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25 Jul 2018, 03:16
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Please review my essay and rate it on a scale of 1-6 if you can. Thanks in advance 
The following appeared in a memorandum from a member of a financial management and consulting firm:
“We have learned from an employee of Windfall, Ltd., that its accounting department, by checking about 10 percent
of the last month’s purchasing invoices for errors and inconsistencies, saved the company some $10,000 in
overpayments. In order to help our clients increase their net gains, we should advise each of them to institute a policy
of checking all purchasing invoices for errors. Such a recommendation could also help us get the Windfall account by
demonstrating to Windfall the rigorousness of our methods.”
Discuss how well reasoned . . . etc.
The argument states that to increase net gains, their clients should
institute a policy of checking all purchasing invoices for errors. The
author bases his conclusion on the account of one employee of
Windfall, Ltd. who claims that Windfall, Ltd. saved around $10,000 in
overpayments by checking one tenth of last month's invoices for errors
and inconsistencies.
Firstly, the argument wrongly assumes that the inconsistencies found
in last month's invoices will be repeated in other months and other
companies. This seems like a stretch. It could be the case that last
month's invoices were just an abberation and usually there are no
errors. This would mean that companies would not really benefit by
overchecking their invoices looking for errors which aren't really
there.
Windfall policy invoices errors
Secondly, the argument assumes that doing a complete check would help
save more money. An implicit assumption here is that there are errors
to be found, which aren't found for lack of checking. But this very
well might not be the case. It might be the case that the number of
invoices with errors which can be found by checking plateau at a
certain percentage. So, it might be unecessary to go through all of
the invoices.
Moreover, the argument does not take into consideration the cost of
checking invoices. It assumes that the money a company would save by
checking invoices (and hence avoiding overpayments, etc.) would be
greater than the cost to the company, a function of employee work
hours, salary, and number of people. It would be critical to know
whether this is really the case.
In conclusion, the argument suffers from three major flaws outlined
above. It fails to take into consideration that the data point might
not indicate a trend, that more thorough checking would help save more
money, and that the cost of checking invoices is less than the money
saved. The argument would be better established if if were based on a
period of data which could help establish a trend. It would also help
to know what the cost to the company for checking invoices is. Lastly,
the argument needs to look into the differences in the kind of
busineeses its clients are into compared to Windfall, Ltd. It might be
the case that Windfall, Ltd. is in a business domain in which this
plicy might be beneficial, but it might not be the case for other
industries such as Aeroplane Manufacturing.
----------------------
I'm just noticing the typos
The following appeared in a memorandum from a member of a financial management and consulting firm:
“We have learned from an employee of Windfall, Ltd., that its accounting department, by checking about 10 percent
of the last month’s purchasing invoices for errors and inconsistencies, saved the company some $10,000 in
overpayments. In order to help our clients increase their net gains, we should advise each of them to institute a policy
of checking all purchasing invoices for errors. Such a recommendation could also help us get the Windfall account by
demonstrating to Windfall the rigorousness of our methods.”
Discuss how well reasoned . . . etc.
The argument states that to increase net gains, their clients should
institute a policy of checking all purchasing invoices for errors. The
author bases his conclusion on the account of one employee of
Windfall, Ltd. who claims that Windfall, Ltd. saved around $10,000 in
overpayments by checking one tenth of last month's invoices for errors
and inconsistencies.
Firstly, the argument wrongly assumes that the inconsistencies found
in last month's invoices will be repeated in other months and other
companies. This seems like a stretch. It could be the case that last
month's invoices were just an abberation and usually there are no
errors. This would mean that companies would not really benefit by
overchecking their invoices looking for errors which aren't really
there.
Windfall policy invoices errors
Secondly, the argument assumes that doing a complete check would help
save more money. An implicit assumption here is that there are errors
to be found, which aren't found for lack of checking. But this very
well might not be the case. It might be the case that the number of
invoices with errors which can be found by checking plateau at a
certain percentage. So, it might be unecessary to go through all of
the invoices.
Moreover, the argument does not take into consideration the cost of
checking invoices. It assumes that the money a company would save by
checking invoices (and hence avoiding overpayments, etc.) would be
greater than the cost to the company, a function of employee work
hours, salary, and number of people. It would be critical to know
whether this is really the case.
In conclusion, the argument suffers from three major flaws outlined
above. It fails to take into consideration that the data point might
not indicate a trend, that more thorough checking would help save more
money, and that the cost of checking invoices is less than the money
saved. The argument would be better established if if were based on a
period of data which could help establish a trend. It would also help
to know what the cost to the company for checking invoices is. Lastly,
the argument needs to look into the differences in the kind of
busineeses its clients are into compared to Windfall, Ltd. It might be
the case that Windfall, Ltd. is in a business domain in which this
plicy might be beneficial, but it might not be the case for other
industries such as Aeroplane Manufacturing.
----------------------
I'm just noticing the typos
sandman13
Joined: 20 Apr 2018
Last visit: 26 Dec 2019
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Concentration: Technology, Nonprofit
Schools: ISB '21 (A)
WE:Analyst (Non-Profit and Government)
26 Jul 2018, 01:38
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nightblade354, can you give me some feedback? A cursory feedback would suffice. I just want to make sure I am not missing out on anything from a structural point of view, i.e. how the essay should be constructed.
Thanks.
Thanks.
Gagoosh
Joined: 23 Nov 2017
Last visit: 02 Oct 2019
Posts: 102
Given Kudos: 132
Location: Singapore
Concentration: Strategy, Other
Schools: NTU '20 (M) ESSEC '21 (A$)
26 Jul 2018, 02:21
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Hi mate,
first of all, note I am no expert myself but would like to add my 2 cents. Besides mending the typos (spellings and grammatical errors), I suggest you add a recommendation to the firm. You can say that instead of enforcing a policy of checking the purchase orders, the firm can also institute a procedure by automatic checking or peer checking or electronic billing etc. You may want to insert some fancy words like opportunity cost (which you detailed very nicely in the para 2) or phrases like insufficient data or unsubstantiated assumption or no evidence to support the conclusion. Also since the essay is read by the e-reader first, you may want to insert the key words. I found the Chineseburned template and myohmy template extremely useful. Good work though
first of all, note I am no expert myself but would like to add my 2 cents. Besides mending the typos (spellings and grammatical errors), I suggest you add a recommendation to the firm. You can say that instead of enforcing a policy of checking the purchase orders, the firm can also institute a procedure by automatic checking or peer checking or electronic billing etc. You may want to insert some fancy words like opportunity cost (which you detailed very nicely in the para 2) or phrases like insufficient data or unsubstantiated assumption or no evidence to support the conclusion. Also since the essay is read by the e-reader first, you may want to insert the key words. I found the Chineseburned template and myohmy template extremely useful. Good work though
11 Jun 2020, 08:49
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Hey there. I am neither an expert but I think you basically did a great job. Nonetheless, there is something to be addressed regarding the content of the essay. IMO, your second point coincide with the third one. They sound to be the same thing. You are contending the idea of a complete check but suggesting to do sampling rather. (This happens to be the case of auditing lolll.)
Your first point is that the kind of errors is not necessarily recurring (I am not sure about this, because carelessness is never one-off IMO). And second is that invoices of some transactions are simply not material enough (not involving much money), so they are not worth a check. This reasoning actually implies the cost benefit analysis, which is your third point.
I found another angle that you may well feel worthy to mention. This manager just overheard from an employee of the client company. We are not sure about the position of this employee (whether he works in the accounting department or supervises something of the sort) and the reliability of the information source. Error correction does not seem to be something that a company would voluntarily disclose. So is blabbing from a plain biscuit reliable? I would definitely ask the manager to do fact check.
Further, why would the manager think that the consulting firm can get the Windfall account? If the company can find the error itself, the consulting firm does not help much by suggesting or facilitating the idea. We should ask the author of the argument to amplify the means of approaching clients.
Above are all I have come up with so far. Hopefully you find it helpful. Cheers on the exam prep and break a leg at the real thing!
Your first point is that the kind of errors is not necessarily recurring (I am not sure about this, because carelessness is never one-off IMO). And second is that invoices of some transactions are simply not material enough (not involving much money), so they are not worth a check. This reasoning actually implies the cost benefit analysis, which is your third point.
I found another angle that you may well feel worthy to mention. This manager just overheard from an employee of the client company. We are not sure about the position of this employee (whether he works in the accounting department or supervises something of the sort) and the reliability of the information source. Error correction does not seem to be something that a company would voluntarily disclose. So is blabbing from a plain biscuit reliable? I would definitely ask the manager to do fact check.
Further, why would the manager think that the consulting firm can get the Windfall account? If the company can find the error itself, the consulting firm does not help much by suggesting or facilitating the idea. We should ask the author of the argument to amplify the means of approaching clients.
Above are all I have come up with so far. Hopefully you find it helpful. Cheers on the exam prep and break a leg at the real thing!
