Compliance_Plan

Sandra Allen Riordan Corporate Compliance Plan 4/9/2012 Trina Eaddy Date: April 9, 2012 Subject: Riordan Corporate Compliance Plan To: Riordan executive officers and directors Dr. Riordan is a professor of chemistry. Dr. Riordan has obtained many patents in high tensile strength plastic substrates. With this patent Dr. Riordan started his own company called Riordan Plastics, Inc. in 1991. When Dr. Riordan first started he was more interesting in research and development. In 1992 Dr. Riordan used his capital to start a manufacturing plant in Pontiac, MI. In 1993 the manufacturing plant started making plastic bottles for beverages (University of Phoenix, 2012). This plant was in Albany, GA. At these plants he made plastic parts for cars, airplanes, beverages, and made parts for the Department of the Defense. At Riordan Manufacturing created a customized Compliance Plan for the industry of plastic design. Many items need to be considered when putting together a compliance plan. This compliance plan includes an Alternative Dispute Resolution (ADR) to help resolve disputes, liability that protects against defective parts claim, international laws that help with the manufacturing ants in China, tangible and intellectual property laws, laws regarding corporations, and protect private and public investors. The United States government has many laws to help corporations with mishandling. Corporations have obligations to mandating reports on internal controls. The Committee of Sponsoring Organization of the Trademark Commission (COSO) “is designed to assist companies with implementing an enterprise risk management process” (Steinberg, 2011, p. 1). COSO program is a private sector program that is funded and sponsored by five professional organizations. The COSO did and 11-year research study to analyze instances in financial reporting and factors that can lead to fraud. In the study the chief executive officer (CEO) and the chief financial officer (CFO) were investigated the most. The study showed that 83% of the time the CEO and CFO was involved. “Enterprise Risk Management (ERM) – Integrated Framework requires that organizations establish a risk appetite, measure actions, and decisions against that risk appetite and communicate results” (COSO, 2006, p. 3). According to COSO (2004), “Enterprise risk management consists of eight interrelated components” (p. 3). These are the eight components according to COSO: 1. “Internal Environment 2. Objective Setting 3. Event Identification 4. Risk Assessment 5. Risk Response 6. Control Activities 7. Information and Communication 8. Monitoring” (COSO, 2004, p. 3-4). Internal Control Environment Internal environment is the tone of an organization. This section is the philosophy of the company or organization. Company’s management is responsible for establishing control and effective communication with the laws and regulations. In this section companies need to establish an Auditor or a committee of auditors to work with the board of directors to control the environment. Objective Setting According to COSO’s ERM-Executive Summary, “Objectives must exist before management can identify potential events affecting their achievement. Enterprise risk management has in place a process to set objectives and that the chosen objectives support and align with the entity’s mission are consistent with it risk appetite” (COSO, 2004, p. 3-4). Event Identification In the Executive Summary states that the event identification is “internal and external events affecting achievement of an entity’s objectives must be identified, distinguish between risks and opportunities. Opportunities are channeled back to management’s strategy or objective setting processes” (COSO, 2004, p. 4). Risk Assessment Quarterly audits should help determine that the company is meeting their objectives. Audits should help validate the company’s financial statements that could help identify and flaws that are in the internal control. Risk Response COSO states that the risk response is “management selects risk responses-avoiding, accepting, reducing or sharing risk-developing a set of actions to align risks with the entity’s risk tolerances and risk appetite” (COSO, 2004, p. 4). Control Activities Backgrounds should be mandatory for employees. Anything in a company needs to be documented. Documentation must be established in activities, such as transfer of funds, withdrawal of cash, and any changes in personal information. Information and Communication The company’s auditors need to gather any information that could help appraise company and risk determination. Auditors need to have access to quarterly financial and organizational reports. This way auditor has access to any accidents, changes, and communication logs. Monitoring An auditor monitors all the transactions that the company does closely. When an error occurs the auditor can fix the problem. Through monitoring auditors can see if a CEO is moving money from one account to another without permission. Reference: Committee of Sponsoring Organizations of the Treadway Commission (2004). Enterprise Risk Management-Integrated Framework. Retrieved on April 4, 2012, from: http://coso.org/documents/COSO_ERM_ExecutiveSummary.pdf. Committee of Sponsoring Organization of the Treadway Commissions. (2006). Fraudulent Financial Reporting: 1987-1997 and analysis of U.S. public companies. Retrieved on April 5, 2012, from: http://www.coso.org/publications/executive_summary_fraudulent_finanical_reporting.htm. Steinberg, R.M. (2011). Using the New COSO Risk-Management Guidance. Retrieved on April 5, 2012 from: http://www.complicanceweek.com University of Phoenix (2012). Riordan virtual organization. Retrieved from April 4, 2012 from: https://ecampus.phoenix.edu/secure/aapd/cist/vop/Business/Riordan/Internet/index.asp