Final Project AAT

Topics: Accounts receivable, Corporation, Legal entities Pages: 40 (9834 words) Published: April 18, 2015


An investigation into the Accounts Receivable Ledger and The Internal Control System


1. Terms of ReferencePage 3

2. Executive StatementPage 4

3. MethodologyPage 6

4. Introduction to the OrganisationPage 7

5. The Review of the current Accounting SystemPage 10

6. The weaknesses of the current Accounting SystemsPage 25

7. Recommendations for improving the SystemPage 30

8. AppendicesPage 35

The report has been prepared to cover the requirements of the AAT Unit “Internal Control and Accounting Systems”.

The objectives of the report are to analyse the accounting function at Inkwell Ltd and to identify any weaknesses, so that recommendations for the implementation of a new and improved system can be put in place, in order to minimise errors and to prevent fraud.

The aim of the report is to analyse and evaluate the current internal control system and accounts receivable ledger of Inkwell Ltd.

The findings of the investigation highlighted the flowing weaknesses: The Retail shops use stand-alone computers which are not connected to the network. Lack of security measures put in place to safeguard the sensitive personal data held on individuals, and non-compliance with the Data Protection of 1998. Non-compliance with company policy, as updates only carried out once per day. Data lost due to infrequent back-ups are costly in both time and money. The retail shops have a sloppy approach to cash management. Cash only banked twice per week. The company does not produce or provide any instruction and help guides, which employees can refer to in order to find help and advice. The company do not have contingencies in place for staff absences due to illness or annual leave There is no encouragement for employees to attend training courses. Passwords used are not sufficient to maintain an adequate level of security. The company uses a just in time system of production, and any unforeseen upholds in delivery can cause delays and may have an impact on the company’s reputation. There are insufficient control and monitoring procedures carried out by senior personnel. The company allows customers to pay by cheque.

The company does not conduct performance appraisals.
The company does not conduct regular staff meetings.
Management not upholding ethics and integrity, and not practicing their own policies thus creating an ideal environment for fraud and unethical practices to be committed. Staff shortages contributing to processing delays of sales invoices.

Suggestions and recommendations have been made to help make improvements which will increase the company’s performance and efficiency and to help create anti-fraud environment.

The research conducted to create this report was primarily obtained from data provided from the AAT website, the Internet, and reference textbooks.

A period of four months was taken to monitor the Internal Controls system and Accounts Receivable Ledger to gather sufficient data in order to compile the report.

A meeting was arranged with Inkwell’s Finance Director and Company Accountant to discuss the areas of concern and the procedures that needed to be implemented to make suitable improvements.

Inkwell Ltd is a large private limited company within the private sector, supplying a complete range of re-manufactured inkjet and laser toner cartridges to its customers. Products can be purchased from either the company’s sixty nationwide chain of high street shops, which are situated in most of the UK cities and large towns, or from their on-line shop facility which is accessible twenty-four hours every day of the week....
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