Internal Controls in a Business- Example

Topics: Inventory, Asset, Depreciation Pages: 9 (3062 words) Published: March 10, 2013
Report: Control Measures| February 14
Grade 12- Accounting | |

Stock holding and security
Brittany Fashions is an international company which supplies young women with modern clothing and accessories. In order to make sure this business will be successful in South Africa a criteria has to be met to ensure the businesses stability. Brittany Fashions will be importing their clothing and accessories from a supplier in China, this is due to the high costs involved when selecting a local supplier, since Brittany Fashions is an international company it will be easier for the clothing and accessories to come from one source. The mark-up percentage on garments will be 56% (cost×2.3) and on accessories it will be 60% (cost×2.5). This is an appropriate mark-up percentage as the market will handle it, people have more money to spend. Sales will be accounted for by the employees heading up the till and the accountants in change, thereafter the money will be kept in a safe which the owner has access to. Customers will be allowed to return an item of clothing a month after purchase, if any fault is found with the product when returned, customers will be allowed to replace the product with an equal amounted one in the store. A stock taking will be done everyday after a full work day; the trading hours are 8:00-16:30 on weekdays and 9:00-14:00 on weekends. 20 employees will be hired, there will be 3 employees to do stock taking after everyday day, the stock will be transported from the warehouse to the store where an employee will record the garments received and put on the shelf and garments put in storage on site. The second employee will be in charge of overlooking the first employee (preferably someone with a business background). Training will be given to those employees without knowledge of stock taking. The third employee will be recording accessories sold and still remaining, this will also be done everyday. Stock taking is necessary to ensure none of the products are stolen or have gone missing, it helps keep track of how much stock is left and how much have been sold, if the amount of sold items from the stock taking correspond with the amount of sold garments and accessories from the businesses computer system then we can safely say none of the merchandise was stolen or misplaced. 3 employees will be working the till, preferably employees with a reasonable amount of experience. These 3 employees will have to undergo a series of interviews to ensure they are trustworthy as well as recommendation from his/her previous employer. A Curriculum vitae will also have to be submitted, this is a written description of your work experience, educational background and skills. This is to ensure no theft occurs, a manager will be appointed to overlook these employees as well as many other tasks that will be mentioned shortly. Employees will check in everyday by the manager, this ensures punctuality in the work place. Return Policies for garments sold (accessories are non-refundable as they damage easily and therefore cannot be resold). Each garment bought will have a time period for when it is still subject to the exchange policies. Garments cannot be refunded but will only be exchanged; this is to prevent any money coming out of the business once brought in by a customer. Customers will be able to exchange their original garment with another of the same price or pay extra for one that is more expensive. Exchanges must be made within 1 Month from the date of purchase. Agreements with suppliers must be done through the signing of a contract. If the business has a signed contract with their suppliers, a copy must be made in case the original contract is lost or stolen etc. Suppliers will have to be notified about the increase in production due to the opening of a new store. The target market for Brittany Fashions is young modern women preferably ages 20-30 years old. The stock range for this target market will be a...
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