IG011 Walden University Communicating Accounting Information cases

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Question Description

Overview

This Performance Task Assessment includes six parts. Each part involves a different case scenario that will challenge you to apply your knowledge about how to communicate accounting information in different business situations. You are strongly encouraged to use the Academic Writing Checklist when completing this Assessment.

Your response to this Assessment should:

  • Reflect the criteria provided in the Rubric.
  • Adhere to the required length.
  • Conform to APA style guidelines. You may use Walden Writing Center's APA Course Paper Template here.

Professional Skills: Written Communication, Technology, and Critical Thinking and Problem Solving are assessed in this Competency.

This Assessment requires submission of two (2) files. Save your files as follows:

  • Save Part 1 as IG011_Part1_firstinitial_lastname (for example, IG011_Part1_J_Smith).
  • Save Parts 2-6 as IG011_Parts2-6_firstinitial_lastname.

For each scenario, you will assume an important role within a fictional company and analyze various aspects of that company using accounting tools and measures.

Part 1: Ensuring Accurate Financial Data

Scenario

You work for a company that has recently experienced a case of embezzlement. The management team is looking for ideas on how it can prevent this from happening in the future and has asked you to present ideas during its next monthly meeting. Using the following case, prepare a 10-slide presentation that presents the details of the case and ideas for how the company could have prevented the embezzlement. Include details on how the company can ensure accurate financial data.

Jared Smith has served as the executive director of the Community Arts Organization for more than 10 years. The Community Arts Organization is led by a board of directors. Jared works independently. He receives all membership fee payments (cash and checks), and he pays all bills and reconciles the checking account. No one reviews Jared’s work and the Community Arts Organization is not regularly audited.

Over the course of the past 5 years, Jared has committed fraud and embezzled nearly $400,000. Jared deposits membership fee payments directly into his own bank account. He also writes Community Arts Organization checks to himself and has created phony companies that he writes checks to and deposits the checks into his own bank account.

Part 2: Explaining Variances in Performance Reports and Suggesting Possible Causes and Remedies

Read the “Widget Company Performance Report” document, provided with this Assessment. Imagine that you are the manager of the production department at the Widget Company and you have been asked to explain the variances found in a performance report, propose possible causes, and make suggestions for how the variances can be remedied. Using the information provided in the Widget Company Performance Report, prepare a memo to your boss that explains the possible causes of the variances in the performance report, and suggest how the company can remedy them. (1 - 2 pages)

Part 3: Alternatives to Discounted Cash Flows, the Information They Provide to Inform Capital Investment Decisions, and the Types of and Usefulness of Qualitative Information on the Decision-Making Process

Scenario

As a new product development manager, you are considering investment proposals for two mutually exclusive investment opportunities. The projects have been analyzed using net present value (NPV), internal rate of return (IRR), payback, and accounting rate of return (ARR), and the results are presented in the Investment Proposals document.

Assume the company requires a minimum return of 16% and a payback of 3 years. Evaluate the projects using the analysis provided and write a brief report that makes a recommendation based on the data. Also include qualitative factors that should be considered and an explanation of how they would impact the recommended investment decision. (1 page)

Part 4: Using Transfer Pricing Methods

Scenario

Graphic Art, Inc. has a print division that produces art prints in China and a Retail Division in Greece that sells the prints. The Print Division has a low 20% income tax rate and the Retail Division has a high 50% income tax rate. The Retail Division in Greece is subject to a 10% import duty on the transfer price of all imported products. Both China and Greece allow firms to use either variable or full cost as the transfer price. The Graphic Art document summarizes both transfer pricing methods.

Assuming both divisions have significant positive taxable income, write a business email that describes the transfer pricing method that you think Graphic Art, Inc. should use. Be sure to cite the data from the spreadsheet. (2 - 3 paragraphs)

Part 5: The Flexible Budget

Scenario

As the newly promoted general manager of the Widget Company, you prepared a performance report using Excel and presented this to your boss. (See “Widget Company Performance Report.”) Your boss e-mailed you and asked for more information regarding the usefulness of a flexible budget report to assess performance. Prepare an e-mail to your boss explaining why the flexible budget provides more useful information than a static budget. (3 - 4 paragraphs)

Part 6: Break-Even Analysis and Decision Making

Scenario

Jaden Water Inspection Service tests water quality for industrial applications.

Jaden receives $150 for each inspection and wants to expand its business by adding another employee and vehicle. Jaden anticipates that another employee would add 60 additional inspections per month. Jaden has determined that the average cost for each inspection is $45. The fixed costs for a new employee and vehicle are $3,000 per month.

To persuade his investors that adding another employee is a good idea, Jaden prepared a break-even analysis. (See the “JWIS Break-Even Analysis” document.) Assume the role of Jaden and prepare a report that includes the following (1 to 2 pages):

  • An explanation of the purpose of a break-even analysis as it relates to this case
  • Based on the break-even analysis, an explanation of why the additional employee is a good investment

Graphic Art, Inc. Transfer Pricing Methods Full Cost Variable Cost Print Division (China): Transfer Price 1,500 1,000 (1,500) (1,500) 0 (500) Less: Cost Taxable Income Income Taxes (or refund) 20% (100) Retail Division (Greece): Sales Price 2,000 2,000 (1,500) (1,000) 500 1,000 250 500 150 100 400 600 400 500 Less: Transfer Price Taxable Income Income Taxes Import Duty 50% 10% Taxes in Retail Division Total Taxes China Tax Rate Greece Tax Rate Import Duty 20% 50% 10% Full Cost 1,500 Variable Cost 1,000 Sales Price 2,000 ©2015 Walden University 1
Investment Proposals Net present value (NPV) Internal rate of return (IRR) Payback Accounting rate of return (ARR) ©2015 Walden University Project A Project B $ 510,000 $ 650,000 16% 3.50 17% 3.25 25% 18% 1
Jaden Water Inspection Service Revenue – Variable costs – Fixed costs = Profit At break-even, the profit is zero Revenue – Variable costs – Fixed costs = 0 P = price, Q = quantity, VC = variable costs, FC = fixed costs PQ – VC – FC = 0 150Q – 45Q – 3,000 = 0 105Q = 3,000 Q = 28.57 which is rounded to 29 inspections ©2015 Walden University 1
Widget Company Manufacturing Overhead Performance Report For Month Ended June 20XX Static Budget at 6,000 units Revenue $ 60,000 Actual $ 63,240 Variance (Actual—Static Budget) $ 3,240 F Flexible Budget at 6,500 units $ 65,000 Variance (Actual— Flexible Budget) $ (1,760) U 29,250 1,950 U Less: Variable costs Contribution Margin 27,000 $ 33,000 31,200 $ 32,040 4,200 U $ (960) U $ 35,750 $ (3,710) U Less: Fixed costs Profit ©2015 Walden University 24,000 $ 9,000 25,000 $ 7,040 1,000 U $ (1,960) U $ 24,000 1,000 U 11,750 $ (4,710) U 1
IG011: Communicating Accounting Information: Communicate accounting information appropriately to various stakeholders in support of managerial decision making. Assessment Rubric 0 Not Present 1 Needs Improvement 2 Meets Expectations 3 Exceeds Expectations Sub-Competency 1: Explain the steps to be taken to ensure accurate financial data. Learning Objective 1.1: Create a slide presentation that depicts pertinent details of the business case. The slides showing pertinent details of the business case are not present. Learning Objective 1.2: Create a slide presentation that explains how the company could prevent embezzlement. Slides showing how the company could have prevented embezzlement are not present. Learning Objective 1.3: Create a slide presentation that depicts the steps an organization should take to ensure accurate financial data. Slides showing the steps for an organization to ensure accurate reporting of financial data are not present. The slides showing pertinent details of the business case are inaccurate and/or incomplete, or fewer than three details are presented. The slides showing three pertinent details of the business case are accurate and complete. Slides showing the company could have prevented embezzlement are inaccurate and/or only two methods are presented. Slides showing how the company could have prevented embezzlement are accurate and three methods are presented. Slides showing the steps an organization can take to ensure accurate financial data are inaccurate and/or incomplete. Slides showing the steps an organization can take to ensure accurate financial data are accurate and complete. Response demonstrates the same level of achievement as “2,” plus the following: More than three details of the business case are presented. Response demonstrates the same level of achievement as “2,” plus the following: More than three methods are presented. Response demonstrates the same level of achievement as “2,” plus the following: The steps are related to two recent high profile fraud cases. Sub-Competency 2: Prepare a memo to a subordinate asking for clarification of the variances found in a performance report and suggest possible causes and remedies. ©2015 Walden University 1 Learning Objective 2.1: Prepare a business memo. Learning Objective 2.2: Explain variances in a performance report. Learning Objective 2.3: Suggest possible causes of variances in a performance report. ©2015 Walden University 0 Not Present Business memo is not present. Explanation of variances in a performance report is not present. Suggestions for possible causes of variances in a performance report are not present. 1 Needs Improvement Business memo format is present but does not contain all required parts. Explanation of variances in a performance report is inaccurate, incomplete, vague, and/or not related to the business context presented. Suggestions for possible causes of variances in a performance report are inaccurate, vague, and/or not related to the business context presented. 2 Meets Expectations A business memo format is used that contains a heading including the following specific parts: to, from, date, and subject. The proper title is used for the recipient and the subject line is specific and concise. Explanation of variances in a performance report is accurate, complete, clear, and related to the business context presented. Suggestions for possible causes of variances in a performance report are accurate, clear, and related to the business context presented. 3 Exceeds Expectations Response demonstrates the same level of achievement as “2”, plus the following: There is an opening that defines the context and the task, a summary discussion, and a closing. Response demonstrates the same level of achievement as “2,” plus the following: Response accurately explains whether or not all variances in performance reports should be examined. Response demonstrates the same level of achievement as “2,” plus the following: Response identifies three reasons for variances that could result from external factors over which the organization has no control. 2 Learning Objective 2.4: Propose possible remedies for variances in a performance report. 0 Not Present Proposal for possible remedies for variances in a performance report is not present. 1 Needs Improvement Proposal for possible remedies for variances in a performance report is inaccurate, vague, and/or not related to the business context. 2 Meets Expectations Proposal includes possible remedies for variances in a performance report that are accurate, clear, and related to the business context. 3 Exceeds Expectations Response demonstrates the same level of achievement as “2,” plus the following: Response discusses the stakeholders involved in the remedies and the effect of the remedies on the stakeholders. Sub-Competency 3: Explain how various alternatives to discounted cash flows provide information to help make capital investment decisions as well as the types of and usefulness of qualitative information on the decision-making process. Learning Objective 3.1: Explain how various alternatives to discounted cash flows provide information to help make capital investment decisions. Explanation of how various alternatives to discounted cash flows provide information to help make capital investment decisions is not present. Learning Objective 3.2: Explain the types of qualitative information that are used to make capital investment decisions. Explanation of the types of qualitative information that are used to make capital investment decisions is not present. ©2015 Walden University Explanation of how various alternatives to discounted cash flows provide information to help make capital investment decisions is inaccurate, incomplete, vague, and/or not related to the business context. Explanation of the types of qualitative information that are used to make capital investment decisions is inaccurate, vague, and/or not related to the business context. Explanation of how various alternatives to discounted cash flows provide information to help make capital investment decisions is accurate, complete, clear, and related to the business context. Explanation includes the types of qualitative information that are used to make capital investment decisions and is accurate, clear, and related to the business context. Response demonstrates the same level of achievement as “2,” plus the following: Response identifies the weaknesses of the alternative methods. Response demonstrates the same level of achievement as “2,” plus the following: Response includes rationale to support the use of qualitative information to make capital investment decisions. 3 0 Not Present 1 Needs Improvement 2 Meets Expectations 3 Exceeds Expectations Sub-Competency 4: Create a business email that demonstrates the appropriate transfer pricing method to use for a given situation. Learning Objective 4.1: Prepare a business email. Business email is not present. Business email is present but does not contain all of the required sections. Writing is not clear, does not flow logically, and/or is not concise. Business email contains an appropriate, relevant, and attention-grabbing subject line. Response demonstrates the same level of achievement as “2”, plus the following: The first sentence clearly states the purpose. The email starts with a greeting, sentences are short and concise, and information is easy to find and understand. Writing is clear, flows logically, and is concise. Learning Objective 4.2: Determine the appropriate transfer pricing method to use for a given situation. The transfer pricing method to use is not indicated. The selected transfer pricing method to use is not appropriate and/or is not supported by relevant data. The transfer pricing method to use is appropriate and is accompanied by an explanation of why it is the appropriate method for the given situation. Bullet points are used for lists instead of burying them in the verbiage. Response demonstrates the same level of achievement as “2,” plus the following: The explanation refers to relevant data for support. Response includes a comparison of full-cost transfer pricing to variable cost transfer pricing and the related incentives. Explanation clearly details the usefulness of a flexible budget and why it provides more useful information Response demonstrates the same level of achievement as “2,” plus the following: Sub-Competency 5: Explain the usefulness of a flexible budget. Learning Objective 5.1: Explain the usefulness of a flexible budget in specific business cases. ©2015 Walden University Explanation of the usefulness of a flexible budget is not present. Explanation detailing the usefulness of a flexible budget is inaccurate and/or incomplete and does not include an 4 0 Not Present 1 Needs Improvement explanation for why a flexible budget provides more useful information than a static budget report. 2 Meets Expectations than a static budget report. 3 Exceeds Expectations Response includes an explanation of when a static budget should be used as a benchmark. Sub-Competency 6: Explain the purpose of break-even analysis and its usefulness in decision-making. Learning Objective 6.1: Explain the purpose of break-even analysis. Learning Objective 6.2: Explain the usefulness of break-even analysis on decision-making. Explanation of the purpose of the break-even analysis is not present. Explanation of the usefulness of break-even analysis on decisionmaking is not present. Explanation of the purpose of the break-even analysis is inaccurate, incomplete, and/or not related to the business context. Explanation of the usefulness of break-even analysis on decisionmaking is inaccurate and/or incomplete. Explanation of the purpose of the break-even analysis is accurate, complete, and related to the business context. Explanation of the usefulness of break-even analysis on decisionmaking is accurate and complete. Response demonstrates the same level of achievement as “2,” plus the following: Response includes a discussion of break-even analysis when more than one product is produced. Response demonstrates the same level of achievement as “2,” plus the following: Response includes an example of how breakeven analysis could be helpful to a specific company with which the student is familiar. PS001: Written Communication: Demonstrate graduate-level writing skills. Learning Objective PS 1.1: ©2015 Walden University Multiple major and minor errors in grammar, spelling, and/or mechanics are highly distracting and Multiple minor errors in grammar, spelling, and/or mechanics are distracting Writing reflects competent use of standard edited American English. Grammar, spelling, and mechanics reflect a high level of accuracy in 5 0 Not Present seriously impact readability. 1 Needs Improvement and negatively impact readability. 2 Meets Expectations Errors in grammar, spelling, and/or mechanics do not negatively impact readability. 3 Exceeds Expectations standard American English and enhance readability. Learning Objective PS 1.2: Organize writing to enhance clarity. Writing is poorly organized and incoherent. Introductions, transitions, and conclusions are missing or inappropriate. Writing is loosely organized. Limited use of introductions, transitions, and conclusions provides partial continuity. Learning Objective PS 1.3: Apply APA style to written work. APA conventions are not applied. APA conventions for attribution of sources, structure, formatting, etc., are applied inconsistently. Learning Objective PS 1.4: Use appropriate vocabulary and tone for the audience and purpose. Vocabulary and tone are inappropriate and negatively impact clarity of concepts to be conveyed. Vocabulary and tone have limited relevance to the audience. Writing is generally wellorganized. Introductions, transitions, and conclusions provide continuity and a logical progression of ideas. APA conventions for attribution of sources, structure, formatting, etc., are generally applied correctly in most instances. Sources are generally cited appropriately and accurately. Vocabulary and tone are generally appropriate for the audience and support communication of key concepts. Writing is consistently well-organized. Introductions, transitions, and conclusions are used effectively to enhance clarity, cohesion, and flow. APA conventions for attribution of sources, structure, formatting, etc., are applied correctly and consistently throughout the paper. Sources are consistently cited appropriately and accurately. Vocabulary and tone are consistently tailored to the audience and effectively and directly support communication of key concepts. Images and layout generally support audience understanding of key concepts. Images and design elements are used purposefully, and they effectively support Use proper grammar, spelling, and mechanics. PS003: Technology: Use technology tools effectively. Learning Objective PS 3.1: Use images and layout of presentations to ©2015 Walden University Images and layout are inappropriate, hard to read, and/or impede Images or layout provide limited support for audience understanding of key concepts. 6 effectively communicate content to a specific audience. 0 Not Present audience understanding of key concepts. 1 Needs Improvement 2 Meets Expectations 3 Exceeds Expectations audience engagement and understanding of key concepts. PS005: Critical Thinking and Problem Solving: Use critical-thinking and problem-solving skills to analyze professional issues and inform best practice. Learning Objective PS 5.1: Analyze assumptions and fallacies. Learning Objective PS 5.2: Generate reasonable and appropriate assumptions. ©2015 Walden University Analysis of assumptions is missing. Assumptions are missing. Response is weak in assessing the reasonableness of assumptions in a given argument. Response generally assesses the reasonableness of assumptions in a given argument. Response clearly and comprehensively assesses the reasonableness of assumptions in a given argument. Response does not adequately identify and discuss the implications of fallacies or logical weaknesses in a given argument. Response does not adequately present and discuss key assumptions in an original argument. Response identifies and discusses the implications of fallacies and/or logical weaknesses in a given argument. Response provides a detailed and compelling analysis of implications of fallacies and logical weaknesses in a given argument. Response justifies the reasonableness and need for assumptions in an original argument. Response presents and discusses key assumptions in an original argument. 7

Tutor Answer

ProfessorMyron
School: UC Berkeley

This is part 1. Let me upload part 2-6 shortly

IGO 11; ENSURING ACCURATE FINANCIAL DATA

Communicating Accounting Information

Background of the Case







Regardless of the company having board directors who worked at Community of Arts, The
company accountant has been working independently for more than 10 years. As the
company accountant, he is assigned the role of receiving all membership fee payments both
in cash and checks)
Under no supervision and monitoring, he reconcile the company accounts books and pays all
the bills.
The company has not hired any independent employee to review Jared Smith work as the
company accountant.
There is no proper established process of external audit by the Community Arts Organization
in the company.

Nature of Financial Fraud







Lack of financial statements audit has enabled Jared to embezzle $400000 from
the company which is a financial fraud.
Being the company accountant, Jared makes deposits to all the fee payment of
membership subscription to his own account instead of the organizational
account.
Jared also writes himself a check from company account instead of writing it to
the Community Arts Organization to himself
Jared has established other proxy companies which he uses to embezzle funds
through writing checks to them and depositing the remaining cash in his own
account.

How The Company Could Have Prevented
The Embezzlement


The company should have conducted Jared lifestyle audit to find out whether
there is conflict of interest in his daily operations.
 The company could have an electronic internal control over cash inflow and
outflow of the company.
 The company could have departmentalized and different divisions for work of
the accountant in the company. This will hinder the accountant from receiving
payment and simultaneously approve, make and request for other expenses.
(Herawati, 2015).
 The company could have opened a business account for collecting all the
payment to the company..

How The Company Could Have Prevented The
Embezzlement


To ensure there is a proper review, the company should have opened a separate account
for recording the payment of membership fee and other expenses incurred by the
company.
 The company should have introduced an internal control whereby, at least two people
put their signatures in all the withdrawals and payments to the company account
(Herawati, 2015).
 The company should have ensured there is provision of more checks and balances in all
the operations of the company. This would have given other employees of the company
to scrutinize the work of Jared Smith as the company accountant.
 The company should have segregation of duties. This would have made Smith to be
accountable to any case of loss or fraud because, an internal control will effectively track
all the receipt and payment of the company.

How The Company Could Have Prevented The
Embezzlement


The payment role of membership fee should be different from the organizati...

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