Inkwell is a Public limited company and was established in 2003. seven old ages ago by two of its three commanding stockholders. Paul Farnon and Victoria Dawson. Two old ages ago Anil Gupta bought into the company and joined the board as Finance Director. The company has its caput office and warehouse on the industrial estate in Birmingham. where the direction squad and history section resides. including a big cardinal warehouse. 4. 2 The concern was set up to offer a portion exchange installation online accessible 24 hours a twenty-four hours or physically convey them into one of the 60 stores. and supplies a complete scope of re-manufactured inkjet and toner cartridges through countrywide high street stores. Its chief rivals are providers in the cartridge provider sector in UK. Its chief internal stakeholders are its
Board of Directors. being the investors and director of the organisation. Employees. they are the workers of the organisation in assorted sections to run its operations in return for a salary. Its external stakeholders are its:
Supplier’s. these are the people that provide the supplies of re-manufactured inkjet and optical maser toner cartridge after it has been refilled. Customers that pay on hard currency. order online. or purchase at one of the countrywide web of stores. These clients account for 80 % of Inkwell Limited gross. Government of UK. they are interested in the public presentation of the concern in order to be able to roll up the revenue enhancements on the net income degrees. 4. 4 The stockholders are still to a great extent involved in the twenty-four hours to twenty-four hours operations with Paul Fernon as Managing Director with 40 % portions with the largest portion. Victoria Dawson as Gross saless Director with 30 % portions and Anil Gupta as Finance Director with 30 % portions. A qualified Accountant Alex Fox has been employed as the first member of the accountant squad that reports to Michael O’Payne but have direct entree to the Finance Director as good. 4. 5 Inkwell Limited is organized into sections and has an equivalent of 180 employees including the accounting section – see Appendix on page for a structured chart. Analysis and measuring the system
Structure and Function
5. 1 The Company Accountant is Michael O’Payne who’s responsible for the running of the accounting section. The first member of the histories squad is Alex Fox with other 5 full clip staff. 5. 2 The computerized system in the caput office is an incorporate system which is linked between the different accounting maps. While in other 60 stores they are on a stand-alone footing and informations and information are stored individually. 5. 3 The different subdivision of the section. its staff and duties: General Ledger and Inventory- Michelle Labelle history clerk. Responsible for come ining relevant informations into the general leger. maintain fiscal control over companies stock lists. Purchase ledger- Liana Khan accounts clerk. Responsible for interceding with providers and other associated minutess. Gross saless ledger- Greg Morris histories clerk. Responsible for covering with clients and other associated minutess. Costing- Alan Cook bing technician. Responsible for covering with input costs and other associated minutess. Payroll- Sharon Ward. BA ( Hons ) is a personnel database and pay clerk. Responsible for fixing monthly wages and rewards for all the employees and all associated minutess and second is to keep the forces database. 5. 4 The accounting maps in inside informations are:
Processing and recording of the fiscal minutess of the recognition clients and recognition providers of the different subdivisions in the histories section. Preparation of direction information’s on recognition gross revenues. recognition purchases. costing and paysheet associated returns and paperss. 5. 5 Michelle Labelle in the general leger and stock list map: Enters all informations necessitating input straight into company’s hard currency book and its junior-grade hard currency imprest system and maintain fiscal control over the company’s stock lists. If stock lists get above three days’ keeping in any store Michelle has to telephone and acquire justifications for the discrepancy. 5. 6 Liana Khan in the purchase leger map:
Brands sure that all supplier’s bills and recognition notes are entered into the
Histories Collectible Ledger. and for Subsequently set uping the payments to providers.
5. 7 Greg Morris in the gross revenues ledger map
Uses a recognition mention bureau to guarantee that possible new recognition clients have no history of hapless payments. Checks any new client who applies is ever given a line of recognition after this test period. 5. 8 Alan Cook in the costing map:
Uses a mark bing attack. working out what the cost of each constituent such as ink or plastic. and Supplies direction with the monthly footing. and
Advises direction of discrepancies from mark.
5. 9 Sharon Ward in the paysheet and forces database map: Operates the company’s two paysheets prepares the wage slips from the Rotas prepared by the directors for the staffs. The wages staffs are paid monthly on the last on the job twenty-four hours of the month utilizing the Bankers Automated Clearing System ( BACS ) . 6 Review of the accounting system
6. 1 Record Keeping System
A concern needs an effectual and manageable recordkeeping system. This is why in the concern environment with regulated accounting constructions. it is critical that organisations have the necessary records of grounds to back up concern operations. All dealing is electronically and manually processed to be made available. The necessity to supply entree to recorded information is important. These are information’s associating to the different accounting map. such as ; Purchase
Cash and Banking
Record maintaining systems are used ;
To better back up the public presentation of the organisation activities and enable better determination doing all throughout the construction of the organisation. To do certain that information is available for future or current procedures. and helps besides in the improving and upgrading of the manual or computerized procedures. To turn to any future issues that may originate internally or externally. such as fraud. cases and other an-ethical accusals. To back up the employees in the different maps of the concern to be more efficient. productive in the truth of presenting the work. Records which are processed and made available are so used to bring forth other fiscal studies. Michelle Labelle in the general leger and stock list map record and treat the different stock list. supplier’s informations to do available information on: Suppliers
Cost monetary values
Selling monetary values
Net income borders
Re-order degree and measures
The information is used to cognize the overall cost of stock list. purchase and how much owed to better program for future costs. Greg Morris in the gross revenues ledger map processes the hard currency. checks and other fiscal informations to guarantee that information is available on demand for: Customers
Selling monetary values
Sum clients owed
This information is used for different intents such as ; it is used by the debt aggregation bureau for the aggregations of debt. The usage of computerized recording system is more efficient than paper base. This is due to because the usage of paper base entering system is more likely to bring forth mistakes so holding a computerized format that information is merely inputted in. Using a computerized system is less dearly-won and clip consuming. 6. 2 Internal System of Control
For an organisation to hold efficient and effectual operation of its activities. internal system of control processs is used by the direction in topographic point to guarantee that the organisation accomplish its ends. This is where policies and processs come in topographic point to set up an internal control system to maximise the sensing of frauds and mistakes. and to minimise their happening besides. Existing internal system of control in Inkwell limited are:
Supervision of the histories office by a Company Accountant and Senior histories member. A staff Rota is prepared by the directors to guarantee equal staff coverage for all the gap hours of their stores. An information engineering policy exists which sets out regulations relevant to procuring the computing machine systems. The computing machine system throughout the company is password protected. Company checks are required for mandate by the three managers & A ; company comptroller and other fiscal paperss for blessing. Reconciliation of the purchased stock against recorded stock list degree. Purchases responsibilities are segregated to minimise the hazard of fraud. A recognition evaluation bureau is used to guarantee that potentially new recognition clients have no history of hapless payments. Policy for covering with non-payment of debt exists. and its province out the actions and process. Checks and hard currency from clients are kept in office safe until it is banked. Internal control that is losing or can better is:
Company policies and processs.
Disciplinary step to breach of policy or miss behavior.
Segregation of responsibilities
Staff Recruitment processs
Staff preparation and Continual Professional Development.
Restriction on accessing of computing machine systems.
Enforcement on Computerize backup of fiscal paperss.
Retention and disposal of records throughout the concern.
Accounting criterion and processs.
Confirmation and cheques of accounting informations.
List of authorised entree.
Checks associating to rewards paid out
Credit control system.
6. 3 Fraud
Fraud is the usage of misrepresentation with the purpose of obtaining an advantage. avoiding an duty or doing loss to person else or to an organisation ; this is the general definition of fraud. It is an unfortunate fact of life and comes in many signifiers and is recognized as a condemnable activity in many states including UK. Possibility and chance of fraud within Inkwell limited is possible due to the internal control is non efficient. efficacious. being lacking and the chance of fraud is at that place for the pickings. Fraud covers a broad scope of country condemnable activity. Common types of fraud are:
Theft – Dishonestly taking person else’s belongings.
False accounting – Dishonestly destructing. disfiguring. hiding or distorting an accounting record for personal addition or to do loss to person else. Bribery and corruptness – taking or giving a payoff that might act upon the actions of others. Deception – Obtaining belongings. money. services or hedging liability by misrepresentation Methods that can be used to observe fraud
Fraud can be detected by the experience director by simple observation and through experience and besides through a robust internal control system. Some sigh can include: Employees moving suspiciously – looking shifty and concealment paperwork Employees with higher degrees of disbursement than you would anticipate from their income Employees working long hours and taking less than the normal vacation entitlement. Employees who have a score against the organisation.
Employees who are known to be short of money.
The use of the cyberspace to for on-line sale is besides at hazard of fraud. since clients give Debit and Credit Cards inside informations to pay their debts. Card fraud dealing can be detected by utilizing Business regulations. Opportunity and Potential countries of hazard of fraud taking topographic point are: ?3000 worth of a peculiar brand of cartridge was unaccounted for during rapprochement of stock list with purchase order. Goods non looking on the warehouse stock list record.
Cash and checks are entered manually which can be easy be capable to false accounting Complaint’s on rewards being underpaid
Merely one staff operates and hold entree to payroll system
Lack of written instructions
Computer are non logged out and locked when non in usage.
No system in topographic point for warehouse or administrative employees to enter and cognize the clip they arrive and when they leave the office The use of debit or recognition card item by clients over the cyberspace to pay. 6. 4 Working Methods and Practices
The working methods used in Inkwell Limited are:
Computers are attributed to each staff whether part-time or fulltime to work on. The computing machine systems are run on an integrated web. with all Personal computers linked to two pressmans in the section. Every store has Personal computers and pressmans of its ain.
Microsoft office excel spreadsheets is used in the accounting system for recording of the different informations. All computing machines use Windows Vista runing system and loaded with Microsoft office 2007 consisting of 80-user operating licence. and one new computing machine loaded with Sage Payroll package to unable paysheet and forces system to be run in-house. Internet entree is available on every computing machine with Mozilla Firefox as web browser. Password is used on the computing machines.
Large trade clients are put on a cash-with-order footing for the first three months of concern. A recognition mention bureau is used potentially new clients have no history of bad recognition. All hard currency and checks are removed from the boulder clay. go forthing a float of ?50 hard currency in each for the start of the following twenty-four hours. Staff wages are paid monthly utilizing the Bankers Automated Clearing System ( BACS ) . Prepared by the pay clerk. signed by the Company Accountant and banked on 24th of each month. The methods and patterns can be improved in the followers:
All 60 computing machines at the stores operate on a stand-alone system. Excel Spreadsheet being used for entering accounting informations.
Debt aggregation bureau being used to roll up bad debt is expensive. Password used for the computing machines.
The remotion of all hard currency and checks. from the single boulder claies are non practiced. Backing up of computerized informations.
6. 5 Training
Training is indispensable for every force of an organisation. as it better the ability of the staff to execute its work and therefor cut downing the sum of mistakes and hired portion clip staff used to execute undertakings that can’t be done inside the organisation. This is why every staff must acquire the chance to go on their professional development and be skilled to execute the undertaking at manus. Inkwell Limited does non hold the proper policy and systems in topographic point to promote employees to be enrolled in a portion clip or full clip class. unless they take it on themselves to turn to the issue to the direction. Benefits of preparation:
Staffs are updated to the accounting criterion and ordinances. They will be motivated to work and be more efficient due to possibility of a publicity or calling chance being increased. therefor mistakes is reduced. Staff will be more skilled to run into the demands of the organisation. Professionally regulated staff will be governed by a recognized codification of moralss from a professional accounting organic structure. Will better cognize how to. pull off the clip to make the undertakings. therefor going more flexible and productive. Development of an ethical attack to the work and to employers and clients. acquired by experience and preparation. WEAKNESSES IDENTIFIED
Record maintaining system
No completion of test balance. statutory histories as planned. Window dressing of the histories.
Transaction accounting are non done on a twenty-four hours to twenty-four hours footing
Accounting record informations entry is non being viewed as apriority by Michael O’Payne and Anil Gupta. Having unusual entries found in the general leger.
Mistakes may happen in inputting informations into the computing machine.
Internal System of Control
No proper enlisting processs in topographic point to engage staff that has dismiss. The bing policies are non to the full followed. This includes the Computers information engineering policy. with no proper watchword. and logging off the computing machine after usage. A deficiency of internal control for sensing and fraud bar Lack of segregation of responsibilities.
No proper programming back up of all IT systems being followed.
No proper security for the stores.
No policy for Data protection.
No list of authorised forces to entree certain paperss.
No follow up control in topographic point to the internal controls being followed.
No supervising is done to supervise the sign language in and subscribing out in the concern.
For the 60 stores. computing machines run on a stand-alone system.
No precaution for the proper security processs in place/security issues associating to debit and recognition cards inside informations over the cyberspace ( Identity larceny ) . Fraud
Possibility of fraud is high ; this may be caused due to:
Nothing is done to guarantee working patterns undergoes a proper manner. Inadequate counsel on how to observe and cover with fraud.
Low effectivity of security systems particularly the watchword which does non improved each clip is changed and can be guessed easy. A deficiency of supervising. monitoring and cheques of accounting activities and records kept. Debit and Credit cards use over the cyberspace for clients to pay their debt can be capable to individuality larceny. Disobedience to internal control.
Unaccounted Cartridge’s deserving ?3500. with no record in stock list. Detailss of minutess being deleted in the database. associating to one-off important payments. Working Methods and Practices
Breach of package and user licence for package in usage. can convey legal action against the company. No coverage or arrangement of professional forces to transport out the work of absent staff. Lack of enforcement of legal demand trough out the concern and working pattern is really low due to low criterions Liquidity direction is really hapless.
Lack of motivational accomplishments from the managers of the concern. No equal physical controls to guarantee the security and safe maintaining of the concerns assets so that they do non travel losing or are stolen. Working conditions and agenda are non respected by the Directors. holding jobs prioritising
work Lack of staffs. doing over working of staffs and no coverage or arrangement of professional forces to transport out the work of absent staff. Therefor bureaus are hired to make the work. which is dearly-won. Job rotary motion is non practiced in the organisation
A needed computing machine plan demands to be attributed to these maps: Invoicing which is carried out.
Datas on Excel spreadsheet is manually input.
More preparation is needed for operating:
Payroll and personal system: Several teething jobs experienced with the integrated paysheet and forces database. Need for instruction is needed for:
Professional attack to work.
Dependability in footings of competency.
How to properly manage a secure recognition and debit card dealing. Recommendation
Recommendations are done following the assorted failings identified and mentioned above. Record maintaining system
The direction must guarantee that the planned working agenda is followed purely. If jobs run intoing the marks occur. it should be communicated to the responsible supervisors so proper action can be taken. Working agenda should be adjusted in so that the reappraisal of the payments and all other associating dealing are done earlier so that they don’t have to window frock. Different undertaking must be prioritized by the direction. so that struggle does non happen. were undertaking are neglected. Accounting record informations entry must be prioritized by the two organization’s managers Michael O’Payne and Anil Gupta. The managers must reexamine the benefits that will be gained. Unsure that the proper records associating to the day-to-day concern dealing are entered into the general leger. Verify the informations inputted in the computing machine to guarantee that is right. Internal System of Control
Standard policy and guidelines of engaging staffs should be introduced. indicating out the necessary elaborate papers that is needed doing the procedure more transparent and dependable. Staffs should be sensitized of the policies in topographic point and cognize the importance of esteeming them. Puting up a fraud policy which sets out the manner to observe and cover with fraud. throughout the different on the job process and pattern. Duties should be segregated. by puting up a system. which when combined. could take to fraud. The bing policy should be re-enforce. so that the record kept on the computing machines would be backed up on the waiter on a regular basis to forestall loss of informations alternatively of making it one time a twenty-four hours. Alarm systems should be installed for all the stores of the organisation. to better protect the concern assets from being stolen.
Proper policy and processs should be introduced. The Data Protection Act should be communicated to all staffs. to better protect the company’s and the client Data. A list of authorised forces should be produced and communicated to the staffs. Staff forces should be put in charge of verifying that all policies in topographic point are being followed. A logging system should be set up to hold a record of who comes in the office and at what clip. Such system should be monitored to guarantee all staff complies. An incorporate web should be set up on a waiter to link the computing machines together with proper licensed package. Precautions should be implemented on the process for dealing affecting debit and recognition card inside informations provided by the clients. A criterion and effectual Sage Accounting bundle should be bought to unable: A standard layout of the bills issued to clients.
Enable informations to be imported and exported from and to Excel spreadsheets. Enable better sensing of mistakes in the different history legers. Fraud
To cut down the possibility of fraud and do the internal control system fraud resistant. the assorted techniques should utilize: Accounting activities should be supervised on a regular footing. The records and computation of fiscal papers should be sampled and checked on a regular basis for mistakes. Make certain that the fraud policy which will be introduced set out the manner to observe and cover with fraud. throughout the different on the job process and pattern and to do any accommodation necessary. Directors of the assorted sections should be given countries of duties and accountability to guarantee that fraud is kept to a lower limit. Value of a concern regulation direction system ( BRMS ) attack to fraud sensing can be implemented. Business regulations can be used to formalize assorted conditions for observing anomalousnesss that can bespeak fraud.
Enables establishments to respond rapidly in their attempt to maintain gait with fraudsters. Disciplinary steps or punishments should be set up for interrupting an internal control or if a staff is practising deceitful act. Physical security should be re-enforced. locking up valuable points off. such as hard currency and checks. Set up a bound to which a fiscal dealing should be necessitating mandate. by one or more authorised signature. This may run from junior-grade hard currency or checks over a certain sum. Making a regular rapprochement of the histories to the fiscal paperss to do certain they balance and mistakes corrected. Management should transport out Risk Appraisals as portion of the of an effectual internal control system. Working Methods and Practices
Make sure that all computing machines use license package in all the stores and sections. proctor that the licence are non broken causing legal action to the organisation. Adequate figure of specialised staffs should be introduced for the coverage of staff that is absent. The concern must follow with all relevant External ordinances. Such as international accounting criterions even authorities ordinance from HMRC. This will help in raising the criterion of working patterns. Better direction of purchasing stock list from providers. Recognition to clients should be reduced. The directors should undergo a direction class. to larn how to better pull off their concern. actuate their employees through preparation. giving out fillips. paying for overtime and other inducements. All assets should be recorded and proper direction of the assets should be put in topographic point. to cognize the life rhythm. Directors should bring forth an effectual working agenda. cut downing the emphasis on employees. Adequate figure of specialised staffs should be introduced for the coverage of staff that is absent. Produce an effectual Rota to unable the staff to revolve to different accounting maps in the organisation. A criterion and effectual Sage Accounting bundle should be bought to unable: A standard layout of the bills issued to clients.
Enable informations to be imported and exported from and to Excel spreadsheets. Enable better sensing of mistakes in the different history legers. Training
More preparation should be provided for:
Quick cost system
Payroll and personal system
To guarantee that staff has the necessary accomplishments and cognition to be more effectual and dependable in their work. in footings of competency: Staffs Training should be invested in by the direction. to better manage the day-to-day undertakings. Including Debit & A ; Credit cards minutess This should include internal or external preparation classs for utilizing any freshly introduced accounting bundle. Telephone support lines made available by the package supplier. Workshops on the betterment of staffs’ communications accomplishments. Cost benefit analysis
Improvement Recommended Cost of Time Benefits
Time spent by director in Training
25 hours ? 3 ? ?25 per hr
Time spent by 5 history staff
25 hours ? 5 ? ?15 per hr
Entire Training COST ?
3750 The work end product will be more accurate due to the rise of standard. The organisation will look more professional. more efficient. significances fewer mistakes and jobs. Cost of engaging new Accounting staffs ?
The different duties can be segregated and work will be done faster. Puting up of computing machines on a web
– Cost of hardware
– Installation cost
Entree to data will be easier which will rush up the work and save clip. New accounting Package
– Cost of the package
– Installation cost
– cost of developing the staff 10000
Many everyday operations will be speeded up. salvage clip and reduces rewards measure. 9. 2 To transport out a Hazard appraisal the direction will necessitate 2 hours per month. This will deter and cut down the hazard of fraud in the accounting system by placing the countries of the hazard of fraud and so puting up a system in topographic point to observe any possibility of fraud and so cover with it. doing the system more dependable. Appendixs
Record maintaining system
Using an archiving computing machine bundle to hive away full accounting records. Easy entree to past exact transcript of company accounting minutess. Sage Payroll package was loaded in the histories section to enable the new paysheet and forces system to be in house. Excel spreadsheets are used for keeping the stock list information. Integrated General. Accounts collectible and Histories Receivable set of leger chief fiscal accounting system. Internal system of control
An information engineering policy exist which sets out regulations relevant to procuring the computing machine systems. The computing machine system throughout the company is password protected. A recognition evaluation bureau is used to guarantee that potentially new recognition clients have no history of hapless payment. Value of a concern regulation direction system ( BRMS ) attack to fraud sensing benefits: The public presentation of the regulations is high plenty to supply real-time sensing of anomalousnesss based on several standards. including multiple beginnings. dealing values. card-use frequence. merchandiser and location of the charges. If implemented new sensing policies can be activated in hours. alternatively of months. assisting to cut down lost gross and increase client satisfaction and provides safety in on-line dealing.