Nick Scali - Company's Operations, Risk Areas, Ways to Reduce the of the Frauds - Case Study Example

NICK SCALI Student name: Institution affiliation: Date of submission: Nick Scali Executive summary In this study, there is the analysis of the factors that revolve around the operations of Nick Scali Company. This is through such things as the operations of the company in such things as the societal impact of the operations. There is also the analysis of the risk areas that are faced by the auditors and the forensic accountants in the carrying out of the audit. I this case, the major risk factor in the operations is the money that is donated to charitable organizations and organizations that aid environmental maintenance. Through this study, the likely factors that they should carry out to reduce the cases of the frauds are also pointed out. The impact of the company operations in the country and in the industry is also analyzed. Through this, the company effects on the economy are also analyzed. This s through the analyses of the levels of employment that it offers to the people of the society. The competition has also been analyzed in this study. NICK SCALI It is an Australian public company. It is listed in the Australian stock exchange. It has since its opening up opened up many stores and expanded across the country. It is through this that it has received attention and has become a household name when it comes to furniture. The success can be said to originate from the strategies which the company has out up in the organization of the business. The company solely deals with the retail of furniture, dining and chairs. This is through the channels that it has put in place to aid in the distribution of its items and products. It is through this that the company has strived and excelled in its undertakings. (Siobhan, 2003) The company was founded back in the year 1962. The founder Nick D. Scali at of the present acts on an advisory capacity to the company. Through this, and over the years that he has been in the company, has passed the vision of the company the people who are currently at the helm of power and management. It is though him that the doctrines and principles that are considered as being vital to the people in the company are passed. The generations that have passed over him have adopted a strong culture which is to the benefit of the company. This culture has been passed to the employees who are new to the company and it has aided in the fostering of the relationships within and without the organization. (Nick, 2003) Since its foundation, the company has focused manly in the leather and fabric lunges. This has been more so in the dining room and bedroom furniture. It also sees at retailing coffee tables, chairs and entertainment units to the customers. The areas of focus and the specialty have brought with it huge and great returns. This has been through the creation of a brand name which has been spread to the world at large and the generations at large. This has also been to the benefit of the company. It has been the belief of the management that through the adherence to a strong culture the company will yield great returns which is to the benefit of the shareholders. The company has been in the forefront in the seeing to it that the values of the company are well passed to the society at large this has been through the respect and maintenance of the values of the society. It has done this through the putting in place of a clear and a straight forward approach to the affairs of the society. This has been through such things as taking part in fundraisers that have been organized by the people in the society (Nick Scali Ltd, 2016). It has also taken up charitable initiatives which are to the better of the society and the population at large. It is in respect to this that it has gained attention and liking among the people of the society. Through this also, they have supported it in its initiatives and this has been pivotal in the overall goal attainment of the company. (Nick, 2012) Some of the success factors that have acted to the favor of the company s first the support and acceptance that it has received from the society. The society has supported the business in its undertakings and this has come up with massive benefits to the company. This has been through such things as the improvement of the goodwill of the company and increased returns from the sales that are made to the people of the society. The second success factor of the company has been its strict adherence to the company culture and values. The values that have been set by the funder have acted as a benchmark for the undertaking of the operations of the company. This has come up to be to the advantage of the company in that it is able to attain its set levels of goals and targets. The culture and goals have acted as a lead in the gal attainment process of the company. (Siobhan, 2003) The company in the undertaking of its activities is faced with a myriad of accounting issues. They include from the recording of the transactions to the preparation of the financial statements. The first problem that is faced by the company is the currency factor. The company majorly deals with exports of the furniture to abroad countries. With this, the company is encountered by difficulties in the accounting for the variations in the currencies of the different regions to which the company supplies the items to. With this, it is the company has issues in the adjustment process of the different currencies of the different regions. The company is also faced by the challenge of incomplete records. This s where some of the transactions are not recorded in the financial statements. This is what is known as the error of total omission of the items in the books of account of the company. This is mostly so due to the lack of adequate accounting knowledge by the accounting staff of the company. (Siobhan, 2003) The company is also faced with several legal matters in the undertaking of its operations. The first major issue is environmental conservation. The furniture that the company deals with the manufacture of the furniture is derived from timber and wood. The timber is extracted from trees and this may result to the destruction of forest cover. In a bid to control the deforestation, there are measures that have been put in place by the local authorities and international bodies such as the United Nations Environmental Program (UNEP). The restrictions are in regards to the tree planting initiatives that are put in place by the company to enable it to plant trees and maintain the environmental cover. These are some of the regulations that are put in place by the regulatory bodies to control the levels and the performance of the company in its undertakings. It is through this regulations that the company is able to operate in a manner that is environmentally friendly and in a manner that will aid in the reduction of the effects of such things as global warming. The main products of the company are dining furniture, bedroom furniture leather and fabric lounges. It is through these that the company is able to generate revenues from its operations. Currently, a total of 360 employees work hand in hand in the seeing to it that the company is able to attain the goals and the missions that it has set to attain in its operations. Through this, they have all been ingrained into the culture of the company. It is through them, that the company is able to attain the goals and the plans that it has put in place. They are motivated by the fact that the actions that they undertake impact on the performance of the company. It in through this that the company has attained the growth and the success that they have put in place. As according to the results of the year2015, the company makes imports of more than 4000 containers of furniture per year from all the corners of the world. It is through this that the company is able to attain high levels of income and returns from the revenues. (McHugRoth, 2012) In the operations of the company, it has opened up several; stores that aid in the distribution process of the furniture. This is through the showrooms and distributions centers. Currently, the company has 50 showrooms and 5 distribution centers that are located in all the parts of the world. It is through this, that the company is able to derive revenues the company has also been on the forefront in the seeing to it that the undertakings are socially responsible to the people in the neighborhood. This is through undertakings activities that are perceived by the local people as being acceptable. This is through such things as taking part in the tree planting programs and other community building projects. This has also been through such activities as aiding the people in the local community in such things as fundraisers. Through this, the company is able to impact into the personal lives of the people in the community. Through this, the company is able to gain the support and the goodwill of the people in the local community. (McHugRoth, 2012) Several strengths work to the better of the company. The first strength is that the company is associated with the offering of high quality instruments and furniture to the customers. With this, quality is assured and this works for the better of the company. Through this also, the company is able to attain quality seeking customers. The service delivery of the company has also been exemplary. This has made the company have a high level of goodwill from the society. This also works for the better of the company. High quality services make the company to attract more customers on the basis of referrals from the existing customers. The main sources of capital for the company are both equity and debt. Equity financing is the financing that originates from the purchase of the shares of the company by investors. With this they get a portion of the shares of the company. (Siobhan, 2003) On the other hand, the company gains the amounts invested and uses them in the operations and in the undertaking of their daily responsibilities and routine. This is for the better of the company. The second strength that works to the better of the company is the market share that it holds. The company has also developed a blend of loyal customers. The loyal customers recommend the company to the colleagues and this aid in the increase in the levels of the revenues that are made and received by the company. The company operations are in line with the industry requirements. It is however above the competitors in that it offers high quality furniture to the customers. Through this further, the company is able to outwit the competition that is poised by the competitors in the market. In the operations of the company, there are several high risk areas that the auditors need to put key attention on. The first is the overstatement of the amounts that have been given in support of the charitable events and the environmental preservation mechanisms. Through this, people are enticed to undertake activities that overstate the amounts that are donated or used up in the charities this is at the expense of the company. Auditors need to pay keen attention on this aspect. In the financial statements, the money spent is recorded as an expense to the company. In this the man transactions are outflows of cash to undertakings that are perceived as being cost educing. This has the effect of reducing the amounts of profits that the company makes in the operations. In order to reduce this risk, adequate documentation and receipts should be used. This can be enhanced by the use of supporting documents from the beneficiaries of the initiatives. This will reduce the probability of collusion between the parties. The auditors therefore need to pay critical actions and analysis of the documents in order to be sure of aspects such as this. Fraud triangle The frauds that are carried out can be analyzed in a fraud triangle as shown below. a. Pressure on the individual The motivation that makes the people to commit the fraudulent is mostly the greed and desire to consume funds that the people should not consume rightfully. This is the urge therefore to fraudulently take amounts that have been allocated for charities and environmental maintenance for personal gains. (ROTH, 2014). b. Opportunity to commit fraud The people go ahead to commit the fraud in the assumption that it will be hard and in some cases impossible to detect the activities. This is mostly so where institutions which are not legitimate are started up. This works to their benefit and to the detriment of the company and the society at large. (ROTH, 2014).Many charitable organizations also lack a well-organized accounting department to account for incomes from donations. Through this the undertakings affect the general operations of the company. c. Ability to rationalize the crime This is where the individuals believe that the environmental control measures that have been put in place by the government and other institutions are enough and appropriate. Through this, they seek to justify their actions on the basis of this pretense. This affects the genera performance of the company in the long run. References Nick Scali Ltd, 2016, Nick Scali Limited annual report 2015, Retrieved on 9th May 2016, from; http://hotcopper.com.au/threads/ann-2015-annual-report.2602774/#.VzAy5SHD_Ao Nick Scali Ltd, 2012, Nick Scali Ltd. - Financial Stmt. (Annual) - June 30, 2012, Reportal. McHugRoth, M2012, Top Stocks 2013: A Share buyer’s Guide to Leading Australian Companies, New York, Willey. Wroth, M2014, Top Stocks 2014: A Share buyer’s Guide to Leading Australian Companies, Melbourne, Vic, The Board Siobhan, B2003, Nick Scali: My Story. Selected Works, New York, Willey. Nick Scali, 2003, My Story, New York, Jayenne Press. . Nick Scali Ltd, 2013, Nick Scali Ltd. - Annual Report - June 30, 2013, Reportal, The Sydney Morning Herald (Faifax Media). Nick Scali Ltd, 2011, Nick Scali Ltd. - Annual Report - June 30, 2011, Reportal. The Sydney Morning Herald (Faifax Media). Roth, M2012, Top Stocks 2013 a Share buyer’s Guide to Leading Australian Companies, New York, Wiley. Roth, M2014, Top Stocks 2015 A Share buyer’s Guide to Leading Australian Companies, Retrieved on 7th May 2016, from; http://rbdigital.oneclickdigital.com. Bovenzi, J2015, Inside the FDIC: thirty years of bank failures, bailouts and regulatory Battles, Manhattan: John Wiley & Sons. Roth, M2013, Top stocks 2013: a share buyer’s guide to leading Australian Companies, Milton, Qld: Wright books. Bovenzi, John2014, Inside the FDIC: thirty years of bank failures, bailouts and regulatory Battles, Manhattan: John Wiley & Sons. Roth, M2014, Top stocks 2014: a share buyer’s guide to leading Australian Companies, Milton, Qld: Wright books. Roth, M., & Roth, M2011, Top stocks 2013: a share buyer’s guide to leading Australian Companies, Milton, Qld: Wright books. Roth, M2008, Top stocks 2008: a share buyer’s guide to leading Australian Companies, Milton, Qld: Wright books. Roth, M2016, Top stocks 2016: a share buyer’s guide to leading Australian Companies, Milton, Qld: Wright books. Australian Companies Institute, 2002, Ausbuy Fiends: the official subscriber’s magazine of the Australian Companies Institute Limited, Milsons Point, N.S.W: Australian Companies. Read More