Question

You are the new Controller for a major real estate

development company in New York, USA It is a big company,

with over 500 employees and 30 managers.

In addition to the normal transaction processing and

financial reporting functions, you are also responsible for

providing information needed by managers.

They've never had that kind of support before, so they

don't know what you'll do for them.

Required: Write up a report for the managers in each

functional area (maximum 2 pages) describing the types of

analysis and information you are able to provide them, and

what they might be able to do with it.

Answer 1

Hi Students

Please see below answer

Starting with the functional wing for the company we will discuss.

1. Procurement function
2. Human Resource Function
3. Sales Function
4. Business Development Function
5. Finance Function
6. Internal Audit Function

1. Procurement Function – Company should have a complete procurement plan, execute, monitor and audit kind of organizational working culture. where procurement function should have a clear guide and written standard operating procedure from selection of buyer through competitive bidding, to raising P.O , getting the buying validation from receiving and delivery challan. Buying of land involves huge capital outlay and being part of capital investment they should strict with their SOP and business practices. Ownership and title transfer should be valid and on the name of the company. Company should strict to follow the documentation and contract procedure. Wherever feasible company should seek external solicitation and legal advice before buying any land or development rights.

1. Human Resource Function – Company should have clear and standard operating procedure properly documented and well communicated regarding.

(a) Advertisement/Recruitment Agency expenses

(b) Staff Induction, development and Continuous Training

(c) Salaries, Allowances, Perquisites and Deductions as per Staff and Service Rules

(d) Statutory Compliances – Income Tax on Salaries, PF, ESIC,Gratuity, etc

(e) Promotion/Retirement Schemes/Staff Advances

(f) Leave Encashment/ Gratuity/ Ex-Gratia Payments/ PF/Recovery.

(g) Human Resources Human Resources director contacted before hiring the services of    any individual

(h) Financial manager review labor distribution reports following each payroll to ensure that individuals and amounts listed are correct.

(i) References checked and education of candidates verified prior to offering employment.

1. Sales Function – Department should have clear written well documented department procedures. Company should create and maintain customer master list of all customer with whom company has contacted even if they have not succeeded to sale. Company should have a procedure to collect and document survey report, title insurance, warranty deed, Tax and Revenue appraisal review, purchase agreement, contracted attorney approval, sales agreement with customer, project wise and customer wise file and document should be maintained. Demand and progress billing should be made and reviewed by the separate department and post audit should be done. Delivery of flat or apartment to the customer and post-delivery documentation and post 6 month customer feedback should be an integral policy for the company.

Legal compliances related to Customer/client handover, billing, title or ownership transfer documentation should be done. billing to customers and actual realization should be reconciled and if any deviation arise should be well communicated ahead time.

1. Business Development Function - Advertisement related to project and business development function should be as genuine as possible with respect to area projecting and delivering. Advertisement budget plan and actual cost and commission to broker sub broker all of these should be well planned and documented and each expenses should be reviewed and authenticated by the finance function.
2. Finance Function – Finance function play a pivot role in the company from day to day management to legal compliances related to direct and indirect taxes, payroll complianes, state stamp duty compliances, accounting compliances. Finance function should have an internal check into the company function so that each work is get independently checks by other than the person who has done it. Revenue booking and revenue recognition in real estate industry is not as easy as in other business. A project which runs over 2 -3 reporting period and while there is continuous work is going on to the projects and regular progressive billing and realization from customers made at regular interval. Revenue recognition should be made as per the accounting policies of the company which clearly depicts the true and fair view of the operating results and of the company.
3. Internal Audit Function – Internal audit function should have an independent audit at regual interval of each and every function of the company . auditor should follow the checklist and questionnaire to have their obejective done in a timely manner.

Audit reveal and put control in each and every function of the company which becomes necessary as the company grows to prevent the frauds within and outside the company