The following report relates to the internal controls of Woolworths, and will look to describe and analyse them with the use of flow charts. The report will then move onto give details of an audit program that has been designed to test the internal controls of Woolworth’s accounts payable. Moreover, possible ways of how controls could be overridden as well as how the overall system could be realistically improved will also be discussed within the report. Business Introduction
Woolworths is a supermarket chain situated within Australia and New Zealand and is owned by Woolworths Limited. Established in 1924, as a single basement store in Sydney Australia, Woolworths has become the largest food retailer within Australia, and second in New Zealand. This year marks Woolworths 25th anniversary with their pledge to being Australia’s ‘Fresh Food People’ and have abided by this pledge by continually sourcing the freshest produce from Australian farmers. Internal Control System
The flow chart in Appendix 1 illustrates Woolworth’s internal controls for fixed assets. Fixed assets are serviced and cleaned on a regular basis in order to maintain them. This can be illustrated in the deli department, where slicers are required to be cleaned every four hours. This ensures that the slicer does not have any residual pieces of food that could prevent the slicer from functioning effectively. In the event there is problem with fixed assets, the matter is immediately reported to management. Management assess the asset and determine whether they themselves can fix the asset, or if a repairer is required. If the asset cannot be fixed right away, a danger tag, or out of order sign is placed on the asset until it can be fixed. For instance, if a self-serve register is not functioning, out of order signs are placed on them. Inventory:
As shown in Appendix 2, inventory is purchased using the AUTOSTOCKR system. AUTOSTOCKR is an inventory system that orders stock automatically. The system is aware when stock is running low, as it records the sale of each item of stock. When the system is aware a certain line of stock is low, it will order more units. Managers can also order additional stock manually if it is required. For example during Easter additional units of seafood are required to be ordered. Stocktaking is regularly done to verify quantities to see if any items have been stolen and can therefore help determine if a line of stock requires security labels. Once inventory has arrived within the store, inventory is inspected to make sure it meets requirements. Inventory is then sorted, and similar items are placed together on roll cages and stacked onto shelves using the first in first out inventory method. Inventory is also recorded to ascertain inventory levels. If perishable inventory that is not selling and are close to their expiry dates, reduce-to-clear stickers are placed on items until they are sold. Ultimately, if the product has not sold and has reached its expiry date it will be dumped. Similarly for non-perishable inventory, if products have been on shelves for extended periods of time, they will be reduced-to-clear until item is required to be disposed. Purchasing:
In line with the AUTOSTOCKER system mentioned above, purchases are generally ordered automatically as soon as the system records show low amount of stock. Once a purchase order is made there is a confirmation of order occurs between Woolworths and supplier. Occasionally, purchase order may change due to quantity changes and purchase order errors. If the trade partners are aware that they cannot supply an order in full, they should contact Woolworths via Electronic Data Interchange (EDI), Web forms, phone or email. Meanwhile state the following information: * Reason for short supply.
* Quantity that will be supplied.
* When stock will become available.
Similarly, suppliers should contact the Business Team if error is...