Cookridge Carpets

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Cookridge Carpets Ltd
A report analysing the Internal Controls in place and evaluating the Accounting Systems.

I testify that the following report is my own unaided work and a true reflection of the organisation.

Word Count – 4570.

Contents:
1. Terms of Reference
2. Methodology
3. Executive Summary
4. Introduction to the Organisation
5. The Accounts Department
6. Review of the Accounting System
7. Internal Control and Analysis of Fraud
8. Recommendations to Improve
9. Cost benefit Analysis
10. Appendices

1. Terms of Reference
2.1 This report investigates the accounting system in place within Cookridge Carpets Ltd with regard to making recommendations to improve the system and the controls in place to protect it and make it less exposed to fraud. 2.2 This report will look at the organisation as a whole and also investigates key internal and external stakeholders of the organisation 2.3 This report will also analyse the recommendations made in terms of costs and benefits to Cookridge Carpets Ltd and analyses the potential for fraud in terms in the risk to the organisation. 2.4 The report has also been made to cover the requirements of the Internal Controls and Evaluating Accounting Systems Paper that is part of the AAT Level 4 Diploma in Accounting.

2. Methodology
3.5 To produce this project I used reference books and the internet 3.6 The existing accounting system was reviewed over a period of 4 months to enable a SWOT analysis to be produced. 3.7 A fraud matrix was prepared to investigate the potential fraud within the accounting system and to analyse the controls in place to prevent them.

3. Executive Summary
4.8 This report analyses the internal controls within the accounting systems of Cookridge Carpets Ltd and makes recommendations to improve them. This report has found that a centralised accounting system will have to be installed within the accounts department which will cost approximately £6,090. It is recommended that all accounts staff should be trained to use the new system and there should be suitable cover for when staff are absent. A full Cost Benefit Analyses (CBA) of all the recommendations is included in section 9 of this report. 4.9 This should improve the organisations finances and cash flow. This will then lead to improved credit control, payments to suppliers, staff wages and morale. 4.10 The report also recommends that all staffs wages should be paid through BACS as this would reduce the need to use cash and cheques around the office.

4. Introduction
4.1.1.Carpets Ltd is a large business based in Southampton. They were established in 2007 and specialise in beds, furniture and carpets. Set up by two brothers it has been trading for 3 years. The company is owned by two brothers, Peter and John Cookridge. It was set up from the £100,000 loan Peter took out, £80,000 John received for being made redundant, and inheritance received from the brother’s uncle. 4.2.1. It employs 20 members of staff which include 3 part time staff in the accounts department. Cookridge Carpets Ltd is the main dealership for Southampton; they started out selling carpets but later expanded. Peter was behind the expansion as he had developed good relationships with carpet manufacturers during his 20 years in the industry. In February 2010, they were approached by Memo Beds and were asked to become the main dealership for Southampton as the existing dealer was going into retirement. Seeing as the sales they made directly with customers were going excellently the brothers decided to sell carpets and beds over the internet. This proved to be a good idea and has increased sales. 4.3The organisation is a flat structure consisting of the owners Peter and John Cookridge; store manager, senior accounts clerk and supervisors. An organisation chart is included as appendix 1 to this report. 4.4...
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