B1: Corporate Governance and Operations Management Flashcards
Network Marketing
Relationships and Referrals
E-Marketing
Use of Internet
Database Marketing
Target Groups
Interaction-Based Relationship Marketing
Repeat Business/Loyalty Discounts
Transaction Marketing
Lowest Price, Single Sale
Cause-and-Effect Diagram “Fishbone”
Trace “Defect” back to source using
- Materials
- Manpower
- Machinery
- Method
Pareto Diagram “Histogram”
Most to Least Frequent. Uses output/total for cumulative percentages
Control Charts
Determine “zero” defects. Also known as goalpost performance to ensure deviations are within an acceptable range
Partial Productivity Ratios
Output / Specific Quantity
Total Factor Productivity Ratios
Output / Total Costs
3 Objectives of COSO Framework “ORC”
- Operations Objectives: Effectiveness & Efficiency
- Reporting Objectives: External & Internal, Reliable and Transparent
- Compliance Objectives: Adhere to laws & regulations
Components of Internal Control “CRIME”
- Control Environment: Tone at the Top
- Risk Assessment: Financial Statement misstatement or fraud?
- Information & Communication: Fair, Accurate, Complete, & Timely = FACT
- Monitoring: Efficiency of Internal Control, Report Deficiencies
- Existing Control Activities: Policies/Procedures to mitigate risks
Control Environment “EBOCA”
Ethics & Integrity Board Independence and Oversight Organizational Structure Commitment to Competence = Hire, Develop, Retain Accountability
Risk Assessment “EAR”
Event Identification
Assess Risk
Respond to Risk
Information & Communication “FACT”
Internal: Internal Audit, Audit Committee, Management External: CPA Firm Fair Accurate Complete Timely
Monitoring
Report and Correct Deficiencies
Existing Control Activies
Develop IT and Deploy Policies
Effective Internal Control Requirements
- Present: Included as Designed
2. Functioning: Operating as Designed
Ineffective Internal Control
Major Deficiency
Enterprise Risk Management Objectives “SORC”
- Strategic: High-level goals designed to achieve the mission
- Operations: Efficient & Effective Use of Resources
- Reporting: Consistent Reporting
- Compliance: With Laws and Regulations
Components of Enterprise Risk Management “IS EAR AIM”
Internal Environment = (C)RIME
Setting Objectives = “SORC”
Event Identification \
Assessment of Risk | -> C(R)IME
Risk Response /
(Existing Control) Activities = CRIM(E)
Information & Communication = CR(I)ME
Monitoring = CRI(M)E
Internal Environment = Tone at the Top “EBOCA HR”
Ethics Board Oversight Organizational Structure Commitment to Competence Accountability
Human Resources & Risk Appetite
Risk Management
Setting Objectives “SORC”
Strategic Objectives
Operations
Reporting
Compliance
Event Identification
Risks (negative) and Opportunities (positive) External = PESTN Political Economic Social Technological Natural Environment
Internal = TIPP Technology Infrastructure Personnel Process
Assessment of Risk
Inherent = What's the risk is Management takes NO action Residual = What's the risk AFTER Management takes action
Risk Response
Must align with the organizations overall risk appetite Avoidance = Discontinue Reduction = Invest Sharing = Buy Insurance Acceptance = No action
Existing Control Activities
Policies and Procedures
Variance Analysis = Budget vs. Actual
Activity Management = Performance Reports
Performance Indicators = Ratio Analysis = Red Flags
Information and Communication “FACT”
Fair Accurate Complete Timely Internal = Personnel External = Supplier and Customer
Monitoring
Verify Effective Operations
Separate Evaluations
Report Deficiencies
