Board of Directors FR: Renewal Essay

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That this case has emerged internally gives us an opportunity to ensure that situations like this do not arise out of our control, i.e. discovered by a customer. We have the opportunity to built our compliance and audit procedures from scratch, so that the level of oversight these departments have on the firm's operations is complete, and insulates the firm against further risk. An investigation should be conducted into past auditing and compliance practices so we can know precisely where the failures occurred and this information will help us to correct those practices in the future.

The third recommendation is that the Board gives consideration to upgrading the bookkeeping system. It is clear that manual updates are unreliable and that reliance on them puts the company at risk. We know this now, on the basis of the preliminary investigation, so this is something that we can deal with now. The compliance department is not in a position to make specific recommendations on this issue at present, so the recommendation is simply that the Board takes this up with the bookkeeping department to get their input.
Summary: It has come to light than many customers who are eligible for our early payment discount have in fact not received that discount. A preliminary investigation has been conducted in accordance with our compliance plan. Three key issues have been identified that should be subject to further scrutiny, along with sub-issues. The company faces significant legal risk as the result of this issue. Therefore the compliance department has three recommendations at this time. The first is to authorize a full investigation into this issue. The second is to authorize additional funding to the compliance and internal auditing departments. The third is to open discussions with the bookkeeping department with respect to eliminating manual processes from their systems. These approaches will not only help us to address the specific overcharging issue that has been identified, but will also help the organization to improve its internal systems in order to prevent such incidents from….....

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