10 11 15 Reeboks - International Sports good manufacturers REEBOK is an international corporation that operates in many parts of the world mostly Western Europe USA and Middle East Its Middle Eastern operations are based in Dubai (UAE) The company is very successful but in recent months it has seen falling orders due to the following factors . Much of the business processes are old and sem-computerized. The board of directors manage the visions and strategy of the company and as such recently hired a KPMG consultants to advise them as to why the firm value is declining year after year. . A weak corporate governance environment persists in the company and the board of directors wants to know how to improve the supervision quality of its directors and enhance the reputation of the firm and increase the share price . The consulting company has advised the board of directors that much of the yearly reported earnings figures are mostly discretionary accruals . The accruals have been created so as to enable the senior management to meet their respective assigned sales targets to enable them to meet the bonus target. Currently senior managers have a pay structure as follows 1. Basic pay averaging $100.000 per annum 2. Average sales target of 58 500 000 per manapor per annum 3. On average manages reach 68% of the sales targets 4. Managers use creative accounting methods to meet sales targets through discretionary accruals and forward accounting methods 5. The Board of Directors has not done much to curb this managerial opportunistic behaviour Note: No bonus is paid to managers if they miss the $8.6m SALES target even by even a single dollar Required: Advise the Board of Directors explaining: The recurring problems of assigned sales targets in relation to managers pay structure and the stress put upon senior managers in relation to the pay structure DAN 10 11 15 Reeboks - International Sports good manufacturers REEBOK is an international corporation that operates in many parts of the world mostly Western Europe USA and Middle East Its Middle Eastern operations are based in Dubai (UAE) The company is very successful but in recent months it has seen falling orders due to the following factors . Much of the business processes are old and sem-computerized. The board of directors manage the visions and strategy of the company and as such recently hired a KPMG consultants to advise them as to why the firm value is declining year after year. . A weak corporate governance environment persists in the company and the board of directors wants to know how to improve the supervision quality of its directors and enhance the reputation of the firm and increase the share price . The consulting company has advised the board of directors that much of the yearly reported earnings figures are mostly discretionary accruals . The accruals have been created so as to enable the senior management to meet their respective assigned sales targets to enable them to meet the bonus target. Currently senior managers have a pay structure as follows 1. Basic pay averaging $100.000 per annum 2. Average sales target of 58 500 000 per manapor per annum 3. On average manages reach 68% of the sales targets 4. Managers use creative accounting methods to meet sales targets through discretionary accruals and forward accounting methods 5. The Board of Directors has not done much to curb this managerial opportunistic behaviour Note: No bonus is paid to managers if they miss the $8.6m SALES target even by even a single dollar Required: Advise the Board of Directors explaining: The recurring problems of assigned sales targets in relation to managers pay structure and the stress put upon senior managers in relation to the pay structure DAN