Chicken Run Case Study. on Internal Control Issue

Topics: Accounts receivable, Financial audit, Payment Pages: 2 (616 words) Published: May 18, 2013
Under internal control, there are three issues arises in the chicken run case study. 1st issue is the credit control system is weak. The lack in credit control system can be seen when the marketing department continued to supply product to Cold Gold Sdn. Bhd even though Cold Gold Sdn. Bhd credit is gone beyond its limit. Besides, Ms Choy as a credit controller did not take proper action about this issue. The recommendations are Ms Choy as a credit controller should know her duties and responsibility. Company need to send Ms Choy for training. The training we recommend for Ms Choy to attend is Credit Management and Debt Recovery course being organised by Mr. Tam Fook Cheong is a fellow member of the Charted Association of Certified Accountant (FCCA), Associate Member of the Chartered Institute of Management Accountant (ACMA) and a Chartered Accountant of the Malaysian Institute of Accountant (CA).  The objective of the course is to establish effective credit policies to increase business profitability, to develop effective strategies and practice to reduce outstanding payments and at the same time provide excellent customer service. Besides, we recommend the company to create a new credit control chart. The picture below shows the credit approval flowchart which the company can follow.

Ms.Choy need to check the credit position of customer first before she give approval to other department to proceed with the order.

The 2nd issue is lack in trade receivable management whereby the figures on statement of the accounts sent to customer did not tied up with the balances in the accounts and it will lead to loss of future customers and sales. We recommend to always double check the account statement before send to customer to ensure the number tied up with the company record and reconcile the subsidiary accounts receivables with the general but the reconciliation should be done by another person to...
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