Example of another Answer After conducting comprehensive analysis of Mann Motors Ltd, we have identified lack of internal controls and an outdated business model as the most immediate concerns. Although the family business has an array of other issues including lack of inventory costing and capital asset depreciation policies, a pressing need for short and long-term tax planning, and no recognition of industry shifts to online retailing, our most urgent recommendations are to hire a CFO/controller, develop and implement an internal controls policy, and streamline order fulfilment processes to reduce inventory levels. These changes will help significantly reduce loss of inventory and cash through theft and/or error. Storage costs can also be significantly reduced if the company sells its historic downtown location and rents a smaller warehouse outside the city. The company is giving too much leeway to executives and sales agents, which is resulting in exuberant travel and entertainment expenses. It is unclear if expensive conventions, business-class flights, and fancy meals with clients are actually helping salespeople sell automobile parts. Each expense/ business strategy needs to be evaluated on its own merit (cost/benefit trade-off) and stronger policies need to be designed and implemented. SAMPLE BUSINESS REPORT 3 Issues This section is one of the two major parts of the report. In this section, you will list and discuss in-depth the major accounting, finance, and business issues raised in the case. You are encouraged to reference information internal and external to this course. Please note that the example provided is considerably shorter than your section should be (it is a simple demonstration of how this section should be structured). Example: There are several alarming issues immediately evident with Mann Motors Ltd. First, the senior management is comprised of only family members who dont come from an accounting background. The firm is overly reliant on junior accounting staff and the tax accountant, who accesses the companys records once a year. This is not an ideal way to handle bookkeeping and accounting functions, as someone with accounting expertise is needed to regularly oversee work of staff accountants and minimize error and theft (Dorward 2019). There is an ethical dilemma present in here with the owners of the company. They are playing favorites in the hiring process which is a concerning issue for a number of stakeholders. First, giving preferential treatment to children of old friends in the hiring process is an ethical and legal concern (Government of Canada 2019). A loyal and productive employee of ten years was laid off, so a new college graduate (family friend) could be hired in her position- at a higher salary! This is not only unethical, but bad business practice. Current and former employees feel highly concerned to see this, so they are more likely to seek new opportunities elsewhere. Shareholders in the company are also concerned by overpaying new hires and letting cheaper, more experienced employees go. Even creditors may be worried about unethical behaviour, as the company is valuing family connections over the well being of the business. Can the management at Mann Motors really be trusted to pay off debt as promised? We have identified lack of internal controls as a major concern. The senior executives have already noticed a concerning level of inventory going missing. Since the accounting staff are severely overworked, the salespeople are often entering their own sales. As these individuals are also responsible for delivering products to their customers, Mann Motors is not separating SAMPLE BUSINESS REPORT 4 accounting from custody of the related assets (MGMT250 ch.8, p.3). This is an internal control failure which must be addressed as soon as possible. Mann Motors should strongly consider adopting our recommendations relating to segregation of duties. SAMPLE BUSINESS REPORT 5 Analysis This section is the second major part of your report. In this section, you will provide supporting analyses to some of the issues you identified in the previous section. You do not have to dissect every issue, especially if it is relatively straight-forward (such as the segregation of duties issue discussed earlier). You are encouraged to reference information internal and external to this course. Please note that the example provided is considerably shorter than your section should be (it is a simple demonstration of how this section should be structured). Also note that you may use Appendices to present information in a cleaner format in your report. Example: Mann Motors Ltd. has several issues which require further qualitative and quantitative analysis. Starting with inventory costing, it is better to implement different methods for the two distinct inventory types within the business. First, Mann Motors collectors items department, which restores and/or resells items such as vintage auto parts, paintings, and other art, should be using a specific-unit inventory costing system. This is a feasible approach since there is low sales volume in the department and tracking costs for specific items wouldnt be overly inefficient. This costing approach would also be the soundest accounting practice, since each piece is unique and incurs different costs (MGMT250 ch.6, p.2). For automobile replacement parts which make up the bulk of sales, a First-In-First-Out inventory costing system would work best. This matches the companys natural flow of inventory, as parts should not remain stocked for too long. Storing inventory can be expensive as space costs money and the company currently holds too many parts for vehicles which are no longer abundant in the local region. Old inventory also has an added issue of significantly higher defective rates than parts not sitting on shelves for months. Hence, Mann Motors should aim to reduce inventory levels and order from suppliers more frequently instead. Here is a FIFO costing schedule of the popular horn kits Mann Motors has been selling for the past month: SAMPLE BUSINESS REPORT 6 Date Quant. purchased Quant. sold Quant. on hand at days end Inventory value Apr. 1 Beginning Inventory 0 (no units stocked yet) $0 3 15 @ $19.85 2 @ $35 13 @ $19.85 258.05 5 4 @ $35 9 @ $19.85 178.65 6 50 @ $19.50 7 @ $35 2 @ $19.85, 50 @ $19.50 1,014.70 9 6 @ $40 46 @ $19.50 897.00 10 8 @ $40 38 @ $19.50 741.00 12 10 @ $40 28 @ $19.50 546.00 13 50 @ $20.25 11 @ $40 17 @ $19.50, 50 @ $20.25 1,344.00 16 8 @ $45 9 @ $19.50, 50 @ $20.25 1,188.00 17 6 @ $45 3 @ $19.50, 50 @ $20.25 1,071.00 18 5 @ $45 48 @ $20.25 972.00 19 8 @ $40 40 @ $20.25 810.00 20 7 @ $40 33 @ $20.25 668.25 23 5 @ $40 28 @ $20.25 567.00 24 5 @ $40 23 @ $20.25 465.75 25 4 @ $40 19 @ $20.25 384.75 26 5 @ $40 14 @ $20.25 283.50 27 50 @ $20.40 12 @ $30 2 @ $20.25, 50 @ $20.40 1,060.50 30 9 @ $30 43 @ $20.40 877.20 30 Ending Inventory 43 @ $20.40 $877.20 SAMPLE BUSINESS REPORT 7 After implementing FIFO costing, we can see that the horn kits have been quite profitable for Mann Motors so far, contributing revenues of $4,700 and gross profit of almost $2,275 (see Appendix 1). However, there has been a decline in demand for this product since Mann Motors first stocked it. The overall gross margin percentage for April looks strong at nearly 50%, but there is significant variance here. When the sales price was increased to $45 in the middle of April, sales dropped to five units a day. At this point, there was a difference of over $25 between the sales price and purchase price (gross profit margin of 56.7%). Recently, management has dropped sales prices of the product significantly. It is unclear if the most recent drop from $40 to $30 is a permanent change or a sales promotion. In any case, the companys latest bulk purchase was at $20.40, and a $30 selling price results in a gross profit margin of only $9.60, or 32%, per unit. This is well below the April average. It is also important to note that sales volume had dipped to low daily levels again, prior to the large price slash. SAMPLE BUSINESS REPORT 8 Recommendations In this section, you will emphasize the main changes you want to see made. Some of your recommendations may have already been mentioned earlier in the report, but you can restate them with more emphasis. Think of this section as an opportunity to sell your ideas to the reader. Example: Our top recommendation is to hire someone with senior accounting expertise into a Chief Financial Officer or Controller role within Mann Motors. This will ensure that there is sufficient oversight of all accounting functions. It will also ensure that sound accounting policy is being developed regularly to handle changing economic and business conditions. Development of policy is only the first step. The policy needs to be implemented correctly and monitored closely to ensure the actions are achieving their desired results. A full-time employee who fulfils this role will reduce the possibility of error or fraud and will also reduce reliance on the tax preparer. The most immediate need for updated policy is in the internal controls area. The duties need to be segregated appropriately so the individual with access to the accounting records doesnt also handle related assets. By putting a wall between certain functions, it is much tougher for an employee to defraud the company, since one must co-ordinate the act with one or more fellow employees. Ideally the person responsible for recording transaction should not handle cash or other asset (MaRS 2014). Hence, we recommend that management assign sales entry duty to a specific member of the accounting staff and have someone else check all entries against sales invoices on a regular basis. We also recommend that Mann Motors develop a strong ethics policy which everyone in the organization, especially senior management adheres to (MGMT250 ch.8, p.2). By setting the right tone, executives can encourage everyone in the organization to act ethically. Proper communication and monitoring of rules will help reduce theft and other detrimental behaviour. We recommend that Mann Motors implement a specific-unit costing policy for the collectors items department and a FIFO costing system for auto replacement parts. This will help the SAMPLE BUSINESS REPORT 9 business in a few ways. First, there will be more accurate records for accounting and taxation purposes. Second, a more accurate system will improve decision making. As an example, management might want to think carefully about placing new bulk orders for horn kits, since demand is dropping, as are sale prices. Alternatively, Mann Motors can look at expanding its sales market to beyond the local area, possibly via online retailing. SAMPLE BUSINESS REPORT 10 Conclusion This will serve as a quick wrap-up to your report. Touch on your main findings and recommendations. Example: Mann Motors needs to make several major changes to the accounting side of its business. There needs to be senior leadership added and solid policy must be developed and implemented. This will be an important step in resolving current issues such as unethical behaviour, growing costs, declining sales, and an outdated business model. We recommend immediate and forceful action to prevent further damage to the brand and to help turn the business around. Please contact us at your earliest convenience to address any questions and/or concerns and to discuss how our recommendations can best be implemented

Swish Hoops Co. was started by Travis James last year. Travis is a young, hip, and creative individual who has always dreamed of owning his own business. He knows Swish needs to be a unique business model to cut it in an increasingly competitive global retail space. The company sells numerous variations of the same three products- basketball hoops, hoop earrings, and hula hoops. Since it is relatively easy to alter product designs and colours, Swish keeps prices consistent for various offerings of the same product. So far, Travis's vision has worked- the company has blossomed in the Cranbrook area. There is a great demand for each product and new customers are showing up daily to check out the coolest shop in town. Unfortunately, the store's success has come at a price. Travis used to enjoy ordering in quality basketball hoops, hula hoops, and earrings which he would hand-paint to sell at his little store. Ever since things blew up, he has been busy hiring and managing staff, finding new suppliers to fill his large orders, and trying to keep product quality high. Travis no longer has time to produce goods himself. In fact, he rarely has time to look at a finished product before it is sold to a customer. Travis does feel like the overall quality of the art has diminished recently with several new artists on board as sub-contractors, but everything is selling so what's the big deal? The company's website is also quite busy. It is full of viral videos- teenagers and young adults love showing off their basketball and hula-hooping skills with the Swish gearl The forums are full of customers discussing the latest fashions and their love for various earring designs. Travis had also intended to get into online retailing with his website, but he is sorely lacking time to develop this idea. Furthermore, the company is barely meeting demand as is. Imagine how much worse things would get if a lot of online orders came inl Travis has already noticed numerous forum posts and emails to him requesting order shipments to faraway cities. He is sure that online retailing will boost Swish's profits at some point, but not right now. Travis has made a few changes to manage Swish's rapid growth. First, he has been gradually increasing the prices of his products to help cover growing expenses, as well as avoid a massive waitlist for products. Second, Travis has added new suppliers, so more inventory can be shipped in. However, he is not convinced the quality and order reliability will be as good as he had been getting from his first supplier. So far, there has been a slight uptick in defective inventory and defective finished goods. A few customers requested refunds and/or exchanges this month, something Travis has never experienced before. Finally, Travis has moved from his small store to a large retail space and storage locker, which costs $4,000 per month (utilities costs are included). He has hired two store staff who work 40 hours a week and are paid an hourly rate of $15.00. He has also hired artists who are sub-contracted and compensated based on how many units they paint/design (basketball hoops are paid the most, followed by hula hoops, followed by sets of earrings). One of Travis's first hires was his childhood friend, Stan. Stan is currently enrolled in an undergraduate business program at the local college. Although Stan didn't have accounting experience when he started working for Travis, he has been able to use knowledge from his first-year accounting class to keep the books up-to-date. Case 1: Swish Hoops Stan currently gets paid 20% of weekly profits, but Travis is open to changing this compensation agreement since Stan is only working about 25 hours a week due to his school obligations. Comparatively, Travis is putting in over 60 hours a week and has taken over several finance/business functions as the business has grown. Because things are so busy, Stan has been recording a full week's sales at once. Purchases are always made prior to the open of business on Monday morning and each week ends on Sunday night. Here are Swish's product sales and purchase numbers for the last three months: * Each basketball hoop purchase includes shipping, insurance, and taxes; each basketball hoop costs $100 to paint/design. * Each purchase of a set of hoop earrings includes shipping, insurance, and taxes; each set costs $3 to paint/design. Case 1: Swish Hoops * Each purchase of a hula hoop includes shipping, insurance, and taxes; each hula hoop costs $10 to paint/design. Travis is worried that Stan's journalizing system is not the most reliable or accurate. He feels as if some sales and purchases are being missed due to lost paperwork since Stan can't record transactions in a timely manner. He is also worried that hoop earrings can easily be stolen in the hustle and bustle of the store. Travis wants to implement a better inventory management system and is looking for specific recommendations on what elements/policies the company should have in its system and why they're important. Travis is planning to significantly increase finished goods inventory in the next months, as he remains optimistic about growing local and online demand for all products. Currently, Stan is expensing all inventory purchases as Cost of Goods Sold expense in the month Swish orders them. His reasoning is everything sells anyway, so it doesn't really matter when you expense a piece of inventory. Travis hasn't had time to look at things more carefully, but he is concerned about the March 11th17th week where profit spiked. Stan's tuition for next semester was due on March 18th and he took home a larger paycheck than usual. Travis wants this anomaly checked for error or manipulation. Also, Travis has done some light reading on the First-In-First-Out and Moving-Weighted-Average inventory costing systems. He wants a detailed explanation of these systems and, if adopted, how Swish's profits may have looked in the past three months. Once again, specific recommendations would be appreciated. Required: Identify all accounting issues raised in this case and make recommendations for Travis, especially in areas of concern to him. You are encouraged to refer to course information as well as other sources. Present your work in professional report form