Case Analysis One Tel

Question: Discuss about theCase Analysisfor One Tel. Answer: Introduction: The important job of an auditor is to assess the risk for his clients when working with them, one of the major types of risk is inherent risk; the risk of material misstatement in the financial record or statements occurs if there is no control. The risk management if anyone can see logically then he will understand that this job of board members. In many organisations the risk committee is formed to evaluate the risk and assessment under the supervision of Board Members. It is considered very high where the transaction of entity is complex and the due to that the judgement and estimation. This risk primarily evaluates or assess by the auditor. Flawless financial records are very rare thats why the auditors are there to find out the errors as well as the risks, especially when internal control is not in place the inherent risk probability of existence becomes very high in those kinds of situations(Quora, 2013). To understand the strategic risk knowledge of ERM or enterprise risk management is important. It is basically performed by the board and management. It is a process of setting the strategy to identify and design potential risk may affect the company or companys financial records. The strategic risk is those internal and external factors which prevent to achieve the companys strategic goals. In recent year there are economic turbulence in world economy, the company has the inherit risk of having the payment of interest. There are compliance threats also, Compliance threats are mostly related to legislation and legal threats to existence, changes in the regulations may be threats. Operational threats are a related to the investors or operators. Apart from that there are some financial threats these may cause from market fluctuations, hike in interest rate, inflation etc. One Tel was expecting a major boom in the market as the handset users increasing with respect of land phone users, b ut market has become saturated as the big players are already there in the market. One Tel has to face the hard competition from other big players. Main challenge in this market is keeping the quality in international standard products have to delivered at low cost(Nocco Stulz, 2006). Discussion: The process of assessing the inherent is very subjective than other sections of audit. Inherent risk is mainly an event, happens in the financial statements for the absence or maintenance of internal control. The One Tel company had make a loss of $282.1 million and again when company is planning to move to a new market, it would require further investment and the return on investment will be lower in the first 3 years, which carries an inherent risk. Initially the One Tel has to lease the other companys network which incurs a recurring cost. High inherent risk means in the financial records or statements are correct or fraud has happened by the way of omission or negligence of material fact. There are Some Key Factors Which can Lead to High Inherent Risk: Environment external factors: there is a list of external and environmental factor that can increase the Inherent risk. Expiring Patents: pharmaceutical companies often face the patent expire risk. Drug patents expire. That means company will face the sales and marketing problem of making the same generic medicine. Rapid change: if inventory of a company becomes obsolete fast then the company may experience high inherent risk. State of economy: economic growth in general level also carries high inherent risk. Availability of financing: It is another external factor, if the client has the problem of meeting cash payment, loans availability in low rate of interest may mean the gap between staying in business or shut down. Fraud: this is one of the major or common factors for high inherent risk. The maintenance of the records and statements are done by the human, there may be a chance that theft can happen. As an example, if any company deals with cash there is a chance of balance sheet cash balance is under inherent risk. It is a most simple example of lack of control in internal operations. There should be regular check- ups of the financial statements can reduce the risk. Another factor for high inherent risk is if prior period misstatements lie in the financial records. This may happen if periodic audits and check- ups of the financial records not done meticulously(Investopedia, 2015). Factors are Mostly Responsible for Strategic Risks: External Factors: The market change can be a major external factor for strategic risk. Management may decide one strategy but due to some market change again the new strategy has to launch by the management. Competition may be another risk, if competitor change the strategy that may led to a high strategy risk. Vendor performance is an external factor that is also responsible for strategic risk. Some financial factors like unknown expenditure, cash flow, and cost pressure are there for increasing the risk. Human resource factors: Fraud Employee or theft can be a factor of strategy risk, also the knowledge, know- how and the staffing can be a factor for strategic risk(Ranong Phuenngam, 2009). Conclusion: As we have found that the inherent risk always is a threats to the company as it is mostly happens due to certain factors, external as well as internal. This kind of risk exists in the financial record and a statement due the misstatements happens due to the lack of control in place. And when it is identified then the common practice is to manipulate the financial record or statements. So for this reason external auditors roles comes. It can only be minimised by the regular audit and taking the needful steps on the basis of audit reports. The strategic risk and the inherent risk both are threats to the company and those can be overcome through regular audit. To some extent strategic risk can be overcome through proper planning and back up plans. Because there are certain things which are beyond control like competitor strategy, market change then govt. policy or legislation changes etc. as One Tel entering a new market that will create a chain of operation with new customers and new operators. There will be many new challenges have to face like competition, the rate new taste and requirements of the customers, buying new equipment and infrastructures and new technology. Proper deployment of the resources is a real challenge. Task 2: Inherent Risk Factors: Inherent risk is the presence of misstatements due to the fraud, ignorance, or lack of internal control in place. This is the job of an auditor to find out the probable risk from the financial records or statements. It also happens if the transaction is complex so to mitigate this company has to take some steps which can simplify the transactions. Inherent risks increase the probability of error misstatements. The main factors are due to errors and omission, it is an audit risk. The financial sector is highly under the inherent risk because the lots of cash transaction done. Sometimes the strategic decision is also responsible for inherent risk. Apart from that rapid change in markets and the completions increase the inherent risks. State of the economy, economic growth or de growth can be a factor for inherent risk. Inflation is also to some extent increase the inherent risk. Availability of loans in low rate of interest may disturb the financial records as a result the risk may increase. For the pharmacy companies if the patents expires the companies may go through some marketing and competition problem. This will enhance the inherent risk in the balance level. The case of One Tel, we have seen it is already under cash crunch from the loss in the year 2000. This financial crisis will not allow entering a new market where there are lots of big player fighting. Entering a new market means lots of investment, new expense in licensing etc. As One Tel is penetrating a new market that means lots of infrastructural cost is involved new network has to be established, new office, hiring a new people as well as big promotional cost is involved(Auasb, 2009). There is a huge fund needed to fulfil the basic necessity as well as the up gradation of technology, new loans will create an impact on the profitability as the interest payment has to done from cash inflow. The regulations and the legislation are major hick ups for the MA. Significant inherent risk is to build the network and coverage. These are the prime challenges every telecom company has to face specially when entering a new market. The long term target of the company sometimes increases the competition which led to the inherent risk(Gary S. Monroe, 2008). The One Tel floated fresh public shares to collect fund from the market that would become an extra burden on the repay and pay the revenue and dividends from the margins. Task 3: Going concern is the assumption on factors that that a company will retain in the business in the coming future. Auditors evaluate the going concerns on the basis of entitys ability for every company the analyses of risk factors are essential, the evaluation and the strategy making are also a challenging job for the board and the management of every entity. What we have found from the cash flow, balance sheet as well as other financial records that the risk of One Tel is medium. One Tel is a big telecom company in Australia, founded in 1995 by Jodi Rich and Brad Keeling. The motto was to sell the mobile phones to the youth through one.net. And gradually it has come in Australias top five telephone company. The going concern based on multiple parameters(Monem, 2011). When a new company penetrating a new area or market for business, the research and planning starts from very early days. Lot of efforts as well as lots of funds are required to get the confidence of the market. Quality as well as the quantity is required and for that lots of cash flow is also needed so the risk of paying the interest is there. The investors should have the confidence not only the company also the management, expertise, previous financial records etc. There are few external factors are also responsible like global economy, in a very fluctuating economic condition the expansion would not be a very good idea. If it is done then the management or the board will carry a huge risk. Even the internal or nations economic conditions have to be taken under consideration. In a volatile condition this will harm the profitability of the company. In such conditions govt. may change the legislations, laws or the taxation policy. Planning is important the investors will check the feasibility of long term, mid - term and the short term planning. At least the short term and the mid- term planning should be more concrete. Planning means forecasting its makes a bridge between where we are and where we want to be. The budget and this forecasting are very important. The One Tel when planning to enter a new market where the trend of using the landline is going down and the mobile handset selling and consumption is going high. The budget should be based on lower revenue at least for first few years as the market competition is also very high(Colvin, 2007). Loan defaults, if, of the company has to bring under consideration. It is difficult to get the loans of investment if the company is a defaulter. Though the going concern concept is not coming under the accounting principles but the GAAS has instructed the auditors to take this under their considerations. References: Auasb. (2009, October). Auditing Standard ASA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with AustralianAuditing Standards . Retrieved September 22, 2016, from auasb: https://www.auasb.gov.au/admin/file/content102/c3/asa_200_27-10-09.pdf Colvin, M. (2007, April 03). Packer investment analyst questioned over One.Tel. Retrieved September 22, 2016, from Abc: https://www.abc.net.au/pm/content/2007/s1889031.htm Gary S. Monroe. (2008, December 31). The Importance Of Inherent Risk Factors: Auditors Perceptions. Retrieved September 22, 2016, from wiley: https://onlinelibrary.wiley.com/doi/10.1111/j.1835-2561.1993.tb00370.x/abstract;jsessionid=EA77CC8850D589C84CE3CDEAC568D650.f02t02?userIsAuthenticated=falsedeniedAccessCustomisedMessage= Investopedia. (2015, April 16). What are some examples of inherent risk? Retrieved September 22, 2016, from investopedia: https://www.investopedia.com/ask/answers/041615/what-are-some-examples-inherent-risk.asp Monem, R. (2011). The One-Tel Collapse: Lessons for Corporate Governance . Retrieved September 22, 2016, from griffith: https://www98.griffith.edu.au/dspace/bitstream/handle/10072/42673/74746_1.pdf?sequence=1 Nocco, B. W., Stulz, R. M. (2006). Enterprise Risk Management: Theory and Practice. Retrieved September 22, 2016, from https://fisher.osu.edu/supplements/10/10402/enterprise-risk-mgt.pdf Quora. (2013, May 10). Financial Risk. Retrieved September 22, 2016, from quora: https://www.quora.com/Is-risk-relative-or-absolute-Does-inherent-risk-exist-Does-risk-always-depend-on-the-specific-situation Ranong, P. N., Phuenngam, W. (2009, May 11). Critical Success Factors for effective risk management procedures in financial industries . Retrieved September 22, 2016, from diva-portal: https://www.diva-portal.org/smash/get/diva2:233985/fulltext01

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Some will be suitable for the clients. Procurement types: Lump sum or traditional procurement Design and build Management contracting Framework agreement Public private partnerships Construction management 1. Traditional procurement: This is most common method of procurement. It is suitable to all clients, including in experienced clients and it is time predictable and cost certainty. It is suitable for fast track projects. In this method client appoints a team of consultants to prepare drawings and also tender documents. The client appoints building contractor as well, to build the structure as per design with completion date as per approved rates. Most work will be distributed to the sub-contractors and the contractor remains responsible. Client appointed consultants administrates the project and advise the aspects associated with progress, design and payments. This is low risk option for the clients to minimise the delays, design failures etc. But some times the risk will increase, when the design phase is rushed and also when tender documents are not fully completed. The two stage tendering is referred as the accelerated traditional method. By this design and construction process will at the same time for a w hile. 2. Design and Build: In design and build procurement system a single contractor or single consultant will be appointed for both design and build or management of construction operations. Subcontractor will be appointed by the main contractor or consultant. The main characteristics of this procurement method are: Single organisation will be appointed for both build and construction of project. It may be contractor or consultant. The construction works will be carried out by subcontractors when handled by the contractor when the project is given to contractor. Client will manage subcontractor when the project is given to the consultants. The design and build procurement system is defined as: Design and built organisation behaves as consultant with direct contact with client for design and building of project. All packaging works are between designs and build organisation. Diagram : Flow chat of Design and Build procurement method Using this contract design and build system, clients obtain single or two competitive bids. The suitable contractor who contains the clients requirements and design will be issued the contract. Tender requires stating lump sum management fee and also offers a guaranteed maximum price in the bids. The contract awarded is mainly based on financial level. The GMP approach will also sometimes considered by the client at the time of management contracting. Management procurement systems are undetermined by instance of GMP involvement with agreement between contractor and employer. 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This approach highlights the difficulties that can cause by all of the management oriented methods to cope the client decision till last moment. Apart from difficulties this method provides accurate final cost of the project. Any late changes are likely to be a current or complete work may delay the entire process of the project. Late changes are agreed by such alteration, if something necessary can be allowed. In most projects the client will appoint the financial consultants, usually quantity surveyor to give advice on financial and contractual aspects of the project. Once the design and build contractor appointed, the formulation of work packages, financial monitoring and control of project is subject of joint management and lies between two parties. Design and build usually compensate sum of: Management fee Design fee Net cost of site establishment Final accounts of all the subcontractors to the GMP. When GMP is in corporate in contract it is accordance with the tender documentation. If the contractor made savings against GMP will be penalises when sum exceeds as a result of mismanagement. Payments will be made on net cost of work contractors. Open book method accounting will be done in designing and build method to make the financial records available for the clients or financial advisor, to verify the actual cost of the project with records. The quality control will be problem with the duty for functions allowed to the design and build contractor. But developing quality control was done by form of inspectors, which were appointed by the client. The contract is an initiative to the contractor to minimise the costs and also need him act as an independent consultant. In this circumstances the quality may drop down, unless additional care was taken is supervision of specification of materials and equipment. Employing and managing the supervisory staffs are must undermine the relationship between design build contractor and the client who indented to form fundamental basis for the success of project where design and build type of procurement method is used. When consultant led design and built is a practical and commercial approach to implement the project. The system creators belief that the most construction projects suffer as a result of poor communication and unwanted large and complex management hierarchy, over planning and lack of commitment to the clients cause by most participants in the project. The principles for management of project were: Drawing and documentation is not a product by means o communicating the clients requirements to the construction manager. Communication between the employees is as direct as possible. As we expecting changes in construction field, full preplanning is not the best control and more flexibility and less detailed short term planning should be adopted. The interest of client is best served to participant to the project objectives not individual aspirations. 3. Management contracting: Management contracting is one of the most common methods of procurement. In this client appoints consultants to prepare drawings and project details. The management contract was selected by tendering, paid bases, prime costs and management fee. The main role of management contract is to manage the execution of work. The main contractor does not involve in any kind of construction work directly. It will be done by packages which were undertaken by sub-contractors, which were appointed by management contractors. In some cases the management contractors also agree design liabilities. In this the works contracted were directly and contractually responsible to the management contractor. The management contractors obligation is to accept responsibility for design and construction means. It referred as Design, Manage, Construct it is called as featured as contractor-led procurement. In this the led designed responsible for overall design and manager was responsible for coordination of work. It is suitable for fast track projects, complex buildings and developing brief. It is not suitable for inexperienced clients. Cost certainty, and not possible to transfer the total risk to contractor. This approach will overlap design and construction progress. The payment is made on the basis of cost of work with agreed fee by the managing contractor. Success of project is mainly depends on the contractors team. Price certainty is less because the construction starts before completion of all design works. This means many of packaging works to be tendered later in the construction stage. Means the design and work packages are adjusted properly to keep the project within the budget. Design and construction tends to be less than design and build methods. 4. Framework agreement: Framework agreement is established with limited number of suppliers or single suppliers. It will allow suppliers bring together with relevant experience which will save both the parties when more projects involved. This method of procurement includes all forms of procurement methods. Like traditional, design and build etc. the developing framework agreements for consultancy service will be done by LSC (Learning and skill council). Reduced transaction costs Continuous improvement within long-term relationships Frame work agreement with number of suppliers or single supplier can result in significance savings to both parties. No need for constant re-tendering at call of stages. When the contract conditions are unchanged for all projects, there will be substantial gains from continuous improvement. When the term changed, small competitions with in frame work will takes place. Client may have more framework suppliers for different requirements. The resource implications for client should be decided whether they need one frame work supplier under one frame work agreement are not. Frame work agreement may be used for design and build and primary contracting procurement methods. Frame work agreements also suitable for maintenance requirements. Client with small and rare project will consider collaborating with similar type to share frame work agreement. Every frame work agreement completed and advertised with procurement rules. There must not be any commitment to the frame work agreement contractor for any other kind of business until the first contract completes. The savings in cost and time will come from the following: Not necessary to rebid for every individual project. Continues development will earn by transferring from one project to another. Working relationships will be improved. Continues work flow. Speed of procurement. Public private partnership: Public private partnership is a partnership between public and private sector means the government and private parties carried out the project together on the agreed division of tasks and risks. Each party keeps its own identity and responsibilities. The public private partnership is growing due to demand in infrastructure. The limited fund in the public sector leads to join with private sector, in this provision of infrastructure. The principle believes PPPs is that the public sector is responsible for the proper delivery of service and it is not responsible for actual providing service. Major public sector projects have always undertaken by private sector contract. The major difference between all the procurement methods and this method was, private sector regarded as a fully fledged performer. The essential characteristics were: Responsibility and risk is transferred from public sector to private sector. The contractual agreements were made to perform based outcomes. Long term contractual agreements. Identification Option analysis Planning and approval Implementation Post-transaction Political risk Construction management: In construction management procurement the total services were been between the package contractors and clients. This will show the difference between management contracting. In this approach the client will contact directly with sub-contractors. Here the construction manager acts as an employee agent. When dealing with sub-contractors. The main points in this system are: Construction manager was appointed as consultant at initial stages and have equal status as design team members. Payments are made by lump sum or percentage fee to construction manager. The main works in the projects are carried out by sub-contractors. The role of construction manager is to supervise, co-ordinate and administrate. The role construction manager is defined as consultant role and responsible to the client. The construction manager work for a safety and all works are carried out by sub-contractor, between client and sub-contractor. This type of procurement method was first started in US during 1960s. They usually called this method as construction project management. This procurement method was started to use in UK in 1970s. This was needed to control the risk, cost and time in large projects. After the uncertainty in the worlds economy takes place the higher interest rates made commercial builders to large financial risks. From that stage this method was used in major projects. There are variations in construction management procedures. The construction manager has the equal level as designers. The both designer and construction manager have a direct contact with clients. In construction management method the involvement of client is more than the other methods. Thus this method will be taken by the entrepreneurial clients, who have ability and resources, unless they must be ready to appoint construction manager to protect their interest. Tough process will takes place to appoint a construction manger. The main roles of construction manager: Planning and management Inception and completion Design to ensure built ability. Value for money and economy. Advising the client of their time and cost. Safety policy for the site. Division of work to appropriate sub-contractors. Interim payments and final accounts with work contractors (sub-contractors) and advising client with proper documentation. Before starting of the project construction manager also involves in preparation of project cost budget. Also involves in preparation of tender documents and solution of potential subcontractor and managing tender documents, evaluation and recommendations in acceptance of tenders were also done by the construction manager. Construction manager will not do any construction work by his own. Construction manager was responsible for control and co-ordination of subcontracts. Programme control and time management. Applications for the payment to the subcontractors were examined by construction manager. The manager will submit the applications to the client with appropriate member of design team. Advantages and disadvantages: Traditional method: Advantages: Design was fully developed and cost is detailed before the building contractor being signed. This method will give clients very customised building. The design and construction was split into separate sections will give clear responsibilities. Disadvantages: Its difficult to fine the responsibility for errors and omissions. Different parties involved in the contract can create climate antagonistic. Unexpected circumstances will change the final cost of the project than original tendered amount. But proper planning keeps this under control. Design and Build method: Advantages: Single point of Responsibility: the manager is responsible for design and construction. The client should have single point of responsibility. This method is more advantageous than other, where the client employee separate designers and construction agreements. If the claim is done, the contractors, designers and architects blame each other of their responsibility. Price certainty: Design and build gets more price certainty than other forms of procurement methods. Many of design and build contractors include guaranteed maximum price (GMP). Design and build contractor cant claim for loss and expenses for late instructions from architects. This kind of claims can be done under traditional form of procurement method. The fee paid for the professionals is also less and depends on the roles of the professionals. Speed: It can be easily achieved from design and build method, by starting the work at site earlier than the traditional forms of contract. The contractor is not relaying on design and supply information, this is called single point of contract. This type of method will allow budget and programmes level of control to the contractor. So the construction process is likely to be quicker. Buildability: The contractor is responsible for design and construction, so the project is more likely to be buildable than other procurement methods. Claims: Its not easy to claim because its a single point of responsibility. Disadvantages: Design quality: Design and build method is not an exact procurement method where high priority of design quality is not given because of certainty among the architects. Additional design fee: If the client likes to take independent advice on design matters where the building contractor involved, then this will cost the client to pay additional fee to the design team of the contractor. Inflexibility: Once the contract proposal is agreed, the scope for client to make changes in his requirement is less otherwise the cost consequences will be prohibitive. Management contracts: Advantages: This system enables client to obtain Guaranteed Maximum Price (GMP) for the construction element of project from the management contractor. It is used to accelerate the project process. The risk of delay will be overcomes by timely targets. Disadvantages: Project cost incurred in this system is higher, when compared with design and build system. When guaranteed maximum price (GMP) achieves, the management contractor position with clients as consultants will be at risk. Framework agreement: Advantages: Single tendering for the life of the framework agreement. Reduction of cost and administrative efforts. Initial tendering allows contractors to know competitive supply and should offer competitive prices for expected value of business. The range of supplies will be provided is short time by contracting authority, it reduces the stock holding for goods and also reduces time and equipment maintenance and repairs. Long term working relationship can be established with the supplier. Disadvantages: This is a closed system, once the framework agreement is established then new suppliers cannot be admitted. Competitive reopen can be considered onerous, if its structure is not planned properly in framework agreement. Public private partnerships: Advantages: Value for money Risk transfer Long term nature of contract Performance measurement of contracts. Private sector management skills Cost efficiency Time to delivery saving Reduction on the public treasury Board support Improved cost calculations Disadvantages: Insecurity Higher transaction cost Higher capital cost Inefficiencies Culture gap Short term rigidities Construction management: Advantages: Positive attitude and more constructive being exhibited at all levels. i.e. management, supervising and operative level. The proper using of value engineer by construction manager. Clients involvement is a bit higher when compared when compared with remaining procurement methods. It will promote better working relationship with project team. In this method the clients will direct contact with subcontractors, which will improve subcontractors cash flow. Means direct payments from the clients. Disadvantages: Client must involve deeply into all course of works. He must also able to manage construction manager and design consultants. The fee to the construction manager will vary from project to project; it will depend on the size of the project and roles of the construction manager. Procurement strategy: The customized nature of construction project increases inborn risks. These risks include the work which was not exactly required in the project completion. This includes late delivery or costs more than the client pay. These kinds of risks will impact clients core business. The procurement strategy should balance these situations at early stages. The main points which are co-dependent and frequently in tension are: Time: Speed and certainty of completion as per deadline. Cost: Level of price and certainty in cost. Quality: As per performance and functionality. Procurement strategies will accomplish, Cost and time certainty for the design is developed by an architect. This consequently slow process. Also know as traditional procurement process or design-bid-build process. In cost certainty and relative speed, the design is responsibility of a contractor. Gradually client will lose the control over the design process in design and build procurement. Virtual speed for the design developed by an architect and cost is uncertain till completion called as management contracting or construction management. After careful analysis of the project brief it is clear that the main factors essential for the project are time, cost, quality and reputation of the organization. In time, cost and quality the top priority goes to time and then followed by cost and quality. So the procurement method which is going to be selected should be very efficient and fulfil all requirements and objectives of the project. The selection of procurement system depends upon the nature and objectives of the project. After careful considerations of all the above factors and objectives of the clients organization the design and built contracting procurement method is suggested as it is best suitable for the client

Chaucers The General Prologue Essay -- Chaucer General Prologue Essay

Chaucer's The General Prologue Chaucer-the pilgrim starts out â€Å"The General Prologue† with detailed descriptions of each pilgrim as he views them. When Chaucer-the pilgrim arrives at the Pardoner, he becomes very focused on his physical appearance and what is seems to be missing. There is something odd about this Pardoner and Chaucer-the pilgrim can’t seem to grasp just what that is. He describes that the Pardoner is all on fire to do is job, just arriving from Rome (Bretful of pardon, come from Rome al hoot). However, his eagerness to Pardon those for God does not help his physical appearance in any respect. Chaucer-the pilgrim describes his voice as that of a high-pitched goat and points out that he has no facial hair and will presumably never have any, as his face is just as smooth as if he had recently shaved (A vois he hadde as small as hath a goot; / No beerd hadde he, ne nevere sholde have; / As smoothe it was as it were late yshave). Chaucer-the pilgrim is setting up in the reader’ s mind that of a prepubescent boy, yet as the reader knows there are no children on the jour...