7) ________________________________________________________________

Expectancy theory suggests that three variables contribute to motivation.Consider the questions listed below.For each one, identify the variable that most clearly applies. a.Can I be assured of a pay raise once I pass the CPA exam? b.Do I really want this promotion? c.How badly do I want the approval of my peers and supervisor? d.How good will I feel if I achieve this goal? e.If I attend a one-week seminar on fraud examination, will I be able to pass the certification exam? f.If I get promoted to accounting manager, will I have more flexibility with my working hours? g.If I read enough books, will I be able to make our inventory purchasing process more efficient? h.If I study at least three hours per night, will I be able to learn this new accounting software? i.What is my motivation for learning this new accounting software? j.Will my chances of getting a better job increase if I get another college degree?

Which of the following best pairs an element of the COSO enterprise risk management framework with an example of that element?

Consider the following table as you respond to the questions: Which of the following is the best choice for Item H in the table?

Gelton was leading a team of three co-workers focused on improving their company's process for hiring new employees.They had read the company procedures manual describing the current process, then interviewed newly-hired workers about their experiences.They used the principles of activity-based costing to determine the average cost of hiring a new employee, then created a line graph tracing the average cost over the last twelve months.What should Gelton and his team do next?

List and discuss three basic principles of business process management.

Nestor and Maureen are partners in a small consulting firm located in the Republic of Bufflufia; the firm has six employees.For the last five years, the firm has focused on tax planning and tax return preparation.But, Nestor and Maureen are now interested in expanding the firm's scope of services.They are considering risk management consulting, fraud examination and business valuation as potential areas to expand the firm.They are sure at least three of their six employees would put effort into at least one of those three areas, but expanding the firm's services would require additional training for everyone.Based on the short case above, which of the following statements is most true?

Nestor and Maureen are partners in a small consulting firm located in the Republic of Bufflufia; the firm has six employees.For the last five years, the firm has focused on tax planning and tax return preparation.But, Nestor and Maureen are now interested in expanding the firm's scope of services.They are considering risk management consulting, fraud examination and business valuation as potential areas to expand the firm.They are sure at least three of their six employees would put effort into at least one of those three areas, but expanding the firm's services would require additional training for everyone.Business valuation is the process of estimating the economic value of an owner's interest in a business, often for the purpose of buying/selling that ownership interest.Based on the short case above, which of the following statements is most true?

Casa Ruiz is a Mexican restaurant in southern California.In anticipation of expanding its operations considerably, Mr.Ruiz (the owner) has contacted you to develop an enterprise risk management plan using the COSO model.Fill in the blanks below to develop an ERM plan for Casa Ruiz; the first two elements are supplied as examples.1) Internal environment: Mr.Ruiz conducted a series of employee meetings to explain the importance of enterprise risk management and the COSO model.2) Objective setting: Mr.Ruiz wants to open a second location within six months.3) Event identification: _____________________________________________.4) Risk assessment: _____________________________________________.5) Risk response: _____________________________________________.6) Control activity: _____________________________________________.7) Information and communication: ___________________________________.8) Monitoring: _____________________________________________.

Nestor and Maureen are partners in a small consulting firm located in the Republic of Bufflufia; the firm has six employees.For the last five years, the firm has focused on tax planning and tax return preparation.But, Nestor and Maureen are now interested in expanding the firm's scope of services.They are considering risk management consulting, fraud examination and business valuation as potential areas to expand the firm.They are sure at least three of their six employees would put effort into at least one of those three areas, but expanding the firm's services would require additional training for everyone.Use the COSO enterprise risk management framework to develop a risk management plan for the expansion.Then, use the elements of expectancy theory to suggest ways Nestor and Maureen can motivate their employees to put effort into the expansion.

Dreambox Creations is an Internet services firm that designs web sites, develops content management systems and recommends online marketing strategies; Dreambox has used the COSO enterprise risk management framework to develop its own ERM plan.For each statement below, identify the element of the COSO framework that most clearly applies.You must use each element of the framework exactly one time.1.Dreambox assigned one of its three corporate officers the responsibility for annually reviewing the plan.2.Dreambox chose "reducing" and "sharing" as discussed in the COSO framework.3.Dreambox developed a plan to hire additional marketing professionals whose main job would be to pursue new clients.4.Dreambox had set a strategic goal of acquiring at least three new clients every year.5.Dreambox planned several meetings with its staff to explain the importance of ERM, the development of the ERM plan and its implications for the firm.6.Dreambox's management had committed to developing an ERM plan.7.If Dreambox lacked the staff with the skills and desire to pursue new clients, they might not be able to achieve their strategic goal.8.The potential impact of that risk was great.At an inherent level, it was also high.

Charlie is a partner in a CPA firm.He wants to make some changes to the company's hiring practices, but is concerned current employees will lack the motivation to do so.He should use ___ to address needed changes to hiring practices and ___ to address his concern about current employees.

The basic principles of business process management discussed in the text include:

Consider the following table as you respond to the questions: Which of the following is the best choice for Item B in the table?