KingJewels

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KingJewels
Case Analysis by NHK-149
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The breakout of corruption in KingJewels
Operations Director Clement Tam accepted
advantages from suppliers , and bribed Jonathan
Ho, Head of Production and Authentication, into
silence, to sell low quality jewels of high price
without certificates in the market. CEO Andy
Wong was alerted to all the facts and decided to
take actions
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Mr. Wongs Concerns
How to prevent the inside fraud from happening
again?
From professional consultants perspectives, COSO
Model can help you to improve Internal Control
Mechanism in this situation.
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Whats COSO? How does it
work?
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COSO Introduction

• In 1992, the Committee of Sponsoring
  Organizations of the Treadway Commission (COSO)
  developed a model for evaluating internal
  controls.

COSO Model can assure of the achievement of

• Effectiveness and efficiency of operations
• Reliability of financial reporting
• Compliance with applicable laws and regulations

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COSO Framework
Control Environment
Control Activities
Risk Assessment
Internal Control System
Monitoring
Information Communication
Source Protiviti KnowledgeLeader
http//www.knowledgeleader.com
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Our Recommendations

• Based on COSO. Positive impact. Soundness
  Consistency.

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COSO Framework
Control Environment
Control Activities
Risk Assessment
Internal Control System
Monitoring
Information Communication
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(No Transcript)
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Integrity Ethic Value
Learning Organization
Public Apology
Corporate Culture
Supplementary Compensation
Sense of Commitment
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Management Philosophy
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Restructure the Organization
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CEO
Operations Director
Marketing Bus. Dev.
Gem Sourcing
Production and Authentication
Business Services
Finance
Admin. HR
Retail
Wholesale
Hong Kong PRC
US and Canada
Global markets
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CEO
Business Development
Gem Sourcing
Business Services
Finance
Admin. HR
Production and Authentication
Retail
Wholesale
Hong Kong PRC
US and Canada
Global markets
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CEO
Business Development
Production
Authentication
Gem Sourcing
Business Services
Finance
Admin. HR
Retail
Wholesale
Hong Kong PRC
US and Canada
Global markets
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CEO
Business Development
Authentication
Gem Sourcing
Business Services
Finance
Admin. HR
Production
Retail
Wholesale
Hong Kong PRC
US and Canada
Global markets
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CEO
Finance
Human Resource
Business Development
Supply Chain
Authentication
Gem Sourcing
Business Services
Production
Retail
Wholesale
Hong Kong PRC
US and Canada
Global markets
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CEO
COO
Finance
Human Resource
Business Development
Supply Chain
Authentication
Gem Sourcing
Business Services
Production
Retail
Wholesale
Hong Kong PRC
US and Canada
Global markets
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Audit Committee

• 1. To assist the Board of Directors
• 2. Comprised of no less than three directors,
  each of whom will be independent

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COSO Framework
Control Environment
Control Activities
Risk Assessment
Internal Control System
Monitoring
Information Communication
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Step 1 Identification of key risks undertaken in
consultation with key personnel and
in the context of corporate objectives. Step 2
Ranking and prioritizing of risk on the basis of
likelihood and impact. Preparation
of risk register. Step 3 Consideration of
current and possible future risk management
controls. completion of risk
register. Step 4 Planning for ongoing risk
management including risk management policy.
Allocation of risk ownership, reporting,
review and update of risk register.
Source Orna Duggan. Accountancy Ireland. Dublin
Aug 2006.Vol.38, Iss. 4 pg. 25, 3 pgs
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Risk Control
Source Protiviti KnowledgeLeader
http//www.knowledgeleader.com
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COSO Framework
Control Environment
Control Activities
Risk Assessment
Internal Control System
Monitoring
Information Communication
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• Effective reporting and communication system
• (Management Information System can be applicable)

CEO
Market
Report/Respond
department
department
department
department
Share
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Monitoring

• Internal Audit

1. Reviewing the proposed scope and plan for
conducting internal audits of Company
operations 2. Obtaining reports of significant
findings and recommendations, together with
management's corrective action plans. 3.
Reviewing the corporate audit function of the
Company, including its charter, plans,
activities, staffing and organizational
structure.
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The End
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Cast
Ren Qi Jian Andy Wong, CEO
Zhu Ting Ting Consultant A

• Chen Ruo Yu Consultant B

Chen Zhuo Yi Consultant C
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Q A