(a) What are some policies and procedures companies put in place in order to make sure the quality does not suffer if there is a rush job or employees are trying to meet their hourly or daily quota?
(b) Should all variances be researched? Favorable and unfavorable? What about a dollar limit? Should the variance be over a certain dollar amount or over a certain percentage before someone starts researching the variance?
(a) When there is a rush job, there is a chance that quality can be compromised, which can also happen when employees are trying to beat the clock to make a quota by a certain time, like by the end of the workday or workweek. One of the most effective measures that a company can put into place is to tighten internal standards regarding quality control when such a situation arises. Meeting quotas and rush jobs should be treated in terms of quality the same as weak internal controls and the possibility of accounting fraud or misstatement are treated. Basically, when a company's internal controls are weak, it increases the chances of fraud. The same general rule applies here, because a rush job or quota is in effect, the chances of poor quality automatically increase. The policies and procedures that are developed therefore have to be based on the company's circumstances. If the company ...
The solution explains policies and procedures put into place in order to make sure that quality does not suffer if there is a rush job or employees are trying to meet their hourly or daily quota. The solution also discusses if overall variances should be researched, including favorable and unfavorable variances, and discusses dollar limits as to when variances should be researched.