The report by the Auditor General of Western Australia presents the findings of an audit that focused on the WA Schools Public-Private Partnership (PPP) Project. The project began in 2015 when the WA government signed a contract with EduWest to design, build, finance and maintain 8 schools until 2047. 1. Under this project, primary schools are built in one stage, whereas secondary schools are constructed in two phases. There were two central issues investigated in the report. The first issue was project efficiency and the fulfilment of contract standards and school needs.2. The second issue was the effectiveness of project management and monitoring of contract performance and risks.
The findings of the audit confirmed that the project was on track as of June 2018. The project was also well-supported by analysis and followed a strong tender, allowing to cut down on financing3. However, there were some contract management issues that came to light when school operations began. First of all, the private company fulfilling the contract was under-resourced, and there were delays in maintenance staff recruitment. Secondly, EduWests electronic system for recording and measuring school jobs did not respond to project needs effectively. Thirdly, there were issues in the timing of staff recruitment, which affected school functioning in the first weeks of operations.
Analysis
The recommendations provided in the report could be useful for future public-private partnerships at the pre-award stage. In particular, the Auditor General recommends developing a contract management plan to ensure that operations run smoothly on all project stages. According to Yescombe and Farquharson, preparing a contract management plan is essential for public-private partnerships because it allows each party to understand its responsibilities and supports the smooth implementation.4. Although this recommendation is primarily for the Department of Education, it would be useful for potential private partners to design and present their vision of the contract management plan at the pre-award stage.
Another recommendation relevant for public-private partnerships at the initial stage is for EduWest to develop a comprehensive performance monitoring program and a risk-based audit and inspection program. This recommendation could also be applied by other companies willing to enter a public-private partnership. Research supports that performance is usually the critical indicator of success in public-private partnerships.5. Creating a detailed plan for performance monitoring, audit, and inspections would help private companies during the pre-contract award stage to draw the attention of potential public partners while also reducing the risk of contract management issues in the future.
All in all, the recommendations of the report are relevant to my personal, professional context. As a project manager, I am often responsible for ensuring that contract needs are met, and all stakeholders are satisfied with the results. The results of the audit highlight the importance of preparedness and planning during the pre-award stage. To incorporate the reports recommendations in my practice as a project manager, I would focus on performance monitoring and contract management planning.
The former plan would allow agreeing on performance metrics prior to signing a contract, while the latter plan would help to show high contract management standards and win the partners trust. The programs would also help during other contract stages, including post-award, since they would help to ensure that the project meets the standards set at signing and there are no significant delays.
Post-Award Contract Management
Description
The selected report is based on the audit of the Office of Auditor General of Western Australia into the WA Schools Public-Private Partnership Project. With regards to post-award contract management, the project covered two essential issues. On the one hand, it reviewed the compliance of the project with specified timelines and contract standards6. On the other hand, it evaluated project management and contract performance monitoring applied as part of the project7.
The findings of the report suggest that, while the project was on track with school opening, there were some contract management and project management issues affecting its initial performance. Namely, the results highlighted the inadequacy of resources for school opening, the failure to recruit all the required staff in time for the first semester, and contract modifications that resulted in additional costs.8. These findings and the recommendations provided in the report can help to enhance contract management at the post-award stage.
Analysis
The key recommendations of the report in relation to contract management include developing a contract management plan and other manuals for opening schools and managing the school operations phase of the contract. 9. This recommendation is based on the evaluation of project success in terms of school opening and operation. Nevertheless, it can also be applied in other contexts involving multi-phase projects. According to Walker, the systems approach to project management involves understanding the relation of different project phases or functional systems to one another10.
In the post-award contract management context, this means that different stages of the project should be planned as a whole rather than consecutively. Using the example provided in the report, contract and project managers could review the standards of project planning to ensure that future project stages run smoothly.
The recommendations on contract performance monitoring provided by the report are also crucial to post-award contract management. In this section, the Auditor General recommends developing a performance monitoring program and a risk-based audit and inspection program. When translated into the post-award contract management context, the recommendations highlight the need to review project performance measurement approaches and conduct internal audits and inspections.
Reviewing how project performance is monitored can help managers to avoid gaps in evaluations and prevent contract management issues from arising. Additionally, internal assessment can assist in identifying project issues before they have an impact on performance and contract fulfilment. They could also help in managing risks and costs, which are of crucial concern in PPP projects.11.
The third important recommendation is developing a framework to formally review and assess lessons learnt during the project and plan how benefits will be adopted in new schools. 12. Although this recommendation concerns the public authority, it could also be beneficial for private contractors. While contingency plans help to determine how a project could adapt to changes and risks, they rarely include problem analysis and its application to future project stages.13. When a contract management issue arises, analysing it and incorporating the results of the investigation into future project planning could help to avoid similar problems in the future.
As a project manager, my goal is to ensure that projects run smoothly. Nevertheless, planning for various contract or project management issues is part of my duties. The lessons learnt from the report will be useful in my personal, professional context since they highlight ways of preventing problems and minimising their impact on the outcomes. Applying the reports recommendations in my work will thus assist in improving contract performance and contingency planning.
Bibliography
Liu, Junxiao, Peter E.D. Love, Jim Smith, Michael Regan, and Peter R. Davis. Life Cycle Critical Success Factors for Public-Private Partnership Infrastructure Projects. Journal of Management in Engineering 31, no. 5 (2014): 1-7.
Liu, Junxiao, Peter E.D. Love, Peter R. Davis, Jim Smith, and Michael Regan. Conceptual Framework for the Performance Measurement of Public-Private Partnerships. Journal of Infrastructure systems 21, no. 1 (2014): 1-15.
Van Den Hurk, Martijn, and Koen Verhoest. The Challenge of Using Standard Contracts in PublicPrivate Partnerships. Public Management Review 18, no. 2 (2016): 278-299.
Walker, Anthony. Project Management in Construction. 6th ed. Hoboken: John Wiley & Sons, 2015.
Yescombe, Edward R., and Edward Farquharson. Public-Private Partnerships for Infrastructure: Principles of Policy and Finance. 2nd ed. Oxford: Butterworth-Heinemann, 2018.
Footnotes
Caroline Spencer, WA Schools Public Private Partnership Project, Office of the Auditor General Western Australia. Web.
Ibid.
Ibid.
Edward R. Yescombe and Edward Farquharson, Public-Private Partnerships for Infrastructure: Principles of Policy and Finance, 2nd ed (Oxford: Butterworth-Heinemann, 2018), 261-262.
Junxiao Liu et al., Life Cycle Critical Success Factors for Public-Private Partnership Infrastructure Projects, Journal of Management in Engineering 31, no. 5 (2014): 3.
Spencer, WA Schools.
Ibid.
Ibid.
Ibid
Anthony Walker, Project Management in Construction, 6th ed (Hoboken: John Wiley & Sons, 2015), 34.
Junxiao Liu et al., Conceptual Framework for the Performance Measurement of Public-Private Partnerships, Journal of Infrastructure systems 21, no. 1 (2014): 2.
Spencer, WA Schools.
Martijn Van Den Hurk and Koen Verhoest, The Challenge of Using Standard Contracts in Public-Private Partnerships, Public Management Review 18, no. 2 (2016): 282.
A lot of attention has recently been given to fraud committed by business management and auditing. A lot of light has been shed on the ability of these public accounting firms on whether they are able to discover and report fraud. Fraudulent activities are available in large organizations not only in America, but also in the whole world. This necessitated the need for review and revision of the procedures that these firms use to detect fraud in present and future financial audit statements.
Rollins and Lanza stated: To meet this need and to serve as the cornerstone of its anti-fraud program, the Auditing Standards Board (ASB) of the American Institute of Certified Public Accountants (AICPA) issued Statement on Auditing Standards (SAS) No. 99, Consideration of Fraud in a Financial Statement Audit, which supersedes SAS No 82 (which has the same title) (56).
Regulations in SAS 99 improve necessary procedures involved in the elimination of fraud in the accounting profession. The role of the auditor was not affected in the transition from SAS No. 82 to No. 99. It sheds light on the procedures the auditor should follow to detect fraud in financial statements.
The main aim of this essay is to describe key requirements of SAS No. 99, and outline its importance on financial statement audits. Statement on Auditing Standards No. 99, as shall be seen is a crucial regulation that tries to prevent fraud in financial statements by auditors. Some auditors link up with clients in a bid to fraud the company. It is therefore duty of SAS 99 to outline the guidelines necessary to oversee this vice.
Components of SAS No. 99
SAS 99 identifies fraud as a global act that yields a considerable misstatement in statements of finance. Two categories of fraud are discussed: misstatements cropping up from illegal financial coverage (e.g. faking of accounting reports) and misstatements cropping up from embezzlement of assets (e.g. asset stealing or illegal spending).
SAS 99 outlines the triangle of fraud. Normally, three conditions are available when a swindle takes place. First is a pressure that gives a basis to engage in fraud. Then there is a chance for fraud to be downsized. Third, people involved in the swindle have an approach that makes them downsize the fraud. Fraud is serious no matter how less an evil it might seem in some situations.
SAS 99 requires that there be a discussion of fraud involving all group members. This discussion involves professionals and specialists. The topic of discussion revolves around misstatements detected in the clients financial statements. SAS 99 requires a rise in associate participation, in the scheduling process, and a much stress on professional skepticism.
A new procedure is the completion of introductory analytical steps to discover unanticipated associations on revenues. These associations may show material misstatements because of illegal financial reporting.
The key components are describing fraud, brainstorming, checks on risk in formation, evaluating entity programs and controls, assess the risks and provide guidance with regards to communication about fraud management.
For a STATEMENT AUDIT STANDARD to describe fraud and its characteristics, it entails that fraud is either misstatement arising from corrupt financial report or misstatement arising from misappropriation of assets. These form the fraud triangle; first, there is a pressure that leads to a person committing fraud. Second, there is an opportunity for the perpetuation of fraud. Third, individuals committing fraud rationalize it.
Brainstorming comes in handy to enable the entity to check where the financial statement might be susceptible to material misstatement. The entity achieves this by allowing team members to share their experiences with clients and set the proper tone at the top.
Another element is ensuring that the auditor gathers necessary information concerning risk of material misstatement by making enquiries of management, analyzing the results of procedures, and risks.
It requires the auditor to assess management and create awareness about fraud. In addition, the auditors are to instill knowledge to the management about fraud and the control measures. Moreover, performing internal audit is also necessary.
Statement audit standard ensures that the auditors have a guideline and support on assessment of risks. It gives the auditors a challenge on the procedures to take and synthesize how the risk leads to misstatement of material.
Statement audit standard also provides measures that explain the identified risks of material misstatement. Moreover, it evaluates the outcome of the audit procedures and other observation that affects the assessment. It ensures clear guidance on fraud management and how auditors communicate this vital information.
When documenting this important document the auditor should; give details on brainstorming session, procedures performed in assessment of risk and its results, give the efficiency of the management of the entity. This most of the time leads to unannounced visits by the audits to the entities.
Criticism of SAS 99
More than half of the procedures are recommended rather than necessary. An outstanding example is; it suggests that auditors appear at the clients end during inventory audit without notifying the client. Practically, auditors inform clients in advance on the location that the audit would be implemented.
This easily provides an opportunity for fraud by the client. Auditors informing a client the location of the audit beforehand are only giving an alert that there would be an audit. It thus makes it easy for clients to cover their tracks where there was fraud. If a client knows that the audit results would reveal discrepancies in the statements of accounts, and then they would do all they can to make the records straight.
SAS 99 has also been criticized for not sealing gaps of expectations. The strategy suggested in the standard enhances expectation on the auditing career. Because of this, auditors have to consider the expectations of SAS 99 as the lowest work level needed to identify fraud. They must be able to protect any choice that does not follow any of the suggested procedures in SAS 99. It is their responsibility to ensure that all procedures are followed in detecting and handling fraud.
Conclusion
Public auditors should follow SAS 99 standards accordingly. This will help in the elimination of fraud, in financial statements. Procedures laid out in SAS No. 99 are crucial for auditors. Auditors use this standard to know the necessary steps they need to take in order to identify fraud in financial statements.
SAS 99 was created to give guidelines. It provides the foundation for malpractice assertions in accounting. They act as a guideline that defines the manner in which they should carry out the auditing process. SAS 99 inflict massive documentation obligations on the auditors than is necessary in SAS 82.
Works Cited
Rollins, Steven and Lanza, Richard. Essential Project Investment Governance and Reporting : Preventing Project Fraud and Ensuring Sarbanes-Oxley Compliance. New York: J. Ross Publishing, 2004. Print.
Recovery audit contractors (RACs) are professionals who work at the state level to identify payments that do not comply with Medicare and Medicaid regulations. Improper payments pose a risk to providers, so the goal of RACs is to track and correct them (Harrington, 2019b). Currently, rules are in place regarding the behavior of RACs, and providers can contact RACs coordinators for misconduct (Recovery Auditors / RACs, n.d.). Harrington notes that RACs allow for standardized payment processes because they operate according to clinical standards and Medicare coding and billing rules (Harrington, 2019b). It allows RACs to act as examiners for payment verification, maintaining financial stability within the organization. Consequently, RACs are tools for additional control of insurance program payments and regulation of improper payments.
Electronic health records (EHR) is a system that allows online tracking and collection of patient data. EHRs are IT products that simplify the processes of handling confidential information within an organization. EHRs provide quick access to information, access information remotely, and improve the accuracy of information (Harrington, 2019a). In addition, EHRs improve the quality of information and make care safer. The effectiveness of EHRs is determined by the ability to structure data (Blumenthal & Tavenner, 2010) and visualize data (Harrington, 2019a). EHRs provide systems for transferring information between employees to clarify diagnoses (for example, after laboratory tests) and up to the patient. Existing systems for patient access to information make it easier to provide a diagnosis and to convince treatment or hospitalization (Blumenthal & Tavenner, 2010). EHRs simplify motivational channels for staff: treatment data becomes visible, and staff can evaluate outcomes. EHRs are needed to visualize information and improve provider performance characteristics.
Harrington, M. K. (2019a). Electronic health records and meaningful use. In Health Care Finance and the Mechanics of Insurance and Reimbursement (2nd ed.) (pp. 205-220). Jones & Bartlett Learning.
Harrington, M. K. (2019b). Recovery audit contractors. In Health Care Finance and the Mechanics of Insurance and Reimbursement (2nd ed.) (pp. 241-251). Jones & Bartlett Learning.
Indoor air quality (IAQ) implies the condition of air within building structures, especially within places of residence. According to Brown (2019), the quality of IAQ tends to affect the health, contentment, and well-being of residents. The issue on poor indoor IAQ has been the main subject of study/research among real estate developers and public health officials. Since the beginning of the 19th century, there have been thousands of real estate agencies building residential apartments in the United States accommodating millions of occupants. These amenities have since been experiencing acute indoor environmental hazards due to substandard external conditions within and around the residential centers. The extent of this problem was realized in the late 90s after researchers proved that most residential premised in the United States gives an account of poor indoor air quality and insufficient ventilation.
This report indicates that tenants, based on the pre-existing poor IAQ and insufficient ventilation, are highly susceptible to health symptoms and illnesses. Furthermore, the Centers for Disease Control (CDC) reports respiratory health concerns to be the core contributor to the tenants illness (Tham, 2016). The CDC also points out the causal factors of health symptoms are related to pollutant vulnerabilities in connection to molds, allergens, bacteria, and volatile organic compounds (VOCs). From this perspective, the research and literature evidence demonstrates that poor IAQ and insufficient ventilation can affect the health of tenants in residential environments. The objectives of this paper, therefore, are to:
To determine residential environmental vulnerabilities pertaining to IAQ and ventilation.
To identify and assess the causal elements leading to health symptoms through evaluation of the existing data on Carbon (IV) oxide (CO2), volatile organic compounds (VOCs), humidity, temperature, dust and molds, and ventilation.
Identify possible solutions and recommendations on how property owners can improve IAQ.
Background
Most people are believed to spend a better part of their day indoors; hence indoor air is a significant environmental factor for most people. Deteriorating IAQ is one of the most critical contributors to poor health concerns, such as respiratory problems and allergies. Exposure to indoor pollution, therefore, needs to be minimized to reduce deaths related to poor indoor air quality. Certain elements, including material, human, and natural factors, have a negative impact on IAQ (Brown, 2019). According to brown, IAQ can be improved if property owners avoid using materials that are believed to be emitting pollutants. With the improvement in technology and change in lifestyle, most residences have introduced modern air conditioners to help improve air quality in the living rooms.
CO2 is among the most common pollutants of IAQ in places of residence and efforts to address this issue can improve air quality. Accordingly, optimized ventilation systems would save energy while at the same time, reduce CO2 in rooms. The high concentration of the gas can cause drowsiness and exhaustion, especially in poorly ventilated rooms. To resolve issues regarding IAQ, researchers have conducted studies on the effectiveness of the HVAC systems in maintaining good indoor air quality. For instance, Chang et al. (2018) described how the HVAC systems interact with both indoor and outdoor environments helping reduce indoor pollution. Proper maintenance of the HVAC systems can help minimize indoor air pollution. Efficient ventilation is considered to lead to good indoor air quality in rooms. Improper ventilation is believed to point to the accumulation of hazardous pollutants. Chang et al. (2018), in their experiment, to examine the relationship between particle movement and ventilation effectiveness established that high ventilation effectiveness results in better removal of fine particles than coarse ones.
Reports and scientific data continue to emerge, pointing out that IAQ directly affects an individuals health. Indoor air quality typically depends on poor dusting/cleaning and insufficient ventilation that impacts on someones health within the surrounding residential environment. For example, in our residential environment, the occupants are exposed to substandard environmental conditions that make them more vulnerable to health symptoms and deterioration of their health standards. A considerable amount of evidence reveals there is a connection between poor IAQ and respiratory health concerns among residents, primarily due to poor cleaning and overuse of cleaning chemicals. Majorly noted health concerns include asthma, allergies, and acute irritant symptoms such as throat irritation, coughing, itching of the eyes, and wheezing.
Most residential apartments also have insufficient ventilation that brings about the growth of molds and bacteria, allergens, too-high or too-low temperatures, dampness, and heightened concentrations of CO2. As a result, the frequency of health symptoms and illness becomes so high within the premises. Improved IAQ in residential environments, on the other hand, is established to minimize health symptoms and respiratory illnesses among occupants. By learning about these details from peer-reviewed literature on IAQ, this paper generates a better understanding of the connection between poor indoor air quality (IAQ) in private residences and individual health. This aspect also includes some of the alleviative factors to be considered.
On several occasions, cases of poor indoor air quality (IAQ) have been reported to be the causal factors for severe health symptoms as well as inactivity among people in their places of residence. Reports have also suggested that poor IAQ lessens an individuals intellectual and psychological processes. However, the big question is how indoor air quality affects peoples health in residential centers. To determine the validity of this possibility, this paper will investigate if, indeed, low indoor air quality in the private premises compromises or directly affects an individuals health.
Method
Considering that no physical samples are allowed for assessment of IAQ at my place of residence, this report only utilized observations. On that note, the report relied on the first-hand audit comprised of observable deductions made at my residence. Moreover, further research on IAQ was made from inferences obtained based on observations made by immediate neighbors and visitors. Toward that end, an open-ended observation was conducted to help come up with this research. The survey aimed at finding the influencing factors affecting the residence IAQ and possible recommendations to help improve the condition of air. The common aspects to be observed include factors such as CO2 concentrations, dust and molds, humidity levels, temperature range, ventilation systems and air movement, HVAC problems, radon, and volatile organic compounds (VOCs).
The survey seeks to explore the property owners building standards in regards to IAQ within the residential house. The questions are to be randomly distributed through various online platforms such as WhatsApp, Facebook, and Twitter because the method is cheap and has the likelihood of reaching most visitors and neighbors. People who have visited my premises are to give their responses about the experience they had in the various living rooms concerning the quality of the indoor air. A rating strategy would be provided for each factor where the respondent is to choose an appropriate scale depending on available data regarding the contaminants. Respondents were, however, assured of privacy and confidentiality to enhance genuine responses. Once the observations are collected, the data would be carefully analyzed, noting down the main points highlighted by the visitors and neighbors concerning the significant factors affecting IAQ at the residence and possible recommendations for improvement.
Results and Discussions
CO2
Exposure to CO2 at places of residence is mainly through the consumption of carbonated drinks, the use of dry ice, or the burning of fossil fuels. High concentrations of CO2 in the indoor air reduce oxygen supply, which may lead to an individual becoming unconscious or even dying (Karnauskas et al., 2020). Property owners should use CO2 detectors in houses to monitor the levels of CO2 in the rooms to protect tenants from high levels of CO2 concentration (Ghaffarianhoseini et al., 2018). Rooms should also be well-ventilated to allow proper air exchange. Machines like the air conditioning system need to be maintained occasionally to avoid the emission of more CO2 in the rooms. Generally, when windows are open, the average indoor CO2 levels in the air-conditioned bedroom were lower compared to when the windows remain closed.
VOCs
The concentration of VOCs indoors is usually higher compared to outdoors, making the living room an easy target of the chemicals. Volatile organic compounds within the residence are commonly emitted by paints, building materials, and all furnishings done in the rooms. Since I often prepare meals, the overheated cooking oils do release acrolein, which also pollutes the indoor air in the rooms. Besides, many types of furniture and building materials used in the rooms have high counts of VOCs that are released to the indoor air over time, contaminating the air. Exposure to low levels of VOCs can lead to respiratory complications, dizziness, and memory impairment. Bad smells from chemicals may not be harmful by themselves but do cause symptoms like nausea and headache (Carrer & Wolkoff, 2018). House management should keep all the materials that emit VOCs far away from the guest rooms as well as ensuring plenty of air circulation in the rooms to reduce the level of exposure of customers to VOCs. Cleaning labels used in the houses should be zero VOC or low VOC.
Radon
Radon gas occurs naturally in some rocks or soils and is likely to diffuse through the soil into buildings. Considering that radon gas is common in America, it was imperative to consider it among the air contaminants in the living rooms. Radon is a leading cause of lung cancer in the mentioned countries, and as a heavy gas, it tends to concentrate at the lowest points of the house. Drinking water and bathroom water is one of the agents that introduce the gas into the rooms with building materials not being the primary source of the gas (Kukadia & Upton, 2019). Therefore, the management should consider testing for the presence of the gas in the rooms regularly to reduce exposure of the gas to occupants. Sealing of basement foundations and water drainage systems is critical in avoiding the leakage of radon gas into the rooms.
Temperature
The temperature in the rooms is very critical in determining the quality of indoor air. High temperatures in the rooms create a conducive environment for chemicals within the house to rapidly leak into the rooms. The chemicals lead to irritation, headache, or even cause serious health complications to the occupants of the room (ElSharkawy & Javed, (2018). Very low temperatures, on the other hand, lead to shivering and results in discomfort. Generally, very high or low temperatures in the rooms make the IAQ unpleasant to the occupant. Air conditioning units, together with ventilation in the house, should be used appropriately to enhance optimal temperatures.
Humidity
There should always be an optimal level of humidity in any indoor environment. High humidity levels in living rooms are caused by water leaks and moisture that condenses on cold surfaces (Mao et al., 2018). High humidity levels lead to poor IAQ as it facilitates the growth of molds. These plants, in turn, will release chemicals that, if one breathes them, can lead to respiratory distress and shortness of breath. The residence experiences poor IAQ during the winter season as it becomes a challenge to maintain humidity levels in the apartment. Despite the season, the management should strive to maintain an average indoor humidity level in the living rooms to avoid the growth of dust mites and molds.
Ventilation
Ventilation is one of the essential factors that determine the quality of indoor air. The residence has a moderate level of ventilation systems in every room. Low ventilation with a high concentration of various chemicals and toxic gases like CO2 are likely to lead to severe health conditions on the occupants of the room. Proper ventilation, even with high levels of CO2, is healthy and is said to contribute to safe indoor air cushioning occupants of a room from major health hazards (Ooi et al., 2016). Ventilation should, therefore, be a priority for house owners, and they should ensure effective ventilation of all rooms as a way of enhancing good IAQ.
Dust and Molds
Molds are biological chemicals released to the atmosphere that are facilitated by moisture. The growth of the plants can only be inhibited by keeping humidity levels below 50 percent. The living rooms, if not well dried, are likely to develop molds that eventually lead to emission of the biological chemicals polluting the indoor air (Qi et al., 2017). Moisture levels in rooms often go up due to condensation occasioned by the moderate ventilation, eventually leading to the growth of molds that pollute the indoor air. The plants also flourish because of mattresses in the bedrooms getting exposed to moisture through humidity or even body sweat. Substantial quantities of dust lead to chest tightness, wheezing, and difficulty in sleeping due to respiratory complications. Routine cleaning of the rooms stirs up the dust trapped inside the room with other contaminants, making it suspended on-air. The management should regularly check for molds in the house and ensure that the environment remains dry to reduce their growth.
HVAC Problems
The quality of indoor air is also affected by problems associated with heating and cooling equipment in the rooms. Microbes easily build up in the HVAC system resulting in poor IAQ (Chang et al., 2018). Moreover, filthy air filters and leakages from refrigerants also result in poor indoor air. Routine maintenance of all HVAC systems in apartment and regular replacement of filters plays an essential role in creating clean indoor air.
Conclusions and Recommendations
The report reveals that the factors discussed affect the quality of indoor air, implying that the pollution of indoor air has a severe health problem in residential apartments. Besides, it is also clear that most people spend a significant part of their day indoors hence risk of the negative implications of poor IAQ. As Chan et al. (2017) note, there is an urgent need for property owners to develop practical measures that will assist in addressing the health concerns by reducing the contamination of IAQ. The real estate sector provides shelter for millions of Americans annually, thus increasing the need for implementing viable solutions to enhance a comfortable and secure environment for tenants. The residence where I stay will gain the trust of more clients through the assurance of improved IAQ because there will be an increased willingness to live within the residence. The following recommendations, if well adopted, will help the property owner to create good IAQ in the apartment by reducing air contamination.
Optimization of HVAC
The management should ensure they optimize on their heating, ventilation, and air-conditioning systems to enhance good IAQ. The HVAC systems must be regularly maintained and inspected as they are central in determining a rooms indoor air quality. Besides, the filtration systems must also be periodically inspected and replaced depending on whether the residence is in an environment with dirty outdoor air. Similarly, they need to install CO2 detectors in strategic places to help regulate levels of the gas in the living rooms. Since the residence receives different occupants every season, there is a need for the hotels to change air filters at least once every two months. Also, the management should ensure that the HVAC systems are maintained to operate as per the original specifications (Afroz et al., 2018). Furthermore, the managers must ensure that the HVAC systems are in operation at all shifts.
Training of House Maintenance Employees
The management should ensure that all its staff is well trained on how to perform their day-to-day activities as well as better ways of minimizing indoor air pollution. Employees involved in the maintenance of the residence need to undergo training on how to maintain adequate ventilation of air contaminants generated during cleaning or maintenance (Quansah et al., 2017). Besides the employees need to know how to minimize adverse effects of IAQ in the process of using and disposing of chemicals and other agents. Employee training should include informing all employees of the contents of the IAQ compliance plan as well as the signs and symptoms associated with building-related illness.
Monitor Possible Sources of Pollution
Most indoor air pollutants within the residence usually arise from various activities in the house. For example, CO2 arise from combustion activities during the preparation of meals using fossil fuels. Besides, materials used in residences during renovations and painting also leads to indoor air pollution. It is, therefore, imperative for the management to ensure that during renovations, they only use low-VOC paints, flooring, and furniture to minimize harmful emissions. Besides, the HVAC systems need regular cleaning and maintenance to ensure it does not keep dust particles. Sources of molds like water-stained ceiling tiles should be monitored and addressed once noted to avoid the effects of the plant. Besides, the management should use environmentally friendly building materials and cleaning products as a way of reducing VOC emissions in the hotel rooms (Afroz et al., 2018). Additionally, the kitchen should be located far away from the guest room to keep the rooms safe from indoor air pollution.
References
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Brown, N. J. (2019). Indoor air quality [Electronic version]. Ithaca, NY: Cornell University.
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Chang, D. Q., Liu, J. X., & Chen, S. C. (2018). Factors affecting particle depositions on electret filters used in residential HVAC systems and indoor air cleaners. Aerosol and Air Quality Research, 18, 3211-3219. Web.
Ghaffarianhoseini, A., AlWaer, H., Omrany, H., Ghaffarianhoseini, A., Alalouch, C., Clements- Croome, D., & Tookey, J. (2018). Sick building syndrome: Are we doing enough? Architectural Science Review, 61(3), 99-121. Web.
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Kukadia, V., & Upton, S. (2019). Ensuring good indoor air quality in buildings. BRE Group.
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Mao, Z., Yang, Y., & Wang, M. (2018). Sleepless nights in hotels? Understanding factors that influence hotel sleep quality. International Journal of Hospitality Management, 74, 189- 201. Web.
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Qi, M., Li, X., Zhu, E., & Shi, Y. (2017). Evaluation of perceived indoor environmental quality of five-star hotels in China: An application of online review analysis. Building and Environment, 111, 1-9. Web.
Quansah, R., Semple, S., Ochieng, C. A., Juvekar, S., Armah, F. A., Luginaah, I., & Emina, J. (2017). Effectiveness of interventions to reduce household air pollution and/or improve health in homes using solid fuel in low-and-middle income countries: A systematic review and meta-analysis. Environment International, 103, 73-90. Web.
State Audit Institute (SAI) is an independent organisation which is aimed at conducting research in the financial sector of different companies to check their performance. The main purpose of this organisation is to make sure that the company functions according to the current legislation and the financial situation in the company is safe. Being the central organisation in the country which has the specialists of the highest range, SAI has an opportunity to conduct an audit of different kind with various goals and in different organisations.
According to the company mission, it aims to safeguard public funds and assist the Federal Government in improving public sector governance and performance standards and to grow Emirati professional capabilities (State Audition Institute, 2011). The company attempts to fulfil the duties it has before the legislation and tries to achieve its objectives via performing its obligations. It should be noted that the fundamental priorities of the company make it play a crucial oversight role when it comes to federal and local government operations in UAE (Ibrahim, 2010, p. 464).
The wide range of objectives and the opportunities SAI has, allows it to provide the following work, regularity audit, performance audit, investigation and information system audit. Regularity audit is a kind of control which is provided annually in the specific companies, obligatory for all Federal Government Organisations. Performance audit is aimed at tasting the performance and efficiency of the part or all activities of the company. Investigation takes place when the case of financial violation is identified, where one of the main goals is to detect wasted money or illegally spent funds. Information system audit is considered to be the central kind of audit for the company as it helps to implement control of performance and financial audit (Profile, 2011).
Being an independent organisation, SAI has an opportunity to audit such organisations as Ministers and Departments of Federal Government, Federal Nation Council, different public organisations accounted to the government, other companies where the government share comprises at least 25%, the organisations which are subsidised by the country, or any organisation which needs independent opinion about its financial situation (Profile, 2011).
To achieve the goals the company sets, it is important to employ highly professional staff. Apart from auditors, the company offers jobs in administration sphere, finance, human resources, IT, etc. (State Audition Institute, 2011). One of the main priorities for SAI is the training opportunities it offers. The organisation cares greatly of graduates and tries to give those as many opportunities for employment as it can (Profile, 2011). A lot of graduates in accounting and financing can find jobs in SAI if their qualities and professional skills and knowledge satisfy the company demand. Moreover, the professional development programs give employees an opportunity to study abroad, for example, for Master of Science in accounting offered by UK University or for Graduate Certificate in Performance Audit in Australia, etc (State Audition Institute, 2011).
Thus, it may be concluded that SAI is an independent company which is aimed at providing different kinds of audit in the country. Functioning for the sake of the country, it offers great possibilities for the graduates and provides training programs for its employees all over the world. Being considered as one of the best audit institutions in the world, the company always improves its performance by means to employing the best professionals in the sphere.
Reference List
Ibrahim, M. (2010). State Audit Institution in United Arab Emirates. International Journal of Law and Management, 52(6), 464-468.
Profile. (2011). United Arab Emirates State Audition Institute. Web.
Many organizations like to measure their compliance level against certain standards even without any legal obligation. This process is known as pre-assessment audit, which is used by many organizations as a tool for evaluation and learning to help in the improvement of the management systems. Through this process, the management will identify all the areas that need improvement. Organizations are also required to carry out pre-assessment audit before they can receive the credential of certification.
Pre-assessment audit is part of internal audit where organizations are required to evaluate their management systems as a way of ensuring that there is good corporate governance. This paper will analyze procedures for pre-assessment audit and internal audit using the case of National Bank of Abu Dhabi (NBAD). The bank is ranked the best financial institution in the Middle East and it was awarded standards for quality management ISO 9001-2008.
Procedures for pre-assessment audit
Pre-assessment audit involves a number of steps which organization ought to follow for a successful process and certification by the registrar. These steps include
Commitment of the top management
The success of the entire process starts with the commitment of the top managers who play the critical role in the audit. Top managers need to be convinced that pre-assessment audit is necessary and successful certification and registration will benefit the organization by showing its commitment to quality for its customers. The management needs to be in the forefront for successful pre-assessment audit; nevertheless, this will only happen if the managers realize that good management systems will improve the efficiency of the business by minimizing duplication of the management systems that are wasteful. In the case of NBAD, the top management of the bank is committed to improve the quality of its services and systems to meet the needs of its customers. This commitment drove the managers in 2008 to carry a successful pre-assessment test required before ISO certification.
Establishing a team for implementation
Pre-assessment audit needs a committed team of staff for its successful implementation. After having a committed top management team, the plan must be made known to all the employees of the organization for them to own and support it. The quality assurance department ought to select a capable team that will spearhead the implementation process. As Asare, Davidson, and Gramling argue, an audit committee may be established to help in this process of auditing (181).
The team may consist one of the member from the top management who will oversee and plan the implementation process together with the other people who are appointed from all the departments of the organization. These departments may include planning, marketing, quality control, and production among others. The representative of the management will motivate and direct all the other managers towards the implementation of the pre-assessment audit. In the NBAD, the quality assurance department, led by its manager, spearheaded the 2008 pre-assessment audit.
Start awareness program
The purpose of the awareness program is to inform all the stakeholders of the intended audit to incorporate them in the process. Awareness program may involve sensitizing the customers and employees on the benefits of the process. NBAD carried out several awareness programs to sensitize its employees and customers on the benefits they will gain from improved quality systems of the bank before its certification in 2008.
Provide training
Internal quality audit will affect all the personnel and departments in the organization. It is therefore important to come up with training programs to prepare all the staffs for any change that may come with quality assurance certification. Many procedures and systems of the organization are affected hence the need to train staff for these changes.
Conduct a survey for initial status
This will involve carrying out a simple survey in the whole organization just to give an idea of what is expected during the audit process. It may require visiting several units or departments, a process that NBAD accomplished.
Steps for internal auditing
Internal quality auditing involves a number of steps, which are necessary for a successful process. The steps include scheduling, planning, conducting, recording, and reporting.
Scheduling
Scheduling involves the process of coming with an annual schedule that will be used for quality audit. Quality assurance department has a duty to come up with the said schedule that will run for a whole year. This schedule ensures that there is proper timing of the activities involved in the process. After preparing the schedule, it is forwarded to the management team for any amendment and approval. As Dacey indicates, an audit manual provided by the Government System Control Department may be used when planning for the audit (1).
Planning
Planning process involves preparation of the documents necessary for the audit taking into consideration the specific procedures that will be used in each unit or division. Quality assurance team also informs all the department of the audit schedule to enable them to prepare in advance.
Conduct
The audit is carried out using a checklist where auditors compare what is in the list with what is already happening in the organization. At this step, the auditor will note the findings on the checklist, which will then be used to assess the position of the organization.
Recording
In this step, the findings of the audit are recorded in preparation for reporting and implementation. The recording shows what has been observed during the auditing process and what is expected to be happening. It shows where there is variation with laid down requirements. If necessary, a follow up audit may be planned at this stage before giving the final report.
Reporting
At this step, the findings of the internal quality audit are reported to the top management for action. The findings will show the present position of the organization in relation to the laid down requirements and the expected position in accordance with these rules. Many governments have laid down all the audit requirements that should be followed by all organization (Franzel 1). From this report, the management may now come up with an action plan to implement the recommendations if they are not satisfied with current position of the organization.
Conclusion
Pre-assessment audit and internal audit are important processes for assessing quality compliance of any organization. All the organizations are required to undertake audit process before quality certification by the registrar. NBAD carried a successful audit before its certification in 2008 as a way of improving quality of its services and systems. Pre-assessment audit will involve initial preparations before the actual quality audit is conducted. Actual audit may involve scheduling, planning, conducting, recording, and reporting.
Works cited
Asare, Stephen, Davidson, Ronald, and Gramling, Audrey. Internal Auditors Evaluation of Fraud Factors in Planning an Audit: The Importance of Audit Committee Quality and Management Incentives. International Journal of Auditing 12.3 (2008): 181-203.
Dacey, Robert. Federal Information System Controls Audit Manual (FISCAM): Exposure Draft. GAO Reports, 2008: 1-611.
Franzel, Jeanette. To audit officials and others interested in: government auditing standards. GAO Reports, 2010: 1-192.
The clients knowledge of the materiality thresholds that the auditor may apply when auditing the firm is very risky. The client may subvert the intention of the auditing procedures or may as well sabotage the integrity of the whole audit engagement.
Since auditors may acquire the client personnel documents so as to save costs as they perform other audit-related activities and prepare schedules for conducting the audit, the client may interfere with the entire process. The client may conceal some critical information from the auditor thereby decreasing the sample size for the audit, thus lowering the auditors materiality decisions.
The client is likely to present misstatements in organizations financial statements. The client may also interfere with the evidence by manipulating the items of the financial statements leading to insufficient or misleading evidence during auditing. This is likely to interfere with the auditors judgment of the business risks that the client is engaged in (Strayer University, 2010).
In North Face Company, Crawford was the companys chief financial officer that concealed fraud from North Face Inc. independent auditors in 1997 by not informing them of the oral side agreements made between him and the barter company.
Crawfords knowledge of the materiality thresholds which Deloitte auditors would apply in auditing the companys financial statement items and the adjustments that they would propose regarding the $1.64 million trade credits made him include the transaction, but did not inform the auditors of the $2.65 until after the completion of the 1997 audit.
Katz who was the companys sales vice president also arranged for the signing of fake purchase orders by the two customers who owned substantial amounts of North Face Inc.s merchandise to deceive the auditors that the two customers actually owned the merchandise (Knapp, n.d).
Guidelines for Revenue Recognition
The guidelines that determine when a company is to record revenue are that the exchange transaction should be complete and again the production earning process should also be complete. This means that the goods must be manufactured and delivered to the client and payment must be received either in cash or receivables at the point of sale.
According to Turner (2001), revenue should only be recognized after they have been realized and recognized by the company. For the revenue to be considered as realized and earned, there should be evidence that the arrangements exists; delivery should have taken place; the sellers and the buyers prices should be determinable; and finally, collectability should be reasonably assured (Turner, 2001).
In the North Face Company, Crawford structured the $7.8 million transaction to recognize trade credits which are barter transactions as profit. Crawford instructed North Faces accountants to record the trade credits of $1.64 million and $2.65 million as profit even though the oral agreements involved payments in phases.
Besides the payments involved, barter transactions cannot be recognized as revenues, meaning that the exchange transaction was not complete by the time the North Face recognized the revenues as profit. The company later reacquired the inventory in 1999 (Knapp, n.d).
Objectives of Work Papers
Its primary objective is to document all the audit procedures performed by the auditor or the auditing team. The procedures documented in the work paper should connect the flow of the information as well as the conclusions in the concluding audit report. Accurate and credible work paper provides the foundation for audit and the subsequent reporting.
It must contain the specific tasks performed as well as the observations and information acquired through inquiry. It has to contain the specific individuals consulted as well as the supporting documents and detailed narratives to support the information contained in the corresponding audit report (Strayer University, 2010).
The revision of the work papers that was done by Deloitte personnel in 1997 to replace the original work papers made new summary memorandum as well as adjustments schedule without documenting revisions in the work papers. Thus the revised 1997 work papers could not show that the revising team reached a different conclusion from the original team concerning North Faces 1997 barter transactions (Knapp, n.d).
The Auditors Responsibility
The auditors role is to detect and prevent fraud in an organizations business processes. They therefore have to evaluate the financial projects as well as the anticipated financial projects that the organization is about to enter and as such, provide reliable and timely feedback on the feasibility and the risks involved in the project.
The external and internal auditors measure the effectiveness of the executives decisions as well as the internal controls put in place by the executives. The auditors assess the quality of the decisions of the executives on the financial activities of the company and therefore determine their competence (Knapp, n.d).
They assess the financial reporting of the company and provide guidance for improving the internal control system to ensure that the company achieves operational as well as strategic objectives. Both the internal and external auditors focus on enabling the organization to provide reliable financial reporting.
The internal auditors are therefore involved in continuous control monitoring as well as in continuous auditing of the organizations business processes (Zabihollah, 2002).
Reference List
Knapp, M. C. (n.d). The North Face, Inc.: An instruction case focusing on ethical issues involving financial accountants and independent auditors. Oklahoma: University of Oklahoma.
Turner, L. E. (2001). Speech by SEC staff: Revenue recognition. US Securities and Exchange Commission: USC SEC and Financial Reporting Institute. Retrieved from https://www.sec.gov/news/speech/spch495.htm
Zabihollah, R. (2002). Financial statement fraud: Prevention and detection. New York: Wiley & Sons.
Conducting an audit on a companys financial statements is not an entirely popular idea. Many managers still hold the belief that conducting external financial audit is too intrusive. Thus, there are those managers who believe that conducting an audit, despite the assured benefits is counter productive. For instance, the cost of hiring auditors is too prohibitive to most companies. Thus doing annual external audit requires extra funds which have to be accounted for in the companys annual budget.
This is likely to lower the companys profit margins. Additionally, as mentioned earlier, some managers feel that auditing can be too intrusive. According to the Center for Audit Quality, audit involves examining available evidence in support of a companys financial statements (CAQ 2011).
Thus, access, by external auditors, to companys sensitive financial information is risky since such information is likely to be leaked to competitors, who are likely to use such information against the company. These assumptions seem to be precipitated by the fact that external auditors overarching aim is to provide a reasonable assessment of a companys financials performance. External audit reports fail to indicate absolute truths about a companys financial position.
The assertions made above are likely to be perceived as demonizing external audit. However, external audit involves a number of practices beneficial to a company. According to Bragg (2011), one of the preliminary stages of financial auditing involves establishing the terms of engagement.
During this process an audit firm conducts its own evaluation of the reputation of the company to be audited. Audit firms normally desist from engaging with companys whose reputation is questionable. Thus, shareholders in a publicly listed company are likely to establish the companys reputation from the caliber of the companys auditors.
Besides establishing the terms of engagement, auditing also involves establishing standards for quality control. In doing this, audit firms largely depend on the willingness of the auditees top management to collaborate with the external auditor in setting the tone for quality assurance.
As such, external audits are stern tests on willingness of the companys top management to establish high standards of quality control. Additionally, establishing standards for quality control involves a number of activities. These include establishing policies within which professional auditing is to be conducted.
Thus, by conducting audits, external auditors help a company improve its internal quality control systems. This implies that by engaging external auditors, firms are able to enhance quality management. This enhances accuracy in financial reporting which translates to improved performance by the company.
According to Center for Audit Quality, no two companies are the same. Each company is unique, in terms of financial reporting. Each company also has its own unique auditing challenges which require customized auditing standards (CAQ 2011). Nevertheless, this does not imply that external auditors develop completely new sets of auditing standards for each firm. According to Craswell (1990) internal auditors rely in international accounting standards.
Thus, CAQs (2011) assertion that external auditors customize auditing standards depending on the uniqueness of the companys auditing challenges ought to be taken in light of the fact that customization of auditing standards is based on the international financial reporting standards.
It is imperative to note that the international financial reporting standards form the core of globally recognized financial reporting standards. Thus, by engaging external auditors, publicly listed companies in Australian test their financial reporting against internationally accepted standards. This gives shareholders an idea of how the company is likely to perform in the global market.
According to Nicoll (2005) conducting external audits amounts to opening a companys financial records to public scrutiny. Based on assertions made by CAQ (2011), this seems to be unpopular with managers. However, external audit reports are valuable tools with which shareholders establish the authenticity of a companys financial position.
Additionally, by opening the financial books to public scrutiny, external audits assist companys management as well as shareholders in comparing the company performance against other companies whose accounts are also open to public scrutiny. This helps to identify a companys position with regards to competition. Thus, external audit of a companys financial record helps in identifying its market position.
This also assists the companys management in making accurate decisions for the future. Additionally, despite CAQ (2011) assertions that external audit reports are unlikely to portray the absolute truth about a companys financial position, these reports are nevertheless very reliable in portraying a companys financial position. Thus, shareholders are likely to use these reports in making decisions their investment.
Conducting external audit on a companys financial performance has it merits and demerits. For instance, engaging reputable external auditors is very costly. Thus for a company struggling to meet profit targets, such cost seems unnecessary. Nevertheless, external audits are beneficial than they are disadvantageous.
Not only is the company able to measure its performance against competitions but also able to establish its market position locally and globally. Such reports indicate an almost near truth regarding a companys position. Thus, they are valuable tools with which shareholders measure the true status of the companys performance. From a shareholders point of view, external audit is necessary.
List of References
Bragg, S. 2011.The new CFO financial leadership manual. New Jersey: John Wiley and Sons.
CAQ. 2011. In-depth guide to public company auditing: The financial statement audit. [online] Web.
Craswell, A.1990. Who audits Australia? Sydney: University of Sydney Press.
Nicoll, P. 2005. Audit in a democracy: the Australian model of public sector audit. Ashgate Publishing, Ltd. Burlington, VT.
Responding to suspicious items in Accounting Records
As a professional accountant, I would apply the professional ethics of accounting that require professionalism, accountability as well as integrity in monitoring the daily operations of the organization so as to be able to report accurately the strengths and weaknesses of the organizations internal control system to the CEO.
Just the same way David Sokol did, it is important to scrutinize the companys accounting records and interview all those concerned with accounting operations of each division in the company as well as the companys Chief Financial Officer.
It is important to take responsibility and inform the CEO or the board of directors of the company about your findings on the companys accounting fraud and your opinion and, give direction of what should be done to correct the accounting abuses in the company (Gibson, Knapp, Mowen, Palepu, & Shank, 2010).
In situations where I have convincing reasons to believe that the auditing firm that had been contracted to audit the firms financial statements might have been influenced so as to ignore the suspected misrepresentations in the financial statement data, I would advice the board or the CEO to retain a different independent auditing firm to investigate the accounting the records.
Measures for enhancing Whistle Blowing in a company
In order to enhance the capacity of corporate employees to report suspected fraud scheme cases in the organization, the firm should increase the internal auditors influence by permitting them to report directly to the CEO or the board of directors on their findings as well as their views of what should be done to save the situation (Gibson, et al. 2010).
Their findings and opinions need to be treated with a lot of confidentiality and proper follow up be taken immediately. The function of the internal auditors should not just be to report to the companys CFO as in the case of Jamaica Water Properties.
The internal auditors need to be independent and not under the jurisdiction of the CFO, this way, they will be assured of their job security and therefore overcome bullying from the CFO or any other senior personnel in the organization.
The company should also put in place policy requiring the internal auditors to have unrestricted access to the audit results of the external auditors and the companys accounting records in order to effectively determine irregularities, manipulations and fraud risks that may occur in the companys financial statements and be able to report this to the CEO (Chhaochharia, & Yaniv, 2007).
Promoting ethical behavior among employees
It is the corporate responsibility of each employee in the organization to report suspected cases of misbehavior such as fraud to the relevant authorities as is provided in the business code of ethics. Besides, each organization has internal policies to guide the ethical conduct of workers. These policies should help employees report cases of unethical behavior by employees.
The company should therefore disseminate information to all employees of the standards of behavior expected of them and steps to take in case they observe or suspect unethical behavior and also implement internal control systems that could help eliminate financial fraud in the company (Boatright, 2003). According to Beaulier, Hall, & Kotkin (2009), rewards also help promote ethical behavior in employees.
However, rewarding ethical behavior may cause unnecessary divisions among employees and may also make employees be dependent on rewards to enhance ethical behavior.
Therefore, this should be done diligently since giving incentives especially monetary benefits to promote ethical behavior in employees may create a culture where employees are unable to differentiate bribe and reward. As Sokol says, employees in an organization should be guided by integrity and honesty.
Reducing Auditing Risks
The board of directors and companys CEO should first acknowledge that the personal relationship that had been created between the retained auditing firm and the personnel in charge of the companys accounting may have an impact on the results of the auditing. Therefore they should request that the auditing team present their results and opinions to the board of directors (Chhaochharia, & Yaniv, 2007).
They should present a critical analysis of their findings so as to enable the board make proper financial decisions. The board of directors should rely on the internal auditors to improve their knowledge on audit items and audit evidence.
This would enhance the board members capacity to analyze the strategic risks and potential fraud in the companys business processes. The company should not rely on one auditing firm to carry out consecutive auditing of the firms accounting records.
Retaining different audit firms would help identify misrepresentations if any that was ignored by the previous audit firm that had been retained to audit the firms financial records. Sokols decision to request the board of directors to contract a different firm other than Ernest & Young paid off as Deloitte & Touch were more independent in their presentations.
Accounting professionals responsibilities to shareholders
As an accounting professional, it is important to carry out comprehensive investigations into the manipulations that had been done in the accounting records of the company and report the findings to the board of directors and explain their impacts on the financial activities of the company as well as remedies for the for minimizing further losses.
The accounting professional should be able to determine the real figures of the fraud as well as the period for which the fraud had existed in the company. The accounting professional should also be able to determine what happened as well as the individuals in the organization responsible for the fraud (Gibson, et al. 2010).
This would help the board of directors provide accurate information to the shareholders which can therefore enable them make their decisions on how to respond to the companys financial statements.
Reference List
Beaulier, S, Hall, J, & Kotkin, R. (2009). The virtue of business: How markets encourage ethical behavior. New York: Nova Science Publishers.
Boatright, J. R. (2003). Ethics and the conduct of business, 4th Ed. Malden, MA: Blackwell Publishers.
Chhaochharia, V. & Yaniv, G. (2007). Corporate governance and firm value: The impact of the 2002 governance rules. New York: Nova Science Publishers.
Gibson, C. H., Knapp, M. C., Mowen, M. M., Palepu, K. G., & Shank, J. K. (2010). Graduate accounting capstone. Mason, OH: Cenage Learning
The concept of marketing is very pertinent to any business, especially when introducing a new product/version into the market. The process encompasses comprehending and meeting the needs of the target customers. The aim of this paper is to develop a marketing plan for the Nissan Patrol Desert Edition through a theoretical and analytical approach. The reason for choosing the Nissan Patrol Desert Edition is that it is a relatively new version that has been introduced into the market.
Thus, the company needs to develop a marketing strategy to entice its loyal customers while at the same time attracting a new wave of clientele.
The research will include an in-depth analysis of the context and environment where the company operates, product overview, social responsibility and marketing ethics issues, core target factors, critical success factors, and the companys position and intended market perception for its Nissan Patrol Desert Edition. The limitation of this assignment will be in identifying its strengths, weaknesses, opportunities, and threats during companys SWOT analysis.
Analysis of the Context and Environment in which Nissan Operates
Political Factors
The government of the UAE has managed to control and maintain low oil prices. As a result, it has positively influenced the buying trends for the Nissan Patrol Desert Edition and other brands. An increase in the profit margins for the new version will allow the company to reduce the pricing of the car, reduce its debts, and even scale up its operations as part of its corporate objectives (Tischler 2002).
The liberal trade policy of the UAE such as low tariffs and few non-tariff trade barriers allow the company to have almost unlimited access to the region. This situation has had a positive influence on the company by allowing it to price the Nissan Patrol Desert Edition at an affordable rate for customers (Hoekman 1995).
Economic Factors
An increase in interest rates will negatively affect the sales of the Nissan Patrol Desert Edition due to the corresponding increase in the cost of servicing loans. Moreover, the increase will discourage spending while at the same time encouraging a savings habit by people who wish to benefit from the high rates from banks. Ultimately, the decrease in spending will reduce sales of the Nissan Patrol Desert Edition (Macdonald 1999).
Unemployment will be another major concern for the company, as it implies a reduction in disposable income of the target, which in turn reflects a negative move in its product sales. Moreover, Macdonald (1999) believes that unemployment increases the amount the government will have to spend on social welfare. This increase in government spending is compensated through increasing taxation on companies and/or products.
Social Factors
An increase in disposable income will have a positive impact on the product sales since consumers will have an extra income to buy the vehicle, which is essentially considered a luxury. A large proportion of a young population will have a positive impact on the companys sales compared to the case of having a larger proportion of elderly people in the UAE. Luckily, statistical findings indicate that a majority of the regions population lies between the age of 15 and 64, which is the companys target market (Statistica 2016).
Technological
Pressure from the market continues to increase for the Nissan Company to come up with new products that have incorporated the aspect of improvement in terms of performance, reliability, and safety. This situation has prompted the company to formulate its power 88 strategy whose goal is to introduce a new product every six weeks for the next six years in an effort to stay ahead of the market.
For instance, the Nissan Patrol Desert Edition introduces a better Hydraulic Body Motion Control System that keeps the new version more stable when negotiating corners (Nissan 2012). With the increase in awareness on global warming, governments and individuals are beginning to demand the innovation of eco-friendly and/hybrid products. For instance, the Nissan Patrol Desert Edition has a reduced smoke emission in comparison with its predecessor.
Legal
The UAE government has laid out stringent laws and regulations on consumer protection. It requires the company to have a solid warranty plan to ensure that the Nissan Patrol Desert Edition is safe for use in the region. In addition, the company is expected to comply with all the taxes payable in accordance with the law.
Company and Product Overview
History, Products, and Mission/Vision Statement
Nissan Company was established in Yokohama City in 1993. Currently, it runs operations in 20 countries, including Japan. Among the companys product portfolio are brands such as Nissan, Infiniti, Datsun, Heritage, and Mortorsports. The company records an average annual production of 2 million units.
This figure represents 4.9% of the global car market. The companys mission/vision is to provide innovative and unique automotive products in line with supporting its vision of satisfying all its stakeholders through an alliance with Renault (Nissan Motor Co. 2015).
Performance from a Financial Perspective
Since 2010, the Nissan Company has had a steady increase in the global sales with the exception of drops in 2013 and 2015. The net sales dropped from 12.4 billion Yen in 2014 to 11.4 billion Yen. Nevertheless, despite the sales revenue drop, the company managed to maintain its net income at a level of 457 billion Yen (Nissan Motor Co. 2016).
Performance from a Marketing Perspective
In 2015, the company claimed 15.9 percent of the UAEs car market, 8.5 percent in the US, 8.5 percent in China, and 25.8 percent in Mexico. These results placed the automaker among the top ten in terms of market share. It attributed the success to its aggressive global marketing strategy (Emirates 2016).
Current Marketing Goals
The companys marketing goal is to remain focused on the consumer by ensuring that the current market needs are well understood and met. The goal includes understanding aspects such as affordability, comfort, and purchasing power. Moreover, the companys primary target remains the low-level consumer market, which constitutes a large portion of the global population (Nissan Motor Co. 2016).
The companys goal is to establish a strong position in the competitive automotive industry where it will continuously produce new products that are reliable, affordable, and appealing to customers (Nissan Motor Co. 2016).
Current Marketing Objectives
The company aims at boosting its share in the global market to 8 percent in the next six years. This goal will be achieved through the companys commitment to producing a new vehicle every 6 weeks in an effort to draw consumers by wooing them from its competitors (Reuters 2011).
Social Responsibility and Marketing Ethics Issues
Economic
The Nissan Companys commitment to reducing the cost of manufacturing its brands has allowed it to competitively price the Nissan Patrol Desert Edition at a lower price of $69,430 compared to its competitors to foster its profitability goal (Nair 2015).
Legal
The Nissan Patrol Desert Edition comes with a company warranty once the consumer buys the car directly from the company or through its authorized dealers. The car also comes with an installed safety system that protects the driver from fatal injury in compliance with the consumer protection laws of the UAE (Nissan 2012).
Ethical
The models safety system complies with the consumer protection regulations of the UAE. The company also ensures that it prices its product on a level that is affordable in its target market without compromising its product quality (Nissan 2012).
Philanthropic
The company has devised a sustainable approach to philanthropy through encouraging the spirit of voluntarism from its employees by contributing to charitable organizations and cooperating with regional NGOs (Nissan 2012).
Pyramid for Corporate Social Responsibility
Core Target Profile
Benefits package
The products innovation was motivated by the companys large market demand in the Middle East and the UAE, particularly for customers who were in need of an ultimate off-road SUV for driving in the rugged desert terrains. The company improved the performance of the vehicle through installing a powerful high performance engine.
For such customers who are concerned about their safety needs, the car comes installed with an automated safety system, including underbody protection and bead-lock wheels that allow the tyres to be usable at low pressures without the risk of coming off (Basit 2015).
Major Competitors
The Toyota Motor Corporation is an auto-company that is based in Japan operating under segments such as automotive operations and financial services among others. The company is considered one of the most valuable brands with a market capitalization of $239 billion.
The company has managed to establish a strong position in the global consumer market. Its brands, namely Toyota and Lexus, enjoy a large share in the market with 45.5% in Japan, 12.2% in the US, 13.4% in Asia, and a significant market share in Africa, South America, and the Middle East regions. Toyotas strong market position has allowed it to continue enjoying high sales and profitability. It continues to expand to untapped territories. Nevertheless, its established brand has empowered its marketing capabilities globally.
Besides, the Jaguar Land Rover Company is considered the largest auto company in Britain with investments in research, development, and engineering. The company is regarded as a global leader in the manufacture of SUVs. It poses intense competition to other SUV makers such as Nissan and Toyota. The company has continued to grow with sales growth of 19 percent in Europe, 18 percent in the UK, and 14 percent in North America (Jaguarlandrover 2015).
Critical Success Factors
Strengths
Nissan Patrol was among the first 4-wheel drive SUVs to enter the MENA/UAE region where it earned the name, King of the Desert . The strong position in the market is a reputation that has been attributed to the cars impressive performance. Moreover, its users describe the product as unbreakable, affordable, and reliable. Therefore, with the newly improved version, the company is optimistic that it will entice its loyal customers while attracting a new generation of consumers in the region (Nissan 2012).
Besides, Nissan Patrol Desert Edition has managed to maintain its loyal breed of customers over the years due to the companys dedication to continued improvement of the cars performance and luxury packages (Nissan 2012). Due to the UAE/MENA market demands for a SUV that can withstand the harsh conditions of the desert, the company has committed itself through its innovative team design, craft and test to fine-tune the new Nissan Patrol Desert Edition to suit its use for the region.
Weaknesses
In 2013, the company recalled 25,000 of the products in Australia after it identified an accelerator fault that it claimed would result in loss of power and hence pose danger to occupants and road users. Such recalls have affected its product image by resulting in reduced sales in the affected regions (Nicholson 2013).
Opportunities
After the reverse of the recession in 2010, the automobile industry has experienced a tremendous growth globally and in the Emirates region. The 6.6 percent growth in 2014 was attributed to the improvement of the UAEs economy, the increased vehicle financing, and the augmented spending by individual households. Through exploiting its strong market position, the company can utilize the increased vehicle loan financing to market its product to potential new owners (Emirates NBD 2015).
In an effort to encourage the importation of products, the UAE government has committed itself to eliminating most tariffs. This move has had a positive effect for the company by allowing it to price its product fairly to increase its sales. Part of the companys market position is the affordability of its products compared to its competitors. Therefore, the company can exploit this opportunity by reducing further its product price that would attract new customers (Hoekman 1995).
Threats
The company faces stiff competition from other market players such as Toyota and Land Rover that produce similar prototypes of the Nissan Patrol Desert Edition. The competitors have a negative effect on the companys market share. To stay ahead of its competitors, the company devised the ambitious Power 88 strategy, which aims at producing a new product everyone and half months to attain an 8% market share by 2017.
This strategy is unattainable, owing to the reduction in the companys sales in 2015 (Harner 2013). The increased cost of raw materials may potentially raise the price for the Nissan Patrol Desert Edition, thus threatening to cause a reduction in the car sales (Jurevicius 2013).
Increased demand for hybrid products poses a major challenge for the company in terms of marketing the Nissan Patrol Desert Edition to consumers who desire to purchase hybrid/eco-friendly vehicles. Therefore, the company should embark on an innovative strategy to develop a hybrid version of the Desert Edition to meet the needs of this market.
Critical Success Factors
Products Intended and Actual Position in the Market
Intended Position
The Nissan Patrol Desert Edition is perceived to raise the expectation of the companys loyal customers and entice a new breed of clients due its high performance, reliability, safety, un-breakability, affordability, and comfort (Nissan 2013).
Intended Position
Actual Position
The Nissan Patrol Desert Edition has been acknowledged by both its critics and supporters as a high performance SUV that is suitable for the desert terrain. The high performance has been attributed to its 5.6 liter V8 400 horsepower engine. As a result, the car has been regarded as suitable for use in the tarmac and sandy terrain (Warrior 2016). However, some critics have regarded the Nissan Patrol Desert Edition as a standard performance vehicle with no significant modifications from its predecessor.
Nevertheless, both critics agree that the product comes with a safety skid plates at the rear and back side to protect the driver from excessive injury in case of an accident (Smuts 2016). In terms of affordability, the Desert Edition is cheaper compared to Range Rover and Toyota Land Cruiser prices at 90,000 and 80,000 USD respectively.
Actual Position
Conclusion
The Nissan Patrol Desert Edition is a high-performance SUV produced by the Nissan Company. The car is specifically designed for the rugged desert terrain in the UAE/MENA region. The company is affected by political, economic, social, legal, and technological factors each of which has its unique trends that collectively affect its overall marketing strategy.
The company commands a large market share both globally and in the UAE/MENA region compared to its major competitors, including Land Rover and Toyota. The companys SWOT analysis reveals strengths such as strong market position while also revealing weaknesses such as product recalls. The company has managed to position its product as reliable, high-performance, safe, and affordable.
Hoekman, B. 1995, The World Trade Organization, the European Union, and the Arab World: Trade Policy Priorities and Pitfalls, World Bank Publications, London.
Jaguarlandrover 2015, Jaguar Land Rover Reports August Sales Performance | Jaguar Land Rover Corporate Website. Web.