Professional Communication Practice for Fuji Xerox - myassignmenthelp

Question: Discuss about theProfessional Communication Practice for Fuji Xerox. Answer: Introduction Established in 1997, Fuji Xerox got the certification from Australian Quality Class for the excellence standard in their business. Their main objective is to understand the documents. They are focussed in building knowledge, based on which the business decisions can be taken. Their understanding helps the clients for leveraging the expectation from paper as well as the electronic media (Fujixerox.com.au/Company/Overview, 2017). The workflows and the document expertise from the company assist in working in smarter way and streamline the procedure of business. Further, they offer various business solutions required by the client for focussing on their business efficiently. Management Accounting Issues The Australian business of Fuji Xerox was getting out of control as the warnings regarding fraudulent behaviour of the company went unnoticed and unsolved, bad behaviours were not only ignored, rather promoted and irregularities with regard to major accountings were simply covered up (Wagenhofer, 2016). The issue that started with Fuji Xerox, New Zealand (FXNZ) and soon spread over Fuji Xerox Australia (FXA) led to global consequence for the company and the technology giant, who turned over the revenue amounted to A$ 26 billion. The organization was forced for delaying their annual report owing to inappropriate accounting at the regional subsidiaries (Fuji Xerox restructures Australia and New Zealand leadership after accounting scandal, 2017). Various top offices of Fuji Xerox were closing down and others were facing cut off of bonuses and wages by 20 to 50%. Further, the recent report of investigation includes the details that were not included in the initial report that was publish ed dated on 21st June. It was revealed by the company that knock six years net profit worth amounted to A$ 451 million that was frozen out from the government contract of New Zealand. The report of investigation included the details regarding how the top level executives continuously bringing the revenue forward to achieve the target. Moreover, they were avoiding the recognition of losses so their subsidiary Red Ink will not reach to the bottom and fabricated the monthly numbers of accounting as well as chalked up the sales of assets as revenue for covering up the missing values. The report alleged that the major individuals from the leadership team and blamed sales at any cost principle of the company under Neil Whittaker, the managing director of FXA as well as FXNZ that enabled the employees to get huge amount of commissions and bonus from the year 2011 (Agrawal Cooper, 2017). It was also mentioned in the report that provided overcompensation to the favoured workers and they involved the family members and paid them six-figure salaries that was three times more than the market rate. Moreover, they were paid gift bonuses and used the corporate expenses for pock et money and lavish meals. Main Reason Behind the Issue The root cause for the issue generated from the exercise of overstating of revenue on the managed agreement of service that had the variable pricing on the basis of utilization and sometimes that too with no minimum value, still it was transacted as the upfront revenue. Further, abusing the managed agreement of service became so common that the inappropriate recognition of revenue was approximately 30% of the total sales. Moreover, the inappropriate accounting included the fictitious transactions apart from the advance recorded revenues. Further, the cumulative amount for sales recorded inappropriately at the earlier period amounted to NZ$ 90 million during 2016 January. Out of that NZ$ 90 million, fictitious sales amounted to NZ$ 35 million and the rest amount was not fictitious but recorded inappropriately (Van der Stede, 2016). Further, recording the revenue inappropriately became the regular practice of the company and took place for 70% of the contracts over the duration of six year. The abusive accounting further overlooked that early recognition of revenue. Further, instances found for advance sales that were recorded twice and fictitious sales recording for achieving the target of monthly performance. Moreover, the promotional giveaways and free products were recorded as sales. Lack in credit policies assisted in green light orders from the risky clients as the credit investigation performed for 10% only of the total transactions. While the financial figures were found to be incorrect, they were just ignored. Further, to clean up the issues and avoid the detection, the company transacted the non-operating transactions and sales of the assets as revenue for minimizing the inappropriate accounting impact that were susceptible to accounting audit at closing of the period. This led to the external appearance as the financial condition and financial activities improved during the fiscal year and the company reported higher revenue as compared to the actual revenue (Bebbington, Unerman O'Dwyer, 2014). It further led to the establishment of disastrous culture and the report claimed that the employees and the executives of the company lacked the sense of honesty and ethics while preparing the annual report of the company. Financial Issues Associated with the Company The auditor of the company, Ernst Young were removed in 2016 July and replaced by the KPMG. The payout to the managing director amounted to million dollar came in focus irrespective of various allegations regarding impropriety by the director, who used the pressures for rebelling and creating the circumstances where the opposition was next to impossible. The scrutiny of the corporate credit card revealed that the director and various other members repeatedly used the credit card for the payment of dinner and lunch at various high-end places. Further, over the time period of 10 months 3 executives from the company spent huge amounts that amounted to $ 50,000 over 41 dinners that averaged $ 1,233 per dinner. Further, it was alleged during the corporate trips that the managing director withdrew an amount of $ 10,000 through cash in the local currency from his corporate credit card and did not submit the receipts as the supporting documents for withdrawals (Drury, 2013). The report furt her alleged that company paid an amount of $ 43,704 for the purpose of private trip of the director and his family members between the periods of June 2015 to April 2016. It was also highlighted in the report that the sales employees brought by the director from FXA were highly compensated. Further, five out of nine employees those were transferred from New Zealand were getting salaries that were higher as compared to the benchmark of normal pay scale. The annual salary of the Business development manager, E amounted to $ 1.1 million, out of which the remuneration based on incentives were 3 3.4 times more as compared to the level of benchmark. Further, the son of the managing director was paid annual salary amounted to $ 749,000 that included bonus amounted to $ 420,000. The functions over control were not efficient and there were lack of transparency as the reporting lines with the parent company as well as with other subsidiaries were limited to the managing director only that were centralising the information flow (Soin Collier, 2013). In such circumstance and lack of efficient supervision by the director, the business easily went out of control. Recommendation Looking at the above accounting issues faced by Fuji Xerox, Australia following recommendations is suggested Using the systems of balances and checks to assure that the duties of financial transactions are properly segregated Require finance, purchases and distributions to be approved by an assigned individual. Isolate taking care of stores and receipt capacities from record keeping capacities (recording exchanges and accommodating records). Further, the purchasing capacities must be segregated from payables capacities and assure that a similar individual isn't approved to compose and sign a check. Reconciling the bank accounts every month Reconciliation shall be completed by the independent person who is not responsible for accounting or does not involved with reconciliation review. Cancelled checks from the vendors must be checked appropriately and reconciled with bank accounts regularly Revenue management the revenues shall be double checked with the records and the duties for recording the sales and receipt of payments for sales shall be properly segregated among different person. Further, the sales account shall be reconciled with the inventories to measure the closing inventories or the goods available for sales. Remuneration and payment remuneration and salaries shall be fixed based on their individual performance and shall not be paid based on the performance of the company. Remuneration policy shall be clearly mentioned in the annual report so that there can be transparency regarding the remuneration and salary of the executives and employees. Usage of corporate credit card the corporate credit card shall exclusively be used for official purpose and the card shall not have the facility for personal use. In this way, the company will be able to save big amount with regard to the misuse of the corporate credit card. Reference Agrawal, A., Cooper, T. (2017). Corporate governance consequences of accounting scandals: Evidence from top management, CFO and auditor turnover.Quarterly Journal of Finance,7(01), 1650014. Bebbington, J., Unerman, J., O'Dwyer, B. (Eds.). (2014).Sustainability accounting and accountability. Routledge. Drury, C. M. (2013).Management and cost accounting. Springer. Fuji Xerox restructures Australia and New Zealand leadership after accounting scandal. (2017). Financial Review. Retrieved 3 September 2017, from https://www.afr.com/technology/fuji-xerox-restructures-australia-and-new-zealand-leadership-after-accounting-scandal-20170806-gxqiel Fujixerox.com.au/Company/Overview. (2017). Fujixerox.com.au. Retrieved 3 September 2017, from https://www.fujixerox.com.au/Company/Overview Soin, K., Collier, P. (2013). Risk and risk management in management accounting and control. Van der Stede, W. A. (2016). Management accounting in context: Industry, regulation and informatics.Management Accounting Research,31, 100-102. Wagenhofer, A. (2016). Exploiting regulatory changes for research in management accounting.Management Accounting Research,31, 112-117.