1. Footings of Mention
1. 1This study has been complied to reexamine the Association of Accounting Technician Internal Control and Accounting Systems Unit.
1. 2The study will reexamine the paysheet country and supply recommendations for Cookridge Carpets Limited.
1. 3The unit mapping papers of Principles of Internal Control ( cognition ) PIC is presented in Appendix A.
1. 4The unit mapping papers of Measuring Accounting Systems ( accomplishments ) EAS is presented in Appendix B.
2. 1In order to finish this study I ab initio reviewed the Internal Control and Accounting Systems ( ICAS ) appraisal book for Cookridge Carpets Limited.
2. 2I completed the ICAS Report Plan to obtain farther counsel from the coach. Using the extra counsel I reviewed several web sites and written stuff.
2. 3Further research was undertaken by utilizing the cyberspace and a figure of books.
2. 4I used Companies House to obtain farther information about statutory ordinances and liability of limited companies.
2. 5Wikipedia was used to derive farther informations on fiscal statements and their intent.
2. 6Her Majesty’s Revenue and Customs ( HMRC ) and Sage web sites was used to collate information on Payroll package and accounting bundles.
2. 7For inside informations around IT Networking I researched the IBM and Dell web sites.
2. 8I used the books to acquire information on fiscal statements.
2. 9I analysed the instance survey for possible fraud and reviewed the IBM web site as suggested by the instance survey.
2. 10The bibliography is layout in Appendix C.
3. Executive Summary
3. 1There are a figure of countries for betterment that need to be addressed by Cookridge Carpets Limited.
3. 2The histories office is easy accessible to everyone. whether it is other staff or general populace. It is recommended that the computer keyboard lock is used to procure the office. The benefit of this will guarantee that information is non obtained by unauthorized people.
3. 3Staff working within the histories section do non hold the necessary makings or appropriate preparation. Investing in staff preparation is recommended to understate and extinguish mistakes from happening. Although. a cost is attached to developing this outweighs the possible hazards with describing histories with mistakes.
3. 4Staff are merely responsible for their countries of work this poses hazards and maps will non be undertaken. Recommendation is that staff “buddy up” for each other on periods of absence. Costss attached relate to preparation. but the concern activity would be conducted every bit usual as consequence of to the full trained staff.
3. 5There are no preparation manuals or certification. It is recommended that preparation manuals are in topographic point. The benefit of this is that staff have a mention point when they are diffident of what they need to make.
3. 6There are no eventuality or catastrophe recovery programs in topographic point. It is recommended that programs are documented and in topographic point to guarantee concern continuity. The company will profit from this as they will be able to go on in an exigency and all staff will cognize what their duties are during this period.
3. 7There are no hazard direction policies. Recommendation is that hazard direction programs and registry be kept. The benefit is the concern will be prepared in the improbable event the hazard occurs and will be able to pull off the hazard cost efficaciously.
3. 8The computing machines are stand entirely machines. These should be running on a web. There are initial and on-going costs nevertheless. benefit to the concern will be staff will be able to portion and entree paperss they need to all usage.
3. 9Passwords are the same for all the staff and machines. All staff should hold single watchwords which are changed sporadically. This will cut down hazards of possible unauthorized entree to the system and the company can supervise who has accessed what paperss whilst adhering to the ordinances within the Data Protection Act 1998.
3. 10Payroll tallies are non conducted in a restricted country. It is recommended that paysheet concern is done in a restricted country to protect employee information to follow with the Data Protection Act 1998.
3. 11Blank Cheques being made and left in unbarred shortss. No clean checks should be written. The benefit of non holding clean checks is it eliminates the potency of larceny and loss to the concern.
3. 12Although. the company has an Information Technology Policy in topographic point it is non enforced. The policy should be enforced and punishments introduced if staff do non follow it. This will decrease the hazard of unauthorized entree to the system and the paperss.
3. 13There is no record of money being spent from Petty Cash. The log should be kept up to day of the month and the grosss produced which are checked to supervise junior-grade hard currency spend. This reduces money being taken from the concern through larceny.
3. 14Supervisor issued wage package to married woman of a member of staff. Pay packages should merely be issued to members of staff. Benefit of this is the company is following with Data Protection Act 1998 and employment statute law.
3. 15Ex member of staff authorised the purchase of rug tape and signed the company check. No members of staff other than the proprietors should be able to subscribe the checks and authorise purchases. The benefit of merely the proprietors empowering payments and purchases is they can supervise what payments are being made and they have an audit trail.
3. 16A member of the Gross saless squad accessing the computing machine with Sage Payroll. No unauthorized entree to computing machines in the histories office should be allowed. The benefit is informations is protected and viruses from the cyberspace minimised.
3. 17Cash from safe given to a Salesperson who had been off work ill. Merely the Wages Clerk should be authorised to publish rewards. This minimises larceny and wrong wage being issued.
3. 18Back ups of the system non updated on a regular basis. Introduce automatic back ups and have the waiter off site. There will be costs to run the waiter off site but benefit is that all concern trading activity will be recorded.
3. 19No records of gross revenues committees. Recommend that the gross revenues staff have a sheet to enter their gross revenues and it is signed off by the supervisor on a hebdomadal footing. This will assist extinguish wrong wage being made.
3. 20Bank rapprochements non maintained. Recommend regular bank rapprochements are completed. The company will profit as they will be cognizant of what existent payments have been made and hold a path on how much they still owe.
3. 21No proper debitor aggregation procedure in topographic point. Introduce procedure on guaranting debitors pay on clip. Benefit is that this will bring forth a positive hard currency flow for the company.
3. 22Staff Rota non updated. Rota should be updated daily by the supervisor and sent electronically to the Wages Clerk. Benefit staff paid for existent yearss worked and extinguishing wrong payments being made.
3. 23No record to look into staff really worked the yearss on the Rota. Introduce electronic or paper sign language in system which is signed by the supervisor on a day-to-day footing to vouch attending. Benefit staff paid for existent yearss worked and extinguishing wrong payments being made.
3. 24Customer paid for goods utilizing her husband’s bank card. Gross saless staff to carry on proper cheques when bank cards are used. Benefit is that fraud will be reduced ensuing in company holding payments for goods sold.
4. 1Cookridge Carpets Ltd was established in 2007 by two brothers. Peter and John Cookridge and has been merchandising for three old ages. The company has been financed through a combination of John’s redundancy money ( ?80. 000 ) . heritage and a loan ( ?100. 000 ) which Peter secured against his place.
4. 2The company ab initio started out straight selling rugs. As concern grew they expanded into selling beds and soft trappingss. They are the chief franchise in the country that specialise in froth beds and mattresses. They have besides now started to sell their merchandises over the cyberspace. this once more has increased concern.
4. 3The company employs a sum of 21 staff. An administration chart is shown in Appendix D. The Accounts section is made up of three parttime staff ( Wages Clerk. Histories Receivable Clerk and Accounts Payable Clerk ) . The company late employed a Senior Accounts Clerk. who works full-time oversing the running of the Accounts section. An administration chart for the Accounts section is shown in Appendix E.
4. 4The Wages Clerk has been with the company for four months and is contracted to work 15 hours over two full yearss normally Wednesdays and Thursdays. She is qualified to AAT NVQ Level 2 in Payroll which was awarded in 2004. She has non undertaken any farther preparation since geting this making.
4. 5The Accounts Receivable Clerk has been with the company for one twelvemonth and is contracted to work 37. 5 hours over five yearss per hebdomad. He really covers his hours over a four twenty-four hours hebdomad. He has no formal accounting making but was trained on the occupation in his old station and has some in house preparation with Cookridge Carpets Ltd.
4. 6The Accounts Collectible Clerk has been with the company for 18 months and is contracted to work 20 hours over five yearss per hebdomad. However. she tends to work over two and a half yearss ( all twenty-four hours on Tuesdays and Wednesdays. half twenty-four hours on Thursday forenoon ) . She has no formal accounting making but has several old ages experience in operating histories systems but has non worked in this country for over two old ages.
4. 7Accounts section is unfastened weekdays from 9am to 5. 30pm. The section is based on the first floor of the salesroom and is accessible via a staff and members of the public shared stairwell. Although. there is a keypad lock on the door nevertheless. this is ne’er used and the office layout is unfastened program with no private working countries.
4. 8Their cardinal provider is Memo Beds. who originally asked the company to go the chief franchise for Southampton. Cookridge Carpets besides have farther external relationships with the bank. Debt aggregation Agency. Credit Reference Agency. clients and staff.
4. 9As a Limited company. Cookridge Carpets need to stay by certain ordinances and statutory statute law when they provide fiscal studies. They should be following with the Generally Accepted Accounting Practice ( UK GAAP ) . This organic structure sets out the ordinances on how company accounts should be prepared within the UK. UK GAAP non merely includes the national accounting criterions but besides UK Company jurisprudence.
4. 10Accounting criterions are made from a figure of beginnings. The primary beginning is The Accounting Standards Board ( ABS ) which is portion of the Financial Reporting Council ( an independent regulator entirely funded by a levy on listed companies. The ABS issues the criterions viz. the Financial Reporting Standards ( FRS ) .
4. 11In add-on to the accounting criterions. UK GAAP includes UK Company jurisprudence. The primary statute law is The Companies Act 2006. This Act includes elements of The Companies Act of 1985 and 1989. and incorporates further extra key aims.
4. 12This Act provinces that any company whether trading or non must register their company with the Registrar of Companies. They must besides register one-year fiscal statements and histories with Companies House. a regulative organic structure that lists all companies merchandising or non. Companies House besides examine and store company information and do this information available to the populace.
4. 13Although. the Companies Act 2006 is the current act. it states that one-year histories of companies established prior to 6 April 2008 can go on to fix the histories and studies in conformity to the Companies Act 1985. Since Cookridge Carpets was established in 2007. the Company would so go on to fix histories and studies in the same mode.
4. 14Being a limited company Cookridge Carpets must maintain accounting records and file histories for each accounting period with Companies House. The manager is responsible for entry and would be penalised should these returns be delivered tardily.
4. 15As Cookridge Carpets autumn into the class of little company they will necessitate to subject an one-year return to Companies House. In this instance an brief Balance Sheet with Notes.
4. 16A Balance Sheet is a fiscal statement that provides a snapshot of the business’ assets and liabilities at peculiar clip. It shows how a concern is funded and how the financess are being used.
4. 17The Balance Sheet can besides help directors in analyzing and bettering the direction of the concern every bit good as assist possible investors in their determination devising with respects to imparting money to the company.
4. 18Notes to the histories are auxiliary fiscal information supplying further inside informations on the figures contained in the fiscal studies. These are of import to investors who possibly interested in supplying financess.
4. 19There are a figure of other ordinances and statute law that Cookridge Carpets need to follow with which are listed below and is non sole ;
•The Furniture and Furnishings ( Fire ) ( Safety ) Regulations 1988 •Health and Safety and Work Act 1974
•Employment statute law
•Trade Descriptions Act 1968 and 1972
•Competition Act 1998
•Consumer Credit Act 1974
•Consumer Protection Act 1987 and the General Product Safety Regulations 1994 •Data Protection Act 1998
•Consumer Protection ( Distance Selling ) Regulations 2000
•Electronic Commerce ( EC Directive ) Regulations 2002
4. 20The company must maintain up to day of the month with alterations in ordinances and implement these every bit shortly as possible.
4. 21To generate the one-year histories it is imperative to hold IT systems that are robust and able to present the needed end product.
4. 22The Accounts section has four base entirely computing machines with each being connected to the same pressman. Two of the computing machines were purchased when the company was established and are running on Windows Vista runing system with Microsoft Office 2007 ( with a three user license ) loaded on them. A new computing machine was purchased. which was loaded with Sage Payroll package.
4. 23All staff use the same watchword to entree their computing machines. The watchwords have non been changed.
4. 24The Sage Payroll package is used to cipher and bring forth rewards for all staff. The stock list ( stock ) information is kept on MS Excel and all bills are prepared utilizing a signifier in MS Word.
5. Review of the Payroll System
5. 1Cookridge Carpets Ltd uses the Sage Payroll package to set about their paysheet responsibilities. However. merely the Wages Clerk is able to run this package and has non had any farther preparation or makings since 2004.
5. 2It besides appears that the Wages Clerk conducts some computations manually. this is non necessary with Sage Payroll as the system is capable in ciphering these every bit long as the information sing wage rates. overtime rates and committees have been input on to the system right for each single staff member.
5. 3The Payroll responsibilities are conducted within the unfastened program office this needs to be reviewed to protect the employee information.
5. 4Payslips are printed on the shared pressman. this is non appropriate as other staff and members of the populace can entree the office.
5. 5Unauthorised entree to the Payroll computing machine by other staff members allows for entree to employee records. possible fraud and viruses to be downloaded from the cyberspace.
5. 6Not all staff are paid through their bank histories and pay packages left in office safe which all the histories staff have entree to.
5. 7There is hapless segregation of responsibility as merely the Wages Clerk prepares the paysheet tally and produces the wage packages.
5. 8There is possible for fraud within the histories section. Fraud by and large is illegal and irregular Acts of the Apostless conducted by people to deliberately deceit. Fraud is regulated through the Fraud Act 2006.
The act defines fraud in three classs:
1. fraud by false representation ;
2. fraud by neglecting to unwrap information ; and
3. fraud by maltreatment of place
6. 1Access to the histories section should be minimum and the computer keyboard should be used.
6. 2It is indispensable that the Wages Clerk receives further up to day of the month preparation to treat paysheet information.
6. 3It is of import that the Accounts Receivable and Accounts Payable Clerks undertake formal preparation in order to finish their responsibilities.
6. 4It is recommended that staff should “buddy up” to guarantee concern continuity during periods of absence or see doing agreements for a concern comptroller to supply exigency screen.
6. 5A hazard registry should be implemented to enter the hazards and issues in order to pull off possible hazards and issues.
6. 6Business continuity and catastrophe recovery programs should be in topographic point to assist manage and reconstruct order during and after an incident. This should sketch the functions and duties of all staff when an incident occurs.
6. 7Automatic back ups should be conducted hebdomadal. Back up transcripts of the paysheet informations should be kept in a lockable fireproof cabinet.
6. 8Computers should run on a web to guarantee file sharing is possible.
6. 9Information Technology processs should be enforced.
6. 10System entree watchwords should be generated automatically by the system and changed sporadically.
6. 11The paysheet undertakings should be run on one computing machine located in a restricted country with a separate pressman.
6. 12Segregation of responsibilities should be applied to the paysheet undertakings. one individual should input the employee records and another should make the paysheet tally with one of the proprietors empowering the payments.
6. 13Only the proprietors of the company should be empowering minutess.
6. 14Staff attending should be recorded utilizing a sign language procedure and supervised.
6. 15Payment of rewards should be through BACS for all staff.
The web sites used to research information for this study were:
hypertext transfer protocol: //www. companieshouse. gov. uk/
hypertext transfer protocol: //www. hmrc. gov. uk/index. htm
hypertext transfer protocol: //www. ibm. com/uk/en/
hypertext transfer protocol: //www. dingle. com/
hypertext transfer protocol: //en. wikipedia. org/wiki/Main_Page
The books that were used to research information around fiscal statements were:
Collis. Jill and Hussey. Roger. Business Accounting. Hampshire and New York: Palgrave Macmillan. 2007
Appendix D: Cookridge Carpets Limited Organisation Chart
Appendix E: Cookridge Carpets Limited Accounts Department Organisation Chart
Appendix F: Fraud Matrix
Appendix G: Cost Benefit Analysis