Management decision making appraisal process
1. In appraisal of management decision, one of the most important things is to see whether the objectives are well defined. Objectives and outputs should be set out clearly and relate explicitly to policy or strategy. They should be defined so that it can be established by evaluation after the event whether and to what extent objectives have been met. It is important that objectives are not described in such a way as to exclude options. Ideally objectives should be SMART i.e. specific, measurable, agreed, realistic and time-dependent
2. Check while taking the decision how many options have been considered. These must include a “do nothing” or “do minimum” option which provide a benchmark against which other options can be judged. Factors below could influence the choice of alternatives:
– Risk;
– Timing;
– Scale and location;
– Scope for shared service arrangements with other public bodies;
– Degree of private sector involvement;
– Capacity of the market to deliver the required output;
– Alternative asset uses;
– Use of new or established technology; and
– Environmental equality.
3. For Major Investment Projects as wide a range of options as possible should be considered before preparing a short list for full appraisal. Time pressures frequently cause a manager to move forward after considering only the first or most obvious answers. However, successful problem solving requires thorough examination of the challenge, and a quick answer may not result in a permanent solution. Thus, a manager should think through and investigate several alternative solutions to a single problem before making a quick decision. Techniques like brainstorming, Delphi technique, nominal group technique may be used to develop alternative solution. Where some options are dismissed before a full appraisal the reasons should be explained.
4. Whether potential options are analyzed reviewed in terms of value costs, benefits, risk and uncertainties of options
While evaluating various options, it is necessary to decide the relative merits of each idea. Managers must identify the advantages and disadvantages of each alternative solution before making a final decision.
Evaluating the alternatives can be done in numerous ways.
– Determine the pros and cons of each alternative.
– Perform a cost-benefit analysis for each alternative.
– Weight each factor important in the decision, ranking each alternative relative to its ability to meet each factor, and then multiply by a probability factor to provide a final value for each alternative.
Regardless of the method used, a manager needs to evaluate each alternative in terms of its
– Feasibility — can it be done?
– Effectiveness — How well does it resolve the problem situation?
– Consequences — what will be its costs (financial and nonfinancial) to the organization?
5.Whether the options are selected after due analysis and a consensus decision is taken
After a manager has analyzed all the alternatives, it is necessary that the best one should be selected. While reviewing the management decision making, it is necessary to see which option have been selected. If an option other than the best option have been selected, it is necessary that justification need to be given. While reviewing whether the selected decision is best of not, justification given may be evaluated. The basic elements of internal control should prevail in decision making process Sometimes, though, the best alternative may not be obvious. That’s when a manager must decide which alternative is the most feasible and effective, coupled with which carries the lowest costs to the organization. Probability estimates, where analysis of each alternative’s chances of success takes place, often come into play at this point in the decision-making process. In those cases, a manager simply selects the alternative with the highest probability of success. All such cases should be reviewed with utmost care
6. Whether the selected alternative implemented efficiently
Managers are paid to make decisions, but they are also paid to get results from these decisions. Positive results must follow decisions. Everyone involved with the decision must know his or her role in ensuring a successful outcome. To make certain that employees understand their roles, managers must thoughtfully devise programs, procedures, rules, or policies to help them in the problem-solving process. While reviewing the implementation phase, it should be seen whether the proper policies and program have been designed to implement the selected proposition. Whether the selected alternative has been implemented as decided.
7. Review of management decision control and evaluation system
Ongoing actions need to be monitored. An evaluation system should provide feedback on how well the decision is being implemented, what the results are, and what adjustments are necessary to get the results that were intended when the solution was chosen.
In order for a manager to evaluate his decision, he needs to gather information to determine its effectiveness. Was the original problem resolved? If not, is he closer to the desired situation than he was at the beginning of the decision-making process?
If a manager’s plan hasn’t resolved the problem, he needs to figure out what went wrong. A manager may accomplish this by asking the following questions:
– Was the wrong alternative selected? If so, one of the other alternatives generated in the decisionmaking process may be a wiser choice.
– Was the correct alternative selected, but implemented improperly? If so, a manager should focus attention solely on the implementation step to ensure that the chosen alternative is implemented successfully.
INTERNAL CONTROL QUESTIONNAIRE FOR REVIEW OF PURCHASE OPERATIONS
| SEGREGATION OF DUTIES
1. Are the individuals responsible for the requisitioning/receiving and purchasing functions different from the individuals responsible for the invoice processing/accounts payable, and budget monitoring/review?
2. Are the individuals responsible for the purchasing function different from the individuals responsible for the requisitioning/receiving functions?
3. Are the individuals responsible for the invoice processing/accounts payable functions different from the individuals responsible for the budget monitoring/review functions?
4. Are the individuals responsible for the payment document creation and payment approval functions different from the individuals responsible for budget monitoring/review?
5. Have individuals received training on the policy and procedures for the business functions they perform?
6. Have individuals received ERP system training (If ERP Exists) for the transactions they have been given security to perform?
REQUISITIONING PROCEDURES AND CONTROLS
1. Is the initiation of purchases of goods and services done by properly authorized requisitions bearing the approval of officials designated to authorize requisitions?
2. Does the person requesting the purchase indicate the budget to be charged on the purchase requisition?
3. Are there procedures that monitor budgets to ensure that expenditures are in align year to date and do not exceed the budget for the fiscal year?
4. Do technical specifications accompany requests for special purpose (non-stock items) materials or personal services?
PURCHASING PROCEDURES AND CONTROLS:
5. Are employees encouraged and supported to attend Procurement training courses.
6. Is a procedure in place to determine availability of item/service from another branch/ associated entity?
7. Are procedures in place to determine if item/service is currently available on agency contract within your department?
8. For purchases under a definite amount i.e. Rs. 25000/- are appropriate management authorizations in place?
9. For purchases are agency competitive bidding procedures in place (obtain minimum three quotes)?
10. When determining the budget for a purchase, are freight and/or delivery charges included in the total estimated purchase price?
11. Does your agency promote the use of the P-card?
12. Is the P-card monthly statement reconciled to approved supporting documentation and the entry to allocate the expenditures posted by the end of the following month?
13. For purchases made within specific delegated authority, are procedures in place to obtain competition, select the appropriate supplier, and document the process?
14. Are there procedures to prevent and detect splitting orders to avoid higher levels of approval?
15. Does the agency maintain a record of suppliers who have not met quality or other performance standards
16. Are open purchase orders reviewed on at least a quarterly basis to determine if correct and valid?
17. Are changes to contracts or purchase orders subjected to the same controls and approvals as the original agreement?
18. Are available offered discounts for purchases entered on the purchase order transaction?
19. Are periodic checks made for compliance with your purchasing policy?
RECEIVING PROCEDURES AND CONTROLS:
20. Is the receipt of all goods documented with at least a signature and date?
21. Are claims filed against carriers or vendors for all shortages or damaged materials?
22. Are goods received accurately counted and examined to verify they meet quality standards?
23. Are copies of receiving reports sent directly to accounting, purchasing, and (if applicable) inventory record keeping?
INVOICE PROCESSING PROCEDURES AND CONTROLS
24. Are payments made only on the basis of original invoices?
25. Are copies of receiving reports and applicable purchase orders obtained directly from issuing departments?
26. Are invoice quantities, prices, and terms compared with those on the purchase order?
27. Are invoice quantities compared with those on the receiving report?
28. Are differences in invoice and purchase order price, terms, shipping arrangements, or quantities referred to the purchasing department or appropriate manager for review and approval?
29. Is the accuracy of all calculations checked?
30. Are available offered discounts entered on the payment transaction (if they were not entered on a preceding purchasing transaction)?
31. Are available offered discounts for purchases deducted when paying by P Card?
32. Calculation of Sales tax, excise duty and other levies is checked before payment?
33. Is a review of the distribution of charges in the accounting department done by an individual with the knowledge and experience to determine the correctness of the distribution?
34. Are the program and expenditure accounts to be charged reviewed for propriety and budget conformity?
35. Does a senior employee reviewing and approving invoices for payment physically check each for completeness of supporting documents and required clerical checking?
36. Is the payment document number written on the invoice or kept as part of the batch documentation?
37. Are the paid invoices and documentation filed with the transaction they were paid on?
38. Are both the accounting and purchasing departments promptly notified of returned purchases?
39. When a vendor credit advice or refund check is received, is it matched with the notification of returned purchases for quantities, prices, and restocking fees?
40. (a) If returned purchases are refunded with a check before any other accounting transactions are recorded, or
(b.) If a check is received for a duplicate payment, is a CR done for the amount received (Entering the Vendor Number, using the original coding block, and noting the original transaction number in the reference field)?
DISBURSEMENTS PROCEDURES AND CONTROLS:
41. Is the payment transaction approved timely to insure that the available discounts are taken?
ACCOUNTS PAYABLE CONTROLS:
42. Payments are not made from vendor statements?
43. Are outstanding balances on vendor statements investigated to determine if not yet paid and the reason why?
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Annexure 2
HR REVIEW QUESTIONNAIRE
| Question | Yes | No | N/A | Comments |
| Management
1. Are HR goals in line with those of the organization? 2. Are workweeks identified and defined? 3. Are full-time and part-time hours defined? 4. Are shifts defined? 5. Is there open communication to and from the HR department? Hiring 1. Do job descriptions exist? 2. Are job descriptions up to date? 3. Are forms and acceptable documentation reviewed annually? 4. Are job openings offered to current employees? 5. Are applicant references checked? 6. Are turnover rates monitored? 7. Are selection processes used with reference to the Uniform Guidelines? 8. Are all applicants required to fill out and sign an application form? 9. Are applicants asked to voluntarily identify their affirmative action information? 10. If applicable, do application forms identify that the employment relationship at the organization “at-will”? 11. Do employment applications refrain from requesting protected information? 12. Are independent contractors accurately identified? 13. If the organization has a qualifying federal contract, is there an affirmative action plan? 14. Is medical information kept separately from personnel files? New employees 1. Are workplace policies in place? 2. Do policies focus on your workplace? 3. Are policies communicated? 4. Are policies enforced? 5. Is there an employee handbook? 6. Is the employee handbook specific to your workplace? 7. Do employee orientations take place? 8. Are employees trained on policies and work rules? 9. Are employees trained on discrimination issues? Wages and hours 1. Are compensation levels monitored and reviewed? 2. Is there a formal pay structure? 3. Is the compensation structured reviewed regularly? 4. Is working time documented? 5. Are paid time off (vacation, holidays, etc) structures developed? 6. Are non-exempt employees compensated at least one and one-half times their hourly wage for any hours worked beyond 40? 7. Is the compensation plan communicated to all employees? 8. Are appropriate payroll withholdings performed? Benefits 1. Are employees informed about their benefits? 2. Are Summary Plan Descriptions provided to plan participants? 3. Are supervisors and managers trained to report employee absences of more than three days to HR? 4. If there is a health care plan, is protected health information kept private? Employee relations 1. Is there a system for performance evaluation? 2. Does the system check for effectiveness of the evaluation? 3. Is quality and quantity of work evaluated? 4. Is performance tied to compensation? 5. Are workplace policies flexible? 6. Are disciplinary actions for violating workplace policies flexible? 7. Is there a process for employees to lodge complaints? 8. Are there a variety of individuals to whom employees may lodge complaints (supervisor, HR representative)? Safety and security 1. Are safety hazards reported to the appropriate personnel? 2. Are workplace accidents, near-misses, injuries, and illnesses reported and investigated? 3. Are measures in place to prevent intruders from entering the grounds or buildings? 4. Is bright, effective lighting installed indoors and outdoors? 5. Are measures in place (access badges, traffic control, etc.) to keep unauthorized persons from entering the facility through normal entrances? 6. Is there a reliable response system in place in the event an alarm is triggered? 7. Are employees encouraged to promptly report incidents, and suggest ways to reduce or eliminate risks? 8. Are structures readily accessible to disabled employees? 9. Are minors prohibited from performing hazardous work? Discrimination and employee rights 1. Are employees trained on discrimination issues? 2. Are supervisors and managers trained in anti-discriminatory practices? 3. Are employment practices in line with the various anti-discrimination laws? 4. Are effective policies in place that prohibit retaliation against employees who exercise their rights? Workers’ compensation 1. Are injuries/incidents investigated? 2. Is follow-up remediation performed where appropriate? 3. Is regular contact made with employees out on lost time? 4. Are return-to-work programs checked for effectiveness? 5. Is contact made with medical providers? 6. Are insurance premiums and competitive quotes reviewed on a periodic basis? 7. Is the workplace environment maintained with safety in mind? 8. Are state (new and existing) requirements monitored? Employee separation 1. Do exit interviews take place? 2. Are final paychecks provided on time? 3. Recordkeeping and other documentation 4. Are personnel files current? 5. Are all appropriate labor posters displayed in a conspicuous place? 6. Are documents regarding employees kept for their required duration? |
Annexure 3
MANAGEMENT INFORMATION SYSTEMS INTERNAL CONTROL QUESTIONNAIRE*
| Sl. No Subject | Yes | No | Comments |
| MIS Policies or Practices
1 Has management developed and maintained a current MIS policy or practice?
2. Does the policy or practice provide guidance in the following areas:
– The definition, purpose, and fundamental components of MIS?
– How to achieve effective two-way communication between management and Employees and specific avenues to maintain such communication?
– Processes for initiating, developing, and completing MIS enhancements?
– Guidelines for installing MIS enhancements in a controlled change environment?
– Procedures for acquiring, merging, manipulating, and up-loading data to other systems?
– Guidance for delineating the need for internal/external audit coverage and testing?
3. Is the policy or practice reviewed and updated regularly?
4. Is the policy or practice distributed to appropriate employees?
5. – Does the policy or practice incorporate or require:
– User approval for each phase?
– Installation of MIS enhancements in a controlled change environment?
– Employees to follow policy or practice and processes as data is acquired, merged, manipulated, and up-loaded to other systems?
– Employees to be sufficiently trained for new systems and subsequent enhancements?
MIS Development
6. Does the internal planning process consider and incorporate the importance of MIS at both the strategic and tactical level? Are longer term strategic goals (beyond 2 years) supported by the development of appropriate MIS? Are shorter term tactical goals over the immediate one-to-two year period regularly and appropriately reviewed and monitored by management?
7 Do project objectives address reported MIS weaknesses and meet business unit requirements?
8 Does management have a process for monitoring project schedules?
9 Does management use a project management technique to monitor MIS development schedules?
10 Does the organization use a consistent and standardized approach or a structured methodology for developing MIS projects
11 Does the methodology encompass the following phases:
– Analysis of the concept, organization of tasks, completions of phases, and approvals?
– Development of the program and contracting for equipment and software?
– Development of user manuals and testing of the system?
– Post-review of the system and future maintenance of it?
User Training and Instructions 12 Is the user manual for the MIS system(s) meaningful, easy to understand, and current? 13 Do user manual requirements include the following information? – A brief description of the application or system? – Input instructions, including collection points and times to send updated information? – Balancing/reconciliation instructions? – A full listing of output reports, including samples?
Communication
14 Does management encourage communication lines to meet the following objectives:
– To effectively link executives, other appropriate users, and information systems employees?
– To ensure effective two-way communication between management and employees?
– To document the MIS process?
Audit
15 Has the MIS target area(s) been internally or externally audited in the past two years? If it has, review the scope of the audit, the findings, and management’s response(s) to that report. If it hasn’t, interview audit management to determine what their plans regarding an audit review of the MIS system are.
Conclusion
16 Can this information be considered adequate for evaluating internal control of MIS activities? This question presumes that there are no additional significant internal auditing procedures, accounting controls, administrative controls, or other circumstances that impair any controls or mitigate any weaknesses noted above. (Note: Explain negative answers briefly, and indicate conclusions as to their effect on specific examination or verification procedures.)
17 Based on a composite evaluation, evidenced by answers to the previous questions, internal control is considered to be _________ (good, medium or bad).
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