80 ĐỀ THI THỬ TUYỂN SINH TIẾNG ANH VÀO 10 SỞ GD – ĐT THÀNH PHỐ HỒ CHÍ MINH NĂ...
The Tyronco Foundation operates worldwide to provide food.pdf
1. The Tyronco Foundation operates worldwide to provide food and...
The Tyronco Foundation operates worldwide to provide food and medicine to needy
individuals in third-world countries. Thirteen countries currently receive assistance
through the program. The number of individuals who benefited has increased from 130,000
in 2010 to over 200,000 in 2021. Data for 2022 is still being tabulated for annual reporting.
Contributions are received from foundations, agencies, governments, and individuals.
Tyronco outsources the marketing and collection processes. The marketing agency
publicizes the benefits and collects donations.
The bylaws require that 75% of the funds collected to be distributed directly to benefit the
needy (benefit expenses) which would be about $50 million. The administration expenses
cannot exceed 25% of contributions. Tyronco's marketing efforts highlight the guaranteed
high percent payoff to the needy. The governing agencies of several countries require that
the attest auditors include the 75% goal in the financial audit.
Background Information
The results of your preliminary work are outlined below:
I. Board-Audit Committee:
Bernie Lay serves as the CEO. There is an outside Chairman of the Board who spends about
16 days per year on Tyronco business.
Technicially the board members are selected by the Chairman of the Board and approved by
a majority of the Board. However, Bernie Lay has a great deal of influence on who gets on
the Board.
The 13 board members are prominent celebrities, politicians, and businesspeople. All of the
members of the Board had some kind of relationship with Bernie Lay prior to joining the
Board.
The four-member audit committee includes four members appointed by the Chairman for a
three-year term. The Board consists of a nominating committee, a risk committee, and a
compensation committee.
The Board and the subcommittees meet for one day each quarter. The CFO is responsible
for the agenda and financial reports. The CEO and CFO participate in the board meetings.
The Chief Audit Executive (CAE) and the external audit partner share a one-hour slot on the
agenda at each meeting.
II. Chief Executive Officer:
The CEO, Bernie Lay, has a military background and has established an autocratic
management style. He feels that this approach will develop a more efficient and effective
2. structure for a decentralized organization.
The CEO has recently instructed the CFO to reclassify distribution costs, which account for
10% of total costs, from administrative expense to benefit costs since distribution benefits
the needy.
III. Chief Financial Officer:
Scott Z. Best, the CFO, was hired an Accounts Payable Supervisor and subsequently
promoted to CFO by Bernie Lay. Scott worked for the attest auditors three years ago. At
that time, he was the manager in charge of the Tyronco account. He maintains a strong
working relationship with Temple and Duncan, a small regional firm in Geneva.
IV. Auditing
Temple and Duncan (T&D) have been the low bidder the last three times the organization
has requested attest proposals. The external auditor proposals are reviewed by the CFO,
who recommends a firm to the Audit Committee for approval. Tyronco represents 40% of
T&D's audit and 60% of their consulting revenues.
The internal audit department is made up of a CAE and 2 staff members. Most other non-
profits of comparable size have 5 internal auditors. At the direction of the CEO, every
function and location gets audited at least once every 3 years. The CEO believes that the
external and internal auditors should be able to complete most of their audit work from
headquarters by utilizing technology. Therefore, only 2-3 site visits are made per year.
V. Operating Management:
Each participating country has a country manager selected by the CEO. The managers
report directly to the CFO. Each country manager approves a quarterly summary report and
forwards to the CFO with the quarterly financial statements for review and approval.
The primary headquarters control is a quarterly comparison of budget to actual spending
reviewed jointly by the CFO, country manager and V.P. of Purchasing. The quarterly
purchasing reports from the purchasing agents provide a summary of expenditures by the
vendor. There is one line for each vendor on the report. For each line item, there is a brief
description of what was purchased from the vendor. If less than $500 is purchased from a
vendor in the quarter, the spend is reported in an "all other" line. If spending does not
exceed the budget, the review is not extensive.
VI. Purchasing:
The purchasing function is decentralized with a purchasing agent located in each of the 13
countries that qualify for food and non-prescription medicine. The purchasing agents report
directly to their country manager but have a dotted line relationship to the V.P of
Purchasing. The V.P. of Purchasing at headquarters has requested that the 13 purchasing
agents purchase 50% of all items from vendors in the same country as the recipients. The
agents can sole-source or utilize competitive bids. Local purchases are typically 20-30%
higher than a competitive bid process. The CEO supports this approach since he feels it
establishes good relations with local government officials and businesspeople.
Purchasing agents are provided with a quarterly budget based on the recipients'
demographics. Adjustments are made to the budget based on actual contributions received
from countries, organizations, foundations, and personal sponsors. The increase in
purchases has been approximately 13% per year but varied from a low of +7% to a high of
3. +21% between countries.
VII. Warehouse:
The warehouse distribution manager and his clerks report to the country manager in their
respective country. Most of the country managers defer to their warehouse distribution
manager and except for limited oversight do not get involved in day-to-day warehouse
issues. Inventory status reports are issued quarterly to the country manager for approval
before being forwarded to the CFO. Each report is submitted as an Excel file. Some files can
be quite voluminous. The inventory status shows by SKU the current on hand balance and
the balance for each of the prior three quarters.
The CFO manually compiles a summary report for the CEO which shows by country the
overall inventory by category vs. forecast.
The inventory shrinkage, which is the difference between inventory on the books and what
is actually on hand, has increased every year for the last five years. Overall inventory
shrinkage has gone from 2% to 4% with the best country at 1.5% and the worst at 6% in
2021.
What are your most significant areas of concern as an internal auditor? You should be able
to come up with at least seven issues (no more than two in any of the seven sections above).
For each issue indicate the risk(s) to Tyronco. List the controls you would expect to find to
mitigate each risk.