Business Risks

Business risks refer to the possibility of a loss to a firm, or a factor that may affect its operations negatively. Business risks that the firm may face in Vietman are due to the country’s economic situation. Possible challenges that the company may encounter include high interest rates, inflation, increase in spending power and high costs of paying wages. Among other challenges are political risks which may lead to low sales and destruction of the company’s warehouses. There is also a risk of changes in legislation, changes in taxation policies, as well as increased costs of licenses which may mean low profits and sales. The firm may also face internal risks stemming from the lack of expertise to operate the warehouses in Vietnam (Ira. H. Jolles 2002). The firm may also face financial challenges ending up not being able to finance all its operations. Potentially threatening may be the likelihood of running obsolete equipment resulting in the lack of market and massive losses.

The key objectives of internal control over plant, property and equipment is to safeguard them from theft, misuse and accidents, to ensure maximum utilization of the assets through preventing wastages and unnecessary usage, and thus encouraging efficient utilization, to ensure reliability by making all cash transactions be in line with the company’s objectives to prevent loss of money. Other objectives include ensuring compliance with the relevant legislation, as well as with operational efficiency of the assets (William A. Niskanen 2002).

The system that Kingsmead requires to control office equipment, motor vehicles, property plant and equipment is to ensure completeness of all the transactions. This means that all records must be kept to avoid any omission. There should be adequate valuation of the assets. This means that depreciation should be provided for at the end of each accounting period. There should be ownership controls (Alan Reynolds, 2002). This involves inspection of title deeds, log books, certificates of ownership and solicitors certificates.



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