3a 7 End Result Audit


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END RESULT ! Whether it is the end result of your audit or you want to audit the end result of the orgaization\'s activities - both are relevent ! Please view this presentation for a more clear understanding...

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3a 7 End Result Audit

  1. 1. “ End Result Auditing”
  2. 3. <ul><ul><ul><li>END RESULT AUDITING </li></ul></ul></ul><ul><ul><ul><li>Auditing “End Result” </li></ul></ul></ul><ul><ul><ul><li>“ End Result based” Auditing </li></ul></ul></ul><ul><ul><ul><li>“ End Result” of Auditing </li></ul></ul></ul>
  3. 4. <ul><ul><ul><li>A VALUE BASED ORGANISATION </li></ul></ul></ul><ul><ul><ul><li>“ Individual & Business Ethics” </li></ul></ul></ul>DESIRED END RESULT
  4. 5. Module 1 Audit of Business end result
  5. 6. What we need to discuss under the first Module? <ul><li>I Phase : Review : </li></ul><ul><li>Concepts of performance & results </li></ul><ul><li>Selection of appropriate studies </li></ul><ul><li>Audit Techniques required </li></ul><ul><li>Some Audit guidelines </li></ul><ul><li>A model questionnaire for “Business Performance Audit” </li></ul>
  6. 7. Problem Identifier (or) Complete Solution Provider? IS IT ENOUGH ?
  7. 8. AN EXTENDED ROLE <ul><li>II Phase : </li></ul><ul><li>Facilitation in implementation </li></ul><ul><li>III Phase : </li></ul><ul><li>Benefits Review / Achievement of audit objectives </li></ul>
  8. 9. Auditing End Result <ul><li>Examination of issues of ‘Performance & Results’ </li></ul><ul><li>(Measuring performance results against goals) </li></ul><ul><li>Shift from emphasis on procedures, controls & regulations </li></ul><ul><li>to accountability for results & performance </li></ul><ul><li>Notion of economy, efficiency & effectiveness </li></ul>
  9. 10. Auditing End Result <ul><li>Assessment of the relationship between business results, </li></ul><ul><li>Vendor performance and core business practices </li></ul><ul><li>Finally leading to application of learnings to influence </li></ul><ul><li>future results ie. where to focus our ‘energy’ & what to be </li></ul><ul><li>taken to increase our effectiveness </li></ul>
  10. 12. Financial and Performance Audits <ul><li>Financial Audit </li></ul><ul><li>Voucher </li></ul><ul><li>Examines compliance to </li></ul><ul><li>financial rules </li></ul><ul><li>Usually quantitative </li></ul><ul><li>Usually not very analytical </li></ul><ul><li>Performance Audit </li></ul><ul><li>Objective - oriented </li></ul><ul><li>Examines economy, </li></ul><ul><li>Efficiency and effectiveness </li></ul><ul><li>in use of resources and goes </li></ul><ul><li>beyond compliance </li></ul><ul><li>Usually qualitative </li></ul><ul><li>Usually analytical </li></ul>
  11. 13. Financial and Performance Audits <ul><li>Financial Audit </li></ul><ul><li>Does not use performance </li></ul><ul><li>indicators, standards and </li></ul><ul><li>targets </li></ul><ul><li>Does not usually consider </li></ul><ul><li>cost benefit analysis </li></ul><ul><li>Performance Audit </li></ul><ul><li>Requires indicators, standards </li></ul><ul><li>and targets to measure </li></ul><ul><li>performance </li></ul><ul><li>Usually considers cost-benefit </li></ul><ul><li>analysis </li></ul>
  12. 14. Financial and Performance Audits <ul><li>Financial Audit </li></ul><ul><li>Examines financial statement </li></ul><ul><li>assertions, such as in finance </li></ul><ul><li>accounts and appropriation </li></ul><ul><li>accounts </li></ul><ul><li>Usually post - event </li></ul><ul><li>Does not usually aim at </li></ul><ul><li>optimal allocation of resources </li></ul><ul><li>Performance Audit </li></ul><ul><li>Examines all or part of an </li></ul><ul><li>entity’s activities in relation </li></ul><ul><li>to economy, efficiency and </li></ul><ul><li>effectiveness </li></ul><ul><li>Considers past, present and </li></ul><ul><li>even the future performance </li></ul><ul><li>Aims at optimal allocation of </li></ul><ul><li>resources </li></ul>
  13. 15. Development of new approach to audit <ul><ul><ul><ul><ul><li>Performance Audit </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Value for money audit </li></ul></ul></ul></ul></ul><ul><ul><li>Aiming at significant contribution towards modern </li></ul></ul><ul><li>management practices & change management style </li></ul><ul><ul><li>Difference between “Information Verification </li></ul></ul><ul><ul><li>Auditing” and “Information Development Auditing” </li></ul></ul>
  14. 16. Business Results Vs Core Business Practices <ul><ul><li>Set of Results link to the Set of Practices </li></ul></ul><ul><ul><li>Do they match? </li></ul></ul>
  15. 17. Approach simplified <ul><li>End result is ‘PROFIT’ </li></ul><ul><li>‘ Profit’ is committed – Adhere to ‘Plan’ & achieve </li></ul><ul><li>‘ PROFIT’ is equal to Sales minus Cost </li></ul><ul><li>Improve ‘Sales’ Revenue </li></ul><ul><li>or </li></ul><ul><li>Reduce ‘Cost’ of operations </li></ul>
  16. 18. Approach simplified <ul><li>Shift the standard ‘bar’ </li></ul><ul><li>Take efforts in sustaining the same </li></ul><ul><li>Sweat the physical ‘Assets’! </li></ul><ul><li>Stretch the Target for ‘Human Assets! </li></ul><ul><li>Thus, it is effective ‘Resource’ utilisation </li></ul><ul><li>Therefore it is the level of, </li></ul><ul><li>Revenue </li></ul><ul><li>Cost & </li></ul><ul><li>Effective utilisation of Resources </li></ul>
  17. 19. Balanced Scorecard Model S.No. FINANCIALS Owner Plan Actual Weightage 1. Contribution as % 6 % of Sales 2. EVA (Economic 6% Value Addition) 3. Sales 7% 4. Sales growth over 6% previous year- value terms 25% BOX 1
  18. 20. Balanced Scorecard Model S.No. CUSTOMER Owner Plan Actual Weightage PERSPECTIVE 1. Net Line Service 8 % Level 2. Measure Brand 8 % Strength 3. Percentage of 9 % complaints - (resolved within 72 hours - 10 cities) 25% BOX 2
  19. 21. Balanced Scorecard Model S.No. INTERNAL Owner Plan Actual Weightage PROCESS 1. Employee 8 % involvement in Cost Reduction 2. Development of 8 % an outsourcing model - Activity ‘X’ 3. Recovery 9 % (Manufacturing Operations) 25% BOX 3
  20. 22. Balance Scorecard Model S.No. LEARNING & Owner Plan Actual Weightage GROWTH 1. Layout issues 8 % 2. Business Loss 8 % Tracking system 3. Development 9 % of core team to focus on a particular efficiency 25% Total of all boxes 100 % BOX 4
  21. 23. End Result Red Flags <ul><li>Unusually rapid growth or profitability, especially </li></ul><ul><li>when compared with that of other companies in the </li></ul><ul><li>same industry. (Enron had a 151 percent increase in </li></ul><ul><li>revenues during 2000, with $ 100 billion, while the second </li></ul><ul><li>ranked pipeline company reported revenues of less than </li></ul><ul><li>$30 billion.) </li></ul><ul><li>Financial results that seem too good to be true or </li></ul><ul><li>significantly better than competitors, without substantive </li></ul><ul><li>differences in operations. </li></ul><ul><li>Unusual balance sheet changes or changes in trends or </li></ul><ul><li>important financial statement relationships such as </li></ul><ul><li>receivables growing faster than revenues </li></ul>
  22. 24. Measuring Performance <ul><li>Timeliness </li></ul><ul><li>Productivity </li></ul><ul><li>Quality </li></ul><ul><li>Customer satisfaction </li></ul><ul><li>Program Results / Mission purpose achievement </li></ul><ul><li>Cost effectiveness </li></ul><ul><li>Profit </li></ul><ul><li>Quantity </li></ul><ul><li>Return on investment </li></ul><ul><li>Financial condition </li></ul>
  23. 27. <ul><li>Efficiency + Effectiveness = Productivity </li></ul><ul><li>Producing a Result * Producing a desired Result </li></ul><ul><li>Doing things Right * Doing the Right things </li></ul><ul><li>Both Efficiency & Effectiveness are necessary for Productivity. </li></ul><ul><li>Doing the Right Things in the Right Way </li></ul>Efficiency, Effectiveness & Productivity
  24. 28. <ul><li>“ Economy” is about minimising the cost of the input resources </li></ul><ul><li>“ Efficiency” is about the relationship between outputs produced, (the goods & services) and the input resources used to produce them </li></ul><ul><li>“ Effectiveness” is about the extent to which an entity’s </li></ul><ul><li>pre-determined objectives have been achieved </li></ul>Economy, Efficiency & Effectiveness
  25. 29. Economy, Efficiency and Effectiveness Planned Inputs Planned Progress Planned Outputs (Policy Objectives) EFFICIENCY Actual Inputs (Resources Used) ECONOMY EFFECTIVENESS Process Actual Outputs (Output Achieved) Relationship between inputs, processes and outputs and between economy, efficiency and effectiveness
  26. 30. Areas of Performance Audit <ul><li>Selective Examination </li></ul><ul><ul><li>Wastages </li></ul></ul><ul><ul><li>Weakness in control </li></ul></ul><ul><li>Broad based Examination </li></ul><ul><li>Standard Managerial operations </li></ul>
  27. 31. Potential Performance Audit areas <ul><li>Type of Activity </li></ul><ul><li>Procurement or Purchasing </li></ul><ul><li>arrangements </li></ul><ul><li>Stores management </li></ul><ul><li>Possible Improvements </li></ul><ul><li>Purchasing goods and services </li></ul><ul><li>more cost-effectively </li></ul><ul><li>Improved procedures resulting </li></ul><ul><li>in reduced stockholding and </li></ul><ul><li>reduced losses </li></ul>
  28. 32. <ul><li>Type of Activity </li></ul><ul><li>Support services (including </li></ul><ul><li>telephones and electricity) </li></ul><ul><li>Estates and assets </li></ul><ul><li>management, including </li></ul><ul><li>vehicles, buildings etc. </li></ul><ul><li>Possible Improvements </li></ul><ul><li>Obtaining services at better </li></ul><ul><li>prices, managing facilities </li></ul><ul><li>better and identifying scope for </li></ul><ul><li>reducing consumption </li></ul><ul><li>Making better use of land, </li></ul><ul><li>buildings, vehicles, equipment </li></ul><ul><li>or accommodation. The latter </li></ul><ul><li>will allow increased capacity or </li></ul><ul><li>release of accommodation for </li></ul><ul><li>other use or for disposal </li></ul>Potential Performance Audit areas
  29. 33. <ul><li>Type of Activity </li></ul><ul><li>Management of major </li></ul><ul><li>capital projects </li></ul><ul><li>Utilisation and deployment </li></ul><ul><li>of manpower </li></ul><ul><li>Possible Improvements </li></ul><ul><li>Improved procedures allowing </li></ul><ul><li>contracts to be completed </li></ul><ul><li>within cost and timescale </li></ul><ul><li>Increased productivity and </li></ul><ul><li>reduced staffing overheads </li></ul>Potential Performance Audit areas
  30. 34. Examples of Performance Measures <ul><li>Area / Activity </li></ul><ul><li>Transport </li></ul><ul><li>Stores </li></ul><ul><li>Performance Measures </li></ul><ul><li>% usage of vehicles </li></ul><ul><li>Cost per vehicle per hour </li></ul><ul><li>Fuel cost compared with hired cost </li></ul><ul><li>% idle time for vehicles </li></ul><ul><li>Ratio of stock held to turnover </li></ul><ul><li>Ratio of slow moving stock to stock held </li></ul>
  31. 35. Examples of Performance Measures <ul><li>Area / Activity </li></ul><ul><li>Printing services </li></ul><ul><li>Cash collection </li></ul><ul><li>Performance Measures </li></ul><ul><li>Cost per page printed </li></ul><ul><li>Average turnaround time </li></ul><ul><li>% work completed on time </li></ul><ul><li>Cost per transaction </li></ul><ul><li>Investment income ‘lost’ </li></ul><ul><li>number of transactions per cashier per day </li></ul>
  32. 36. Selection criteria <ul><li>Materiality </li></ul><ul><li>Auditability </li></ul><ul><li>Timeliness </li></ul><ul><li>Impact </li></ul><ul><li>Scope for improvement </li></ul><ul><li>Acceptability of study results </li></ul><ul><li>Environment </li></ul><ul><li>Assessed Risk </li></ul><ul><li>Customer dissatisfaction </li></ul><ul><li>new / unused function </li></ul><ul><li>known performance failure </li></ul><ul><li>operation size </li></ul><ul><li>cost -history </li></ul><ul><li>topicality of subject </li></ul>
  33. 37. Questions on Performance Study Selection <ul><li>Is the study likely to add value? </li></ul><ul><li>Is the study practicable and cost effective? </li></ul><ul><li>Is the study auditable in terms of skill? </li></ul><ul><li>Is the area topical, of interest to stakeholders? </li></ul><ul><li>Is there scope for improvement? </li></ul><ul><li>Is the study innovative? </li></ul><ul><li>Is it a new programme never studied? </li></ul>
  34. 38. Questions on Performance Study Selection <ul><li>Is the study likely to generate financial savings? </li></ul><ul><li>Are the study results likely to have acceptance? </li></ul><ul><li>Is the study feasible in the sense that answers are available to </li></ul><ul><li>question relating to economy, efficiency and effectiveness? </li></ul><ul><li>Is the study likely to be timely and to assist decision taking? </li></ul><ul><li>Is it possible to collect sufficient and reliable evidence at a </li></ul><ul><li>reasonable cost? </li></ul>
  35. 39. Adopt a Standard “ Each audit should be complete, accurate, objective, convincing and clear.
  36. 40. Tools & Techniques <ul><li>Examination of Records </li></ul><ul><li>Interviewing </li></ul><ul><li>Direct observation </li></ul><ul><li>Bench marking </li></ul><ul><li>Case studies </li></ul><ul><li>Surveys </li></ul><ul><li>Focus Groups </li></ul><ul><li>Flow charting </li></ul><ul><li>Statistical Analysis (Now replace with CAATS!) </li></ul><ul><li>Work Study </li></ul><ul><li>Cost benefit analysis </li></ul>
  37. 42. Module 2 Audit end result
  38. 43. <ul><li>Eyes & Ears of “Management” approach - ‘Sawyer Days’ </li></ul><ul><li>Eyes & Ears of “Audit Committees” - “Today’s assurance role </li></ul><ul><li>Organisational </li></ul><ul><li>Governance problems/ </li></ul><ul><li>Corporate failures </li></ul><ul><li>Partnering with operating management - Emerging Consulting / </li></ul><ul><li>by bring about operational improvements Advisory role </li></ul><ul><li>“ Positioning the IAF in terms of proving both </li></ul><ul><li>assurance & consulting services ” </li></ul>“ End result” based Audit!
  39. 44. <ul><li>(by the Institute of Internal Auditors, Inc, USA – </li></ul><ul><li>the International Body promoting the </li></ul><ul><li>profession of Internal Auditing) </li></ul><ul><li>  </li></ul><ul><li>“ Internal Auditing is an Independent and Objective Assurance and Consulting Activity that is Guided by a Philosophy of Adding Value to Improve the Operations of the Organisation. It Assists an Organisation in Accomplishing the Objectives by Bringing a Systematic and Disciplined Approach to Evaluate and Improve the Effectiveness of the Organisation’s Risk Management, Control, and Governing Processes.” </li></ul>Reference from the revised ‘ Internal Audit’ Definition
  40. 50. <ul><li>Risk Assessment / Internal Control facilitation </li></ul><ul><li>CSA workshops </li></ul><ul><li>Promotion of ‘Corporate Governance’ </li></ul><ul><li>Fraud prevention efforts ‘Whistle blowing’ role </li></ul><ul><li>‘ Best Practices’ sharing </li></ul><ul><li>‘ Knowledge Manangement’ </li></ul>Facilitation Role
  41. 51. <ul><li>Continuous ‘Benefits’ evaluation exercises </li></ul><ul><li>Status ‘escalation’ / constraints resolving </li></ul><ul><li>Survey on ‘internal’ / ‘external’ customer </li></ul><ul><li>satisfaction levels </li></ul><ul><li>Making things happen! </li></ul>Benefits Review
  42. 52. Keeping an eye on the “ End Result” of Audit!
  43. 53. A n effective Audit <ul><li>Apply to all Operational areas - Projects, Procurement, Production Processes, Despatch, Marketing & Selling & Support Services (Inbound -- Operations --Outbound) </li></ul>
  44. 55. Module 3 Ultimate end result ! A VALUE BASED ORGN. Individual & Business Ethics!
  45. 56. A New Dimension ! (refer IIA’s Practice Advisory – 2130-1 )
  46. 57. Individual & Business Ethics “ Essence of ‘HR’ is to increase the value of human capital”
  47. 58. CODE OF ETHICS <ul><li>[An IIA document that is heavily tested.] </li></ul><ul><li>These ethical obligations are important not only to internal auditors but also to all professionals both personally and professionally. </li></ul><ul><li>Objectivity, integrity, confidential and disinterested use and protection of information and competence. </li></ul>
  48. 59. ‘ Perspective on Ethics’ <ul><li>1. Definitions </li></ul><ul><li>Individual ethics - moral principles and standards of </li></ul><ul><li>conduct adhered to by an individual </li></ul><ul><li>Business ethics - an organisation’s policies and </li></ul><ul><li>standards established to assure certain kinds of </li></ul><ul><li>behavior by its members </li></ul><ul><li>2. Areas of Concern Regarding Business Ethics </li></ul><ul><li>General business understanding of ethical issues </li></ul><ul><li>Compliance with laws </li></ul><ul><li>Conflicts of interest </li></ul>
  49. 60. ‘ Perspective on Ethics’ <ul><li>Entertainment and gift expenses </li></ul><ul><li>Relations with customers and suppliers (should gifts or kickbacks be given or accepted?) </li></ul><ul><li>Social responsibilities </li></ul><ul><li>3. Factors that may lead to unethical behavior </li></ul><ul><li>In any normal population, some people have less than </li></ul><ul><li>desirable levels of ethics. If these people hold </li></ul><ul><li>leadership positions, they may adversely influence </li></ul><ul><li>subordinates. </li></ul>
  50. 61. ‘ Perspective on Ethics’ <ul><li>Organisational factors </li></ul><ul><ul><li>Pressures to improve short-run performance may </li></ul></ul><ul><li>promote unethical behavior </li></ul><ul><ul><li>Emphasis on strict adherence to chain of command </li></ul></ul><ul><li>authority may provide excuses for ignoring ethics </li></ul><ul><li>when following orders. </li></ul><ul><ul><li>Informal work-group loyalties may subvert ethical </li></ul></ul><ul><li>behavior </li></ul><ul><ul><li>Committee decision processes may make it possible </li></ul></ul><ul><li>to abstain from or avoid ethical obligations </li></ul>
  51. 62. ‘ Perspective on Ethics’ <ul><li>External factors </li></ul><ul><ul><li>Pressure of competition may compromise ethics in </li></ul></ul><ul><li>the interest of survival. </li></ul><ul><ul><li>Wrongful behavior of others may force a </li></ul></ul><ul><li>compromise of ethics </li></ul><ul><ul><li>Definitions of ethical behavior may vary from one </li></ul></ul><ul><li>culture to another. For instance, bribes to overseas </li></ul><ul><li>officials or buyers may be consistent with some </li></ul><ul><li>countries’ customary business practices </li></ul>
  52. 63. ‘ A. Perspective on Ethics’ <ul><li>General Guides to Ethics </li></ul><ul><ul><li>Golden Rule - Do unto others as you would have them do </li></ul></ul><ul><li>unto you. </li></ul><ul><ul><li>Maximise good - Act to provide the greatest good for the </li></ul></ul><ul><li>greatest number </li></ul><ul><ul><li>Fairness - Act in ways that are fair or just to all concerned. </li></ul></ul><ul><ul><li>Maximise long-run outcomes - Act to provide the best long-range benefits to society and its resources </li></ul></ul><ul><ul><li>General respect - Act to respect the planet and the rights of </li></ul></ul><ul><li>others because business decisions have widespread effects </li></ul>
  53. 64. ‘ Perspective on Ethics’ <ul><li>Simplified Criteria for Evaluating Ethical Behavior </li></ul><ul><ul><li>“ Would this behavior be acceptable if people I respect knew I was doing this?” </li></ul></ul><ul><ul><li>“ what are the consequences of this behavior for myself, other employees, customers, society?” </li></ul></ul><ul><li>Ethics are individual and personal, influenced by </li></ul><ul><ul><li>Life experiences (rewards for doing right, punishment for </li></ul></ul><ul><li>wrong) </li></ul><ul><ul><li>Friendship groups (professional associations, informal </li></ul></ul><ul><li>groups) </li></ul><ul><ul><li>Organisational pressures (responsibilities to superiors and </li></ul></ul><ul><li>the organisation) </li></ul>
  54. 65. ‘ Perspective on Ethics’ <ul><li>Codes of Ethical Conduct </li></ul><ul><ul><li>An organisation’s code of ethical conduct is the established general value system the organistion wishes to apply to its members’ activities by </li></ul></ul><ul><ul><ul><li>Communicating organistional purposes and beliefs </li></ul></ul></ul><ul><ul><ul><li>Establishing uniform ethical guidelines for members </li></ul></ul></ul><ul><ul><ul><li>[Including guidance on behavior for members in making decisions] </li></ul></ul></ul><ul><ul><li>Because laws and specific rules cannot cover all situations, organisations benefit from having an established ethical code. </li></ul></ul>
  55. 66. ‘ Perspective on Ethics’ <ul><li>The code, </li></ul><ul><li>Effectively communicates acceptable values to all members </li></ul><ul><ul><li>[including recruits and subcontractors] </li></ul></ul><ul><li>Provides a method of policing and disciplining members for </li></ul><ul><li>violations, </li></ul><ul><ul><li>through formal review panels </li></ul></ul><ul><ul><li>through group pressure (informal) </li></ul></ul><ul><li>Establishes high standards against which individuals can </li></ul><ul><li>measure their own performance </li></ul><ul><li>Communicates to those outside the organisation the value </li></ul><ul><li>system from which its members must not be asked to </li></ul><ul><li>deviate </li></ul>
  56. 67. ‘ On Ethics’ <ul><li>Ethical dilemma of a Manager- Law will be silent! </li></ul><ul><li>Eg: </li></ul><ul><li>Take a favour from one’s dealer to get your child admitted to a good school? </li></ul><ul><li>Use your office service provider to set up your home computer / cooling system? </li></ul><ul><li>Are you making off with company funds, if your travel agent can exchange your entitlement to a business class ticket in such a way that you and your spouse can travel together by paying economy fare? </li></ul>
  57. 68. ‘ On Ethics’... <ul><li>if the decision does not entail a monetary loss for the organisation, then is it okay? </li></ul><ul><ul><li>Company may not lose money, but a bad precedent is set! </li></ul></ul><ul><ul><li>The integrity of records has been tampered with. (It is the first wrong step that is most critical on most occasions) </li></ul></ul><ul><li>Each organisation must find adequate answers & develop common policies </li></ul><ul><li>Creating a definite cultural norms which can be translatable in practice. (culture is what one does in the open) </li></ul>
  58. 69. ‘ On Ethics’... <ul><li>Rules for exceptions: </li></ul><ul><ul><li>Seeking exception must not be made easy </li></ul></ul><ul><ul><li>Sanction at a very high level </li></ul></ul><ul><ul><li>Criterion of transparency </li></ul></ul><ul><ul><li>Exceptions should not break the law of the land </li></ul></ul><ul><ul><li>No exceptions should tamper with the integrity of records </li></ul></ul><ul><ul><li>[Thus achieve : Uniformity & Fairness] </li></ul></ul><ul><li>Business ethics works best when you are happy, comfortable & content to be in a fish bowl. </li></ul>
  59. 70. ‘ Manager to take the lead! <ul><li>opportunities for exercising leadership! </li></ul><ul><li>Eg: trivial, but demonstrative exercise in leadership has quite an impact down the line </li></ul><ul><ul><li>Misuse of office stationery </li></ul></ul><ul><ul><li>Office punctuality </li></ul></ul><ul><ul><li>personal calls on the company paid phones </li></ul></ul><ul><li>Bigger you are the harder you fall! </li></ul><ul><li>(those in high levels of market respectability should be more clearer than those around them. Transparency & integrity) </li></ul>
  60. 71. ‘ On Ethics’... <ul><li>Rule of thumb </li></ul><ul><ul><li>imagine what it would be like if the act you are contemplating were to appear as ‘headline news in the morning papers! </li></ul></ul><ul><ul><li>Would you be able to face the work? Your friends? Your subordinates? Your colleagues? Your family? </li></ul></ul><ul><ul><li>If you can, then go ahead, if you cannot stop right there! </li></ul></ul>
  61. 72. Value based Business Management
  62. 73. Value based Business <ul><li>The life breaths of business </li></ul><ul><li>The Human element </li></ul><ul><ul><li>Attitude based costing (ABC) </li></ul></ul><ul><ul><li>Business - Process reengineering (BPR) </li></ul></ul><ul><ul><li>( Self reform before business reform) </li></ul></ul><ul><ul><li>‘ Creative’ market </li></ul></ul><ul><ul><li>International Marketing </li></ul></ul><ul><ul><li>(Avoid ‘shady’ deeds) </li></ul></ul><ul><ul><li>Total Quality Management </li></ul></ul><ul><ul><li>(Mental quality before material quality) </li></ul></ul>
  63. 74. ‘ Attitude’ based Costing <ul><ul><li>Manufacturers should not adopt questionable means in the manufacturing process to enhance profit. </li></ul></ul><ul><ul><li>It is not proper to sacrifice consumer interests for the sake of profit maximisation </li></ul></ul><ul><ul><li>Cost should be reduced without compromising on quality </li></ul></ul><ul><ul><li>Business should be based on the principle of fair exchange </li></ul></ul><ul><ul><li>Part with fair amount and get worthy product </li></ul></ul><ul><ul><li>[ If a devotee offers an unconditional / pure and steady love, “God” will also bestow full grace] </li></ul></ul>
  64. 75. Business Process Re-engineering (“ Self reform” before business reform) <ul><ul><li>It is not possible to reform anything without first reforming one’s own self </li></ul></ul><ul><ul><li>‘ Veda’ is the source of business, education, employment, cultivation etc. </li></ul></ul>
  65. 76. ‘ Creative’ Marketing <ul><ul><li>“ Create” Market for products / services which are not in existence so far </li></ul></ul><ul><ul><li>‘ Indigenisation efforts’ should be taken </li></ul></ul><ul><ul><li>‘ Human element’ predominant in creative marketing </li></ul></ul>
  66. 77. What is a ‘Market’? <ul><li>‘ Market’ is one which provides to the </li></ul><ul><li>customers all their requirements. </li></ul><ul><li>Man (Customer) needs air for survival and </li></ul><ul><li>wherever he goes it is made available. </li></ul><ul><li>The Almighty God (Business owner) who is </li></ul><ul><li>‘ omnipresent’ arranges for it. </li></ul>
  67. 78. ‘ International Marketing’ <ul><ul><li>Foreign exchange transactions will have to be managed with a great deal of prudence </li></ul></ul><ul><ul><li>Shady deals will have to be shunned at all costs and in all circumstances. </li></ul></ul><ul><ul><li>Intermediaries (middle men) change the complexion of marketing by questionable practices. Their influence should be reduced. </li></ul></ul>
  68. 79. ‘ Total Quality Management’ <ul><ul><li>Give importance to ‘mental’ quality besides material quality </li></ul></ul><ul><ul><li>Mental quality ensures material quality as everything around is the reflection of the mind </li></ul></ul><ul><ul><li>Manager should not confine himself to air-conditioned office. He should cultivate the art of managing by walking around (MBWA) </li></ul></ul><ul><ul><li>Manager should internalise the formula: “Be good, Do good & Tell good.” </li></ul></ul><ul><ul><li>Managers should have compassion and forgiveness </li></ul></ul>
  69. 80. <ul><li>is to be treated as a </li></ul><ul><li>where in the entire work force </li></ul><ul><li>by means of sincere work </li></ul><ul><li>offers worship to </li></ul>TEMPLE GOD A Business Organistion
  70. 81. Thank You Very Much