3 - Executive Summary
4 – Background of the company
5 - The Accounting System & Internal controls
6 – Evaluation of the Accounting Systems
7 – Strengths & Weakness in the Accounting System
8 – Recommendations for Improving the cash handling, Payroll & Accounting Systems
9 – Cost benefit analysis
10 - Conclusion
11 - Appendices
1) Terms of Reference
This project has been prepared to fulfill the criteria of Unit 10, managing systems and people in the accounting environment of Level 4 AAT.
The objectives of this report are:
To identify the current weaknesses in the payroll and cash handling systems within Cookridge Carpets ltd, and to help to prevent fraud from within the business To suggest an implementation of new systems that will help to reduce errors and fraudulent activity with in the financial accounting systems of the organisation, particularly payroll and improving the current systems relating to the storage of cheques and petty cash.
In order to write this report, the company diary and job descriptions have been made available to review. By looking over the diary and seeing how the accounts department currently works it will be possible to identify strengths and weaknesses and determine recommendations off the back of these weaknesses. This will make the business more effective and improve the company’s internal controls.
3) Executive Summary
To summarise, after research and feedback from employees within Cookridge Carpets Ltd it has been discovered that there are several weaknesses in the current accounting systems relating to payroll and cash handling within Cookridge Carpets ltd.
The petty cash system is not secure and is susceptible to theft. The way in which the payroll information is stored means that it could be accessible to all and could be subject to identity theft. There are no backup systems in place meaning that should any data be lost, it would have to be re-input by a member of the accounting staff, resulting in work being duplicated and a loss of valuable staff time. Whilst a member of staff is re-inputting lost work, other important accounting work will be delayed and would have to be completed at the company’s cost. Staff wages could easily be stolen as most of the staff are paid in cash, these pay-packets are kept in the safe once processed until the office manager collects the wages and hands them out, again, no record system in place to record who has received their wages. Staff wages are calculated from the staff rota, meaning that those who hadn’t worked overtime could be overpaid, and those who had worked overtime could be underpaid, as these rotas are not always upto date before the payroll clark receives them. Only one member of staff has the knowledge to complete payroll procedures.
Recommendations have been made to ensure the safe and secure storage of information and backing up of information. Improvements have been suggested as to how to maintain a secure petty cash system. Staff training should be addressed immediately to ensure a smooth running of the accounts office and to address the situations where only one member of staff is trained to do the wages, this way should there be holidays or sickness, then the rest of the staff wont suffer from unpaid or short wages. A new system for handling wages each week needs to be put in to practice ensuring all staff receive their correct wages on time each week.
4) Background of the Company
Cookridge carpets Ltd is a large Company selling carpet, soft furnishings and beds, they are based in Southampton. The business has been established since 2007 and has been trading for the past three years. It was set up by two brothers, Peter & John Cookridge. Peter is a trained carpet fitter and has been in the carpet industry for 20 years. John was a mining engineer, but has...