Examining Riordan Manufacturings Corporate Compliance Plan Accounting Essay

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

As a global leader in plastic manufacturing, Riordan Manufacturing Virtual Organization has introduced a corporate compliance plan which addresses various aspects of its business management. Being headquartered in the United States, most elements of the Sarbanes-Oxley Act, 2002 have been incorporated at various stages of the compliance plan. Some of the features addressed in the compliance plan include alternative dispute resolution strategies, enterprise risk management, intellectual property rights and general enterprise liabilities.

In various parts of the essay, mitigation steps and legal frameworks followed by the organization when dealing with cases of non-compliance to the plan have been highlighted. All these strategies incorporated in the compliance plan are used at ensuring that the business retains its corporate image and global market share in the plastics industry


The Riordan Manufacturing Virtual Organization is a globally renowned business enterprise in the field of international plastics, with several branch networks across the United States (for instance Georgia and Michigan) and in various parts of the world including Europe and Hang Zhou, China. Having been in the plastics business for only two decades, Riordan Manufacturing presently commands international respect as a leading employer and manufacturer of a broad range of plastic products, specifically designed to suit individual customer requirements. Its customers are drawn from various economic sectors and businesses e.g. medical and healthcare institutions, the US military and law enforcement agencies, bottlers and beer manufacturers, food processing industries, appliance manufacturers, learning institutions and even spare part manufacturers for motor vehicles, aircrafts, ships, submarines etc (Carbajal, 2009).

Riordan Manufacturing Virtual Organization boasts of its current position and success in the global plastics business to various factors namely, use of ultra-modern environmentally friendly technologies, proper customer service practices to ensure customer retention and satisfaction, full utilization of marketing channels and total conformity to ISO standards at various operational levels and production of high quality plastic products at prices affordable and attractive to their customers and prospects.

This essay on Riordan's Manufacturing Virtual Organization shall address various aspects of the firm's corporate compliance plan, how it has been incorporated in the organization's daily operations, the legalities of the plan and the precautionary measures incorporated into the compliance plan to address issues to do with non-compliance or infringement. The various roles to be played by the firm's management as guided by the compliance plan would also be addressed briefly in several parts of the essay.

Riordan's Corporate Compliance Plan

From the basic definition, corporate compliance is regarded as the adherence and total conformity to existing defined standards and requirements at corporate level (Doyle, et al, 2004). In order to ensure compliance, Riordan Virtual Organization has put in place a corporate compliance plan that emphasizes on best management policies and general guidelines to be adopted by the firm. The compliance plan designed by Riordan Manufacturing addresses several issues such as the legal principles of business management, alternative dispute resolution frameworks, risk management, international law and governance, tangible and intellectual property rights, legal forms of business, the standard rules and regulations, contracts, laws addressing non compliance issues among other aspects. Riordan's corporate compliance plan attempts to explain the various roles played by internal control strategies within the organization and recommends possible strategies to be adopted in the mitigation of general enterprise risks. The organization's corporate compliance plan seeks to its objective in order to guarantee awareness and conformity to appropriate regulations and laws to the firm's personnel, as well as state and federal programs, security and confidentiality requirements, financial and other related rackets, exploitation, ethics, waste and general organizational management. So as to be in line with Riordan's form of business, the directors of Riordan Virtual Organization designed a corporate compliance plan specifically aimed at addressing issues to do with plastic manufacturing and designs. To achieve their primary objective, this compliance plan incorporates various aspects such as employee requirements and/or expectations, ethical standards, and optimal business practices to be adopted by the enterprise in its daily operations, ISO requirements among other issues (Clarke, 2004). Based on the requirements defined in Riordan's corporate compliance plan, the organization's directors are expected to exercise integrity in their general administration and decision making in order to guarantee a working environment that encourages logical business practices and compliance.

Managing Legal Liabilities of Riordan's directors and officers

In the United States, the law, based on the Sarbanes-Oxley Act, 2002 requires that all business executives and directors of a corporate firms to carry out their business transactions in an open and transparent way, to allow proper financial auditing of the state of the enterprise. This act recommends arrest and/or conviction of corporate executives who intentionally manipulate their balance sheet accounts in order to cover up for cases such as misappropriations, embezzlement and/or mislead the public on matters to do with their profitability in order to evade income taxes or for other personal reasons (Carbajal, 2009). Riordan's compliance plan also contains some aspects of the Sarbanes-Oxley Act in order to guide the firm when addressing similar cases. The company's directors, general personnel and executive officers are guided by the Code of Business Conduct & Ethics, in various aspects revolving around the ethical expectations at the corporate level. In order to effectively manage the legal liabilities of its staff, the compliance plan requires all the concerned staff and other personnel to conduct their firm's business with honesty and high sense of integrity (Whittington, 1993). Finally, the compliance plan also provides room for establishment of an internal counsel or group of internal auditors within Riordan Manufacturing Virtual Organization to carry out private investigations and forward any suspicious ongoing scandals to the relevant authorities as long as the evidence gathered is sufficient enough to initiate a court process or legal action. To limit irregularities from occurring due to errors or ill motives of the directors/officers, the compliance plan has put in place precautionary measures such as asset segregation. Financial statements may only be approved by the firm after thorough scrutiny and subsequent certification by the team of internal auditors.

Alternative Dispute Resolution

Riordan Manufacturing's corporate compliance plan provides adequate room for addressing conflict management and resolution within the organization. These mechanisms as incorporated in the plan are aimed at ensuring fairness in the decision making process and in turn ensure a win-win situation whereby the demands of both the parties involved are addressed to guarantee satisfaction. The disputes addressed in this case may either be internal, i.e. involving the company executives and their junior staff, or external, i.e. revolving around the company and other regulatory bodies, competitors, customers or major stakeholders in the business.

As opposed to the traditional court processes which often consume a lot of time before a judgment is reached, the Alternative Dispute Resolution strategies as provided for by the compliance plan may act as a viable and reliable substitute which is less expensive and may take a relatively short period to reach a conclusion depending on the resolution mechanism adopted. Some of the ADR mechanisms include mediation, arbitration, peer review, dialogue, compromise, retribution among others. To add on this, the Ombudsman is provided for in the corporate compliance plan so as to collect and investigate grievances filed by the organization's personnel. The Ombudsman is quite effective since the identity of the complainant is kept unanimous, thus minimizing any chances of victimization in case the grievances reported concern an influential company executive.

Enterprise and Product Liabilities

Due to the quality of products manufactured by the company and its current international positioning in the plastics sector, the dangers posed by forces of competition, barriers to entry, technological advancements, the recent global financial crisis and government regulations are almost negligible.

The only liability in this case is brought about by its medical products which touch on sensitive areas revolving around life and death. Some of its medical products include artificial heart valves, sophisticated medical instrumentation and measurement systems, plastic surgery ingredients, etc. Errors in the manufacture of such products are rated as the most costly to the business enterprise since they may lead to negative publicity, suspension from the business, and imposition of hefty fines on the company depending on the extent of the effect on the user's health. The danger in this case may be brought about by any forms of defects or distortions in such products, which may end up having a serious negative effect on the health or life of the users of such products. The company's research and development department has however tried to put in place adequate precautionary measures including use of modern technology to minimize chances of errors. These measures include several testing, safety certification and routine inspection of the production chains and finished products to ensure accuracy or to correct any defects found.


It is the duty of the company directors in this case to create internal awareness about the corporate compliance plan, the nature of punishments allocated in case of non-compliance, and the benefits associated by the adoption and enforcement of the corporate compliance plan. Once the employees fully understand and support such governance policies, the general competitiveness and overall profitability of the firm may rapidly increased due to the adoption of high standards of production, management and quality of the products. Improvement in the communication channels between the staff and the management should be carried out in order to ensure accuracy, preciseness, and timeliness of the information conveyed by the company executives (Whittington, 1993).

To address governance issues, the corporate compliance plan has a defined set of procedures used in allocating penalties and/or disciplinary actions incases of non-compliance on the part of the workers or management staff. The modes of disciplinary actions recommended in the plan include verbal/written warnings, summary dismissals, suspensions or finings. The kind of penalty imposed on an offender in most cases depends on the level of encroachment on the compliance requirement.

With proper governance structures in place, Riordan Manufacturing Virtual Organization may end up encouraging adoption of optimal business strategies. This may also enhance proper decision making and timely implementation of any positive feedback from the company staff, customers and other stakeholders such as governmental regulatory bodies.

Tangible and Intellectual Property Rights

In order to maintain its current global market share, Riordan Manufacturing Virtual Organization has patented most of its innovative products through registered trademarks and copyrights. The secrets behind the manufacture of the company's durable products in terms of their chemical composition and methods followed have been protected by these rights. The tangible and intellectual property rights of the organization have been duly protected by international laws. Such legislations minimize the chances of competitors manufacturing similar products using the same procedures and chemical compositions. Intellectual property rights therefore act as barriers to entry to potential competitors and ensure that the firm maintains its market share and overall profitability.

Enterprise Risk management based on COSO

The Committee of Sponsoring Organization of the Treadway Commission- COSO is an establishment meant to work hand in hand with organizations in addressing issues such as risk assessment and management. The COSO committee has got defined procedures that guide business enterprises in the identification of risks, analysis and evaluation, and possible mitigation strategies that may be adopted when addressing the risks. The mitigation steps followed in addressing risks by the organization are always dependent on the nature of the risk involved, its urgency and the cost associated with the risk. For the case of Riordan Manufacturing, the possible risks include technological errors and risks, financial misappropriation, confidential data / information security, non-compliance risks and other external forces that may threaten the operations of the enterprise. In enterprise risk management, the identified risks need to be addressed in order of priorities and associated costs. Those with negligible impacts on the business should be put on hold or dealt with at a later stage.

International Law

Most countries have different laws governing business management and operations within their borders. In regard to corporate management, some countries have regulations put in place to limit the maximum number of international expatriates that a given company may have at one point. In regard to corporate compliance, the United States is guided by the Sarbanes-Oxley Act of 2002. Some elements of this act are not applicable in the U.K. and most Asian countries such as China and thus for the enterprise to penetrate such international markets, it has to adhere to the internal standards of individual countries. The variations may be in form of the different disciplinary actions taken when addressing non-compliance issues, varying court processes among other aspects. For a firm to penetrate other markets, its range of products and services have to be in tandem with ISO certification requirements in order to guarantee safety, environmental management and quality assurance. It's in this regard that the operations of Riordan Manufacturing in terms of physical location and general operations have to be cross-examined by host countries in order to ensure compliance.

Legal Forms of Business

Riordan's legal form of business is in the manufacture of a wide range of plastic products meant for international markets involving several sectors. In order to ensure the firm remains within its business form, the management has introduced a corporate compliance plan that looks at the legal frameworks of the business intermarried with the company policies (Jennings, 2006). This plan ensures the smooth running of the enterprise so as to minimize any losses that may result from non-compliance and financial misappropriations. Using this plan, all financial approvals, and transactions have to be subjected to thorough audits in order to correct any illegitimacies or erroneous reports that are against the required standards (Whittington, 1993).


The primary objectives of any business enterprise are to maximize their profit margins, improve on their competitiveness and offer the best services and products to their customers. To achieve this, Riordan Manufacturing has introduced a corporate compliance plan as management tool that could be used to minimize cases of fraud, waste, financial misappropriation among other aspects. The compliance plan also deals with cases of non -compliance and all necessary information related to compliance has been made available to its personnel and executive officers for reference purposes and to ensure conformity to international business standards