Assignment 3: Capstone Research Project

Due Week 10 and worth 440 points

Project Parameters:

You have been selected as the consultant to develop a business plan for Durango Manufacturing Company, which is a start-up, medium-sized public manufacturing company. The CEO has a background in manufacturing and is well versed in supply chain management. However, the CEO has limited experience in financial management and creating value for the various stakeholder groups. Your business plan must include a five (5) year strategy to increase revenues by 10% and a recommendation for creating an organizational structure to comply with SOX mandates for strong corporate governance over the internal controls. Your business plan must also include prescriptions for creating an ethical environment. Your recommendation must be approved by the Board of Directors before the company can begin its operations.

Based on your knowledge of accounting and financial, prepare a ten to twelve (10-12) page report in which you:

1. As the consultant, create an argument that you will present to the CEO that suggests accounting and financial management knowledge and skills will be essential to the company’s success and stability over the next five (5) years. Provide support for your argument.

2. Suggest to the CEO how the company’s stakeholders (investors, lenders, and employees) will use financial statement information and ratio calculations to make key determinations related to the financial condition and operational efficiency of the company. Provide support for your rationale.

3. Given the strategy to increase revenue during the five (5) year plan period, which will need to be achieved through expansion and capital expenditures, determine which capital budgeting ratio is appropriate for Durango to evaluate its proposals for capital expenditures, such as NPV, IRR, etc. Defend your position.

4. In order for the company to improve its operational efficiency, recommend which production departments should use process, job order, and activity-based costing—all three (3) of which must be implemented within Durango. Defend your choice for each department.

5. The CEO would like to consider outsourcing his manufacturing operations if labor can be supplied cheaper overseas than in the U.S. Create an argument either for or against outsourcing the manufacturing operation to a foreign country. Your argument should include key points that support your position. The key points should address economic and business management aspects related to outsourcing.

6. Predict the economic and business environment over the next five (5) years, indicating at least two (2) ways it may impact Durango Manufacturing Company’s ability to achieve the desired 10% growth in revenue. Provide support for your prediction.

7. Formulate a strategy to improve the opportunities for Durango to reach its revenue goals (i.e., increase revenue by 10% within five [5] years).

8. Use the Internet to research a company similar to Durango that has been accused of committing fraud. Determine the specific internal control that was defective, along with aspects of corporate cultural environment that contributed to the fraud or unethical behavior. Based on these findings, determine how improving this internal control failure can mitigate future risks.

9. Assess the potential for fraud within Durango based on the lack of IT controls, and determine at least two (2) ways Durango will structure its internal IT controls to ensure that such controls are effective in detecting fraudulent transactions.

10. Examine the current roles and responsibilities of Durango’s audit committee members, and propose a model for your company to improve the effectiveness of the audit committee and thus ensure effective corporate governance.

11. Use at least six (6) quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic resources.

Your assignment must follow these formatting requirements:

 Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.

 Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

The specific course learning outcomes associated with this assignment are:

 Analyze financial reports, prepare analysis, and draw conclusions based on the financial analysis

 Calculate and interpret various financial and operating ratios used in business.

 Apply activity-based costing and other managerial accounting concepts to various business situations.

 Evaluate capital budgeting situations by calculating financial returns and drawing appropriate conclusions.

 Evaluate internal controls within an organization and create a risk assessment.

 Analyze ethical theories to evaluate a decision-making process to determine compliance with professional codes of ethics.

 Evaluate the health of organizations to assess the level of risk in an audit engagement.

 Evaluate financial data for potential fraud and prepare an audit approach for detecting fraud.

 Assess the risk of financial misstatement in an IT-based environment.

 Evaluate financial data for potential fraud and determine the business relationships contributing to the fraudulent reporting.

 Use technology and information resources to research issues in accounting management.

 Write clearly and concisely about accounting management using proper writing mechanics.

Grading for this assignment will be based on answer quality, logic / organization of the paper, and language and writing skills, using the following rubric. Points: 440 Assignment 3: Capstone Research Project Criteria Unacceptable Below 70% F Fair 70-79% C Proficient 80-89% B Exemplary 90-100% A

1. As the consultant, create an argument that you will present to the CEO that suggests accounting and financial management knowledge and skills will be essential to the company’s success and stability over the next five (5) years. Provide support for your argument.

Weight: 5%

Did not submit or incompletely created an argument that you will present to the CEO that suggests accounting and financial management knowledge and skills will be essential to the company’s success and stability over

Partially created an argument that you will present to the CEO that suggests accounting and financial management knowledge and skills will be essential to the company’s success and stability over the next five (5) years, as the

Satisfactorily created an argument that you will present to the CEO that suggests accounting and financial management knowledge and skills will be essential to the company’s success and stability over the next five (5)

Thoroughly created an argument that you will present to the CEO that suggests accounting and financial management knowledge and skills will be essential to the company’s success and stability over the next five (5) as the consultant. Did not submit or incompletely provided support for your argument.

consultant. Partially provided support for your argument.

years, as the consultant. Satisfactorily provided support for your argument.

years, as the consultant. Thoroughly provided support for your argument.

2. Suggest to the CEO how the company’s stakeholders (investors, lenders, and employees) will use financial statement information and ratio calculations to make key determinations related to the financial condition and operational efficiency of the company. Provide support for your rationale. Weight: 5%

Did not submit or incompletely suggested to the CEO how the company’s stakeholders (investors, lenders, and employees) will use financial statement information and ratio calculations to make key determinations related to the financial condition and operational efficiency of the company. Did not submit or incompletely provided support for your rationale.

Partially suggested to the CEO how the company’s stakeholders (investors, lenders, and employees) will use financial statement information and ratio calculations to make key determinations related to the financial condition and operational efficiency of the company. Partially provided support for your rationale.

Satisfactorily suggested to the CEO how the company’s stakeholders (investors, lenders, and employees) will use financial statement information and ratio calculations to make key determinations related to the financial condition and operational efficiency of the company. Satisfactorily provided support for your rationale.

Thoroughly suggested to the CEO how the company’s stakeholders (investors, lenders, and employees) will use financial statement information and ratio calculations to make key determinations related to the financial condition and operational efficiency of the company. Thoroughly provided support for your rationale.

3. Given the strategy to increase revenue during the five (5) year plan period, which will need to be achieved through expansion and capital expenditures, determine which capital budgeting ratio is appropriate for Durango to evaluate its proposals for capital expenditures, such as NPV, IRR, etc. Defend your position.

Weight: 5%

Did not submit or incompletely determined which capital budgeting ratio is appropriate for Durango to evaluate its proposals for capital expenditures, such as NPV, IRR, etc., given the strategy to increase revenue during the five (5)year plan period, which will need to be achieved through expansion and capital expenditures. Did not submit or incompletely defended your position.

Partially determined which capital budgeting ratio is appropriate for Durango to evaluate its proposals for capital expenditures, such as NPV, IRR, etc., given the strategy to increase revenue during the five (5) year plan period, which will need to be achieved through expansion and capital expenditures. Partially defended your position.

Satisfactorily determined which capital budgeting ratio is appropriate for Durango to evaluate its proposals for capital expenditures, such as NPV, IRR, etc., given the strategy to increase revenue during the five (5) year plan period, which will need to be achieved through expansion and capital expenditures. Satisfactorily defended your position.

Thoroughly determined which capital budgeting ratio is appropriate for Durango to evaluate its proposals for capital expenditures, such as NPV, IRR, etc., given the strategy to increase revenue during the five (5) year plan period, which will need to be achieved through expansion and capital expenditures. Thoroughly defended your position.

4. In order for the company to improve its operational efficiency, recommend which production departments should use process, job order, and activity-based costing—all three (3) of

Did not submit or incompletely recommended which production departments should use process, job order, and activity-based costing—all

Partially recommended which production departments should use process, job order, and activity-based costing—all three (3) of which

Satisfactorily recommended which production departments should use process, job order, and activity-based costing—all three (3) of which

Thoroughly recommended which production departments should use process, job order, and activity-based costing—all three (3) of which must be implemented within Durango. Defend your choice for each department.

Weight: 10%

three (3) of which must be implemented within Durango, in order for the company to improve its operational efficiency. Did not submit or incompletely defended your choice for each department.

must be implemented within Durango, in order for the company to improve its operational efficiency. Partially defended your choice for each department.

must be implemented within Durango, in order for the company to improve its operational efficiency. Satisfactorily defended your choice for each department.

must be implemented within Durango, in order for the company to improve its operational efficiency. Thoroughly defended your choice for each department.

5. Create an argument either for or against outsourcing the manufacturing operation to a foreign country. Your argument should include key points that support your position. The key points should address economic and business management aspects related to outsourcing.

Weight: 10%

Did not submit or incompletely created an argument either for or against outsourcing the manufacturing operation to a foreign country. Did not submit or incompletely included key points that support your position. Did not submit or incompletely addressed economic and business management aspects related to outsourcing.

Partially created an argument either for or against outsourcing the manufacturing operation to a foreign country. Partially included key points that support your position. Partially addressed economic and business management aspects related to outsourcing.

Satisfactorily created an argument either for or against outsourcing the manufacturing operation to a foreign country. Satisfactorily included key points that support your position. Satisfactorily addressed economic and business management aspects related to outsourcing.

Thoroughly created an argument either for or against outsourcing the manufacturing operation to a foreign country. Thoroughly included key points that support your position. Thoroughly addressed economic and business management aspects related to outsourcing.

6. Predict the economic and business environment over the next five (5) years, indicating at least two (2) ways it may impact Durango Manufacturing Company’s ability to achieve the desired 10% growth in revenue. Provide support for your prediction.

Weight: 10%

Did not submit or incompletely predicted the economic and business environment over the next five (5) years, indicating at least two (2) ways it may impact Durango Manufacturing Company’s ability to achieve the desired 10% growth in revenue. Did not submit or incompletely provided support for your prediction.

Partially predicted the economic and business environment over the next five (5) years, indicating at least two (2) ways it may impact Durango Manufacturing Company’s ability to achieve the desired 10% growth in revenue. Partially provided support for your prediction.

Satisfactorily predicted the economic and business environment over the next five (5) years, indicating at least two (2) ways it may impact Durango Manufacturing Company’s ability to achieve the desired 10% growth in revenue. Satisfactorily provided support for your prediction.

Thoroughly predicted the economic and business environment over the next five (5) years, indicating at least two (2) ways it may impact Durango Manufacturing Company’s ability to achieve the desired 10% growth in revenue. Thoroughly provided support for your prediction.

7. Formulate a strategy to improve the opportunities for Durango to reach its revenue goals (i.e., increase revenue by 10% within

Did not submit or incompletely formulated a strategy to improve the opportunities for Durango to reach

Partially formulated a strategy to improve the opportunities for Durango to reach its revenue goals

Satisfactorily formulated a strategy to improve the opportunities for Durango to reach its revenue goals

Thoroughly formulated a strategy to improve the opportunities for Durango to reach its revenue goals

five [5] years).

Weight: 10%

its revenue goals (i.e., increase revenue by 10% within five [5] years).

(i.e., increase revenue by 10% within five [5] years).

(i.e., increase revenue by 10% within five [5] years).

(i.e., increase revenue by 10% within five [5] years).

8. Use the Internet to research a company similar to Durango that has been accused of committing fraud. Determine the specific internal control that was defective, along with aspects of corporate cultural environment that contributed to the fraud or unethical behavior. Based on these findings, determine how improving this internal control failure can mitigate future risks.

Weight: 10%

Did not submit or incompletely used the Internet to research a company similar to Durango that has been accused of committing fraud. Did not submit or incompletely determined the specific internal control that was defective, along with aspects of corporate cultural environment that contributed to the fraud or unethical behavior. Did not submit or incompletely determined how improving this internal control failure can mitigate future risk, based on these findings.

Partially used the Internet to research a company similar to Durango that has been accused of committing fraud. Partially determined the specific internal control that was defective, along with aspects of corporate cultural environment that contributed to the fraud or unethical behavior. Partially determined how improving this internal control failure can mitigate future risk, based on these findings.

Satisfactorily used the Internet to research a company similar to Durango that has been accused of committing fraud. Satisfactorily determined the specific internal control that was defective, along with aspects of corporate cultural environment that contributed to the fraud or unethical behavior. Satisfactorily determined how improving this internal control failure can mitigate future risk, based on these findings.

Thoroughly used the Internet to research a company similar to Durango that has been accused of committing fraud. Thoroughly determined the specific internal control that was defective, along with aspects of corporate cultural environment that contributed to the fraud or unethical behavior. Thoroughly determined how improving this internal control failure can mitigate future risk, based on these findings.

9. Assess the potential for fraud within Durango based on the lack of IT controls, and determine at least two (2) ways Durango will structure its internal IT controls to ensure that such controls are effective in detecting fraudulent transactions.

Weight: 10%

Did not submit or incompletely assessed the potential for fraud within Durango based on the lack of IT controls; did not submit or incompletely determined at least two (2) ways Durango will structure its internal IT controls to ensure that such controls are effective in detecting fraudulent transactions.

Partially assessed the potential for fraud within Durango based on the lack of IT controls; partially determined at least two (2) ways Durango will structure its internal IT controls to ensure that such controls are effective in detecting fraudulent transactions.

Satisfactorily assessed the potential for fraud within Durango based on the lack of IT controls; satisfactorily determined at least two (2) ways Durango will structure its internal IT controls to ensure that such controls are effective in detecting fraudulent transactions.

Thoroughly assessed the potential for fraud within Durango based on the lack of IT controls; thoroughly determined at least two (2) ways Durango will structure its internal IT controls to ensure that such controls are effective in detecting fraudulent transactions.

10. Examine the current roles and responsibilities of Durango’s audit committee members, and propose a model for your company to improve the effectiveness of the audit committee and thus ensure effective

Did not submit or incompletely examined the current roles and responsibilities of Durango’s audit committee members; did not submit or

Partially examined the current roles and responsibilities of Durango’s audit committee members; partially proposed a model for your company to improve the

Satisfactorily examined the current roles and responsibilities of Durango’s audit committee members; satisfactorily proposed a model

Thoroughly examined the current roles and responsibilities of Durango’s audit committee members; thoroughly proposed a model

and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of

corporate governance.

Weight: 10%

incompletely proposed a model for your company to improve the effectiveness of the audit committee and thus ensure effective corporate governance.

effectiveness of the audit committee and thus ensure effective corporate governance.

for your company to improve the effectiveness of the audit committee and thus ensure effective corporate governance.

for your company to improve the effectiveness of the audit committee and thus ensure effective corporate governance.

11. 6 references

Weight: 5%

No references provided

Does not meet the required number of references; some or all references poor quality choices.

Meets number of required references; all references high quality choices.

Exceeds number of required references; all references high quality choices.

12. Clarity, writing mechanics, and formatting requirements

Weight: 10%

More than 6 errors present

5-6 errors present

3-4 errors present

0-2 errors present