Key issues: Agenda item 3.1 was prepared by Anita Low which aimed at presenting the annual audited financial statements. It was observed that the last board meeting had annual financial statements drafts present and since then many adjustments had to be done to the accounts which also include the amendments in some of the notes to the account. Due to these adjustments, many account-related issues have risen. Moreover, it did not put any positive impact on the accounts. Adding to it, the audit of the accounts done by Cross and Buble had an unqualified audit opinion. The audit committee was advised about issuing the unqualified audit report. The issue of unqualified accounts audit is very significant as it directly affects the growth of an organization. As per Francis (2011), audit quality can be considered as a continuum and not a binary process noting that audit failures occur very rarely but there may be significant variations in the audit quality.
Possible questions: As per the annual financial statement and the audit of the accounts, several questions can be raised.
Recommendations: The board needs to go for a deep analysis of the audit report. An unqualified audit can fail in the organization’s objectives. Continuous adjustments made to an account can turn out to be very problematic. So, the accounts should be operated in a manner that it does not need to have adjustments.
Anticipated outcomes: If the above-mentioned recommendations are made to the accounts of the organization, the accounts are expected to be still and have fewer requirements of adjustments.
Key issues: The audit committee examined the accounts and internal control system of the organizations and came out with some of the key issues. The audit team observed that the accounts procedures of the organization need some improvements. The progress of any organization highly depends on its accounts. It the accounts of a company are not properly maintained, it is quite difficult to assess the development of an organization. Furthermore, it also creates many finance-related problems within the organization. The problems of the organization’s accounts came to attention only when they were audited. This account audit was only meant to form an opinion on the annual financial accounts of the organization. The audit covered only these matters and it did not cover other issues to make all-round improvement of the organization’s accounts. The audit confirmed that there were more account signatories than need. Adding to it, the organization uses an Excel spreadsheet to maintain the record of its fixed assets which possesses opportunities for errors as it has no proper control over methods used for calculating accessions, discarding, devaluation, and opening and closing balances. Another key issue is that the employees leave balance is not regularly monitored due to which, mismanagement in the overall work performance occurs at the organization.
Possible questions: Following questions can be raised depending on the audit of the accounts.
Recommendations: As per the audit report, it is highly recommended that the organization should advise the management of the relevant bank of changes as soon as practicable. Moreover, the management should always have a check on the list of authorised signatories to assure its accuracy. The organization should think about investing a more sophisticated programme for the record and management of fixed assets. It should also regularly monitor the leave balances of the employees.
Anticipated outcomes: The recommendations can have advantageous outcomes if adopted. The authorised signatory can deliver better outcomes if they are identified distinctively apart from the former employees. The management and the record of the fixed assets will be more accurate and the improper leave balance of the organization can be maintained.
Key issues: This agenda was prepared by the CFO of the organization which was aimed at presenting the forecast of the updated cash flow and financial results for the quarter. The report suggested unfavourable variances in most of the cases. It also observes that the cash flow in the organization was not properly balanced. In such a case the development of the organization is very difficult to be determined. The actual income of the organization was varying with the forecasted income. It clearly shows that there must be something improper while managing the cash flow. The finance officials need to be more attentive regarding this situation as it is one of the most important departments of an organization. Another issue was that this quarterly forecast was prepared before the commencement of the SSI. The extreme work on SSI caused delay in beginning some government deals because the management was engaged with the work of SSI and Koala Joe. The delay in commencing government contracts puts negative impressions of the organizations in the government’s minds. It creates a doubt among the government officials regarding the working capacity of the organization. Adding to it, the forecast had no new offices.
Recommendations: The report shows that the actual cash flow of the organization, in most of the cases, is less than the forecast report. There must be some strong strategies to ensure a regular and balanced cash flow in the organization as the growth of the company highly depends on the cash flow.
Anticipated outcomes: If the above-mentioned recommendations are followed, there are chances that the cash flow of the organization will be balanced.
Key issues: This agenda item talks about the problems that organizations are facing nowadays. They are struggling in demonstrating real commitment to environmental outcomes. One of the recent surveys has observed that the public is either unaware of the report of the corporations or they don’t trust these organizational report. Australia has been ranked at #37, in the report of the 2018 Global sustainable Development Goals (SDG) which put it behind many countries smaller to it like Slovenia, Costa Rica, Estonia, Belarus, Malta, Latvia and Lithuania. Media has shown it as a national embracement and has attacked the company boards in recent AGMs. Also, the Banking Royal Commission has surprised the public due to which the media has reached into board offices and focusing on the board roles and their responsibilities to the broader community.
Possible questions: Several questions can be raised based on the above mention agenda item.
The organization should try to win the trust of the public in terms of its report. It should develop and test a concept for the new national social enterprise. The organization should get rid of the current reporting abyss and provide a clear and simple reporting format to the investors and the community. The organizational reports should be true and so that it can regain the faith of the public and the stakeholders.
Anticipated outcomes: If the above-suggested recommendations are applied, the organization will be able to regain its trust among the public and the investors.
Key issues: Agenda 8.2 focuses on the acquisition of Koala Joe Foundation into EnviroGo Limited. The key issues related to this acquisition is that the Koala Joe Foundation has some management and negative publicity issues due to which the KJF were not assured of their progress. They want to be merged with the EnviroGo Limited. Moreover, the KJF was struggling throughout the year with a grim condition. The negative publicity of an organization acts as an obstacle in the progress of any organization. Is such a case, it can be a risky decision for EnviroGo to adopt KJF as a part of the organization. Apart from the negative publicity issue, KJF also has some management issues which can be a matter of consideration for the management of EnviroGo Limited.
Possible questions: Based on the report of KJF’s acquisition into EnviroGo, the following questions can be raised.
Recommendations: The board of the EnviroGo should work to resolve to ratify the CEO’s decision to acquire KJF and the organization should make it sure to provide sufficient resources to ensure KJF’s success in integrating into the EnviroGo family. Moreover, the management of the EnviroGo should make it sure that the negative publicity of the KJF will not put any negative impression on the public about the organization. Taking such steps can stop the chances of defaming the organization.
Anticipated outcomes: Once the mentioned recommendations are applied, the organization will have more strength to work for the environment as another family of KJF will be there. Due to the acquisition with KJF, the organization will now have more government’s projects and contracts which will expand the EnviroGo family and ensure its progress.
An organization can improve its performance by applying an approach to risk management in its firm (Florio & Leoni, 2017). Risk is responsible for occurring an event which causes losses. If the risk is not properly managed within an organization, the organization may have to suffer many losses (Nasution, 2019). Many companies have suffered bankruptcy due to the poor risk management system of the organization. Most of the companies are now looking to improving their corporate governance with an emphasis on the risk management’s roles. The risk management committee has a very significant role in the development of a company. The risk management committee is expected to assist the governance board of an organization to carry out their functions as an effort to secure stakeholders and achieve the company’s goal. The risk management committee has become very popular as a significant risk monitoring mechanism for companies. It is highly recommended to consider organizational risk management strategies, to evaluate the organization’s risk management operations, to estimate financial report of the organization and to make it sure that the company in practice complies with applicable laws and regulations. The risk committee of EnviroGo has the responsibility of undertaking and identifying and assessing the risk for the organization. It is not formally authorised. It is responsible for informing the board about the risks of significance considering in its decision making. The risk committee includes a chair and two other directors as the members of the risk committee. To finalise the committee’s charter, it works with the company secretary. The committee manages several functions in the organization such as ensuring that the risk management policy is understood and adhered to by all the employees of the organization, considering all risks that expose the organization to the material impact that may be detrimental to the organization, advising an appropriate procedure to the management to ensure that the risk policy is adhered to, receiving reports from management regarding the organization’s risk management system and making appropriate recommendations to the board. The committee considers strategic, operational and financial risks; and conduct risk mitigation and review residual risk after treatment. The committee is expected to follow the specified meeting schedules of the organization that is as follows:
The organization has some key issues such as its Work Health and Safety (WHS) is due for a review and upgrade to manage with its expanding workforce. The staffs of the organization are not available to assist with the task over the next two or three months due to other commitments. The organization has proposed some resolutions to the need of solutions. The board was suggested to establish a risk committee to make proper strategies to cope up with all the related issues. It was suggested for the board to appoint two directors of the company as the members of the risk committee. The risk committee also proposed to work with the company secretary to finalise the company’s charters. It also oversees the development of an integrated risk management system for the organization. The above-mentioned issues are highly responsible in the development of an organization. The WHS needs to be updated immediately or it will keep damaging the organizations development. The risk committee should be appointed at an urgent basis as it ensures the overall growth of the organization. A company’s progress is hugely dependent on the risk management of the firm.
The organization is currently facing some governance issue within the members of the company. According to Irvin, the organization has no proper governance order. Some members of the governance board are not lined up with the organization’s goal. The work approach of the committee is rather superficial. Norton, a member of the organization who chairs, appears occasionally in the office to have a conversation with the finance staff but at the place of discussing the business, he socialises with the members of the committee. Moreover, he quickly dismissed an interesting matter related to the application of AASB 1004 regarding the accounting which was raised was CFO. It was declared inapplicable by Norton. Another issue as the EnviroGo Limited is that the organization who does not formally manage risk. They possess a risk register which is updated annually. It was said to be the board’s responsibility and not of the management. The board is also not informed about several recent incidents. For example, the information about the legal action by a volunteer who hurt herself while on an expedition. The organization and the expedition leader were claimed to have negligence to such incidents. Another issue that had happened was a social media post which went viral. It showed two volunteers were fighting with accusations of drug use. More incidents of such cases had already taken place; it was not just for the first time. These incidents damage the reputation of the organization. Adding to this the organization had also lost three contracts over the last year. It was dismissed by the finance team declaring it as insignificant though it was having some other problem which was being discussed among the finance team. It was discovered that the contracts were won by a new competitor in the market. The organization does not have a formal risk management system and it needs a better management system than it currently has. Moreover, some members of the organization deny accepting the issue and say that there are no evidences of problems to support a complex corporate risk management system. No information is contained in the board papers that are needed to make a decision. The directors are used to discuss all the important matters with few specific members of the organization assuming that discussing only with them is sufficient to make any decision. These factors of the organization can be identified as key issues an organization needs an improve risk management system to achieve the aim of the company. The negligence of the organizational members towards any incident creates negative impressions on the mind of the public and other members of the team. The social media posts are highly sensitive for an organization as it has a huge user base. The organization should control unfriendly social media posts as it put a negative effect on the masses. The finance team should make sure that no contract should slip from the organization’s hands due to any competitor in the market or any other reason. The board members also need to understand the significance of other members of the team and should also value their opinions regarding any decision making.
Florio, C. & Leoni, G. (2017). Enterprise risk management and firm performance: the Italian case. The British Accounting Review, 49, 56-74.
Nasution, A. A. (2019). Analysis of corporate governance effect and characteristics of companies on the existence of risk management committee. IOP Conference Series: Material Science and Engineering, 648, 1-5.
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