Course: Risk Management and Internal Control (Nanjing University) 

ACCY 304--Accounting Control Systems (UIUC)

Term: Autumn

Teaching Professor: Juan Zhang

Email: zjtider@nju.edu.cn

Office: Room 1911 Anzhong Building

Phone: 83621082

Teaching Assistants: one postgraduate

 

1. Required Text and Learning Materials

1.1 Committee of Sponsoring Organizations of the Treadway Commission. Internal Control – Integrated Framework. 2012. Downloadable from the course website. Free!! 
1.2 Reading Packet. Available Resources. 
1.3 Case Packet. Available Resources. 
1.4 Any additional publicly-available readings I deem valuable over the course of the term (e.g. popular press and/or current events)

 

2. Course Description

“Internal control is a process, effected by an entity’s board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance.” 
                                                                                                                                                COSO, p. 1 
 

“Control comprises those elements of an organization (including its resources, systems, processes, culture, structure and tasks) that, taken together, support people in the achievement of the organization’s objectives”. 
 

                                                                                                                                                COCO, p. 2

This course deals with the design, implementation and use of control systems to achieve firm goals.

 

3. Course Overview

During the term you will extensively analyze and discuss cases involving real organizations. You will put yourself in the role of the manager in various settings, critically consider the situation and respond verbally and on paper. Case-based, experiential learning emphasizes and develops important discovery skills – curiosity, problem identification, information search, evidence evaluation and, finally, effectively communicating an understanding. Professional accountants must develop these skills to enable a lifelong process of learning, growth and value creation.

Much of your prior experiences in high school and college courses likely focused on knowledge gained via repetition and completion of practice questions (e.g. the sort typically found at the end of textbook chapters). If so, cases that appear ambiguous may leave you feeling frustrated. While it is true that there is generally no unique, correct answer to a case, there is always a rigorous analysis to be conducted. To fully investigate a case, you must actively understand your intentions, hypotheses and assumptions – you have to understand the why of your conclusions.

Consider this routine to be sure you succeed: 
1. Earnest individual preparation - study the readings and analyze the case on your own. 
2. Discuss the case with classmates. 
3. Constant mental participation and occasional verbal participation during class. 
4. Be certain you are comfortable with the most important points from the case. 
5. Review the areas where you still feel uncertain, either alone or with peers. 
6. Get help from your TA or me, if necessary.

Note that although you are strongly encouraged to work together while preparing for class discussion, your submitted work must be yours alone (i.e. completed individually). The questions accompanying each case are meant to help you focus your attention.

Class meetings will generally have three elements. First, some introduction by me – could be administrative information, announcements or other stage setting. Second, discussion of the case, led by the assigned team or by me if no team is assigned that day. Finally, we will settle on the key elements of the case that you should be sure you understand and then segue into the next bit of material, teeing up the next case.

 

4. Course Learning Goals

As the above quotes suggest, this is an enormous area, which we can’t hope to completely cover in one short term, so our exploration will consider four broad areas:

1. Frameworks for thinking about control systems 
2. Risk in an organization 
3. Organizational design and systems thinking 
4. Performance measurement

Upon completion of the course, assuming your full involvement, you will be well oriented to the challenges of strategy implementation and the vital role of control systems in firm performance. You also will have had significant practice analyzing business decisions and communicating your judgment. These are all necessary skills for whatever future designations you may choose to pursue and professional roles you may fill.

 

5. Course Requirements

5.1 Individual contributions to learning

You should submit the daily individual case memos. Each of ten submissions will be graded Pass/Fail for 10 points. Submissions 1) should be in memo format with 1” margins and a font similar to 12-point Times New Roman, 2) include student name, section and group and 3) contain no more than 500 words. Memos should be submitted via the course website no later than the start of the class session. 
Five of the memos must also be submitted for a writing style grade out of 20 points. 
Note that while you are encouraged to collaborate when analyzing cases, any submitted work must be done by you alone (i.e. individual). Assignments that are fully or partially derived from the work of others (whether the work of others is in the form of oral or written notes, computer files, electronic form, paper form, etc.) are considered plagiarism and a serious academic offense. Please, do us both a favor and just do the right thing.

5.2 Group case analysis

Each team will be assigned two cases to present at 100 points each. The presentations will be weighted 60% to content and 40% to the presentation. I have placed relatively heavy weight on the presentation, as it is vital that you engage your peers and put effort into leading a meaningful conversation. Receipt of full marks requires that you bring us along as you go (e.g. share points where you were uncertain, etc.), facilitate significant interaction and go beyond the specific questions. It is not sufficient to just present your answers and then ask for questions. Please provide me with hard copy of any presentation materials at the beginning of the class session.

5.3 Attendance policy 

What constitutes ‘participation’? It starts with being in class and regular attendance is required. Beyond that, input that is thoughtful, on point and moves the discussion forward counts; statements of agreement (for instance) do not.

While I run a particularly informal classroom, an element of participation is your overall 
professionalism. This is the individual accountability you demonstrate, the respect you show me and others during class (including punctuality, cell phone and laptop use, etc.), the way you present and carry yourself during presentations, and the manner in which you communicate with me both in and out of class, among other factors. If you have questions about what constitutes professionalism, please get in touch with me; I’m happy to clarify and discuss.

5.4 Additional comments

Getting Help 
I am always open to scheduling an appointment; please feel free to get in touch with me. That said, while I am always an option, I am almost always the least efficient in terms of you getting the assistance you need to move on. As a result, I highly recommend you lean on your peers first as they are thinking deeply about the same issues and are more available. Bonus: this gives both you and your peers the opportunity to teach the material, which is a fantastic way to study. 
Help with developing your written and oral communication skills is available through the Department of Accountancy.

Academic Integrity 
It is the responsibility of the student to follow the Student Code, in particular, on plagiarism. And all the copyrights for the course materials should be respected, and materials shouldn’t be used for any other purpose than the course.

Ambiguities in the Syllabus 
Any ambiguities in this syllabus will be resolved at my discretion. While I will do my utmost to effectively communicate, it is your responsibility to keep track of any announcements, revisions or clarifications.

 

6. Evaluation and Grading

The following table summarizes how you will be evaluated. Each item is discussed in detail below.

Item                                                       Points
Final exam                                              60 
Group case presentations                      20 
Individual case memos                          10 
Participation                                          10 
Total                                                      100

 

7. Course Calend

Session Topic Readings Assignments
1 Introduction Guidance on Control p.1-9
COSO 2013

  HVAC 

2 Systems Theory & Process Modeling   Sterman Ch. 1 
Turner & Weickgenannt Ch. 2/8 
 Process Constraints 
3 Systems Theory & Process Modeling  Hammer and Champy Ch. 3
Bell, et al. Ch. 7
Pivate Fitness Ltd
4 Control Systems   COSO p. 22-86   Guidance to Internal control system 
5  Control Systems  COSO p. 87-135  Violet Bay School District 
6 Control Environment   Brickley, et al. Ch. 10 & 11 
Brickley, et al. Ch. 12
Main types of Organizations
7 Control Environment  Comprehensive Budget 

Violet Bay School District

8 Risk and Control   COSO: Key Risk Indicators    Freedom Company 
9 Risk and Control   Yates Ch. 1 
Gryna Ch.1 & 2 
Accounting control and strategies
10 Risk and Control    Fraud Triangle   ACFE Report
11 Risk and Control  Risk Map and risk Endurance   ERM 2004
 
12  Control Activities    Internal Control Application Guidance issued by MOF   S-S Technologies Inc 
13  Control Activities    Internal Control Application Guidance-MOF-Cash  Hainan Rubber Processing Ltd. 
14  Control Activities    Internal Control Application Guidance -MOF-Inventory and procure cycle   Papa John’s and Pizza Hut 
15  Control Activities    Internal Control Application Guidance- MOF-sales   Lincoln Electric Company  
16   Control Activities   Internal Control Application Guidance -MOF-Financial report  Sunshine Center 
17     Group Field Project   Presentation slides 

  None 

18       Course Summary                   None                           None

 

 

8. Reading Packet

TABLE OF CONTENTS
A. Systems Thinking, Identifying and Managing Business Risks 
1. Ouchi, William G. – A Conceptual Framework for the Design of Organizational Control Mechanisms 
2. Yates, J. Frank (ed.) – Risk-Taking Behavior 
Ch. 1: The Risk Construct 
3. COSO – How Key Risk Indicators can Sharpen Focus on Emerging Risks 
4. Gryna, Frank M. – Quality Planning and Analysis: From Product Development Through Use 
Ch 1: Basic Quality 
5. Gryna, Frank M. – Quality Planning and Analysis: From Product Development Through Use 
Ch 2: Companywide Assessment of Quality 
6. Sterman, John D. – Business Dynamics: Systems Thinking and Modeling for a Complex World 
Ch. 1: Learning in and About Complex Systems

B. Modelling and Analyzing Business Processes 
7. Turner, Leslie, and Andrea Weickgenannt – Accounting Information Systems 
Ch. 2: Foundational Concepts of the AIS 
8. Turner, Leslie, and Andrea Weickgenannt – Accounting Information Systems 
Ch. 8: Revenue and Cash Collection Processes and Controls 
9. Hammer, Michael and James Champy – Reengineering the Corporation 
Ch. 3: Rethinking Business Processes 
10. Bell, Timothy B., Frank O. Marrs, Ira Solomon and Howard Thomas – Auditing Organizations Through a Strategic-Systems Lens 
Ch 7: The KPMG Business Measurement Process

C. Designing Organizational Architecture 
11. Brickley, James A., Clifford W. Smith, Jr., and Jerold L. Zimmerman – Managerial Economics and Organizational Architecture 
Ch. 10: Incentive Conflicts and Contracts 
12. Brickley, James A., Clifford W. Smith, Jr., and Jerold L. Zimmerman – Managerial Economics and Organizational Architecture 
Ch. 11: Organizational Architecture 
13. Brickley, James A., Clifford W. Smith, Jr., and Jerold L. Zimmerman – Managerial Economics and Organizational Architecture 
Ch. 12: Decision Rights: The Level of Empowerment 
14. Kaplan, Robert S., and David P. Norton – Transforming the Balanced Scorecard from Performance Measurement to Strategic Management: Part I 
15. Ahn, Heinz – Applying the Balanced Scorecard Concepts: An Experience Report

D. Implementing Personal and Corporate Responsibilities 
16. Brickley, James A., Clifford W. Smith, Jr., and Jerold L. Zimmerman – Managerial Economics and Organizational Architecture 
Ch. 22: Ethics and Organizational Architecture 
17. Cialdini, Robert B., Petia K. Petrova, and Noah J. Goldstein – The Hidden Costs of Organizational Dishonesty

 

9. Copyright Statement 

All users of course materials are required to abide by and comply with all Nanjing University and UIUC policies governing copyrights. The use of copyrighted material may require the permission of the copyright owner. The absence of a copyright notice or symbol on a work does not mean it is not copyrighted. Copyrighted works can include, but are not limited to, text, graphics, and photographs. Permission to use any Nanjing University copyrighted materials for any purposes or unofficial University purposes must be approved in writing by an authorized representative of The Nanjing University.

 

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