Globecom Ltd (Globecom) is a new large-scale online retailer which is experiencing rapid growth by offering very attractive deals to its new customer members. Customers are attracted by Globecoms user-friendly website, which offers very cheap deals on the last Friday of every month to its first 100 customers who log on with their bid for products by the expiry date.

If customers are unhappy with the service or products, they receive an immediate refund without any personal identification or any further checks. Globecom has a policy to not only match their competitors prices, but also offer a 10% discount on the customers next purchase.

This fast growth has meant that Globecom has not been able to recruit a sufficient no. of employees to its Financial Accounting team. Whilst the Chief Financial Officer (CFO) is a qualified CA, the other Accounting employees are either not trained as accountants or they do not have appropriate tertiary qualifications.

Globecom has not yet completed its Human Resources Policy and Procedures or delegated permanent roles to its current staff. To promote knowledge sharing, the CEO encourages all staff to share roles, including accounting positions. Employees have benefited from seeing what other duties and responsibilities are involve in the Financial Accounting team.

Month-end reports have been prepared by several different staff on a priority basis only. Bank reconciliations have been performed on a needs only basis, and some bank accounts have not been reconciled at all. The CFO does not have enough time to review and sign the bank reconciliations.

Whilst the majority of customers use pay-pal accounts or credit cards, loyal customers are rewarded with additional discounts of between 10 - 20%, which are arbitrarily allocated by the CFO.

Globecom Ltd has a large number of suppliers, who provide a vast range of products. New suppliers are created in the Accounts Payable master file each week to increase the variety of products and increase the diversity of suppliers available. As yet, there is no specific Accounts Payable Officer who enters in the new supplier details. This role is shared between current employees.

Required:

a) Based on the case study above, identify five (5) key risks in relation to Globecoms business model and/or control environment and provide descriptions of each risk type identified?

(5 marks)

ANSWER: ** Answer box will enlarge as you type

b) For the risks identified, provide an appropriate risk response or improvement / recommendation to address the risk you have identified in part a).

Please provide your answer in the following format (insert rows as required). (5 marks)

Risks

Risk Response / Improvement / Recommendation)