ISYS Report

Topics: Generally Accepted Accounting Principles, Balance sheet, Accounts receivable Pages: 6 (1926 words) Published: April 17, 2015
3 Methodology
3.1 This report has been written using information gathered from the accounts staff at Chic Paints Ltd. A brief overview about each accounts employee, an overview of the accounting system and a list of events that have occurred over the past six months can be found in the company diary. 3.2 A SWOT Analysis of Chic Paints Ltd has been produced to find out any strengths, weaknesses, opportunities and threats to Chic Paints Ltd. The SWOT Analysis can be found in Appendix 1. 3.3 A Fraud Matrix has been produced to investigate the risk for fraud to occur within Chic Paints Ltd. The Fraud Matrix can be found in Appendix 2. 3.4 An ethical review of Chic Paints Ltd has been carried out to make sure the company meets the five fundamental principles of ethical conduct and the AAT Code of Ethics. 3.5 A sustainability review of Chic Paints Ltd has been carried out to make the company meets the sustainability principlaes in regards to social, corporate and environmental issues. 3.6 This report has also been written using information which has been obtained from the internet to make recommendations on how to improve the accounting system. A full list of websites can be found in Appendix 3.

4 Introduction
4.1 Chic Paints Ltd was formally a part of Ashstead PLC before the management buyout in 2007 where the company manufactured and supplied goods to the household paints market. After the management buyout in 2007 Chic Paints Ltd decided to move away from the household paints market and move into a more niche market manufacturing and supplying specialist paints used on boats, cars and industrial machinery due to a less competitive market and higher gross profit margins even though Chic Paints Ltd required increased capital expenditure on specialist equipment and a higher skilled workforce. 4.2 Six years on from the management buyout Chic Paints Ltd have steadily reduced the company turnover from £200 million in 2007 to £120 million in 2013. Even though the turnover has reduced the gross profit margins have improved from around 12% in 2007 to around 30% in 2013. Net assets over the same period have increased from £20 million in 2007 to over £25 million in 2013. Chic Paints Ltd currently employs around 350 employees. 4.3 Chic Paints Ltd is currently comprised of five company directors who are the heads of each department. A breakdown of the five company director’s shareholdings and line management responsibilities can be found in Appendix 4 and an organizational chart can be found in Appendix 5. 4.4 Chic Paints Ltd internal stakeholders are the shareholders and employees of the company. The main interests of each stakeholder are as follows: 4.5 Shareholders – The shareholders at Chic Paints Ltd are interested in the company making a profit by reducing costs and improving revenue for an increased return in the investment made by receiving higher dividends. 4.6 Employees – The employees at Chic Paints Ltd are interested in how well the company is performing to make sure jobs are secure and wages are being paid. 4.7 Chic Paints Ltd external stakeholders are suppliers, customers, environmental agency, HMRC and the bank. The main interests of each stakeholder are as follows: 4.8 Suppliers – The suppliers of Chic Paints Ltd will be the manufacturers of goods used to make Chic Paints Ltd paints and products and would want to ensure that the company continues to trade with them for supplies and that prompt payment for supplies is made. 4.9 Customers – The customers of Chic Paints Ltd are interested in purchasing from the company and for a good service to be provided by receiving goods on time when required at a reasonable price on good credit term. 4.10 Environmental Agency – The environmental agency are interested in making sure Chic Paints Ltd are complying with laws and regulations. 4.11 HMRC – HMRC are interested in making sure Chic Paints Ltd are complying with HMRC’s regulations...
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