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11 Cards in this Set
- Front
- Back
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W: Board members who are involved in operations and have management bonus |
I: Due to their involvement and management bonus, there is a lack of independence. They may act in their own best interests rather than the entity's best interest. R: Board members should be independent. Find a suitable substitute to replace the current board members |
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W: Management/Board has proposed that you enter into an agreement with whom they have a close relationship with. |
I: there is a potential conflict of interest with the role and the person/entity. It is possible that they may put the other party's best interest before yours. R: perform due diligence. Ask for more information supported by third party information to verify. Be wary of conflict of interest, and be cautious of that person's advice |
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Board members do not have experience in business management |
I: it is important to have board members with relevant skills and experience to provide useful advice/guidance and help make decisions at the strategic level. Recruit individuals who have management skills as well as experience in the industry. However, you do not want someone who is currently involved with a competitor. |
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W: Considering bringing on individuals to join board |
I: Need to assess whether skills and experience benefit you. Someone who can provide constructive criticism to ideas and proposals. Can provide financial advice and oversight Can provide financial and business knowledge. R: determine if they are a good fit |
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W: Board members focusing on operational decisions. |
I: overseeing too much operational aspects. This takes away time and energy from the strategic direction of company and ability to assess strategic initiatives. Results in short-term focus instead of long-term. R: Adjust roles that are directly involved in day-to-day operations, especially if biased. |
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W: No indication of board meetings and set frequency |
I: regular and timely meetings are important to -ensure adequate oversight over management and performance of the company -respond to issues and decisions in a timely manner R: Consider size of company and meet at appropriate frequencies to have effective meetings |
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W: Board only has 3 members |
I: A small sized board may limit the range of knowledge and expertise that is available to help develop and assess the strategic direction and performance of the company. R: Consider appointing at least 2 more members. It is a good idea to have an uneven number of members to ensure that decisions do not end up with a tie vote. |
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Cash flow issues |
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W: purchase entries based on supplier invoices (objective), are not checked for accuracy when shipments received |
I: entries to record purchases may not be accurate. AP could be overstated/understated. R: before making AP entries, accountant should compare supplier invoices to units/prices that were physically received. Verify the mathematical accuracy of supplier invoices, taxes, shipping, and document on the invoice that it has been checked and reviewed. |
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W: processing purchases without checking accuracy of invoice |
I: could be paying for the wrong units or the wrong amount of units from what was ordered. It also be paying fictitious invoices. R: make payment only after receiving confirmation that invoice has been reviewed or shipment has been physically checked. |
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W: Purchases from various locations are not consistent/centralized |
I: purchases may not meet required specifications/ quality standards. Results in safety issues and replacement costs and loss of revenues R: centralize the purchasing function, optimizing the process and ensuring shipments are correct. |
