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Part One

1. Prepare a systems flowchart of CLS proposal evaluation process.

2. Design and populate a normalized relational database capable of tracking


accepted
consulting engagements. In addition to appropriate tables, the database must
include:
a. A report showing the information listed below for each current project
(this report must be based on a query):
i. Client name
ii. Lead consultants name
iii. Expected completion date (For simplicity, assume every month has 30
days.)
iv. Total amount to be billed upon completion.
b. A form CLS would use to assign a lead consultant to a new project.

Sent Via e-mail.

3. List and discuss three risk exposures CLS faces. Suggest internal controls to
address each risk, clearly explaining how each control is related to the risk.
A. Fee Arrangement
The entity should established rate of fees which is applicable to all clients. It
should have already listed its rate based on the complexity of the consultancy
service and the duration of the project as appropriate.

B. Senior Consultant Volunteers


As an engagement is accepted by the team, a senior consultant volunteers to
take the lead and chooses one member from either the associate or assistant
consultants. This process may affect the integrity of the senior consultant as well as
the conduct of its consultancy service.
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The entity should assign one person to choose who among the senior
consultant should lead the engagement. This person should acquire the knowledge
and skills necessary for the selection of the qualified consultants. By this, conflict
of interest may be avoided.

C. Collection of Accounts Receivable


Based on the case, CLS collects half of the fees during the start of the
engagement and the other half at the time the engagement is completed. This
process may prejudice the service that the firm offers since it already received half
of the payment.
Since it is a management consulting firm, it should collect fees based on the
percentage of completion.

Part Two
1. Using spreadsheet software, prepare an analysis which shows, for each
consultant:
a. Their salary amount
b. Whether the salary is within the 75th 90th percentile
c. If the salary is not within the 75th 90th percentile, whether it is greater than
the median and the amount by which it differs from the 75th 90th percentile.
d. The average salary within each position level (assistant, associate, senior)
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2. Based on that analysis, respond to the following questions:


a. Is there a difference in pay between accountants originally employed by
CLS and SMC?
As observed, there is a difference between some of the accountants salary. The
original employees of CLS are following the greater or equal the median policy of
salary while the acquiree, SMC, were not.

b. What, if any, adjustments should be made to salaries? Explain your response.


Following the belief of the surviving entity, the CLS, salaries should be adjusted
that should be greater than or equal the median and preferably within the 75th to 90th
percentile. As observed, Lynn Saunders salary should be adjusted as it is lower than
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the median. But if the consideration of 75th-90th percentile is observed, 63.63% of the
employees salary should be adjusted.

c. If the changes are made, what would be the cost to CLS?


If the only thing to consider is the condition of a salary greater than the median of
each particular level of accountant, an increase of $71 is the only additional cost to
incur. But if the consideration of 75th-90th percentile should be followed, at least an
additional of $16,539 should be incurred just to make the two Senior Accountants,
Saunders and Jones, be on the 75th percentile. And lowering the salary of the other
accountants who are over than the 90th percentile. This totals a lowering by $18,982.

d. Are there differences in pay that appear to be based on factors other than
expertise or length of service? If so, what risk exposures does CLS face? What
internal controls would you recommend to mitigate them?

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