Identify the weaknesses in the internal control systems at Ancom Berhad

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Identify the weakness in the internal control system and give recommendation to improve the system.

2.1 Marketplace

2.1.2 CSR Management and Reporting

The weakness of the report in marketplace is Ancom Berhad did not adopt a specific reporting guideline. Without a proper reporting guideline, it is difficult for the company to provide consistency with reporting practices of company peers, and thus benchmarking with others. Adoption of a specific reporting guideline is very important to company as it can help to inspect or examine whether the company report was reported in accordance with the standard requirement or not. It will also be hard for the company to determine the materiality and how to focus on issues that are important and relevant to the company and their stakeholders.

The recommendation for marketplace is Ancom Berhad should adopt a specific reporting guideline. For example, Global Reporting Initiative (GRI) is a leading company in the sustainability field (Global Reporting Initiative [GRI], n.d.). According to Global Reporting Initiative (n.d.), the framework, including the Sustainability Reporting Guidelines has sets out the Principles and Standard Disclosures that company can use to report their environmental, economic, impacts, and social performance which also include labor practices and decent work, human rights, society, and product responsibility for all those interested in the disclosure of governance approach. The guidelines are very useful for the preparation of any type of documents which requires such disclosure. There are a lot of reporting standards that can be followed such as The Extractive Industries Transparency Initiative (EITT), The United Nations Global Compact (UNGO), AccountAbility’s AA1000 series and others.

2.1.4 Procurement Policies

In addition, Ancom Berhad did not have Corporate Social Responsibility (CSR) procurement policies. According to WiseGeek (2015), procurement policy is a business rules and regulations to govern the process of obtaining goods and services to function efficiently by the company. The purpose of procurement policy is to ensure that the procurement of goods and services is conducted in integrity, competitive, equal and transparent manner that delivers the best value for money outcome (Monash University, 2011). This will help company to minimize expenses associated with the purchase of goods and services by using suitable strategies (“What is Procurement Policy?”, 2015). According to European Pathway to Zero Wast (EPOW) (n.d.), company implement the procurement policy will help to deliver long term savings through whole life costing, improved risk management, progress towards achieving company sustainability targets as well as being better prepared for emerging Europe and United Kingdom legislation and policy, and improved supplier diversity.

Ancom Berhad should adopt procurement policies. For example, the Brother International (Malaysia) Sendirian Berhad is adopting the procurement policy. The procurement policy included The Brother Group acts fairly with all suppliers, respects the rules and regulations of laws in all countries and regions where they operate, and builds strong, respectful working relationships with suppliers for mutual growth, places their customers first everywhere, every time, while remaining committed to delivering high quality goods and services at reasonable costs and others (“With Business Partner”, n.d.). When Ancom Berhad develop the policy, the company need to understand the internal customer base who are responsible for specifying the goods and services requirements, involve and secure buy in from the highest level of the company, government’s sustainable procurement policy landscape and others (EPOW, n.d.)

2.1.5 Product Responsibility

Furthermore, top management does not implement product responsibility for Ancom Berhad. The meaning of product responsibility is that list out a complete content of all goods that country of origin is stated and the company will uphold its declarations of intent and assume liability for its products (“Corporate Social Responsibility”, 2015). According to Bombardier (n.d.), product responsibility strategy helps company attend to sustainability, safety and customer need opportunity throughout products’ lifecycle which is from initial design to end-of-life. The importance of product responsibility is increasing within a broad range of industry area, so company should develop in an innovation management culture with product responsibility (Davorin & Mirko, 2008).

Ancom Berhad should have product responsibility that report goods and services of company that will affect directly customers such as health and safety, information and labeling, marketing, and privacy (GRI, n.d.). Ancom Berhad may refer to product responsibility that BMW Group implement due to product responsibility is a central focus of the BMW Group (“Product Responsibility,” n.d.). BMW Group wants their goods to protect the environment and conserve resources and the benchmark for the success of these measures is the satisfaction of their customers (“Product Responsibility,” n.d.). According to BMW Group (n.d.), company provides an excellent example which is from raw material extraction through vehicle operation to recycling. For BMW Group, product responsibility is about more than just safety for them because they concern on protection of their customers and safety of other road users (“Product Responsibility,” n.d.).

2.3 Workplace

2.3.3 Work-life Balance

Moreover, Ancom Berhad does not implement work-life balance for the employees’ quality of life. According to Business Dictionary (n.d.), a comfortable state of equilibrium achieved between an employee’s primary priorities of their employment position and their private lifestyle. Most psychologists would agree that the demands of an employee’s career should not overwhelm the individual’s ability to enjoy a satisfying personal life outside of the business environment (“Work-life Balance”, n.d.). It is critical to concern on work-life balance because it will directly impact on company productivity, talent management, and business performance. Ancom Berhad did not have policy created in promoting work-life balance to ensure employees are treated fairly in workplace. Therefore, it may lead to negative impacts on both employees and business.

As a responsible employer, Ancom Berhad should provide a written policy on work-life balance to employees. The written policy can be a simple and clear statement that mentions company’s commitment to employees which might include childcare, pensions plans, flexible-working arrangements, counseling or assistance programmes, sport activities, yoga, and others. For example, Nestle Berhad which assists their female employees in achieving balance in work and life had won the life at Work Award (Narayanan, 2013). According to Narayanan,S,V. (2013), realizing the need to recognize and celebrate the companies that do provide women with excellent opportunities for advancement and offer benefits that help retain women in the workforce with leading workplace strategies that demonstrate commitment to assist employees achieve better success at work and in their personal lives by promoting diversity, work-life balance and flexible work arrangements.

2.3.4 Diversity in the workplace

  1. Staff Composition
  2. Providing equal opportunities

Besides, Ancom Berhad does not adopt diversity in the workplace included staff composition, providing equal opportunities and others. According to Greenbergh, J. (2004), workplace diversity refers to the variety of differences between in a company such as race, gender, ethnic group, age, personality, cognitive style, tenure, company function, education, background and more. Diversity not only involves how people perceive themselves, but how they perceive others. Workplace diversity also embraces employment equity where persons seeking employment with Australian Radiation Protection and Nuclear Safety Agency (ARPANSA) receives fair and equitable treatment, where employment decisions are based on merit and where all staff can work in an environment that is free from discrimination, harassment and bullying (“Workplace Diversity Program”, 2013). According to Andrade, S. (2010), there are few benefits of diversity in the workplace such as increased productivity, increased creativity and problem solving, attract and retain talent, help to build synergy in teams and enhances communication skills, save money on litigation expenses, and increases market share and create a satisfied diverse customer base.

Ancom Berhad should implement diversity in the workplace since there are many benefits. For example, Nestle Berhad received the awards on being recognized for Sustainability Reporting and also Gender Diversity in the Workplace (“Congratulations Nestle Malaysia,”, 2013). Nestle Berhad have signed up to the UN’s Women’s Empowerment Principles to strengthen their commitment and lead to improve all aspects of diversity, across Nestle, as an asset, helping to harness the local insight and imagination of people, and building competitive advantage and responsiveness to customers’ and society’s needs (“Diversity”, n.d.). According to Nestle (n.d.), company has been investing in Gender Balance Initiative since 2008, with a concern on awareness and education, flexible working, mentoring, and mobility solutions.

2.3.5 Employee Welfare

Ancom Berhad does not provide employee welfare for their employees. Employee welfare is a term including various services, benefits and facilities offered to employees by the employers such as allowances, housing, transportation, medical insurance and food, monitoring of working conditions, creation of industrial harmony through infrastructure for health, industrial relations and insurance against disease, accident and unemployment for the workers and their families (“Employee Welfare,”, n.d.). According to Koening, E. (n.d.), although this may increase business expenses and negatively affect bottom line, but look after their employees will benefit company in other ways included compliance, hiring and retention, employees motivation, employees’ well-being, company image, and others.

As a recommendation, Ancom Berhad should adopt employee welfare for their employees. For example, 7-Eleven provide employee welfare program to their employees. The company use awards to further promote employees’ excellence, productivity as well as growth, top performing Employee of the Year are chosen and recognized annually (Employee Welfare Program, n.d.). 7-Eleven also put high reward to the service and loyalty of employees that each year, awards, are given to those who have been servicing the company for a number of years (Employee Welfare Program, n.d.). Besides, the company also have a number of socialization events that promote camaraderie among employees such as Friday Morning Rituals, Family and Foundation Day, Christmas Party to name a few (Employee Welfare Program, n.d.). Last, to strengthen the importance of communication among the employees and management, 7-Eleven have established a strong partnership with Employees Council (Employee Welfare Program, n.d.).