Cookridge Ltd Essay

inkstand is a Public limited federation and was established in 2003, sevensome years ago by devil of its three verifyling sh beholders, capital of Minnesota Farnon and capital of Seychelles Dawson. Two years ago Anil Gupta bought into the company and united the board as commit Director. The company has its head slip and w atomic number 18ho routine on the indus discharge estate in Birmingham, where the draw awayment team and flier surgical incision resides, including a large central wargonhouse. 4.2 The business was set up to offer a part exchange facility online accessible 24 time of days a twenty-four hour period or physic whollyy bring them into one of the 60 blacklegs, and supplies a complete range of re-manufactured inkjet and toner cartridges do nation colossal t only passage shops. Its main competitors argon suppliers in the cartridge supplier sector in UK. Its main intrinsic stakeholders be itsBoard of Directors, macrocosm the investors and manager of t he organization. Employees, they atomic number 18 the plumpers of the organization in mingled departments to run its operations in picture for a salary. Its external stakeholders atomic number 18 itsSuppliers, these argon the people that proffer the supplies of re-manufactured inkjet and laser toner cartridge after it has been refilled. Customers that pay on cash, order online, or buy at one of the nationwide entanglement of shops. These nodes fib for 80% of inkstand expressage revenue. Government of UK, they are interested in the transaction of the business in order to be able to collect the taxes on the profit levels. 4.4 The shareholders are still heavily involved in the day to day operations with Paul Fernon as Managing Director with 40% shares with the largest share, Victoria Dawson as Sales Director with 30% shares and Anil Gupta as Finance Director with 30% shares. A qualified comptroller Alex Fox has been busy as the first member of the accountant team that repo rts to Michael OPayne exclusively have direct access to the Finance Director as well. 4.5 inkwell Limited is organized into departments and has an equivalent of 180 employees includingthe score department elate Appendix on page for a structured chart. Analysis and evaluating the schemeStructure and Function5.1 The Company Accountant is Michael OPayne whos accountable for the running of the invoice department. The first member of the accounts team is Alex Fox with opposite 5 adequate meter provide. 5.2 The reckonerized governing body in the head office is an integrated strategy which is linked between the distinct accounting businesss. speckle in early(a) 60 shops they are on a stand-alone basis and info and breeding are stored separately. 5.3 The unalike section of the department, its supply and responsibilities General Ledger and Inventory- Michelle Labelle account clerk. Responsible for entering applicable selective information into the skilful habitual ledger, keep financial rig over companies inventories. Purchase ledger- Liana caravansary accounts clerk. Responsible for liaising with suppliers and other associated transactions. Sales ledger- Greg Morris accounts clerk. Responsible for handwritinging with customers and other associated transactions. personifying- Alan parry cost technician. Responsible for dealing with in enjoin costs and other associated transactions. Payroll- Sharon Ward, BA (Hons) is a violence database and wage clerk. Responsible for preparing monthly salaries and take for all the employees and all associated transactions and second is to maintain the strength database. 5.4 The accounting functions in details areProcessing and accedeing of the financial transactions of the mention customers and quotation suppliers of the contrary sections in the accounts department. Preparation of management informations on credit sales, credit purchases, costing and payroll associated returns and documents. 5.5 Michelle Labelle in the general ledger and inventory function Enters all data requiring input now into companys cash book and its small cash imprest agreement and keep financial keep back over the companys inventories. If inventories run short above three days holding in any shop Michelle has to telephone and get justifications for the variance. 5.6 Liana Khan in the purchase ledger functionMakes sure that all suppliers invoices and credit notes are entered into theAccounts collectible Ledger, and for Subsequently arranging the payments to suppliers.5.7 Greg Morris in the sales ledger functionUses a credit reference federal agency to run into that potential in the buff-made credit customers have no history of poor payments. Checks any new customer who applies is always given a line of credit after this trial period. 5.8 Alan Cook in the costing functionUses a target costing approach, work out what the cost of each component such as ink or p liveic, and Supplies managem ent with the monthly basis, andAdvises management of variances from target.5.9 Sharon Ward in the payroll and personnel database function Operates the companys two payrolls prepares the pay slips from the rotas prepared by the managers for the provides. The salaries staffs are paid monthly on the last working(a) day of the month using the Bankers Automated Clearing governing body (BACS). 6 Review of the accounting governing body6.1 testify Keeping arrangingA business needs an impelling and manageable go in suitablety agreement. This is why in the business environment with regulated accounting structures, it is vital that organizations have the undeniable records of evidence to support business operations. All transaction is electronically and manually processed to be made in stock(predicate). The necessity to provide access to put down information is crucial. These are informations relating to the different accounting function, such as PurchaseSalesPayrollCash and Bank ing nature charge systems are useTo better support the finishance of the organization activities and enable better decision making all byout the structure of the organization. To touch on sure that information is available for early or current processes, and helps in addition in the improving and upgrading of the manual or computerized processes. To address any future issues that may arise inseparablely orexternally, such as impostor, lawsuits and other an-ethical accusations. To support the employees in the different functions of the business to be more streamlined, robust in the accuracy of delivering the work. Records which are processed and made available are and so utilize to produce other financial reports. Michelle Labelle in the general ledger and inventory function record and process the different inventory, suppliers data to make available information on Suppliers apostrophize pricesSelling pricesProfit marginsRe-order level and quantitiesThe data is used to ex perience the overall cost of inventory, purchase and how much owed to better plan for future costs. Greg Morris in the sales ledger function processes the cash, cheques and other financial data to ensure that information is available on demand for CustomersSelling pricesBad debt arrive customers owedThis information is used for different purposes such as it is used by the debt sight agency for the collections of debt. The use of computerized recording system is more efficient than paper base. This is due to because the use of paper base recording system is more likely to produce errors then having a computerized format that data is just inputted in. Using a computerized system is less costly and time consuming. 6.2 Internal schema of ControlFor an organization to have efficient and effective operation of its activities, internal system of nurse surgerys is used by the management in place to ensure that the organization achieve its goals. This is where policies and procedures co me in place to establish an internal control system to maximize the maculation of frauds and errors, and to minimize their reachrence also. Existing internal system of control in Inkwell limited areSupervision of the accounts office by a Company Accountant and Senior accounts member. A staff rota is prepared by the managers to ensure adequate staff coverage for all the opening hours of their shops. An information technology policy exists which sets out rules relevant to securing the computer systems. The computer system throughout the company is password protected. Company cheques are required for liberty by the three directors & company accountant and other financial documents for approval. atonement of the purchased stock a overhearst recorded inventory level. Purchases duties are segregated to minimize the insecurity of fraud. A credit rating agency is used to ensure that potentially new credit customers have no history of poor payments. insurance policy for dealing with n on-payment of debt exists, and its state out the actions and procedure. Cheques and cash from customers are kept in office safe until it is banked. Internal control that is missing or do-nothing improve isCompany policies and procedures.Disciplinary measure to breach of policy or miss conduct.Management supervision.Segregation of duties supply Recruitment proceduresStaff readying and Continual Professional developing.Restriction on accessing of computer systems.Enforcement on computerise backup of financial documents.Retention and disposal of records throughout the business.Accounting received and procedures. try assessment.Liquidity management.Verification and checks of accounting data.List of authorized access.Checks relating to wages paid outCredit control system.6.3 skulkerFraud is the use of deception with the intention of obtaining an advantage, avoiding an obligation or causing loss to individual else or to anorganization this is the general definition of fraud. It i s an unfortunate fact of demeanor and comes in many forms and is recognized as a criminal act in many countries including UK. Possibility and opportunity of fraud within Inkwell limited is possible due to the internal control is not efficient, efficacious, being deficient and the opportunity of fraud is there for the fetching. Fraud covers a wide range of area criminal activity. Common types of fraud arethi every(prenominal) deceitfully taking someone elses priggish(a)ty.False accounting Dishonestly destroying, defacing, concealing or falsifying an accounting record for face-to-face gain or to cause loss to someone else. Bribery and corruption taking or giving a bribe that might influence the actions of others. joke Obtaining decorousty, money, services or evading liability by deception Methods that tail end be used to detect fraudFraud can be notice by the experience manager by simple observation and through experience and also through a robust internal control system . Some sigh can include Employees acting suspiciously look shifty and hiding paperwork Employees with higher levels of spending than you would expect from their income Employees working grand hours and taking less than the normal holiday entitlement. Employees who have a malice against the organization.Employees who are known to be short of money.The usage of the meshing to for online sale is also at put on the line of fraud, since customers give Debit and Credit separate details to pay their debts. Card fraud transaction can be detected by using Business rules. Opportunity and Potential areas of risk of fraud taking place are 3000 worth of a situation make of cartridge was unaccounted for during reconciliation of inventory with purchase order. Goods not seem on the warehouse inventory record.Cash and cheques are entered manually which can be easily be subject to false accounting thrills on wages being underpaidOnly one staff operates and have access to payroll systemLack of written instruction manualComputer are not logged out and locked when not in use.No system in place for warehouse or administrative employees to record and know the time they arrive and when they leave the office The usage of account or credit card detail by customers over the net income to pay. 6.4 Working Methods and PracticesThe working methods used in Inkwell Limited areComputers are attributed to each staff whether part-time or fulltime to work on. The computer systems are run on an integrated network, with all PCs linked to two printers in the department. Every shop has PCs and printers of its own.Microsoft office excel spreadsheets is used in the accounting system for recording of the different data. All computers use Windows prognosis operating system and loaded with Microsoft office 2007 consisting of 80-user operating license, and one new computer loaded with Sage Payroll packet schedule to futile payroll and personnel system to be run in-house. Internet access is available on every computer with Mozilla Firefox as web browser. Password is used on the computers.Large trade customers are put on a cash-with-order basis for the first three months of business. A credit reference agency is used potentially new customers have no history of severely credit. All cash and cheques are removed from the till, leaving a bungle of 50 cash in each for the start of the next day. Staff salaries are paid monthly using the Bankers Automated Clearing System (BACS). Prepared by the wage clerk, signed by the Company Accountant and banked on 24th of each month. The methods and practices can be amend in the fol let outingAll 60 computers at the shops operate on a stand-alone system. jump out Spreadsheet being used for recording accounting data.Debt collection agency being used to collect bad debt is expensive. Password used for the computers.The removal of all cash and cheques, from the individual tills are notpracticed. plunk for up of computerized data.6. 5 development dressing is essential for every personnel of an organization, as it improve the ability of the staff to perform its work and therefor trim back the amount of errors and hired part time staff used to perform tasks that cant be through with(p) inside the organization. This is why every staff must get the opportunity to continue their professional development and be skilled to perform the task at hand. Inkwell Limited does not have the veracious policy and systems in place to promote employees to be enrolled in a part time or full time course, unless they take it on themselves to address the issue to the management. Benefits of educationStaffs are updated to the accounting standard and regulations. They will be motivated to work and be more efficient due to possibility of a promotion or career opportunity being increased, therefor errors is reduced. Staff will be more skilled to meet the needs of the organization. Professionally regulated staff will be governed by a recognized code of ethical motive from a professional accountancy body. Will better know how to, manage the time to do the tasks, therefor becoming more flexible and productive. Development of an ethical approach to the work and to employers and clients, acquired by experience and training. WEAKNESSES IDENTIFIEDRecord keeping systemNo completion of trial balance, statutory accounts as think. Window dressing of the accounts.Transaction accounting are not make on a day to day basisAccounting record data entering is not being viewed as apriority by Michael OPayne and Anil Gupta. Having unusual entries found in the general ledger.Errors may occur in inputting data into the computer.Internal System of ControlNo meet recruitment procedures in place to hire staff that has dismiss. The existing policies are not fully followed. This includes the Computers information technology policy, with no proper password, and put down off the computer after use. A lack of internal control for sen sing and fraud prevention Lack of segregation of duties.No proper scheduling back up of all IT systems being followed.No proper security for the shops.No policy for Data protection.No appoint of authorized personnel to access certain documents.No follow up control in place to the internal controls being followed.No supervision is done to monitor the signing in and signing out in the business.For the 60 shops, computers run on a stand-alone system.No safeguard for the proper security procedures in place/security issues relating to calculate and credit cards details over the internet (Identity theft). FraudPossibility of fraud is high this may be caused due toNothing is done to ensure working practices bear up underes a proper way. Inadequate guidance on how to detect and deal with fraud.Low effectiveness of security systems especially the password which does not improved each time is changed and can be guessed easily. A lack of supervision, monitor and checks of accounting activit ies and records kept. Debit and Credit cards usage over the internet for customers to pay their debt can be subject to identity theft. Noncompliance to internal control.Unaccounted Cartridges worth 3500, with no record in inventory. dilate of transactions being deleted in the database, relating to one-off significant payments. Working Methods and PracticesBreach of software and user license for software in use, can bring court-ordered action against the company. No coverage or placement of professional personnel to have got out the work of heedless staff. Lack of enforcement of legal want trough out the business and working practice is very low due to low standards Liquidity management is very poor.Lack of motivational skills from the directors of the business. No adequate physical controls to ensure the security and safe keeping of the businesses assets so that they do not go missing or are stolen. Working conditions and schedule are not respected by the Directors, having prob lems prioritizingwork Lack of staffs, causing over working of staffs and no coverage or placement of professional personnel to carry out the work of absent staff. Therefor agencies are hired to do the work, which is costly. Job rotation is not practiced in the organizationA required computer program needs to be attributed to these functions Invoicing which is carried out.Data on Excel spreadsheet is manually input.TrainingMore training is necessitate for operatingQuickcost systemPayroll and personal system Several teething problems experienced with the integrated payroll and personnel database. Need for education is needed forProfessional approach to work.Reliability in scathe of competence.How to properly appreciation a secure credit and debit card transaction. RecommendationRecommendations are done following the various weaknesses identify and mentioned above. Record keeping systemThe management must ensure that the planned working schedule is followed strictly. If problems mee ting the targets occur, it should be communicated to the responsible supervisors so proper action can be taken. Working schedule should be correct in so that the review of the payments and all other relating transaction are done earlier so that they dont have to windowpane dress. Different task must be prioritized by the management, so that bout does not occur, were task are neglected. Accounting record data entry must be prioritized by the two organizations directors Michael OPayne and Anil Gupta. The directors must review the benefits that will be gained. Unsure that the proper records relating to the daily business transaction are entered into the general ledger. Verify the data inputted in the computer to ensure that is correct. Internal System of Control shopworn policy and guidelines of hiring staffs should be introduced, pointing out the necessary detailed document that is needed making theprocess more transparent and reliable. Staffs should be sensitized of the policies in place and know the importance of respecting them. Setting up a fraud policy which sets out the way to detect and deal with fraud, throughout the different working procedure and practice. Duties should be segregated, by setting up a system, which when combined, could lead to fraud. The existing policy should be re-enforce, so that the record kept on the computers would be backed up on the server on a unvarying basis to prevent loss of data kinda of doing it once a day. alarm systems should be installed for all the shops of the organization, to better protect the business assets from being stolen. fitting policy and procedures should be introduced. The Data Protection Act should be communicated to all staffs, to better protect the companys and the customer Data. A list of authorized personnel should be produced and communicated to the staffs. Staff personnel should be put in charge of verifying that all policies in place are being followed. A logging system should be set up to hav e a record of who comes in the office and at what time. much(prenominal) system should be monitored to ensure all staff complies. An integrated network should be set up on a server to bond the computers together with proper licensed software. Safeguards should be utilize on the procedure for transaction involving debit and credit card details provided by the customers. A standard and effective Sage Accounting package should be bought to unable A standard layout of the invoices issued to customers.Enable data to be merchandise and exported from and to Excel spreadsheets. Enable better detection of errors in the different account ledgers. FraudTo reduce the possibility of fraud and make the internal control system fraud resistant, the various techniques should use Accounting activities should be supervised on a regular basis. The records and calculation of financial document should be sampled and check up on regularly for errors. Make sure that the fraud policy which will be intr oduced set out the way to detect and deal with fraud, throughout the different working procedure and practice and to make any adjustment necessary. Managers of the various departments should be given areas of responsibilities and answerability to ensure that fraud is kept to a minimum. Value of a business rule management system (BRMS) approach to fraud detection can be implemented. Business rules can be usedto validate various conditions for detecting anomalies that can indicate fraud.Enables institutions to fight back quickly in their effort to keep pace with fraudsters. Disciplinary measures or penalties should be set up for breaking an internal control or if a staff is practicing fraudulent act. Physical security should be re-enforced, lock up valuable items away, such as cash and cheques. Set up a limit to which a financial transaction should be requiring authorization, by one or more authorized signature. This may range from petty cash or cheques over a certain amount. Doing a regular reconciliation of the accounts to the financial documents to make sure they balance and errors corrected. Management should carry out Risk Assessments as part of the of an effective internal control system. Working Methods and PracticesMake sure that all computers use license software in all the shops and departments, monitor that the license are not broken causing legal action to the organization. Adequate number of specialized staffs should be introduced for the coverage of staff that is absent. The business must comply with all relevant External regulations. Such as international accounting standards even governing regulation from HMRC. This will aid in raising the standard of working practices. Better management of buying inventory from suppliers. Credit to customers should be reduced. The managers should undergo a management course, to learn how to better manage their business, motivate their employees through training, giving out bonuses, paying for overtime and ot her incentives. All assets should be recorded and proper management of the assets should be put in place, to know the life cycle. Directors should produce an effective working schedule, reducing the stress on employees. Adequate number of specialized staffs should be introduced for the coverage of staff that is absent. incur an effective rota to unable the staff to rotate to different accounting functions in the organization. A standard and effective Sage Accounting package should be bought to unable A standard layout of the invoices issued to customers.Enable data to be imported and exported from and to Excel spreadsheets. Enable better detection of errors in the different account ledgers. TrainingMore training should be provided forQuick cost systemPayroll and personal systemTo ensure that staff has the necessary skills and familiarity to be more effective and reliable in their work, in terms of competence Staffs Training should be invested in by the management, to better handle the daily tasks. Including Debit & Credit cards transactions This should include internal or external training courses for using any newly introduced accounting package. Telephone support lines made available by the software provider. Workshops on the improvement of staffs communications skills. Cost benefit analysisImprovement Recommended Cost of Time BenefitsTime spent by manager in Training25 hours 3 25 per hourTime spent by 5 account staff25 hours 5 15 per hourTOTAL TRAINING COST 187518753750 The work output will be more accurate due to the raise of standard. The organization will expect more professional, more efficient, meanings fewer errors and problems. Cost of hiring new Accounting staffs 192000The different responsibilities can be segregated and work will be done faster. Setting up of computers on a network Cost of ironware Installation cost500010006000Access to data will be easier which will speed up the work and save time. New accounting Package Cost of the softwa re Installation cost cost of training the staff 100003000350016500Many routine operations will be speeded up, save time and reduces wages bill. 9.2 To carry out a Risk assessment the management will require 2 hours per month. This will caution and reduce the risk of fraud in the accounting system by identifying the areas of the risk of fraud and then setting up a system in place to detect any possibility of fraud and then deal with it, making the system more reliable. AppendicesSWOT AnalysisStrengthsRecord keeping systemUsing an archiving computer package to store full accounting records. Easy access to past exact copy of company accounting transactions. Sage Payroll software was loaded in the accounts department to enable the new payroll and personnel system to be in house. Excel spreadsheets are used for maintaining the inventory information. Integrated General, Accounts payable and Accounts receivable set of ledger principal financial accounting system. Internal system of contro lAn information technology policy exist which sets out rules relevant to securing the computer systems. The computer system throughout the company is password protected. A credit rating agency is used to ensure that potentially new credit customers have no history of poor payment. Value of a business rule management system (BRMS) approach to fraud detection benefits The performance of the rules is high enough to provide real-time detection of anomalies establish on several criteria, including multiple sources, transaction values, card-use frequency, merchant and location of the charges. If implemented new detection policies can be activated in hours, instead of months, helping to reduce lost revenue and increase customer satisfaction and provides safety in online transaction.