| terms of reference: | |This report has been prepared to cover the assessment requirements of AAT Learning and Assessment Area ‘Internal Control and Accounting Systems.’ | |The objectives of this report are to: | |a)analyse accounting system and effectiveness of its internal control | |b) to identify the strengths and weaknesses of accounting system and to recommend necessary improvements or funding changes. | |5. | |To identify methods for implementing its recommendations and strategies. | | | | |
4.1 Cookridge Carpets LTD is a company owned by two brothers Peter and John Cookridge who specialised in selling carpets, beds and soft furniture in Southampton. It is the main dealer for Memo@memory foam beds and mattresses in the area and has been trading for the past three years.
4.2 Capital for setting the business they were using from John redundancy money plus inheritance they received and plus mortgage.
4.3 Company has many suppliers but main supplier is Memo Beds who supplies products on line of credit. The showroom beds are used as demonstration models, and these are paid for 90 days after receipt. Customers beds are purchased to order with a minimum deposit of 20% must be paid when order is placed and the rest of money is due for payment to suppliers within 60 days.
4.4 Customers mostly are local people. Company offers credit for those who want to buy with 6 month interest free and 28.4 % after.
5 The (accounting) function/system
5.1 It is a small company with:
• nine direct sales staff
• three internet sales staff
• two cleaners
• two car delivery drivers
• one accessories salesperson
Three part time staff in the small accounts department which is: • Sonja Douglas (Wages Clerk) 15 hr over two full days per week. Responsibilities are: To prepare weekly and monthly payroll information.
• Stefan Kalinowski (accounts receivable )37.5 hr over five days a week Responsibilities are: To prepare sales invoices, to manage credit accounts, to insure all payment are made within 90 days, to prepare monthly management information, to ensure payment occur.
• Margaret Peterson (accounts payable)20 hr over five days per week Responsibilities are: to check purchase invoices, deal with suppliers, look after payable account.
• Jelena Lazareva, the writer of this report, has been employed to work as the Senior Accounts Clerk on full time basis to supervise the running of the accounts office.
5.2 Company has flat organisation structure with owner in charge
5.3 The accounting function within company is a small department with its main tasks to manage accounts payable accounts ,credit account, cash handling and banking, petty cash, to prepare monthly management information and do payroll. Because it is small organisation it is closely...