CONTRACT ADMINISTRATION

Introduction

Financial statement fraud refers to the intentional misstatements, and/or omission of important transactions and events in the company’s business, made in order to deceive the financial statements users, especially investors and creditors.

The potential issues facing the company if the invoice turns out not to be okay are many. However, it is import ant to note that falsified information on the invoice is a clear demonstration of financial statement fraud or windows dressing of financial statement. This is a crime and has consequences. Financial, statement fraud will can harm the company’s finances and corporate image.   Falsifying the invoices mean that there are underlying problems with the company’s finances and this is done to cover up the problems in the financial records. For one, financial statement fraud undermines the overall quality of the company’s financial reporting processes. The fact that the company falsified its invoices indicates that the company’s financial reporting processes are flawed and thus the entire financial department is fraudulent.

 Secondly, the company’s integrity and credibility is at stake.  With the falsified invoices, there are chances that the integrity as well as objectivity of the accountants is low and this affected the objectivity of the accounting profession. This eventually affects the value of the company, as well as the oral image of the accounts. Finally, this will lead to the company’s litigation losses at the company would have to address the crimes in court of law. Finally, finance ail statement fraud can also lead to bankruptcy or defunct as well as economic loses. Recently, companies involved in financial statement fraud have been subjected to significant changes in ownership while some have been delisted from the national exchanged. However, the most painful consequence is financial penalties imposed on the company after the disclosure of fraud.

Finally, the companies engaged in financial statement fraud are subjected to  strict regulatory interventions and in the process the normal operates  of the company is interrupted and may probably close for a period of time over which the fraud cases are reviewed

What issues confront the employee? 

First, the employees are faced with professional and ethical issues. The employees by their lack of professionalism in doing the invoices are remotely guilty for aiding and abetting/accessorizing crime. The employees actually falsified the financial records and knowingly contributed to fraud.  The license should be revoking and be subjected to legal action. Finally, the employees associated with the financial statement fraud must be subjected to class action legal suits as well as financial penalties. The employees should also be terminated or even forced to resign as their cases of involvement are being reviewed. Even though very few people will explicitly admit or plead guilty, the individuals found guilty should serve their prison sentences as an example.

How would you recommend these issues be addressed? 

First, it is the duty of the COR to prove beyond doubt that the revelations are true and there are evidences to prove that. Secondly, the COR should I conjunction with the company’s legal representatives, and external auditors  review all the allegations and determine if this were legal according to the company’s standard operating procedures. Finally, as the COR I would recommend that the company review its financial records are make good all the debts that would amount to class legal action against the company.  Additionally, the program manage, the billing officers, and the customer service representatives be terminated as their case is beige reviewed. If found guilty of the allegation, they should be penalized for their lack of professionalism. Finally, Easy Corp should correct all the financial statement and reports
As the COR, I would recommend the contracting officer discuss the following at the next program review meeting with the Easy Corp chief executive officer (CEO) and program manager?

As the COR, my work is to represent the contracting officer, monitoring technical performance and reporting any potential or actual problems to the contracting officer. It is imperative that the COTR stay in close communication with the contracting officer, relaying any information that may affect contractual commitments and requirements. In this case, a termination for cause is appropriate.

the contracting officer should highlight the findings  in the next program meeting and recommend discontinuation of the planned acquisition as the original acquisition decisions were  based on falsified financial, statement. There misstatement that has significant impacts on the company’s valuations. The contracting officer should call for re-evaluation of the company’s value based on the company’s assets, fixed and current assets, goodwill less the liabilities.

References

Trevor L. Brown, Matthew Potoski, David M. Van Slyke, (2013). Complex Contracting. Cambridge University Press.

Arun Kumar Basu, &, Malayendu Saha, (2013).Studies in Accounting and Finance: Contemporary Issues and Debates.

Scenario Essay

Instructions

You have three topics from which you may choose. You must choose only one topic and respond to the situation making your recommendations to the scenario.

Please note that there is no single answer to this scenario, but you should keep your focus on contracts, procurement, and subcontracts issues in your response.

Required Formatting of Scenario Essay:
•This essay should be double spaced, 12-point font, and three to four pages in length excluding the title page and reference page;
•This paper is to be written in the third person.  There should be no words in the paper such as “I and we.”
•Title page with your name, the course name, title of paper, the date, and instructor’s name;
•Include reference page;
•Use APA formatting for in-text citations and reference page;
•Students need to paraphrase and avoid direct quotes;
•Submit the paper in the Assignment Folder.

Scenario Essay: Option 1

You are a mid-level Contracts Administrator of the contracts department. You are responsible for approving invoices being submitted to the Government.  You notice on this month’s invoice that some charges appear that don’t belong to the contract-perhaps it is equipment rental or the assignment of a particular engineer. You go to your boss and he says that he’ll take care of correcting it. A few months later, you are reviewing some billing information and you notice that the invoice that you questioned has been paid by the Government. You check –only to learn that the invoice, which you suspected was in error, was submitted and paid.

Required Elements to include in this Scenario Essay – Option 1:
•You are required to prepare a report identifying the issues
•Provide some ideas about resolving these issues and mitigating risks that the company may face in the near future.

Scenario Essay: Option 2

Background:

The contract you are assigned to as the contracts administrator calls for the delivery of a product called “The Superwidget”. The USG (the DoD and the Dept of State) buy thousands of these Superwidgets a year. Several companies manufacture them and competition for Superwidgets is fierce, based on technical innovation, price, and delivery criteria. The Superwidget is manufactured from components, software, and firmware from numerous companies. The final Superwidget usually sells for between $800 and $1200 per unit, based on some special features, warranty, and service. Your contract is a multi-year contract with a base period and several option years, and you are performing in Contract Year One at the moment. Also, there are about 8 to 10 other contracts with other companies for a competing and similar Superwidget.

The Situation:

You are a contracts administrator and you work for the prime contractor.

Let’s say your company (the prime contractor) buys a particular subwidget for $100/unit. This subwidget is a critical component of the prime’s Superwidget. You have a multi-year subcontract with this subcontractor.

You have just been informed in a monthly status meeting that deliveries of the subwidget will be late for the next 3 to 4 months. After your company completes an analysis, you determine that you do not have sufficient stock of subwidgets to cover the required deliveries to the USG. You will need to notify the USG that deliveries of the Superwidget will also be late.

You check the prime contract: your company may be subjected to damages based on the value of the prime contract. You may also face a potential termination for default. You check the subcontract: The subcontractor’s liability is based on values in the subcontract, that is, the price of a subwidget at about a $100/unit level. You also have the right to terminate the subcontractor for default.

Management recognizes that it has the potential for a lot of problems in this situation, which it may not be able to correct for several more months (if you believe in and rely on the subcontractor).

Your boss, the VP of Contracts, asks you to develop some business scenarios, focusing on the contractual and subcontractual issues that may arise.

Required Elements to include in this Scenario Essay – Option 2:
•You are required to prepare a report identifying the issues
•Provide some ideas about resolving these issues and mitigating risks that the company may face in the near future.

Scenario Essay: Option 3

You are the contracting officer’s representative (COR) of a program management support contract awarded to Easy Corp. It is the first year of a five-year contract.

You have noticed the following trends:
•Management reports are typically late and incomplete.
•The program manager is rarely seen by Easy Corp employees or the COR.
•Billing is often delayed and contains errors.
•The company requiring activity is very pleased with the professionalism of Easy Corp employees who deliver quality support and up-front analysis, and who excel at ethical customer service.
•The owners of the firm are looking to sell Easy Corp.

Required Elements to include in this Scenario Essay – Option 3:

Looking at this issue from two different perspectives:

•What potential issues does the company face if the invoice turns out not to be okay?
•What issues confront the employee?
•How would you recommend these issues be addressed?
•You will need to be formal in your responses and to rely on the textbook and other sources to the extent you can.

As the COR:
•What do you recommend the contracting officer discuss at the next program review meeting with the Easy Corp chief executive officer (CEO) and program manager?
•What suggestions for improvement will you make to the contracting officer in advance of the meeting?

Due Date

Feb 15, 2015 11:59 PM

Hide Rubrics

Rubric Name: Written Assignment (10%)

Criteria

Outsanding

Superior

Good

Substandard

Failure

Critical Thinking/Reasoning

3.5 points

demonstrates a high degree of critical thinking, is consistent in accurately interpreting questions & material; provides solid assumptions, reasoning & claims; thorough analysis & evaluation with sound conclusions

2.98 points

shows good critical thinking; accurately interprets most questions & material; usually identifies relevant arguments/reasoning/claims; offers good analysis & evaluation with fairly sound conclusions

2.63 points

shows occasional critical thinking; questions & material is at times accurately interpreted; arguments/reasoning/claims are occasionally explained; offers fair analysis & evaluation with a conclusion

2.28 points

shows little critical thinking, misinterprets questions or material; ignores or superficially evaluates; justifies little and seldom explains reasoning; draws unwarranted conclusions

1.93 points

lacks critical thinking consistently offers biased interpretations; ignores or superficially evaluates; argues using poor reasoning, and/or unwarranted claims

Application of Concepts/Development

3.5 points

arguments or positions are well-supported with evidence from the readings/experience; ideas go beyond the course material and recognize implications and extensions of the material and concepts

2.98 points

arguments or positions are mostly supported by evidence from the readings and course content; ideas presented demonstrate student’s understanding of the material and concepts

2.63 points

arguments are more often based on opinion or unclear views than on position grounded in the readings of material or external sources of material

2.28 points

arguments are frequently illogical and unsubstantiated; student may resort to ad hominem attacks on the author instead of making meaningful application of the material

1.93 points

a meaningful attempt to explain or support ideas does not exist

Attention to Instructions

1.5 points

demonstrated full understanding of requirements; responded to each aspect of assignment

1.28 points

demonstrated understanding of requirements; missed one minor aspect of assignment

1.13 points

demonstrated some understanding of requirements; missed a key element or two minor aspects of assignment

0.98 points

failed to show a firm understanding of requirements; missed two key elements or several minor aspects of assignment

0.83 points

did not demonstrate understanding of assignment requirements

Clarity; including grammar

1 point

writing is clear and easy to follow; grammar and spelling are all correct; formatting gives a professional look and adds to readability

0.85 points

most ideas are presented clearly; occasional spelling and/or grammar issues

0.75 points

wordy; some points require rereading to understand fully; more than an occasional spelling and/or grammar

0.65 points

unclear and difficult to understand; frequent spelling and grammar issues

0.55 points

largely incomprehensible writing/poorly written in terms of mechanics and structure

Adherence to APA Style (6th ed.)

0.5 points

no APA style errors

0.43 points

attempts in-text citation and reference list but 1 or 2 APA style errors are present

0.38 points

attempts in-text citation and reference list; APA style errors are present; inconsistencies in citation usage can be found throughout the document

0.33 points

attempts either in-text citation or reference list but omits the other

0.28 points

no attempt at APA style

Overall Score

Outstanding
9 or more

Superior
8 or more

Good
7 or more

Substandard
6 or more

Failure
0 or more

Pearson Education India.

Rosemary O’Leary, David M. Van Slyke, Soonhee Kim, (2010).  Public Management and Change-The Future of Public Administration Around the World: The Minnowbrook Perspective. Georgetown University Press.

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