Review of Payroll Accounting System

Only available on StudyMode
  • Download(s) : 500
  • Published : March 17, 2013
Open Document
Text Preview
A Review of the Accounting System of Kaplan Furniture Ltd

A N Other Senior Accounts Clerk Date: 2nd December 2012 AAT number: 1234567 Centre: Kaplan Financial BH 1234 Word Count: 3587 (exc appendices)

Signed Student Workplace mentor

Date Date

1

CONTENTS

Page number 1. Terms of Reference 2. Methodology 3. Executive Summary 4. Introduction 5. Review of the Accounting system 6. Recommendations 7. Appendices 3 4 5 6 9 11 17

2

1 1.1

TERMS OF REFERENCE The report has been prepared to cover the requirements of the AAT Level 4 ICAS unit.

1.2 This report analyses and evaluates the accounting system and provides recommendations to improve the existing accounts function and general work environment at Kaplan Furniture.

3

2

Methodology

2.1 Staff have been interviewed to gain a working opinion on the systems under review. They were also asked for ideas for improvements 2.2 Observations have been carried out over a number of weeks to see the departments in action and to gain a full understanding of the issues discussed. 2.3 Research for the recommendations has been completed using the internet. A full list of websites and resources used can be found in appendix 1. 2.4 Meetings were held with the directors to gain an understanding of the full requirements and the budget for any recommendations.

4

3

Executive Summary

3.1 Following a full review of the company’s accounting functions, and in particular the payroll function, a number of weaknesses have been identified. There are weaknesses in other areas of the accounts department, but a major overhaul of the payroll function is required. The report also looks at the fraud issues arising due to the lack of security employed in the accounts office 3.2 There is a lack of support offered to the payroll clerk. Only one staff member is trained to use the system. This creates both pressure on the clerk and also opens the business up to potential theft and fraud. It is recommended that at least one other staff member is trained on Sage. This will cost the business just £290 and could reap benefits of over £19,000 per annum on an ongoing basis 3.3 Wages being paid to employees in cash give rise to issues relating to fraud and theft. It is recommended, that at a minimal cost of £780 per year, Kaplan Furniture should consider moving to BACS payments for all staff wages. This could save the business up to £4,500 per year on an ongoing basis. 3.4 A lack of time and sales recording equipment could lead to incorrect wages and commission paid. Staff wages are paid based on manual time recording by the sales floor manager. This is open to fraud. It is recommended that Kaplan Furniture purchase a clocking in machine and official POS system to accurately record sales against the correct salesperson. Combined, these could cost the company up to £7,000 but could save over £7,000 per year in wages and ensure commission payments are more accurate. 3.5 Signed blank cheques are often left on the premises to cover director absence. This opens the business up to fraud. Security procedures need to be reiterated to accounts staff and this could prevent cheques from being stolen and used fraudulently 3.6 Lax security within the accounts office can lead to theft of sensitive information. Again a tightening up of security measures already in place will prevent a breach of Data Protection legislation and could avoid a fine of up to £500,000 3.7 The above recommendations would cost Kaplan in the region of £8000. However, these recommendations have the potential to save the company an estimated £530,000 per annum.

5

4.

Introduction

Overview of the Business 4.1 Kaplan Furniture is a large furniture dealership in Leicester. It is the main dealer for Sleeptight foam Beds and Mattresses in the area and having been established in 2007, it has been trading for the past three years. It is a private limited company run by two brothers. 4.2 Kaplan Furniture has a...
tracking img