Issues in Fit Food Inc Essay

Significant part of the behavioral displacement can be related to results enclose system that is in place. FFI is evaluating the stratumal personals writ of execution found on their skill of Annual Operating plans some of those are the likeAchieving 7% divisional growth ratesBonuses ground on achievement (upto 150%)of annual operating plans and no bonuses on failure roue options offered to corporate managers and divisional presidentsSeans ( go bad & chairperson) c e real for better financial performance during those peak recessionary period(2008-2009)These quantitative results controls can be related to those behavioural displacements. As a result presidents of Drink division and Cookie division kick in involved in those unacceptable fraudulent practices of aggressive tax income recognition, prepaying expenses and capitalising parts cost.Since the CFO has the information about those fraudulent practices he should set about the process of restating those prior year financ ial statements accordingly and those restatements require macrocosm disclosures. It is a serious issue for a listed company. Worse impacts would include disordered of investor confidence, as a result share value deteriorates.Suggestions controlsResults Control1.Instead of find out a target based on investors expectations, during the recession age company should defend adjusted its targets according the economic condition. May be keeping the same market share or little supra that could be a better option. It might create BUDGET SLACK. except that slack can reduce the tension, and stress for those managers and build an environment to convince from there. Since 2008 was the peak recession time the AOP s growth rate has to be altered and it can be changed into sustainability2.Controls should balanced with those quantitative and qualitative results orientated controls. In this case most of controls such as achieving 5%divisional growth and bonuses of 150% when divisions exceed t he AOP has lead many issues . gamesmanship , manipulated financial statements, and unethical behaviour of divisional managers are some to be named therefore FFI should predate various control methods which include the measurement of their performances and ethical behaviour. Such control methods would include rather than just checking increase in sales, it should increase in actual sales. Solid sales, numbers sport to be real and should not be manipulated towards the end of the period. An increase in market share, customer belongings 1.Results controls should be tight results controlPersonal control 1.Replacement of managersRemoval / transposition of those managers in cookie division and drink division including the presidents of both divisions are the first step to re build the confident in the company. level off the chair Sean ineluctably to be replaced however it is question since he is the founder he may have the controlling rights over the company.2.Replacing external att endees.Because they are the ones first to know about those accounting frauds in the organisation. However they have failed. They have not had a good canvas plan and scope. This could have happened due to the following reason too. since the FFI is a public company and it needs a clean opinion to keep its position in the listing. hence auditor might have asked to provide such an opinion based on promises such as FFI is going to implement a tighter infixed control policies so it prevents most of the fraud. Further auditor has already been frighten about cancellation of the contract based on the price it charged. Therefore auditor may not be performing well planned audit instead providing a lower service which is not good for on the whole those three parties (auditor, users and audtiee)Action Control 1.Behavioral ConstraintsSeparation of duties since FFI is one company some(prenominal) division it can have one administrative division. Since all the changes have to be done by thos epeople who different from those divisional staff, divisional heads data management actions would not remain secret as earlier Second thing one storage facility for all division. shake up the same effect. That data management can be controlledThe direct costs of this may include delay in processes and a system should be created for fast communication2.Pre action reviewsThough there are several(prenominal) discussions and reviews held regarding the approval of AOP, the quarterly performance review meetings are seems to be very brief. Regardless of whether the target has been achieved or not every item has to analysed exhaustively and plans for rest of the period should be altered accordingly to achieve a real performance3.Action accountabilityUnlike the current system divisional managers bonuses should not be purely based on achieving AOP profit. It has to include the strategies apply in achieving profit, closing stock, new product developments, and effective sales closing However costs associated with each option has to be analysed before the decision.Since all the divisions are managed by humans. Certain level goal incongruence is present in any divisionalised organisation. It is im practicable to eliminate it totally. Though a very minimum level of date manipulation and game playing activities are possible since those number in the financial statements are not perfect in real world