Question

If top management determines that the company will not provide a defined practice if the cost...

If top management determines that the company will not provide a defined practice if the cost of providing the defined practice outweighs the perceived benefits and strategic risk, how can/should the Accounting Department make this determination and how will this impact the holding of a Responsibility Center accountable.

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Answer #1

Defined practice are very important for any organization.

Accounting department should analyze the risk and losses due to lack of defined practice.

Accounts department can determine the same explaining the impact of define process.

Like in case of major Fixed Asset procurment and it payment by accounts there can be financial risk, business risk as because fixed assets are used for long term revenue generation.

Therefore as according to above example we can determine the risk.

Apart from that it has a huge impact since because lapse of process may incur such losses which

cannot be measured many times in monetary terms like customer disatisfaction, delayed services,

delayed vendor payments which may delay important delivery.

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