A company has an investment policy that requires all capital expenditures above $10,000 be approved by...

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A company has an investment policy that requires all capital expenditures above $10,000 be approved by the investment committee. A local manager who wanted to acquire a computerized system has decided to bypass the policy by purchasing the system in individual pieces. The cost of each piece is lower than the capital expenditure approval limit. a. In the context of management controls, is the local manager's behaviour acceptable? Explain. (4 marks) b. Identify some potential reasons that might drive the local manager's behaviour (4 marks) c. Provide recommendations to management to improve the tightness of the MCS regarding capital expenditures. (4 marks) A company has an investment policy that requires all capital expenditures above $10,000 be approved by the investment committee. A local manager who wanted to acquire a computerized system has decided to bypass the policy by purchasing the system in individual pieces. The cost of each piece is lower than the capital expenditure approval limit. a. In the context of management controls, is the local manager's behaviour acceptable? Explain. (4 marks) b. Identify some potential reasons that might drive the local manager's behaviour (4 marks) c. Provide recommendations to management to improve the tightness of the MCS regarding capital expenditures. (4 marks)

Answer rating: 100% (QA)

a In the context of management controls the local managers behavior is not acceptable The manager is intentionally bypassing the capital expenditure a... View the full answer