This system should also take care of verbal and nonverbal agreement of contract expenditure, and no cost approval beyond the budget unless being approved by senior management and financing unit
These boundaries must be revised on an annual basis and edited if necessary. When employees understand the core beliefs and boundary system, then they do not just worry about delivering the bottom line results. Instead, they will strive to deliver corporate objectives without crossing boundaries.
Diagnostic control system should also be employed into the company whereby, new processes and performance measurements must be developed for the following:
Unit occupancy rate: this strives to achieve economy of scale.
Internal auditing: There should be a team of internal auditor reporting to the accounting VP. This team must constantly review the transactions and ensuring the numbers are correct; also ensure that the controls in place and being followed to verify those numbers are correct. The Verago policies must be owned and controlled by the auditing team rather than HR.
Inspection: all the extra expenses around properties must be inspected and verified by an independent inspection team that would report directly to the head office auditing team.
The auditing team must be independent of the accounting team that is reporting the transactions and the inspectors must be independent of the property management team [ARC principal- Exhibit 2]
Lastly, there should be an Interactive control system - to learn from performance measurements. Management should engage in strategic uncertainty conversation. The debate should raise questions about customers, performance scorecard, suppliers and other relationships that the business could have. The communication needs to be open from top to bottom and bottom to top as well. The company can set up a generic email to receive feedback from employees. HR should be responsible for collecting these feedbacks and raise it to management attention. There should be quarterly meeting for all staff and GM and PM and VP of each property region to discuss what's working and what...
(Ie. Use EPP to enhance the employee's pension plan)
Threats:
Industry slow down due to environmental factors (SARS and Mad cow out break)
Environmental instability due rapid changes in the industry
Current payment authorization process:
Cheque requisitions to be signed by an authorized manager -> submitted to account payable for processing -> account payable to verify signature to the authorized signing lists> invoice go to the accounting department for final review
Exhibit 2
ARC principle for creating control at Verago Properties Group Inc.
An employee cannot perpetrate and conceal fraud or theft (and accidental errors will be reduced) if he or she does not have responsibility for more than one of:
1. Authorization of transactions: held by property management
2. Recording of transactions: being done by property accountant located at the head office
3. Custody of resulting assets: being held by the auditing team
