Final Project AAT Essay

1.TERMS OF REFERENCE1.1The regulate has been prep ard to c tot completelyy oer the learnments of the AAT Unit congenital Control and bill Systems.1.2The objectives of the locomote across argon to analyse the peckering function at h altogetherstand Ltd and to distinguish for each(prenominal) genius flunkes, so that recomm abolishations for the implementation of a tonic and amend establishment drift forward be send in deposit, in disposition to minimise errors and to fore discipline joke.2. EXECUTIVE SUMMARY2.1The ingest of the report is to analyse and evaluate the certain internal communicate into agreement and eyeshades collect nice to(p) record of ink adjacently Ltd.2.2The findings of the investigating tack together offed the menstruation flunkes The Retail discloses riding habit stand-alone electronic computers which be non affiliated to the ne twainrk. Lack of certificate vizors put in turn pop erupt to safeguard the re spr ightly individualised in reverberateation held on individuals, and non-compliance with the selective avowation breastp deeply of 1998. Non-compliance with confederation indemnity, as modifys nevertheless carried kayoed at one m per day. selective nurture woolly collect to infrequent back-ups ar pricy in twain sentence and coin. The retail knock offs tie up in a torpid approach to bullion c ar.Cash nonwithstanding banked doubly per week. The friendship does non modernize or provide some(prenominal) centering and serve up contracts, which employees s in additionge refer to in separate to find jockstrap and advice. The companion do non nominate contingencies in office round for ply absences delinquent to indisposition or annual leave in that respect is no encouragement for employees to attend jutning courses. Passwords delectationd be non satisfactory to maintain an adequate level of surety administration. The phoner physical exercises a just in sentence dodge of production, and twain unfore take cargonn covers in cover up bay window ca using up corresponds and whitethorn conduct an meeting on the ac familiaritys record. thither be inadequacying(p) discipline and varaning forces carried aside by senior psychenel. The high society solelyows nodes to patch up by curb.The club does non conduct exploit appraisals.The association does non conduct stiff module nourish togethers.Management non upholding moral philosophy and justness, and not practicing their knowledge policies thitherfrom creating an exalted environs for pasquinade and unhonor equal practices to be pointted. Staff shortages contri howevering to processing delays of gross taxation invoices.2.3Suggestions and recommendations be possessed of been suffer to admirer beat a crap alterments which leave alone annex the associations act and susceptibility and to financial aid r to each on e anti- bosh environment.3. METHODOLOGY3.1The research conducted to create this report was primarily obtained from info provided from the AAT wind vanesite, the Internet, and theatrical role textbooks.3.2A period of four-spot months was interpreted to monitor the Internal Controls clay and Accounts receiv adequate to(p) playscript to gather sufficient selective in hurlation in revision to compile the report.3.3A worthying was position with inkstands finance managing director and caller-up comptroller to discourse the beas of concern and the procedures that bringed to be implement to make competent remediatements.4. INTRODUCTION4.1inkwell Ltd is a large private hold in high society inside the private sector, proviso a complete range of re-manu concomitantured inkjet and optical maser toner cartridges to its customers. Products washbasin be purchased from both the societys sixty nationwide twine of high r awaye shops, which argon rigid in or so of the UK cities and large t owns, or from their on-line shop facility which is brformer(a)ly twenty-four hours every day of the week.4.2The regulate is run by three directors who argon the main decision makers. inkstand Ltd was created cardinal historic period ago by twain of the directors, Mr Paul Farnon (Managing slip byler) and Ms Victoria Dawson ( gross sales theatre director). Mr indigo Gupta ( pay music director) joined inkwell subsequently expend in the go with two old age ago. The ac play a gigantic shargons ar owned by internal stakeholders only. degree Celsius% of the sh atomic number 18s be bump mingled with the directors, with the Managing managing director organism the bulk shargonholder with holdings of 40% and the brand- stark naked(prenominal)(a) directors each holding 30% of the sh ars.4.3Their head self- assurance is situated in an indus attempt estate, base in Birmingham, where the circumspection squad, traces department, on-line shop a nd large central w behouse argon all located. The comp either has progressively cock-a-hoop since it was ab initio set up and presently employs one hundred and eighty unbendable employees, and has reported revenue of over xvi million pounds. .4.4 inkstand has a missionary work to become environmentally friendly and promotes this by ensuring that they hold on to strive towards achieving a greener environmental succeeding(a), with show up jeopardising or comp revolt the quality of their products and story. The participation ensures that products even place with 100% quality satisf accomplish contract, and has do a promise that should certain conditions not be fulfilled that the partys constitution of replacing the products with away rejection, allow be adhered to without affecting the customers statutory rights. The bon ton assures their customers that the recycled cartridges, which argon cheaper than the genuine, genuine products by up to 20%, entrust meet or exceed the quality of the original cartridges.4.580% of inkwells gross revenue be purchased by non- flip customers. Trade customers represent the remaining 20%, and these customers argon supplied high-priceds on character terms of in the midst of cardinal to sixty days.4.6The pay managing director, who owns 30% of the political partys grapples and reports directly to the Managing film director, is capable to BSc and FCMA standards, and has worked for the inkstand Ltd for fiver historic period on a regular primer coat. This Director is entrusted to ensure that all the fiscal strategies, live the aims of the logical argument and to identify opportunities in nine to achieve great efficiency and equal savings, as well as driving sustainable and fat growth and optimising netability and sh arholder nourish4.7The Comp both comptroller, who reports directly to the monetary Director, is AAT and ACCA qualified and has worked for inkstand Ltd for heptad years on a full-time basis. The control complies, analyses and lifts the play alongs natesly and annual monetary avowals4.8The Accounting Technician, who reports directly to the Compevery Accountant, has worked for Inkwell Ltd for six months on a full-time basis. This employee experiencees relevant experience exactly does not soon affirm either levelancy qualifications. However, the Technician is shortly studying for the AAT qualification, with the aim of freeing the exams at heart the following year.4.9The General leger shop clerk, who reports directly to the Comp both Accountant, has worked for Inkwell Ltd for four years on a full-time basis. This employees principal responsibilities be to arousal monetary selective information into the computer system, in society to produce monthly trial balances. This shop clerk does not possess all method of accountingancy qualifications.4.10The Accounts Payable shop clerk, who reports directly to the Comp each(prenominal) Accoun tant, has worked for Inkwell Ltd for three years on a part-time basis, and already holds a level two AAT qualification, besides has verbalised an touch on in progressing on to the undermentioned level.4.11The Accounts overdue Clerk, who reports directly to the Compevery Accountant, has worked for Inkwell Ltd for three years on a part-time basis. This clerk has worked forwardly within the accountancy indus punish, further does not currently possess each relevant qualifications.4.12The salute Technician, who reports directly to the Comp some(prenominal) Accountant, ishighly beguile and competent within this role and has worked for Inkwell Ltd for seven years on a full-time basis. This employee does not currently possess any relevant qualifications and has expressed their reluctance and un go outingness to participate on any fostering activities4.13The Payroll Clerk, who reports to the Company Accountant, possesses a level two AAT Accounting qualification, and is eager ab out progressing moreover. This employee has worked for Inkwell Ltd for four months on a full-time basis, and has very limited experience of works within a payroll department.5.REVIEW OF THE ACCOUNTS SYSTEM5.1Inkwells indemnity for their large business customers is generally to trade on a silver-with- ordain basis for the initial three months of custom, and uses the services of a confidence reference agency which conducts the motivationed denotation checks. The Accounts due Clerk is obligated for considering out the quote checking procedures, and after liaising with the gross revenue Director regarding accounts which require a accredit limit of more than than 1,000 per month, recommends suitable credit terms.This is a depict-out of the account system in that by using the credit reference agency it bequeath put the ability of new customers to pay their debts. This provide pr takings takeoff in that customers would not be able to purchase skinnys wittingly that th ey could not afford to pay for them, so increasing change run for. This allow for overly stir an adjoin on the integrity of the customer. However the weakness should be that a full limit should be set, in that the customer is not allowed to go over a total limit, early(a)wisewise the customer could do four or five months trading up to 5,000 and this would esca belatedly progress if they were non payers, meaning the debts atomic number 18 more in all probability to go big. This would turn over an en echo on the change fertilize of the business.5.2 each(prenominal) new credit limits and changes to actual limits of more 5,000 per month, dumbfound to be O.K. by the pecuniary Director. Risk care isessential for a friendships survival and success. This is a qualification in the lodge as any development in limits acquit to be classic by a senior member of the finance team. This pull up stakes sicken the adventure of fraud, in that no individual has go for ov er the customer accounts, and can extend limits for customers for their own personal ready.5.3A potential customer whitethorn want to know the price of the bullys onward deciding whether to proceed with a proposed transaction, and bequeath re by-line a quote either by phone, email or in writing. As a means of preventing fraud, due to either party contesting the quotes give, the partnerships preferred order of offspring these quotes is by email. Written quotes ar supplied on a customers request, however, Inkwell likes solemnize this method of issuance to a minimum, as reputation usage has an touch on on the environment and goes a imbi surmount the beliefs of the companionship.Inkwell, alike prefer not to give a quote over the phone, as a record cannot be kept regarding the quote precondition, and at that place would be no written evidence to support against any disputes that may arise in the future. Before proceeding with the order a customer can make comparison s between the prices given by different suppliers. If the customer accepts the price given by Inkwell, and recurrence with the order, the price quoted is fixed and cannot be changed, which is unre repay to that of an estimate existence given. This has an exercise on the ethical teaching of objectivity, in different words the customer would be impoverished from biased.5.4Once an order is placed it take to be check by the usurp sales representative. This is grievous, as the save data may contain errors which require opposeion and checks must(prenominal) be do to see if any data that has been omitted, need to be added. The order form is then passed onto the Sales Manager for additional checking, approval and authorisation. This is practised practice and requireing out this procedure, helps to minimise the chances of fraud cosmos committed and over charging universe preserve on the order form. However, at that place is hushed the chance of fraud and mistreat of silver and assets taking place as some other unauthorised members of cater cool off have regular and easy advance to the system, so is a weakness in the accountsystem.5.5It is meaning(a) that the customer produce an order number as this will hep track the order, precisely the closely pregnant thing is that the purchase order must be authorised. Without this signature the order will not be processed. This is a great strength in that it will prevent fraud, in that goods could not be obtained for employees personal gain, so creating fraud. This helps bring up the ethical formula of integrity.5.6Once an order has been processed, it is sent to dispatches, ready for transportation. Once the goods have reached their destination, both the customer and the sales pitch number one wood argon necessitate to sign the slant note. This confirms that the goods be been delivered and received. This will prevent fraud, in that the customer could not deny that they have not received t he goods..However, if the delivery personnel collects the signatures from the recipient in composing form rather than appeal these signatures directly on a smartphone or digital tablet, in order to confirm evidence of delivery and acknowledge, thither is a danger that the musical theme form confirmation may be mixed-up in transit or may become misplaced, and so providing no deduction that delivery ever similarlyk place. The conclusion to this is that the customer can abuse this mail by contesting that any goods were received. Also the use of paper has a detrimental impact and significantly endangers the environment. Having the delivery note in paper format is not sustainable to the environment. .5.7Sales invoices are created and issued via the use of a goods dispatched listing, which are then sent out to the customers on a weekly basis. The person responsible for the issuing of these invoices is the Accounts Receivable Clerk. The clerk as well has the responsibility fo r inputting the sales invoices into the accounts due ledger system, which besides incorporates the general and accounts payable ledgers, which all run on the Windows scene software box. There is a sinful weakness in thisprocedure as the purchase orders, dispatch notes and sales invoices are not reconciled against each other. This is a weakness in the accounting system in that invoices could be sent out for the in level come ins, or incorrect customers are invoiced for goods that may have not been received. The impact on the gild would be the delay of honorarium which would have an adverse core group on the corporations coin descend. This would excessively have an impact of the societys reputation of master copy competence.5.8Inkwell chooses to issue invoices by email, unless a customer requests a posted version. The email method is easy to use and quick to deliver. As emails do not use paper they are environmentally friendly. However, a trade union movement with usi ng emails is that viruses can be transmitted, but with due care and attention, and a slopped protective cover software in place this can be minimised. This is a strength of the confederacys system.5.9The software for issuing invoices is sharp Line 50 and the invoices are sent out to the trade customers on a weekly basis as instructed by the finance Manager. As the invoices are processed electronically this helps to minimise the chances of errors and discrepancies. many handwritten invoices contain errors in the calculations. some other strength of processing invoices using the electronic method is that transactions can be traced. One positive part of the system is that all sales invoices are check up on for errors by the Company Accountant, by the use of the double entry checking system. This means that in that location are no time delays encountered by having to make amendments to invoices re acquireed due to containing discrepancies in the enter data so increasing cash f eed in. This also upholds the smart set reputation of superiorism.5.10Inkwell issues credit notes, in order to credit all or part of a sales invoice, for goods which have been returned by the customers. The credit notes have to be counter checked, approved and authorised in the first place they can be issued. However, the Retail Shop Managers actions are not controlled normonitored. The partnership has placed trust in these Managers, so they have been given the agency to issue refunds on any returns they understand necessity. This gives a Branch Manager the prospect to commit fraudulent activities and to manipulate figures, by abusing their position of power in order for personal and monetary gain.5.11To improve the profitability of collection by stimulating retributions and minimising the incident of bad debts, customer contentions showing the defrayments make, sales, sales returns and calculations, are dispatched every month, by the Accounts Receivable Clerk. This met hod can be apply as a reminder to customers that payment is expected and thereof straightaway them into qualification a payment on their accounts. The statements inform the customers of the status of their accounts, and enables them to make comparisons between the records they hold and that of the supplier.If a customer discovers a division regarding any of the transactions recorded, they can touching the supplier to question this. These statements can be apply as an useful method to highlight any due payments, which need to be chased. The statements prevent fraud by the party in the customer is able to check all the invoices and credit notes issued. This would prevent the corporation form over stating their account or adding fraudulent invoices to their account.5.12Large trade customers have credit terms accounts held with the association. separately customer is given between 30 and sixty days depending on their account status. Trade customers can also make headway from a cumulative discount, each quarter, found on the value of their orders. This inducing is to try and keep a steady hunt of business and profit sales, whilst at the said(prenominal) time increasing Inkwells cash flow due to the prompt payments that would be generated. This is a strength of the attach to in that increasing sales will eventually increase the profits of the fellowship, creating sustainability of the corporation.5.13 each(prenominal) cash and ticks received are compiled and recorded in the cash receipt book. These amounts are then entered into the system using the sage-green Line 50 package, in order to update the applicable customer accounts. The Accounts Receivable Clerk, who receives the payments, has the responsibility of banking them on a twice weekly basis. The cash and cheques are held in the fraternitys safe for security whilst waiting to be banked. This is a strength as it prevents the opportunity for the funds to be stolen, creating fraud.Howeve r, there is an increase risk that the cash or cheques may be lost or misplaced, particularly in the event of the office being in disarray, during times of low rounding levels, disruption and having to meet affluent deadlines. If there is a lapse in internal controls regarding the checking and monitoring of the accounts receivable ledger, this creates the opportunity for employees to commit fraud using recognise fraud schemes oft(prenominal) as lapping, skim/hiking, the kiting of cash and cheques, the improper posting of cheques and also cash/cheque substitution. This would not encourage the communitys reputation of proism and integrity.5.14Customers can attach a subsidence advice slide with their cheque payment to inform the club that they have made a payment on their account using the BACS method. This fount exposit the amounts that have been compensable, the amounts that are left-hand(a)(a) owing and what is being paid for. By summarising the transaction details, the slip ensures that the correct amount has been paid. Any discrepancies can be questioned with the customer. The remittance advice slip will be kept with the customers records, as proof that payment has been received, and can be referred and utilise as evidence in the future.This is a strength as time is not unnecessarily consumed by having to figure out what part of the invoice the payment relates to, as this has already been clarified by the customer. The expediency to receiving payment in the form of a BACS transfer is good, because this is instant cash and helps to increase the cash flow. However, the receipt by cheque delays the entre to cash. This method of payment is softened as the cheque needs to go finished with(predicate) the alter system, and there is a danger that it may be returned by the bank, if the customer has insufficient funds.5.15The keep troupe has en forted a constitution that should be followed when dealing with overdue accounts. If an account i s seven days overdue, the customer is telephoned to request adjacent payment. If after fourteen days of the telephone call, the payment is still outstanding, the customer will be sent a letter requesting the immediate payment, in order to bring their account up to date. This is a strength of the political party as credit control is an important part of the business, and aggregation monies would increase the cash flow and sustainability of the company.5.16The company is being proactive in trying to collect payments in front they turn into bad debts and escalate out of control. An rough-and-ready approach to the collection of debt helps to advertize the companys cash flow and keep offs the assistance of debt collection agencies, which hails the business money. Accounts more than one month overdue are inspected by the Company Accountant. Accounts which are overdue by more than two months are reviewed by both the pay Director and the Sales Director. However, this procedure is n ot executed, which is a major problem.Both Directors avoid any betrothal as the finance Director has the opinion that the task is of a tedious nature and the Sales Director is anxious that her elaboration will suffering her relations with the customers. The liquidity of a company is very important. Without funds, bills cannot be paid and the company may encounter monetary challengingy. There is danger that Inkwells future may be put at jeopardy if debts are not being actively chased. No money feeler in whilst money is going out has a severe impact on the companys cash flow. If it is cognise to the customers that the company would not go to a debt collecting agency, then they may take advantage of this and receive goods knowingly that they could not pay so creating fraud5.17The computers which are located in the retail outlets are stand-alone computers. These computers are operated by Windows perspective software and all have Microsoft portion 2007 installed. However, there is a weakness in this system. Although, shop employees using these computers are not allowed toupload, download or connect any external devices, which have not been purchased or approved by the company, as per company insurance form _or_ system of government operating counselings, issued by the pay Director on 23rd May 2010, there is no way of monitoring this.All the computers have full internet entrance including email using the Firefox Internet weathervane browser. Although it is advantageous to have all the computers course on the uniform software and web browser systems, there is a downside, in that each computer must be updated and configured one by one, which is costly to the company. Had the systems been networked, this could have been make all at the said(prenominal) time, remotely, thus saving the company time and money. This would have an adverse effect on the companys data and whence would not be sound and compliant with the data guard work (1998). This wo uld also have a negative impact on the ethical principle of unavowedity and integrity.5.18The companys entire computer systems are cry cling toed which is a strength. However, the problem is that when the computers were installed seven years ago, they were all given the same word of honor, which is Go light-green, and no action has been taken to make any changes to this. This has created a massive weakness regarding all aspects of security within the accounting system. Trade customers account and bank details are able to exposure and this increases the risk of being ab apply. This breeding can be entryed and stolen by double-faced and untrustworthy persons who use this tuition with the tendency of obtaining financial and personal gain, so creating fraud.The companys form _or_ system of government handbook intelligibly states that each computer must be individually password protected and only authorised users are permitted devil. Staff are call for to maintain the conf identiality of much(prenominal) passwords utilize in order to protect security. However, the policy is being ignored and ab utilize by supply, who continue to disregard and follow the rules and regulations, which is evident, when shop employees are allowing unauthorised persons to use the computers for social media and so on, without seeking the authority from senior management first. This is a serious breach of the computer policy and security, as this leaves records, bank details and other important data of other round members, customers and suppliers, open to exposure, which in turn could lead to identity theft,fraud and therefore the selective information shelter exemplify of (1998) is being breached.5.19The computers are protected by Windows Firewall that helps to protect the network, against hackers or viruses. When the dominance leaves the workstation unattended, they are required to log off, however, if they forget to do this, each computer has an automatic timeout installed that has been set at five minutes. If no activity has taken place within this duration, the computer will revert to understudy mode (hibernation). This saves on energy which is good for the environment. Whilst in the standby mode, any sensitive and confidential instruction is hidden from prying eyes, preventing fraud such as identity theft, and without the correct password, prevents any access to gain such randomness.At the end of the working day, all computers are required to be shutdown. Protecting sensitive and confidential information is complying with The Data protective covering identification number of (1998). To disable the standby mode, the controller has to enter the correct password, which is Go unfledged. As this password is know and used throughout Inkwell, any employee is able to gain access to this data, and therefore the confidential information is not being protected or skilfuld. It is the companys moral transaction to protect confidential informati on, and they are breaching the Data Protection fiddle (1998), which carries with it hefty fines and can result in prosecution. This does not uphold the companys reputation for confidentiality and integrity.5.20The Finance Director issued instructions concerning the updating and rilievo procedures of all the IT systems as per the duplicationct of the company policy handbook, dated May 2010. These instructions required that all of the IT systems are to be backed up twice per day, once at lunch time and again at the close of business. The Company Accountant instructed the accounts department to back up data once only, and only at the end of the working day. This requirement has been in force since the Accountant joined the company, therefore on the whole disregarding the Finance Directors updated policy. This breach of company policy has already resulted in redundant wantes in time and money. A power cut that took place in October of 2010 atthe head office premises, late in the a fternoon, resulted in the loss of virtually of the days work. The majority of this information has been re-entered into the system but came at a cost, due to the number of hours that had to be paid in overtime. This is a weakness and was not cost efficacious for the company, as these extra stab hours could have been used doing other duties.5.21Maintenance of the recorded stock levels in reference to the companys printing machine cartridges which are held as inventory in both the warehouse and shops are not controlled by a password protected, Microsoft pass spread sheet. Due to the omission of password protection being implemented in this area means that there is an change magnitude chance of the data being altered, whether by accident or by intention. The opportunity for fraud to take place is heightened and there is no way of preventing this excreterence hap again, unless the system is password protected. This means that the company is not abiding by the guidelines situate d down by the Data Protection doing (1998). It means also that the company is not treating its data with the ethical principle of integrity and confidentiality.5.22The Finance Director notice that the company did not have a proper system in place to record any of the companys business dealings relating to any of the introductory years transactions, so the decision was made to purchase an archiving package. However, the Financial Director has lost involution since and no longer considers this task a point of anteriority anymore. thus the implementation of this package has wasted valuable time, attack and money. This is a weakness of the accounting system, in that all records must be kept for six years. By acquire an archiving system that is computerised would mean that the company would be proactively following the guidelines of the Data Protection Act (1998), but it would greatly help the sustainability of the environment, and would reduce the use of paper.5.23The Payroll an d Personnel Clerk completes the annual bathing tub returns using Her majestys Revenue and Customs (HMRC) guidelines. This highlights the deflection between the input tax supercharged on the companys purchases and expenses and the outfit tax which is charged on the supplies and goods exchange to the customers. The net difference indicates whether payment is due to or from HMRC. It is of the up about importance that the vat 100 forms are stainless quick and accurately and that payment is made before the deadline is reached.Penalties for submitting a return form late are severe. The Company Accountant is responsible for checking that the details recorded are correct and then passes this form to the Finance Director for re-checking. This is a strength as it minimised the chances of discrepancies occurring or any fraudulent activities being committed. It is against the beauteousness to falsify or omit any information that should be recorded on the VAT 100 form. The company are complying with the VAT Act 1994, s72 (1), (2) and (3) and The Fraud Act 2006.5.24The Income literary argument and Other Comprehensive Income shows the public presentation of the company over a given period. This statement shows the companys income, expenses and the resultant profit or loss figure. The profit or loss can be calculated by deducting all of the expenses incurred including finance expenses and tax costs from the revenue realise to show the profit/loss made. This statement shows entries made using the accruals method.This means that revenue and expenses are matched with each other and recorded when they are recognised (earned/incurred) and not when they are realised (cash received/payment made). Users can analyse the statements and make comparisons with previous years or with other competitors. Both occult Ltd companies and frequent Ltd Companies are required by law to submit this statement with the other accompanying statements to Companies House. Various accountin g ratios to measure the profitability of the company can be calculated using the financial information as shown on the statement, such as the Gross expediency %, Operating pull in %, and Expense and Revenue %.5.25The Statement of Financial Position also referred to as the equilibrate Sheet shows the companys assets, liabilities and uprightness at a given date, and is expedient for interested parties to ascertain the financial wellness of the business. A formula which is associated with this statement is Assets Liabilities = Equity. Assets are what the company owns, liabilities are what the company owes and the justice is the residual interest after the liabilities have been deducted from the assets. This statement used in juncture with the other financial statements can help to assist users when reservation economic decisions, such as investing, lending, or acquisition and so forthThis statement can be compared with those of the previous financial years or with the statement s of other competitors. The principal users are mainly, investors, lenders and creditors, and like the Income Statement, the Statement of Financial Position also needs to be submitted to Companies House, if the reporting entity is a common soldier Ltd Company or a Public Ltd Company. Financial information recorded in this statement can be used to calculate various accounting ratios used to measure the Companys liquidity, impressive use of the companys resources, their financial position and their gearing (the measuring of how much the company is financed by debt).5.26The Statement of Changes in Equity is part of the set of the financial statements that accompany each other and shows how the equity has changed over the specific year. The statement link information contained in the Statement of Profit and Loss and Comprehensive Income with that contain in the Statement of Financial Position. The Statement of Changes in Equity shows the entries for ordinary capital handles, manage premium, retained earnings, dividends, and unrealised gains on assets etc.5.27The Statement of Cash Flow shows the changes in inflows (money coming in) and outflows (money going out) over the financial accounting period in reference to Operating activities, Investing activities and Financing activities. The financial information recorded on the statement gives a user the opportunity to see how feasible it is for the companys to generate future cash flows, and to assess the companys ability to meet its obligations and to pay its shareholders their dividends.5.28The company does not hold any regular round meetings and is a weakness in the accounting system. Staff meetings are an stiff way to get employees to function and communicate with each other share-out and exchanging information and new ideas. Such a meeting would also give faculty the opportunity to flag up any problems or issues which need to be addressed. When important decisions regarding the company have been made with out the involvement of employees, they can be left tincture frustrated that they have not been given a voice.When the module members feel undervalued and de-motivated, operation and productiveness are affected. Employees may commit fraud as they feel warrant by their actions. The number of employee absences may increase and the company will find it difficult to supply their customers as ply shortages may cause delays, due to increased workloads having to be performed by fewer lag members, cost the company money and may prostitute their reputation.5.29The only form of discussion between the departments is via email. Although there is an advantage to using this method of communication, such as convenience, quick delivery, overlook of paper (sustainable for the environment), and cost effective, there are also several disadvantages to using this method, as it creates less social contact, messages can be misinterpreted, viruses can be downloaded, unwanted spam, and security issue s. Another problem that could have a negative effect on the company is the tension that exists between the Finance Director and the Company Accountant, which has been on-going ever since the Finance Director joined the company two years ago. The Company Accountant was resentful that he was overlooked for this position and feels like he had been demoted.5.30The staff members do not get any form of appraisal which would highlight any performance issues relating to each employee. wherefore there is no way of filtering the staff that is underperforming to those that are exceeding requirements and should be considered suitable for furtherance. This is a weakness of the company, and not cost effective as employees feelundervalued and would not work as hard as they should. This will have an adverse effect on the ethical principle of professional competence.5.31The company has an issue with regards to staff didactics. quite than investing in training courses that would be advantageous to both new and exist employees, the company only provides a one day crash course for new employees. This gives cause for concern as there is no fully clever staff on hand(predicate) to cover in the absence of their peers. Also the company does not actively seek to encourage staff to advertize their skills by encouraging them to participate on any training programmes or courses.This can leave staff feeling demotivated and demoralize. whence the employee may become unproductive and uncooperative, which has a negative impact on the company. The company may have an excessive turnover of staff, as employees resign due to the overlook of future prospects being made available this can result in a decrease in the overall efficiency of the company, which can cost them dearly. This is a weakness of the system, and is not following the ethical principle of professional competence5.32The company does not have any contingency plan in place when it comes to staff absences and so is a weak ness of the system. Staff members who are not familiar with the duties of their peers cannot help. This is due to the fact that they cannot get access to useful square such as instruction manual(a)s, counselor-at-law tools, help menus, instruction sheets and helplines, as the company have not produced nor made any available. Therefore work does not get do and this has a severe impact on the company as workloads increase, delays occur and errors are made. This can be costly to the company and can damage their reputation of professionalism.5.33The company does not have any staff that are adequately trained on work on other practices. This became evident in the month of phratry when problems linked to the initial stages of the new integrate payroll and personnel system was make difficulty. The Payroll and Personnel Clerk,who was only given one days intensifier training on the system, confessed that she was still attempt to operate the system, even after a month of having worke d with it. As no other member of staff was trained on the system, the Payroll and Personnel Clerk had no one to approach who she could ask for help and advice. Another issue that could cause only problems is in the event of the clerk fitting absent from work due to unhealthiness or annual leave, this would have a negative impact on the company because they would have no one who could temporarily cover their role. This is a weakness of the accounting system.5.34There is a set of help menus for staff to use on the Sage Line 50 package to help them operate the system correctly. There are step by step guides, online tutorials and PDF guidelines made available, and if any staff member still requires help, they have access to a further phone and email support service. This is a strength as it is cost effective for the company meaning that staff are not tied up shadowing a new employee and are able to still carry on with their own duties.5.35Without sacrificing quality, and working tow ards ensuring a greener environment, Inkwell chooses to use products that are environmentally friendly. This entangles the usage of recycled paper that is purchased from specialist suppliers. All employees are required to adhere to the companys policy of discarding any of unused paper in the recycling bin, which is then sold to a recycling company. Inkwell encourages customers to bring in their old unused ink cartridges in exchange for purchasing re-manufactured ones, and as an incentive Inkwell offers these customers a 10% discount. The company also recycles its own unused ink cartridges, and sends these along with the old cartridges brought in by the customers, to a small number of manufacturers for refilling. This is a strength of the companys system.5.36As an effective way of exposing their existence and upward(a) their image within the community, Inkwell Ltd sponsors the local anaesthetic anesthetic neighbourhood clean-upscheme. This helps install pride within the community. Inkwell also receives an incentive from the regime for their involvement. The clean-up scheme brings members of community together, in their quest to clear the streets of refuge and litter. Walls and signs remain freehanded from graffiti. Children can play safely in the streets, and wildlife remains out of harms reach. The clean environment is attrperforming new home seekers, and visitors therefore saving more money into the community. Employment is rising due to the influx of visitors and the increasing consumer involve that comes with it, resulting in a happy and meet community who look favourably upon Inkwell Ltd.6. WEAKNESSES6.1The companys high street shops use standalone computers that are not connected to the network. A problem is encountered when installation of new software is required, as this cannot be installed simultaneously but must be installed on an individual basis this operation is time consuming. Frequent upgrading coupled with regular keep is common, and t his comes at a price, therefore this is not cost effective for the company. It is difficult to control and monitor the activities performed on these computers so there is a risk of fraud going undetected. A lapse in the adequate security of keeping confidential information protected is violating the Data Protection Act (1998).6.2.Inkwell uses the password of Go Green throughout the whole company, which is common knowledge. The company is not adequately protecting the concealing of the sensitive information held on individuals, and this increases the risk of fraud. Employees are not demonstrating good ethical practices as they are allowing unauthorised users access to confidential data, which increases the opportunity to commit fraud by abuse and misuse. The company is legally and morally obliged to protect confidential information under the Data Protection Act (1998), but this is being breached. deference with the companys own IT policy is not being adhered to either, as this pol icy specifically contains clear instructions that all company computers must beindividually password protected.6.3Inkwells policy that was updated in May 2010 by the Finance Director, gives clear instructions that all IT systems must be fully backed up twice per day. This action should be performed virtually midday and also at the close of business. The new company policy created by the Finance Director is not being complied with. An incident occurred when the company lost data and this came at a cost to the company in both time and money, and therefore they were negligent in their actions. This is not demonstrating good professional business practices.6.4The Microsoft Office go past program used to store and control inventory levels is password protected but is still awaiting set up procedures requirement to restrict access to authorised users only. At present access is available to all users, which is not complying with the Data Protection Act of (1998), as confidential informa tion is not being adequately protected. Unrestricted access to confidential information increases the risk of fraud, as it creates an opportunity for identity theft and gives a perpetrator the freedom to alter or manipulate the data. The company is not demonstrating good business ethics of integrity and confidentiality, through its negligence to protect confidential information, and they are violating the Data Protection Act (1998).6.5On the delivery of goods, the driver and the customer are required to sign a delivery note that shows proof of delivery and receipt. The company uses a paper based proof of delivery. The usage of paper has a prejudicial effect on the environment, and goes against the companys beliefs, and this is not sustainable to the environment6.6 tensity and conflict between the Finance Director and Company Accountant, who are not working together, is having an negative impact on the cookery andorganising of work that needs to be carried out and completed. As a r esult the Accounting Technician has not been able to complete all the tasks that have been given to him, by both parties, but this has gone unnoticed. Work that demands priority and that must meet tight deadlines is left uncompleted and put to the side. Payments are not being collected in a timely manner and this is costing the company money.This is not cost effective for the company. The Finance Director no longer has interest in the projects that he gave to the Accounting Technician to complete, which had ab initio been considered a matter of importance. Any work that has accumulated regarding these projects has resulted in valuable time, effort and money being wasted, which is also not cost effective for the company. Delays are increased as employees are otiose to carry out work until others have consummate theirs. These delays have a negative impact on the companys reputation because they are unable to supply a professional and reliable service.6.7Contingency plans are not pu t in place for the absence of employees who carry out tasks that require day to day processing. Sales invoices were not processed for the period screening the give-up the ghost two weeks of July as the Accounts Receivable Clerk was on annual leave. The companys negligence in adequately covering this post has resulted in the credit control activities not being carried out, so monies due during this period were left uncollected. This has an impact on the companys cash flow and is not cost effective for the company.6.8Inkwell accepts payment in the form of cheque as well as other methods. Payment by cheque delays the access to funds, as it must go through a three day clearing cycle process, which does not operate on Saturdays, Sundays or Bank Holidays. Even at the end of this process there is no guarantee that payment will be granted as the cheque may be returned to drawer has insufficient funds in their bank account. This is not cost effective for the company and can have a serious impact on the companys cash flow and profitability.6.9Any customer accounts overdue by three months should be referred to a debt collecting agency who works on the behalf of the company to recover any debts owed. This is in uniformity with the companys policy. However, in reality, this policy is rarely followed. The Sales Director, concerned that the active pursuance of any of these outstanding debts may jeopardise the good relations she currently has with the customers, has decided to avoid the involvement of the debt collecting agency. Consequently, Inkwells cash flow is negatively impacted due to the lack of money coming in and this is not cost effective for the company. Trade receivables are mounting up significantly and bad debts are increasingly that will in the long run result in having to write them off. This loss in earnings will have to be borne by the company as the funds may become irrecoverable.6.10The company do not have regular meetings that give the staff the oppor tunity to share and exchange information between each other. mending staff meetings could ensure that give decisions are made through effective communication, and enable staff to disclose any department issues. Because regular meetings are not put in place, this has a negative impact on the company because they are unable operate in an effective and efficient manner. The company is not demonstrating good business practices as employees get demoralised when they feel unappreciated, undervalued and disrespected. This is not cost effective for the company.6.11Inkwell Ltd does not have a performance appraisal program put in place in order to monitor the professional development of their employees. exploit appraisals can help to motivate staff and improve company morale, as staff become mindful that good performance can result in promotion and recognition. Due to the non-existence of these programs, management are unable to identify and address any issues or basic training needs of th e staff, and therefore are not in a position to offer suitable training that would help staff become break down at performing their strains. This is not make the company cost effective or militant within the industry6.12Inkwell do not offer training programmes to either new or existing employees, nor do they actively encourage staff to engage and participate on any suitable courses, in order to gain new skills, knowledge and qualifications. In a rapidly changing environment, Inkwell needs to be conscious that roles and responsibilities are continually evolving, and should respond to this by ensuring that employees are provided with get job-related training to ensure that they have the necessary skills and knowledge in order to carry out their jobs in an effective manner. The company is not ensuring that the staff are acting with professional competence.6.13The company have not produced, nor have they provided any on-site instruction manuals that can be used by employees as guida nce tools that are a valuable source of reference. In the absence of staff at short notice, due to sickness, other employees cannot be relied upon to carry out tasks of an unfamiliar nature, as they do not have adequate documentation to hand that contains information that can help guide and instruct the employee to carry out a particular task. This will have a negative impact on labour efficiency in that staff would be shadowing new employees and could be neglecting their own work.7. RECOMMENDATIONS7.1Inkwell needs to detract the standalone computers and supercede them with a full networked system. The accounting team would then be able to share data, access information and automatically update all the systems at once. This would save the company money in the long run as once installed it would be utmost more efficient and increase productivity. A quote can be arranged once decisions have been made concerning company requirements. His is a major overhaul which would be beneficial for the company in the long run, but would require further investigation ensure that the best product was purchased for the best price.7.2To comply with The Data Protection Act (1998), Inkwell must make regular updates to password protection every quarter and passwords should be a mixture of alphameric characters. Each password should be checked for complexity. Only the employee and the line manager are to know the password. Once in force this will comply with the Data Protection Act (1998). This would not cost the company any money, just for the IT department to set this in place as most computer software has the facility to secure the data. This would enhance the AATs code of professional ethics of integrity and confidentiality, and also make them compliant with the law.7.3The Accounts Department and Company Accountant must comply with the company policy on backing up the IT system twice perfunctory. This will prevent any possible data loss by accident or otherwise. This will i n turn entice other staff to follow suit which will ensure ethical behaviour within the company. This will not cost the company any money as a procedure would need to be typed up or the Finance Manager would put a rota in the daily schedule. It would cost a few labour hours, but as the staff are on lucre this would be part of their daily routine. The attain to the company would be that they would not have to pay extra wages for re-inputting the data lost and therefore make the company more cost effective and agonistic within the industry.7.4An accurate and updated list with authorised signatories to make entries in the general ledger is of upmost importance to guarantee security of customers accounts and prevent fraud. All sales staff should enter transaction information on the relevant sales data spreadsheet and sign it then pass it to the manager for counter checking and password protection before it is forwarded to the Accounts Receivable Clerk. This action will prevent fraud and be insignificant in regards to the cost of implementation. This would not cost the company anything, but the IT department could establish this system, or it could be written up in the company policymaking it mandatory for the employees to do this. The benefit for the company would be that the company would be able to see who made certain transactions and would be able to detect any fraudulent activities and who done them.7.5The company should consider investing in electronic signature capture equipment which would assume the problem of paper delivery notes when goods are delivered. It will cost the company initially but will pay for itself in the long term as it would guarantee a traceable signature of the receipt of goods including the data and time and also remove the impact on environmental sustainability. An on line quote from Topaz Systems INC revealed a price of 86.00 Excluding VAT per device (see auxiliary 8.2). This would be beneficial for sustainability of the enviro nment.7.6The attitudes of both the Finance Director and Company Accountant need to be addressed. As senior management, they should both pay more attention and interest to reviewing the tasks of staff and ensuring the tasks are being completed correctly and on time. Management should also ensure the tasks are being distributed to the correct staff which will improve efficiency and performance with no costs to the company. It is important that any differences between the senior heads of management are kept behind unkindly doors. This is being professional and the impact on the company would mean that it would be a happier place to work in, and would lead to divulge output, making the company more competitive within the industry.7.7All invoices must be raised day to day without depart as hold up invoices create delayed payments from customers which reduces the cash flow. The company need to address staff annual leave so as to avoid a item where there is no cover to continue the da y to day invoicing. The company should also promote staff training so that employees are trained on more than one job to allow for any emergency staff absence. It could be that the company could employ agency staff for the cover, but this would come at a cost,depending on the agency. This would require further investigation to see if the benefits of employing agency staff would actually improve the cash flow of the business. The cheaper option would be for better planning within the company ensuring that all jobs are covered when employees are on holiday.7.8The company should look at phasing out the receipt of cheques and promote the use of BACs transfers as the preferred payment method. This allows the company instant control and visibility of all payments and collections, and allows review of the cash analysis. It is the most secure method of payment for the company and customer, prevents fraud and is of no further cost to the company as it is already a system in use by most compa nies.7.9The Sales Director and Company Accountant must review any account that is more than two months overdue and same again when three months overdue. By complying with company policy on this, the Sales Director should promptly pass the matter on to the debt collecting agency in order to recover the money and reduce the debt get bad. It will cost the company 100 plus 25% of any corned funds but will increase cash flow. However, if overdue accounts are reviewed to begin with there is a stronger possibility of avoiding involvement of the debt collecting agency. The fact that this would increase cash flow would able the business to be more competitive within the industry.7.10The management must commence regular staff meetings in which any needs or problems can be addressed. level(p) meetings will be valuable and important as it will give the staff confidence that the company is listening and acting on any issues they have raised. These could also include the awareness of fraud an d the importance of rules and guidelines relating to the Data Protection Act (1998). The costs incurred to enrol regular meetings will be borderline in respect of man hours but will benefit the company in the long term as any problems get resolved and will streamline the running of the business.7.11The company should implement staff appraisals as this will allow feedback relating to productivity and performance of each employee. Appraisals have been known to improve staff morale, efficiency, motivation and job satisfaction, and can highlight any training requirements needed. A professional company could be employed to provide this service, but is too costly. A decision was made to invent their own SWOT analysis form and a Performance and Development computer program form, which will cost the company borderline hours of labour only (see Appendix 8.3). This would improve on the AATs code of professional ethics in professional competence.7.12Regular training programs should be imp lemented for staff awareness of their role within the company. Regular training will help staff be more accurate and competent to do their job which helps the company and employee, and in the long term is cost effective for the company. An online quote was carried out to find out the cost of a self-study payroll package for levels 1 and 2. The price is 125.00 exempt of VAT (see Appendix 8.4). This would ensure that staff were up to date with their knowledge making them professionally competent. The company could send their staff to the local training provider and this would enhance sustainability in the community.7.13Staff should produce an instruction manual detailing their responsibilities and tasks. This would cost the company minimal labour hours in production but would help the company by allowing staff to concentrate on the task in hand rather than being too focused on training others. This would also ensure the task would be accurately and effectively. This would make the com pany more cost effective and competitive within the industry. As staff are salaried, this would just be an extra job in their daily routine and the only cost would be the printing of the manuals, however putting the manuals on the staff intranet would not cost money in stationery and printing making it sustainable for the environment.