Icas Notes

Only available on StudyMode
  • Download(s) : 99
  • Published : March 16, 2013
Open Document
Text Preview
Internal Control and Accounting Systems

The following report covers the AAT ICAS unit.

The report covers the area of credit control within the organisation and makes recommendations for its improvement.

The report was researched through the internet, written information and trade journals as detailed in appendix.

1. Cookridge Carpets Ltd is involved in the sale of carpets, soft furnishings and beds. They are the main dealer for “Memo@memory” foam beds and mattresses in the Southampton area since 2010. 2. The company was established in 2007 by the Cookridge brothers, Peter and John. 3. The premises is an aircraft hangar-sized building which is used as a carpet and bed showroom. 4. Peter-developed relationships over twenty years in the industry. Recently they hae become the main dealer for Memo Beds, a company specialising in foam beds and mattresses. 5. Their main source of business is through direct sales, but are increasingly finding success through online sales. 6. Twenty members of staff are employed, nine in direct sales, three in online sales, one in accessory sales, two drivers, two cleaners, and three part time accounts staff. 7. The accounts function was until recently overseen by the company secretary. Due to maternity issues she has been replaced by a full-time Senior Accounts Clerk to oversee the running of the office.

8. There are currently four staff members within the accounts department, the Accounts Receivable clerk, responsible for the management of credit accounts, the preparation of information for information for management, the preparation of sales invoices; the AP clerk, responsible for purchase invoices, liaising with suppliers, management of supplier accounts, the making of prompt payments; the payroll clerk, responsible for the preparation of weekly and monthly payroll information, the calculation of monies due, comprising wages and commission, making up of pay packets and preparation of BACS returns where appropriate.

9. The accounts statements produced are the income statement, the statement of financial position and the cashflow forecast. Each provides information which is useful within the business, and to external stakeholders. 10. The Statement of Financial Position is a snapshot of the assets and liabilities held by the business at a set point in time. 11. The Income Statement gives information on the performance of the business over a period of time. (PandL as result of trading) 12. The Statement of Cash Flow shows the movement of cash in and out of the business over a period of time, and is a key indicator of liquidity. 13. The purpose of the accounting function is to provide information to the users of financial statements. Management, for instance, will be interested in an analysis of revenues and expenditure that will provide useful information for decision making. The budget can be compared with actual results over time, and variances can be investigated. The cost consequences of various courses of action can aid decision making. 14. The employees of a company will be interested as good potential performance may indicate safety of employment and promotional prospects. Trade union representatives will balance this information in demands for better pay and conditions. 15. External stakeholders will also have an interest in the viability of the company. Although Cookridge Carpets Ltd does not trade on the stock market, shares can be sold privately, and the investing public and their advisors will be interested in past events as a performance indicator. This may affect their voting on certain proposals, or their willingness to buy and sell shares. 16. Creditors of the business will be interested in the security of their loans. Suppliers, for example, in credit terms. This will affect the ability of the company to meet its obligations. 17. The Inland Revenue requires a tax computation based on profit. 18. Business...
tracking img