Committee of Sponsoring Organizations - Corporate Planning - Case Study Example

CORPORATE COMPLIANCE PLAN INTRODUCTION COSO i.e. Committee of Sponsoring Organizations of the Tread way Commission formed in 1985 and it is U.S.private sector. The main focus of COSO is to establish factors that can be identified fraudulent financial reporting and to reduce such incidents. COSO is a joint sponsorship with the American Institute of Certified Public Accountants, American Accounting Association, Financial Executives International, The Institute of Internal Auditors and the Institute of Management Accountants. INTERNAL CONTROL The concept COSO is one way of internal control. The internal control consists with interrelated components like Control Environment, Risk Management, Control activities, Information & Communication and Monitoring. COSO also established Enterprise Risk management frame work which consists eight components in order to support four categories of business objectives. The eight components enterprise risk management are Internal Environment, objective setting, event identification, Risk assessment, Risk response, Control Activities, information & communication and Monitoring. AMERICAN DEPOSITORY RECEIPTS (ADR) The ADRs can be issued by any foreign company in order to represent their ownership that is to be traded in United States Financial markets. Many Non-US companies can be traded on United Stock exchanges through the issue and use of ADRs. With the purchase of the ADRs, the US investors able to buy shares of foreign companies without inviting cross-border transactions. The ADR is carried in U.S. dollars in all respects such as price, dividend and it can be traded as US based company, though foreign company issued ADRs. The ADRs can be issued by US depository bank. Sometimes the prices of ADR close to the home price market. In respect of foreign companies who are situated in UK attracts 1.5% stamp duty reserve tax. So ADRs only to be issued by foreign companies so that US investors free to purchase or trade the securities of foreign companies. But M/s Riordan Industries is not foreign company and hence it cannot issue ADRs. The corporate personnel who are looking the investment need not to waste time on this issue. The decision is based that the headquarters of M/s Riordan Industries situated at San Jose, which is city of California and hence it is US based company for which it cannot issue ADRs. ENTERPRISE LIABILITY Every enterprise get benefited from the society by using the local resources hence it is liability be extended towards society. Mere earning of profits and doing the business is not enough. Hence the enterprises have common responsibility towards society so that society should be not damaged in any angle. As for as the concern of M/s Riordan Industries, it is engaged in the manufacture of plastics and its allied items such as plastic bottles, fans, heart valves, medical stents, customs plastic parts etc. but the world itself is troubling with plastic since there was no other option to ruin the plastic and its related items. Simultaneously universe is overcrowded with the plastic. In order to protect the nature, the United States established the following laws: Endangered Species Act Clean Water Act and Clean Air Act Safe Drinking Water Act Resource Conservation and Recover Act National Environmental Policy Act Mere providing compensation to the effected people is not enough. Hence M/s Riordan Industries should comply the above Acts, besides the organization should establish schools and hospitals to fulfill the social responsibility. The above responsibilities should be fixed with the Chief Legal Counsel, Lowell Bradford. PRODUCT LIABILITY Product liability indicates that all the manufactures, distributors, suppliers, retailers are responsible will deliver such products to the public that will be caused injuries to the public. The product liability may be connected with the negligence, strict liability, breach of warranty and other consumer protection laws. The product liability laws are determined at the respective state level in the United States. These laws vary from state. The product liability claim involves different elements so that only it can be proved as successful claim. In this regard, the M/s Riordan Industries should attach the responsibility the quality manager who is supposed to maintain quality of the product so that it should not be violated with the existing laws. Besides the prime responsibility should be fixed with the VP Product Support Mr. Bob Havinga. TANGIBLE AND INTELLECTUAL PROPERTY & INTERNATIONAL LAW With respect to the intellectual property rights such as patents, trade marks and copyrights, M/s Riordan Industries should attach the responsibilities to the legal counsels such Rick Ethridge It is the primary responsibility of legal cell to ensure the strict compliance of various legislation either in home country and international laws too. GOVERNANCE It is corporate good governance. The concept of the governance indicates voluntary disclosure irrespective of the Legislation disclosure which is compulsory. So beyond the legislation, the organizations will declare the facts voluntarily. The image of the organization will be increased by maintaining the good governance. Since M/s Riordan Industries international company, the organization should also deliver voluntary disclosures to enhance its credibility. Occupational Safety and Health Administration Occupational Safety and Health Administration (OSHA) is an agency of the United Stated Department of Labor. OSHA is governed by Occupational Safety and Health Act. The agency will issue rules and regulations to maintain the safety and health at work place. Accordingly the employer should comply the standards to avoid work-related injuries including illnesses, deaths. The employer should make a set up for which the employees to report work-related injuries/illness. It is also responsibility of the employer to guide the employees so that they will be able to report work-related injuries/illness. The employees or former employees or their representative have right to access the OSHA injury and illness records with certain limitations. (1904.35 (b) (1). Under 1910.120 (b) (1), the employers should develop a written safety and health program for their employees who will be involved in hazardous waste operations. The program should be aimed to identify, evaluate and control safety and health hazards with a conclusion of a proper response for hazardous waste operations. Such safety and health program should include the details like organizational structure, comprehensive work plan, medical surveillance program, employer’s standard operating procedures for safety/health etc. Besides, the employer should notify to the employees with respect to the chemical, physical, and other toxicological properties that can be present on site. The notification should be present before when the employee is expected to perform functions at the site. (1910.128 (c) (8). The supervisors and management responsible to give proper training to the employees where the hazardous substances, health hazards or safety hazards may expose and the employees supposed to receive the training under regulation of 1910.120 (e) (1) (i). The employees are permitted to be engaged at hazardous substances, only after receiving training for which management/supervisors responsible to provide the training. The employees should also be trained to give emergency response where the hazardous substances may exist. THE FAIR LABOR STANDARDS ACT (FLSA) The FLSA established to provide minimum wages and overtime to the all the employees either in private or in public employment. Under this FLSA, the employer to required to pay covered employers who are not exempt from federal minimum wage rates. The Act also prohibits the children who are under age 16 for such businesses to related to non agricultural operations. The Act is administered by U.S.Department of Labor. The minimum wage laws also differ from each State in the United States. Hence M/s Riordan Industries ensure to follow the compliances of FLSA Since the organization is engaged in non agricultural activity, M/s Riordan Industries should not engage the children who are under the age of 16. The present minimum wage is $6.55 per hour from July, 2008 and $7.25 from July 24, 2009. Hence M/s Riordan Industries should pay the above of federal wage and as per the State rates. It means if any state law is declared the minimum wage more than the federal rate, then State rate only should be followed by the organizations. Even some states provide more employee protections, for which the employers must comply the both regulations. Besides the law requires that employers must display the poster where employees can see the details of FLSA. Hence in this regard M/s Riordan Industries should also exhibit some posters for which the employees can understand the details of minimum wage that is to be paid according to State Law and Federal Law. The Act also allows to get exemption from FLSA for certain employers; In this case, M/s Riordan Industries can proceed to get the exemption if it has at least $500,000 business or gross sales in a year. However some jobs excluded from coverage under FLSA and some jobs specifically excluded in the statute itself. The jobs are movie theaters and agricultural workers. These are general exclusions. Specific exclusions also provided for which the FLSA will not be applied. Therefore the M/s Riordan Industries should explore the advantages which are mentioned under section 213 of FLSA. So many exclusions found in this section. The legal department of the company must take the advantage of this section in order to escape from FLSA. EQUAL EMPLOYMENT OPPORTUNITY ACT In order to prohibit the discrimination, the following federal laws established for which the organizations must adhere. Title VII o the Civil Rights Acts of 1964 Equal Pay Act of 1963 Age discrimination in Employment Act of 1967 Title I and Title V of the Americans with Disabilities Act of 1990 Sections 501 and 505 of the Rehabilitation Act of 1973 Civil Rights Act of 1991 The EEOC i.e. U.S.Equal Employment Opportunity Commission enforce all such laws. Besides the commission also provided coordination for all regulations which are related to equal employment opportunity and its policies. Besides other federal laws also prohibit the discrimination against federal employees and its applicants. But these laws are not covered by EEOC. The laws namely the civil Service Reform Act, Office of Personnel Management etc are not covered by EEOC. Though the laws not covered under EEOC, yet the organization must comply the rules and regulations of such Acts. The EEOC main object is to end the employment discrimination that is related race, color, national origin, sex, age, disability etc. In this regard the EEOC make investigations and files suits against the employers. Therefore M/s Riordan Industries should be alert with the above laws. CONCLUSION Besides there are many laws that are to be addressed by the M/s Riordan Industries. The laws include several labor laws, economic laws, commercial laws, general laws, and security laws etc. hence one man cannot undertake all this compliances. So separate compliance cell is to be established with M/s Riordan Industries and at least 7 to 10 compliance officers should be posted to comply the laws. Opting and giving such compliances on retainership is not advisable as the retainer will escape from the liability. REFERENCE: 1. http://www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=STANDARDS&p_id=12779 2. http://www.dol.gov/compliance/laws/comp-flsa.htm 3. http://en.wikipedia.org/wiki/Fair_Labor_Standards_Act 4. http://www.hrhero.com/topics/flsa.html 5. http://www.eeoc.gov/abouteeo/overview_laws.html 6. http://www.flsa.com/coverage.html Read More