Internal controls in inventory, accounts payable, accounts receivable and payroll are an important part of a company system. The four systems require efficiency and accuracy from the employees before accounting system can ensure expedient access to cash availability.
Internal controls provide foundation for successful and safe organization. Information listed in this brief will provide management some insight into the internal controls and some risk organization should be aware off.
Payroll
The payroll chart not clearly defines the process and procedures. Approval of the employee timecards in the system is missing. Because the system is automatically capturing time, approval of the employee timecards in the system should be out loaded based on the biometric system.
Personal in charge for the payroll input data should only have to enter all sick leave, vacation or overtime once. The system will automatically load this afterward.
Approval of the payroll needs to be included in to the system to avoid fraud and to establish preventive controls.
Inventory
Inventory receipts have to match electronically version of the PO. In addition to this receipt will be send to AP to match the invoice. However, inventory will be updated by POS sales.
Addition of the bar code inventory can be scanned in and out from system and automatically updated with the stocking, checks and balance and monthly inventory information. Inventory system will be in the accounting system available for the review.
Internal Control and Risk Evaluation
Accounts Receivable
Accounts receivable can be improved by adding future growth in flow charts for invoicing. Nevertheless to say, expansion of the catering, and invoicing for business to business sales are required. In addition to this information, new collection method is added.
Accounts Payable
To match receipt to the invoice we recommend Po system. Risk of entering an invoice to printing checks without manager approval or matching can be skipped by the validation of the checks on documents, batching documents on checking batch total, and authorization process.
In conclusion we can say that is important to recognize risk and internal controls. Organization as Kudler Food’s need to prevent fraud, data integrity, policies and procedures set by management for checks and balances.
Internal controls is defined as a process, effected by an entity’s board of directors, management, and other personnel, designed to provide reasonable assurance
Director Moore stated there was a complaint to the Union against DOH regarding time issues. The proper channel was not followed. Ms. Jones explained the policy on earning comp time/over time when a person takes Medical Leave on the same day. It is not earned at time and half, but rather it is earned as straight time. Ms. Jones suggested more training on how to handle the timesheets since Ms. Mahoney left, especially when Ms. Arrighi is out of the office. This is especially true for whenever a person works on the weekends. An e-mail is needed from management regarding time worked on the weekend, as this is important on the Monday after payroll week ends. It was decided that in order to expedite payroll, e-mail Ms. Jones about hours worked
Accounts Receivable has good separation of duties and strong internal controls such as control numbers and reconciliations to sales and bank statements. One weakness in the Accounts receivable system is the accounting supervisor approves summary entries and reconciles the general ledger account, which could indicate a weakness with segregation of duties. We recommend that the controller approves of summary entries to segregate these duties.
There are several important people involved with this project and will help with the necessary changes needed for the Payable Audit System (PAS). Each person has a very detailed job description and the skills that would be used to make the changes to the system. First, Ted Anderson the director of disbursement began to notice how their current system was very labor-intensive. He knew of other ways to increase the productivity to the system and he would help in the plan to transform these changes. First, he changed the mind-set of how the system would work, and he organized a difficult training course with a 9 month duration designed for the employees. With his role on this project the company will make several fundamental changes, to pay the invoices in their tolerance. Keeping all history transactions, they would adopt a quality-control approach. Also eliminating all their paper files they would develop a Document Control System (DCS), where they would scan all of their documents into their computer system.
It is often used to declare value for customs. It is not an actual invoice, and thus the seller does not record a pro forma invoice as an account receivable and the buyer does not record a pro forma invoice as an account payable. A pro forma invoice is not provided by the seller until the seller and buyer have agreed on the terms of the order. In some cases, a pro forma invoice is issued to request advance payments from the buyer, either to start production or for the security of the goods
1. The best way to keep accounts receivable numbers accurate is to have an accurate and timely billing system. All invoices should be sent out at the end of the month. Then, a ten-day period should be given for the payments to arrive. If payments haven't been received by then, calls and letters to the customers should start right away.
The second step is entering the transactions of the period in appropriate journals. This step consists of taking the journal entries, assigning each to an asset, liability, equity, expense or revenue account(s) to debit and credit. This can be done by almost anyone. I have had jobs where the bookkeeper does the journal entries and figures out which accounts are affected. I have also had jobs where anyone from a receptionist to a staff accountant does this step. If the person doing the journal entries does not have a background in accounting, or is unfamiliar with which accounts are affected, the person submitting the source documents will write down which accounts should be debited and which should be credited. This practice makes doing the journal entries little more than data entry, which can be done by nearly every employee.
RFID data, for example, part and serial numbers, assembly dates and support history are put away on the tags and catches which help in maintenance of equipment. RFID technology as high value for asset management and inventory systems. A barcode is a visual representation of data that is checked and utilized for data. Bar code is simple to control equipment and tool inventory. In facilities supervisors can use barcodes to link work orders, purchase orders, spare parts and equipment which can be further used to track and collect costs.
Customer A, B & C Purchase 5 Products from FlipKart in a month and these products are a Book, a Stereo, A Fridge, A Mobile Phone and a Bed sheet from 3 Sellers. Invoice for the Month for FlipKart looks like below table .
Control mechanisms are necessary in order for any business to run smoothly and ensure that things are going as planned. These controls help the business determine the activity and direction of its employees in a manner that helps the company meet its goals (Bateman & Snell, 2007). There are three basic types of controls: bureaucratic, market, and clan. Bureaucratic control basically consists of the formal rules and regulations that establish authority, set standards, and regulate behaviors (Bateman & Snell). Market control regulates activities by examining the competition, analyzing profit and loss, and utilizing economic information (Bateman & Snell). Clan control differs from the previous two controls in that there are no formal rules, regulations, or analysis. Clan control functions under the assumption of common goals, values, and trust among individuals and the organization (Bateman & Snell).
It is undeniable that Inventory Management is an important key to success at Walmart. This paper will discuss the two main methods of Inventory Management used by Wal-Mart: Material Requirements Planning and Just-in Time. Next we write about the technical means of keeping track of inventories, like RFID tags. We conclude by discussing how Wal-Mart, one of the world’s largest retailers, manages its inventories. Material Requirements Planning (MRP) Walmart needs to make sure that consumers are satisfied all the time, not only with the quality of service being provided to them, but with the quality of the product they are planning.
(6)In order to ensure safety of company property, the company bank account should be monitored by someone out of the account payable department. However, in this system, there is no such person who could reconcile the account. As a result, it is difficult to measure whether the payment is equal to the value of purchased good. On top of that, treasurers and account payable clerks can hardly be controlled. The owner of this business is recommended to find some trusted and reliable accountants as supervisors of the company bank account. And the company should also design a system which requires the authorised fingerprint for each payment. This can maximize the protection of the company's property.
Barcodes are used everywhere around us. They are used to track products through shipment, track products at a store and speed up and enhance the checkout process, as well as allowing faster access to information. Barcodes began to be used heavily in the 1970’s. This began a great movement in the consumer industry, speeding up the checkout process and allowing easier inventory tracking. However, just like all technologies, barcodes have been enhanced many times over and are being replaced by better, more efficient systems (Bonsor).
First of all, an effective payroll cycle provides accurate and detailed accounting records. These records can be stored in an outside record-keeping
Overall, the company is having ineffective controls regarding different departments and in the whole organization. An effective internal audit department should be established within the organization which should test the effectiveness of these controls on regular basis and make it sure that all controls are working effectively and efficiently with the different departments of the organization. Also the Internal auditor should implement the most effective processes and measures to prevent and detect the fraud, corruption and non compliance with the laws and regulations in the organization. Establishment of internal audit committee would be helpful in this regard which comprises of executive and non executive directors.