DEGO

1) Organisational analysis
a) Type of firm
Service organisation that put knowledge and skills at their customers’ disposal, selling man hours (directly in case of turnoover maintenance, and indirectly in case of repairs and renovation maintenance). There is a limited flow of goods (large components).

b) Administrative and organisational conditions
Computer security
The operations of the OFS is relevant for the completeness of revenues as the hours and costs(to be charged on to TFD) are recorded via this system. The ERP system is the core system for financial recording and data processing so regular measures have to be in place to ensure effective and efficient operations. TFD’s central IT department will gave issued procedures for this (including test, audits, authorisation matrix, maintenance procedures etc). Specials attention to safety and reliability issues of cloud application for renovation management (yearly evaluation and recommendations by IT-specialist)
Segregations of duties
The regular SoD have to be in place. The ERP system will enforce seperisation of authorisation, recording, checking functions (e.g. authorisation by management of contracts for renovation maintenance by management; recording of hours by mechanics, recording of repairs executed by mechanics, (sample) checking of repairs by call center employee; recording of purchases and items in stock by warehouse department; checking by administration)
With regard to the completeness of revenues the segregation between recording man hours by the mechanics and checking (and final authorisation) of these hours by the region managers is imporrtant

Budget and budgeting procedures
The budget is based on number of repair jobs; number of expecvted turnover amintenance jobs (including manhours expected for these jobs) on and expected volume of turnover projects. Overhead costs such as administration, directors, etc. are also part of the budget. Cost allocation will mainly be on man hours per type of job, partly number of jobs for overhead costs.

Guidelines issues by management
There will be guidelines, amongst others, on the following subjects. All guidelines are authorised by operational or general Director.
-execution of repairs/maintenance, (e.g. what to do if work is longer than expected; how to record; how to report; recording of materials used/lost of not allocated to a specific repair/maintenance job)
- execution of renovation maintenance projects ( monitoring on progress safety and quality; billing of actual costs to TFD)
- subcontracting guidelines
- warehouse (e.g. authorisation procedures for use different types of materials)
-billiing to TFD (monthly invoices of turnover maintenance
- purchase procedures
- Call center (how to register repair request; how to deal with complaints; in which case refer request to management)

c) reconciliations, control totals, and tests of relationships to be made and analyzed by Finance & Control total hours available by mechanics (pay time) = total hours recorded by mechanics (job time) + idle time of mechanics = total hours allocated to repairs + total hours billed to TFD for turnover maintenance +idle time of mechanics (idle time = hours within working time without work; usually 8 hours – job time) = materials billed (to TFD) = materials purchased - materials in stock – materials written off/reported lost repairs performed = repairs billed to TFD hours maintenance performed * agreed tariff = total bill of hours of maintenance work to TFD paid bills of renovation maintenance to subcontractor = paid bills for renovation maintenance by TFD (w/o surcharge) – A/R +A/P – advance payments from TFD not settleed (25%) total surcharge billed = total bill for renovation maintenance * fixed percentage (reconciliation can be done on cash received as well) repairs recorded by call center = repairs performed by mechanics + outstanding repairs (scheduled)
Total amount billed to TFD = Accounts receivables (AR) + payments received from TFD

2 Risk analysis

* Performed repairs not charged to TFD / Performed hours of turnover maintenance not charged to TFD /Performed renovation maintenance not charged to TFD: automatic charge in ERP to monthly bill to TFD; sample check to be performed by employee of planning and project management (or other department, e.g. purchase) * Performed work by mechaics not reported : check of idle time of mechanics by region manager; check of time spent on repair works by region manager; sample testing by call center who could check which work was performed; surpise visits of region manager to mechanics) * Too little hours reported: sample check by call center not only of job performed, but also on hours spent; reconciliation on pay time = shop time = job time * Materials used but not charged : daily checking of inventories of warehousing staff (based on reconciliation: items/materials in stock today = items/materials used in stock yesterday – materials used (via OFS)+ items/materials replenished – items/materials written off) * Settlement of advance payment renovation maintenance not correct : automatic programmed in ERP; authorisation of manager planning/projects of final bill for each renovation maintenance

3 Internal controls in the processes
Renovation maintenance:
At receipt of order from TFD, first a check is done by manager Planning/Projects if the order meets standard described in renovation maintenance guidelines (earlier authorised by operational director). If so the order is accepted by manager P/P, he will ask a p/p office to prepare draft pre calculations. Based on these proposals the region directors of DEGO and TFD discuss and decide on precalculation. P/P officer enters each job to be subcontracted into the contract register of the cloud application (CA), including precalculated price. Region Directors of DEGO and TFD authorise these contracts to be subcontracted.
Based on jobs to be subcontracted adminstration (pre calculation) Administration does billing of advance payment to TFD (25% of pre calculation + fixed percentage surcharge) via ERP system. Authorisation by Head of Admin, regional manager and p/p officer in order to double check allignment ERP with cloud system.
Based on jobs to be sub contracted DEGO region managers start the subcontracting procedure according to the subcontracting guidelines. As a result of this proces sub contracts are assigned to subcontractor. These contracts are scanned and electronically archived. Part of the information of the contracts is entered in the contract register, including, total fee agreed agreed time to finish and one or more planning milestones which are part of the contract (as per subcontracting guidelines) .
Based on contract register, Administration prepares purchase order for contract in ERP system. POs are authorised by Region manager and p/p manager.

Employees of p/p monitor the work of the Subcontractors, check the quality deliverd and the timing based on the milestones. If relevant milestone work is finished this is registered in the contract register by p/p officer. Manager p/p regular check if chack on miliesotnes had been [erformed correctly.If work is not progressing as expected they report to p/p manager. They prepare a quarterly report on the progress (milestones planned versus actuals). This information is included in quarterly report.
Bills sent by subcontractors are received by admin, checked if there is a relevant PO and if so, sent for approval to the p/p officer and region manager. They will only approve if relevant milestone was approved (in cloud ssystem). Regular check are being done by Manager p/p and head of Adminstration. There authorisation is also required at amount higher than 1000 euro.
The ERP system automatically prepared the bills for TFD based on the approved bills of suncontractors (+fixed % surcharge). Monthly checks are performed by head of Administration.
If work on contract is finished, this is recorded in contract register and ERP system. If final bill has been sent by subcontrator this will be approved by relevant officer (see above). Final bill can only be closed after physical check by the p/p office rand regional manger. p/p officer changes status to closed in register and ERP system This has to be authorised by regional manager and manager P/p..
ERP will automatically make up a final bill to TFD when project status changes to closed. This is checked on a monthly basis by head of admin : Has a final bill been sent to TFD on all projects closed in contract register, in order to avoid that recordings in cloud system and ERP system do not match. As an additional measure there is a field “final bill sent to TFD ”in the cloud application, which needs to be autorised by Head of Admin. A monthly check will be performed by head of admin whether there are project finished, but no final bill sent. If so, he will take corrective action.

Logical data file Sub contract register * Subcontract number * Approved? * Renovation project * Sub contractor, supplier ID, * Precalculation * fixed price agreed with supplier * finish date * planning milestones: planned and actual * contract number (in archive) * project finished: planned and actual * final bill sent to TFD?