Standard Soap Company Cost Accounting Essay Example

understand that implementing ABC will be a complex and costly project, and there might be cheaper alternatives available.

However, it is important to highlight that for SSC to maintain its competitive advantage, it needs a precise and robust costing system. The initial costly investment is highly likely to result in significant expected benefits.

3.0 Recommendations 1.

The implementation of a proficient risk management (RM) structure is recommended. The existing RM structure should be enhanced with the involvement of appropriate personnel at various levels. This should include business unit management with a comprehensive understanding of the business, supported by an efficient control and communication framework to address risk vulnerabilities promptly.

Roles and responsibilities need to be clearly defined in order to ensure accountability and control policy violations. It is important to have knowledge about failure modes along with an operational monitoring and response system. The risk identification and assessment mechanism should be in line with Hamilton’s strategy and sensitivity to protect its reputation. It must be capable of detecting failure modes promptly, and have compensating controls and pre-emptive actions in place for damage control. Additionally, it should comply with legal and regulatory requirements.

It is crucial for Hamilton to adhere to legal regulations by implementing internal control systems. Validations and reviews that comply with the Sarbanes Oxley Act must be integrated. This includes addressing IT systems and security risks. Given its heavy dependence on IT systems, Hamilton needs to develop a comprehensive risk management policy to tackle emerging security threats and increasing regulatory demands. Special attention should be given to protecting against unauthorized access or use of information, maintaining system security, and preventing fiduciary and privacy

breaches.

5. Validation and independent review.

Hamilton should conduct regular and independent external audits in addition to internal controls to ensure compliance with the law and assess risk management strategies.

6. Accuracy of Information

Ensuring accurate assessment and dissemination of information is vital for Hamilton.

Efficient reporting system to ensure ‘Fair Value’ assessments must be incorporated.

7. Safeguards against Insider Trading.

Insider trading is an imminent risk for Hamilton and should be governed by Trade Rules 10b5-1 and enforcement practices. Trading in Hamilton's funds by its staff can be conducted legitimately during corporate blackout periods as per defined stipulations that protect against insider trading violations.

8. Organisational culture and governance.

Hamilton should establish an organizational security and awareness culture with a 'zero tolerance ethical' approach at the core of its RM policies. The ultimate success of an implemented internal control system heavily relies on the active, motivated, and voluntary participation of employees.

Hamilton operates in two main areas: mutual funds and brokerage services. In the mutual fund business, value is generated through three key processes: investment management, marketing and sales, and transaction processing. Hamilton Brokerage Services, on the other hand, involves three major brokerage houses that execute trades for external parties in equity and financial products. Customer service and trust are crucial aspects of this business. Furthermore, Hamilton relies heavily on technology research, innovation, investment skills, and economies of scale to achieve success.

Overseeing the risk management structure is Brandon Lamm, who leads a team of four specialist risk managers. This team collaborates with the management of each business unit to coordinate, monitor, and control risks. They are responsible for promptly reporting and escalating risks to senior management while finding a balance between decentralized

control and centralized risk monitoring. The protection of customer trust is an area that Hamilton prioritizes in terms of potential risk factors.

Timely execution, billing, and accurate information are crucial for Hamilton. The sales representatives are given the authority to furnish fund information exclusively, empowering investors to make decisions. Ineffective practices have the potential to erode the company's reputation, which can be lost in an instant but takes years or decades to establish. The intermediaries participate in the selling of products.

Hamilton's reputation could be damaged due to bad recommendations or financial issues faced by distributors. The use of technology heavily increases the risks of IT system failures and security breaches. The success of Hamilton relies on the involvement of management, research, innovation, and investment skills. However, the lack of a conducive environment, organizational structure, and accountability can hinder these important factors. Accurate hedging is necessary to mitigate risks associated with interest and exchange rate fluctuations, as well as OTC share values. To prevent internal and external fraud, effective internal controls and checks are crucial. Hamilton is faced with the dilemma of whether or not to allow its executives to trade its funds in order to gain expertise, which could potentially result in insider trading.

Hamilton recognizes the importance of decentralized operational functioning but also acknowledges the need for Corporate management to be constantly aware of potential risks in the business units. It is crucial for staff to receive security awareness training to properly handle information assets. While Hamilton has developed performance measurement metrics to manage risks, there is room for improvement in their effectiveness. The company must also address the tendency to bend or circumvent policies in

order to "over achieve." To ensure proper risk management, Hamilton should establish detailed risk assessment, control policies, and processes.

Hamilton recognizes the need for a widespread awareness of risk among its employees. This awareness must be ingrained in the company's culture to be effective. Hamilton has implemented a business continuity plan to address disaster recovery, test plans, dependencies on external vendors, and communication strategies. The company is also focused on improving its Risk Management control through its organizational structure. However, it is crucial to involve team members from the relevant business units at the appropriate level to ensure their understanding of the consequences and accountability. A clear definition of roles and responsibilities is necessary for this purpose.

To ensure security and risk awareness permeates throughout the organization, it is crucial for it to be ingrained within the corporate culture. The executive management should consistently promote this initiative among all employees. As part of their risk management strategy, Hamilton should prioritize the process of identifying and assessing risks. Having an effective mechanism to identify all potential risks is key, as understanding the enemy is essential for defeating them.

This process requires a thorough understanding and analysis of the operational dynamics of Hamilton's business imperatives, including the extensive use of IT systems. Experienced personnel must assess potential failure modes. Regular review and updates are necessary to keep up with technology changes and business advancements. Risk management monitoring is crucial. Hamilton needs an early detection system to prevent and minimize potential risks in a timely manner.

There is a requirement to identify potential risk profiles and their early warning indicators within the system. Additionally, implementing an efficient communication structure to report these

indicators to senior management immediately is necessary. Constant analysis and updating of the risk monitoring system is crucial for risk mitigation. Control and mitigation are essential components of risk management.

In order to prevent damage, it is essential to have effective policies and control processes that can eliminate or reduce most risks. However, it is also important to have a damage control policy in place for risks that cannot be controlled in time, in order to minimize their impact. To achieve this, staff training, clearly defined responsibilities, safeguards, and regular audits should be utilized. Flawed cost information can be detrimental to the company's strategic and financial position, as it can lead to inaccurate prioritization, improper focus, and confusion (Turney, 2005).

While ABC involves cost and effort, it serves as a powerful tool to enhance the company’s profitability and competitive edge.

Reference

1. Activity-Based-Costing System (ABC): Introduction And When It is beneficial (2004, June 20) Retrieved May 04, 2008 from http://fmaccounting.com/activity-based-costing-system-abc-introduction-and-when-it-is-beneficial/ Becker, H & Glad, E., 1995.
2. "Activity based cost and management", Juta & Company, Capetown. Cooper,R.,1989. "The rise of activity based costing - Part 3" in Journal of Cost Management:7-9 Integrating Activity Based Costing and Economic Value Added (n..)
3. ) in Manufacturing.

Retrieved May 05, 2008 from http://www.logistics.tuc.gr/Contents/Lessons/kostol/EMJ99.PDF McNair,C. J.

1990. "Interdependence and Control: Traditional vs Activity Based Costing", in Journal of Cost Management: 15-25 O’Guin, M.

Turney, P., 2005. "ABM - How to succeed with activity based costing and management". McGraw-Hill, New York. Wiersema, W.

H., 1995. "Activity Based Management Today's Powerful New Tool for Controlling Costs and Creating Profits", Amacon, New York.