The South African media is awash with stories of maladministration, fraud and corruption. Small businesses are the most vulnerable to fraud because they often don’t have effective internal controls. This is largely as a result of the cost of ensuring compliance with internal control systems. However, by removing opportunity and motivation for fraud and theft, and ensuring you have systems in place to discourage errors and identify mistakes timeously, you are able to discourage fraud in the first place and, if that fails, you can take corrective action to minimise losses.
A small business has limited resources, and owners must be active and vigilant in protecting their resources. Good internal controls help you manage resources and make sure operations are efficient and effective. Owners/managers hold the key to the fight against internal control failures and must be attentive to the concept and issues of internal controls to maximise the business potential and minimise the risk of fraud, error and loss.
Some key objectives of internal control are to:
- Help align objectives of the business – to ensure thorough reporting procedures and that the activities carried out by the business are in line with the business’s objectives.
- Safeguard assets – ensuring the business’s assets are protected from fraud, theft and error.
- Prevent and detect fraud and error – ensuring the systems timeously identify errors and fraud.
- Encourage good management – allowing the manager to receive timely and relevantmanagement information
- Allow action to be taken against undesirable performance – authorising a formal method of dealing with fraud, dishonesty or incompetence when detected.
- Reduce exposure to risks – minimising the chance of unexpected events.
- Ensuring proper financial reporting – maintaining accurate and complete reports required by legislation and management
The graphic below outlines the process of internal control:
Should you require assistance with setting up or a review of internal control systems we are well qualified to assist in this regard.
DEFINING YOUR VALUE PROPOSITION
An organisations ability to define and communicate its value proposition to all stakeholders is imperative. A value proposition is essentially an undertaking of value to be delivered and a belief from the customer that value will be delivered and experienced. A value proposition can apply to an entire organisation or parts thereof, and should form the core of your business strategy. “Strategy is based on a differentiated customer value proposition.
Satisfying customers is the source of sustainable value creation.” – Kaplan and Norton
Developing a value proposition is based on a review and analysis of the benefits, costs and value that an organization can deliver to its customers, prospective customers, and other constituent groups within and outside the organization. It is also a positioning of value, where Value = Benefits – Cost. There are a number of models that exist to help formulate your value proposition.
The graphic below clearly depicts the various components that need to be considered:
Value proposition statements are internal documents, used as a blueprint to ensure that all the messages you communicate, internally and externally, are consistent. Should you require assistance with formulating your value proposition feel free to contact us for professional advice in this regard.
TOP GLOBAL TRENDS AND IMPLICATIONS FOR 2015
So what does 2015 have in store for us? Every year Forbes get their futurists at Frost & Sullivan to put their heads together to predict the top 15 trends for 2015. We have summarised their predictions in the table below.
BUDGET TIPS 2015
In October last year, finance minister Nhlanhla Nene said that government had no option but to adjust expenditure and increase taxes so as to return our fiscus to a sustainable path. This decision was made against a backdrop of the difficult economic environment as well as the high level of debt government has accumulated since the onset of the global financial crisis in 2008.
The budget framework announced in October seeks to restore balance to public finances, boost investment, and ensure that treasury improves the efficiency and effectiveness of the expenditure of public funds. In line with the National Development Plan, the medium term objective is to ensure that government spending promotes economic growth and enables increased investment by the private sector.
It is in this context that Minister Nene would like to hear your ideas on how treasury can:
- Change the dynamics of our cities to improve living conditions, modernize transport and communications infrastructure and expand economic activity.
- Reinforce government support for exporting businesses and improve their competitiveness and by so doing increase the capacity of our economy to create more jobs.
- Improve our ability to expand the skills base of our economy.
If you wish to participate and contribute your thoughts, you can send your contribution in the following ways:
Twitter: @Budget2015 Facebook: National Treasury South Africa
Fax: 012-406 9055 Email: firstname.lastname@example.org
Alternatively we would like to hear your thoughts and we can submit on your behalf.