ICAS Report Pl Cookridge Carpets Ltd
ICAS Report Plan
Name: Joe Bloggs
Email address:
Phone number:
Description of organisation
Briefly describe what the organisation does and what department you will be reviewing.
Cookridge Carpets Ltd is a large carpet, soft furnishings and bed dealership. They are the main dealership for Memo@memory foam beds and mattresses in the area of Southampton. The payroll department will be the department to be reviewed.
What financial statements does your organisation produce and why?
The organisation produces three types of financial statements:
Firstly, they produce the income statement. The income statement provides information on the operation of the company, which reports on the company's income, expenses, and …show more content…
profits over the year.
Secondly, they produce a statement of financial position. The statement of financial position reports on a company's assets, liabilities, and ownership equity at a given point in time.
Finally they produce a cash flow statement.
The cash flow statement reports on a company's cash flow activities, particularly its operating, investing and financing activities.
The company produces these financial statements to create a set of accounts which can then be used for multiple purposes. For example owners and managers use these financial statements to make important decisions relating to actions to increase profit or reduce cost of sales. Also the tax authorities, for example HMRC, will need these financial statements, as they will need to determine the accuracy of taxes and other duties declared and paid by a company.
What software do they use? Are there better alternatives?
Within the accounts department, Cookridge Carpets Limited uses two main types of software. These are Microsoft Excel and Microsoft Word 2007. The company use Excel to keep inventory levels up-to-date. Microsoft Word is also used to produce a template for invoices.
There is an alternative, which is a quick and simple way of producing invoices, with either software called Sage Line 50 or QuickBooks. QuickBooks is relatively cheap (£99) and has all the tools to create and raise invoices, or there is Sage Line 50, which is more expensive (£580), however this includes a tool that is able control stock levels as …show more content…
well.
Fraud
Potential Fraud
|Area of risk |Current controls in place |Likelihood |Impact |Net likely impact |Action |
|Sales commission |None – no recording of which|High |Lower profit, incorrect tax calculations |High |Set up excel spread sheets with each |
| |salesperson takes what | | | |individual salesperson calculating their |
| |commission | | | |commission based on sales they record |
|Petty cash |None – No reconciling |High |Less cash, decrease in profits, increase |Low |Safe for the petty cash, with only |
| |receipts, no lock on drawer | |in fraudulent behaviour. | |certain personnel able to access the |
| |and anyone can claim the | | | |cash. Receipts needed to reconcile |
| |cash. Kept in the staffroom,| | | |amounts. |
| |next to the coffee and the | | | | |
| |tea. | | | | |
| |Payroll packets mainly seem |Medium |Increase in wages, leading to a decrease |Medium |Set up a software that uses timesheets, |
|Over/under payment packs |to be based on standard | |in profit culminating in incorrect tax | |so that if people are ill, then this |
| |hours and then on what | |calculations. Resulting in fines from | |would be recorded and not be paid for it,|
| |people say | |HMRC and the reputation of the business | |and people who work overtime will get |
| | | |decreasing | |paid accordingly. |
Weaknesses
Comment on the weaknesses of the current system and the implications of those weaknesses – include any areas from the fraud matrix where there is a weakness in the control
Ensure that you clearly demonstrate the impact on the accounting system, (Profit & Loss or Balance Sheet)
Are the systems and processes you are looking at :
• Cost-effective.
• How do the stack up for speed
• Are they reliable
|Weakness (describe the fact) |Implication ( Dr Cr errors – £x?, potential fraud, waste of time |
| |(hrs?) etc) |
|Pay packets: There is not enough security with the handling, filing |Dr Wages £560 |
|and distribution of pay packets. Proven by the fact that Matthew |Cr Bank £560 |
|Perkins’ wife could just pick up his pay pack without any questions |This is because the company would have paid the correct wages to |
|or qualms about it. |Matthew’s wife, but then also paid Matthew the correct amount to him|
| |again (Assuming average wage of £24,000 per annum) |
| |High risk of potential fraud, anyone could come in claim to be |
| |someone else and the company would lose money unnecessarily. |
| |This would also lead to an unnecessary waste of hours dealing with |
| |this problem. |
| |Dr Wages £90 |
| |Cr Bank £90 |
|Payroll aren’t qualified enough for the role: Sonja has admitted she|There will be many hours of wasted time due to this way of going |
|is the only employee who knows how to use the Sage Payroll system, |about things, whenever Sonja wants to go on holiday.
|
|and therefore if she is on holiday, as per a couple of weeks in |Dr Wages £335 |
|December 2009, then there is no one to step in, she has to complete |Cr Bank £335 |
|3 weeks in advance which is a waste of time, and then has to waste |More wages will unnecessarily be spent as well, if situations keep |
|more time, putting through adjustments to peoples wages. If there |arising that pay packs cannot be found and wages are calculated |
|are a lot of adjustments to be made, this could also lead to more |based on the rota, and not take into account sick days or holiday |
|errors. Another example is when Sonja was not in the office in |leave.
|
|December 2010. Parton Senna wanted his pay packet, after being ill |Dr Wages £170 |
|for several days, but could not find it. As Stefan is not fully |Cr Bank £170 |
|trained in using the Sage Payroll system, he decided to calculate |Therefore because of these errors, there will be incorrect income |
|his wages from the rota, and gave him this in cash from the safe, |statement figures, leading to misstated accounts. This means tax |
|without even including the 5 sick days. |calculations will be incorrect leading o fines from HMRC and late |
| |payment fines as well. |
| |Dr Fines £600 |
| |Cr Bank £600 |
|Sales commission: – No recording of which salesperson is responsible|Dr Wages £3,000 |
|for what commission bonuses. Proven by the fact that when John asked|Cr Bank £3,000 |
|Jim Andrews about the topic, he did not know who was responsible for|This, technically, could be an unlimited cost, because if sales |
|the increase in commission. |people catch on to the fact they can get away with it then they will|
| |continue to participate in this fraudulent behaviour. |
|The brothers have stated that they fully trust their staff, and |This could potentially add up to lot of money being paid out, as |
|therefore have decided that no system is needed for either the sales|staff could easily take advantage of this lack of control, and claim|
|or office staff to sign in or out when they start or finish work. |they have done so many hours overtime when in fact they haven’t. |
| |Dr Wages £2,500 |
| |Cr Bank £2,500 |
|Recommendation |Costs |Benefits |Support for staff |
|Describe a recommendation for each weakness – who |Note what costs are involved in the implementation and |Note the monetary benefits (reduced errors £x, saved|How will the change be communicated to staff, |
|should do what, how often, etc. |continued running of your recommendations e.g. training |time x wage rate £x savings etc) and non monetary |with there be a written policy, guide, |
| |£x, recruiting £x, designing new forms, communicating new |benefits of each (including compliance with |training provided? |
| |procedures, time x wage rate £x |regulations if relevant | |
| |Training: This would take about 1 day of training for 2 of|There would be a huge decrease in errors, as no one |Initially there would be an email sent round |
| |the accounts staff which would amount to £150, plus the |would be able to pick up other peoples pay packets. |to all staff that these changes will be |
|Pay packets should be electronically sent out to |hours spent from the 2 personnel spending time training |This for example would save situations like Matthew |implemented from a certain date, and then they|
|each employee, and sent into the accounts by BACS |instead of working, which would equal £135 approx. |Perkins, and therefore save £650. |should all be given a work email address if |
|on a weekly basis to the sales staff. So the | | |they already haven’t got one, and then the |
|payroll staff would just need to calculate wages as| | |e-payslips would be sent directly to this |
|per usual and confirm this information so that the | | |email address. |
|wages can be sent by BACS. |Training: As Stefan Kalinowski asked John Cookridge about |There would be monetary benefits from this training | |
| |receiving accounts training, which John was happy about, |as on the days/weeks where Sonja is away, Stefan | |
|More staff need to be trained how to use Sage |it would make sense to put him on an AAT Level 2 course. |would be able to fill in seamlessly. This in turn |No immediate action required. A notice would |
|Payroll. So staff you be set up to do a course. |Therefore, as well as receiving basic double entry |would decrease the number of mistakes made |go up on the intranet though saying if they |
| |lessons, there is a unit that teaches specifically about |massively, meaning incidents like Sonja having to do|now have any queries about their pay for the |
| |Sage and Payroll so would be useful for the employers as |pay packets weeks in advance and then spending time |week they should contact either Stefan or |
| |less mistakes would be made. The course would cost £649 |making adjustments to correct errors, would be |Sonja. |
| |plus books at £80. This course would mean either Stefan |reduced and cost effective. Potentially saving | |
| |would be out of the office once a week if he was on a day |approx. £505, plus more depending on how many times | |
| |course, but to save costs he could go to the evening |the situation may have occurred. | |
| |classes which would be held twice a week after work. | | |
| | |The benefits of this would be the exclusion of | |
| |An Excel training course would only cost £100. The courses|errors in the future, of sales people giving wrong |All sale people will be emailed of the changes|
| |can easily be done on evenings or weekends, and if needed |figures, as there would be a more reliable way of |to this system. There will also be a policy |
| |Sonja could have a day off work to go to a day class, due |keeping up to date with figures. This could save |change notifying all sales people that if any |
| |to the responsibilities to her children, and would only |£3,000, if the anomaly of March 2010 is deducted by |fraudulent behaviour is found to be carried |
| |last around 8 weeks. The maximum cost it could possibly be|the average, but could potentially be more if sales |out whilst employed for Cookridge Carpets |
|Sonja should attend an Excel training course, as |if she did have to take a day off work every week to |people had been lying about their commission |Limited, then they will receive a written |
|this would increase her ability with spread sheets |complete the course would be £540 worth of h to college. |regularly. |warning, or if it has been known to be going |
|and therefore be able to create one for sales | | |on for a while, then there would be immediate |
|commission. This would breakdown all the sales | | |termination of contract. |
|staff in the spread sheet, and then from the sales |To implement this system for such a small company would | | |
|orders they receive both through the web shop and |cost £1,000. Training would be needed for maximum of 3 |The benefits would be that no longer would staff be | |
|by invoices, which would both specify who was the |hours of time for all 20 members of staff. This |able to lie that they had done xx hours of overtime,|Training would take place for half a day, |
|sales person responsible, she work out commission |approximately total to £460. |as they would have had to be in the office until |explaining to staff when this will come into |
|accordingly. | |then for it to have been clocked into the system. |effect, and how to use the swipe cards. An |
| | |This would save many hours of wages, potentially in |email would then be sent out reminding al |
|Clock cards system should be implemented. All staff| |excess of £2,500 per year as the system would not |staff of the upcoming change of policy. |
|would have a card that lets them in and out of the | |have to replaced or maintained often. | |
|building, which notifies a system that records who | | | |
|it is and when they entered and left the building | | | |
Note testimony provider.
If you are basing your report on your workplace you will have to supply a letter on headed paper with the finalised report to authenticate your work. At this planning stage please ask your line manager to review your plan to ensure they are happy for you to submit this.
Witness comments
| |
|I, John Cookridge, have agreed for Ade Adeleye to do this project and have no objection as matters of confidentiality have been |
|discussed. |
| |
| |
| |
| |
| |
Please ask them to sign below so we have a sample signature for our records.
Witness sample signature: John Cookridge.
Name: Joe Bloggs
Email address:
Phone number:
Description of organisation
Briefly describe what the organisation does and what department you will be reviewing.
Cookridge Carpets Ltd is a large carpet, soft furnishings and bed dealership. They are the main dealership for Memo@memory foam beds and mattresses in the area of Southampton. The payroll department will be the department to be reviewed.
What financial statements does your organisation produce and why?
The organisation produces three types of financial statements:
Firstly, they produce the income statement. The income statement provides information on the operation of the company, which reports on the company's income, expenses, and …show more content…
profits over the year.
Secondly, they produce a statement of financial position. The statement of financial position reports on a company's assets, liabilities, and ownership equity at a given point in time.
Finally they produce a cash flow statement.
The cash flow statement reports on a company's cash flow activities, particularly its operating, investing and financing activities.
The company produces these financial statements to create a set of accounts which can then be used for multiple purposes. For example owners and managers use these financial statements to make important decisions relating to actions to increase profit or reduce cost of sales. Also the tax authorities, for example HMRC, will need these financial statements, as they will need to determine the accuracy of taxes and other duties declared and paid by a company.
What software do they use? Are there better alternatives?
Within the accounts department, Cookridge Carpets Limited uses two main types of software. These are Microsoft Excel and Microsoft Word 2007. The company use Excel to keep inventory levels up-to-date. Microsoft Word is also used to produce a template for invoices.
There is an alternative, which is a quick and simple way of producing invoices, with either software called Sage Line 50 or QuickBooks. QuickBooks is relatively cheap (£99) and has all the tools to create and raise invoices, or there is Sage Line 50, which is more expensive (£580), however this includes a tool that is able control stock levels as …show more content…
well.
Fraud
Potential Fraud
|Area of risk |Current controls in place |Likelihood |Impact |Net likely impact |Action |
|Sales commission |None – no recording of which|High |Lower profit, incorrect tax calculations |High |Set up excel spread sheets with each |
| |salesperson takes what | | | |individual salesperson calculating their |
| |commission | | | |commission based on sales they record |
|Petty cash |None – No reconciling |High |Less cash, decrease in profits, increase |Low |Safe for the petty cash, with only |
| |receipts, no lock on drawer | |in fraudulent behaviour. | |certain personnel able to access the |
| |and anyone can claim the | | | |cash. Receipts needed to reconcile |
| |cash. Kept in the staffroom,| | | |amounts. |
| |next to the coffee and the | | | | |
| |tea. | | | | |
| |Payroll packets mainly seem |Medium |Increase in wages, leading to a decrease |Medium |Set up a software that uses timesheets, |
|Over/under payment packs |to be based on standard | |in profit culminating in incorrect tax | |so that if people are ill, then this |
| |hours and then on what | |calculations. Resulting in fines from | |would be recorded and not be paid for it,|
| |people say | |HMRC and the reputation of the business | |and people who work overtime will get |
| | | |decreasing | |paid accordingly. |
Weaknesses
Comment on the weaknesses of the current system and the implications of those weaknesses – include any areas from the fraud matrix where there is a weakness in the control
Ensure that you clearly demonstrate the impact on the accounting system, (Profit & Loss or Balance Sheet)
Are the systems and processes you are looking at :
• Cost-effective.
• How do the stack up for speed
• Are they reliable
|Weakness (describe the fact) |Implication ( Dr Cr errors – £x?, potential fraud, waste of time |
| |(hrs?) etc) |
|Pay packets: There is not enough security with the handling, filing |Dr Wages £560 |
|and distribution of pay packets. Proven by the fact that Matthew |Cr Bank £560 |
|Perkins’ wife could just pick up his pay pack without any questions |This is because the company would have paid the correct wages to |
|or qualms about it. |Matthew’s wife, but then also paid Matthew the correct amount to him|
| |again (Assuming average wage of £24,000 per annum) |
| |High risk of potential fraud, anyone could come in claim to be |
| |someone else and the company would lose money unnecessarily. |
| |This would also lead to an unnecessary waste of hours dealing with |
| |this problem. |
| |Dr Wages £90 |
| |Cr Bank £90 |
|Payroll aren’t qualified enough for the role: Sonja has admitted she|There will be many hours of wasted time due to this way of going |
|is the only employee who knows how to use the Sage Payroll system, |about things, whenever Sonja wants to go on holiday.
|
|and therefore if she is on holiday, as per a couple of weeks in |Dr Wages £335 |
|December 2009, then there is no one to step in, she has to complete |Cr Bank £335 |
|3 weeks in advance which is a waste of time, and then has to waste |More wages will unnecessarily be spent as well, if situations keep |
|more time, putting through adjustments to peoples wages. If there |arising that pay packs cannot be found and wages are calculated |
|are a lot of adjustments to be made, this could also lead to more |based on the rota, and not take into account sick days or holiday |
|errors. Another example is when Sonja was not in the office in |leave.
|
|December 2010. Parton Senna wanted his pay packet, after being ill |Dr Wages £170 |
|for several days, but could not find it. As Stefan is not fully |Cr Bank £170 |
|trained in using the Sage Payroll system, he decided to calculate |Therefore because of these errors, there will be incorrect income |
|his wages from the rota, and gave him this in cash from the safe, |statement figures, leading to misstated accounts. This means tax |
|without even including the 5 sick days. |calculations will be incorrect leading o fines from HMRC and late |
| |payment fines as well. |
| |Dr Fines £600 |
| |Cr Bank £600 |
|Sales commission: – No recording of which salesperson is responsible|Dr Wages £3,000 |
|for what commission bonuses. Proven by the fact that when John asked|Cr Bank £3,000 |
|Jim Andrews about the topic, he did not know who was responsible for|This, technically, could be an unlimited cost, because if sales |
|the increase in commission. |people catch on to the fact they can get away with it then they will|
| |continue to participate in this fraudulent behaviour. |
|The brothers have stated that they fully trust their staff, and |This could potentially add up to lot of money being paid out, as |
|therefore have decided that no system is needed for either the sales|staff could easily take advantage of this lack of control, and claim|
|or office staff to sign in or out when they start or finish work. |they have done so many hours overtime when in fact they haven’t. |
| |Dr Wages £2,500 |
| |Cr Bank £2,500 |
|Recommendation |Costs |Benefits |Support for staff |
|Describe a recommendation for each weakness – who |Note what costs are involved in the implementation and |Note the monetary benefits (reduced errors £x, saved|How will the change be communicated to staff, |
|should do what, how often, etc. |continued running of your recommendations e.g. training |time x wage rate £x savings etc) and non monetary |with there be a written policy, guide, |
| |£x, recruiting £x, designing new forms, communicating new |benefits of each (including compliance with |training provided? |
| |procedures, time x wage rate £x |regulations if relevant | |
| |Training: This would take about 1 day of training for 2 of|There would be a huge decrease in errors, as no one |Initially there would be an email sent round |
| |the accounts staff which would amount to £150, plus the |would be able to pick up other peoples pay packets. |to all staff that these changes will be |
|Pay packets should be electronically sent out to |hours spent from the 2 personnel spending time training |This for example would save situations like Matthew |implemented from a certain date, and then they|
|each employee, and sent into the accounts by BACS |instead of working, which would equal £135 approx. |Perkins, and therefore save £650. |should all be given a work email address if |
|on a weekly basis to the sales staff. So the | | |they already haven’t got one, and then the |
|payroll staff would just need to calculate wages as| | |e-payslips would be sent directly to this |
|per usual and confirm this information so that the | | |email address. |
|wages can be sent by BACS. |Training: As Stefan Kalinowski asked John Cookridge about |There would be monetary benefits from this training | |
| |receiving accounts training, which John was happy about, |as on the days/weeks where Sonja is away, Stefan | |
|More staff need to be trained how to use Sage |it would make sense to put him on an AAT Level 2 course. |would be able to fill in seamlessly. This in turn |No immediate action required. A notice would |
|Payroll. So staff you be set up to do a course. |Therefore, as well as receiving basic double entry |would decrease the number of mistakes made |go up on the intranet though saying if they |
| |lessons, there is a unit that teaches specifically about |massively, meaning incidents like Sonja having to do|now have any queries about their pay for the |
| |Sage and Payroll so would be useful for the employers as |pay packets weeks in advance and then spending time |week they should contact either Stefan or |
| |less mistakes would be made. The course would cost £649 |making adjustments to correct errors, would be |Sonja. |
| |plus books at £80. This course would mean either Stefan |reduced and cost effective. Potentially saving | |
| |would be out of the office once a week if he was on a day |approx. £505, plus more depending on how many times | |
| |course, but to save costs he could go to the evening |the situation may have occurred. | |
| |classes which would be held twice a week after work. | | |
| | |The benefits of this would be the exclusion of | |
| |An Excel training course would only cost £100. The courses|errors in the future, of sales people giving wrong |All sale people will be emailed of the changes|
| |can easily be done on evenings or weekends, and if needed |figures, as there would be a more reliable way of |to this system. There will also be a policy |
| |Sonja could have a day off work to go to a day class, due |keeping up to date with figures. This could save |change notifying all sales people that if any |
| |to the responsibilities to her children, and would only |£3,000, if the anomaly of March 2010 is deducted by |fraudulent behaviour is found to be carried |
| |last around 8 weeks. The maximum cost it could possibly be|the average, but could potentially be more if sales |out whilst employed for Cookridge Carpets |
|Sonja should attend an Excel training course, as |if she did have to take a day off work every week to |people had been lying about their commission |Limited, then they will receive a written |
|this would increase her ability with spread sheets |complete the course would be £540 worth of h to college. |regularly. |warning, or if it has been known to be going |
|and therefore be able to create one for sales | | |on for a while, then there would be immediate |
|commission. This would breakdown all the sales | | |termination of contract. |
|staff in the spread sheet, and then from the sales |To implement this system for such a small company would | | |
|orders they receive both through the web shop and |cost £1,000. Training would be needed for maximum of 3 |The benefits would be that no longer would staff be | |
|by invoices, which would both specify who was the |hours of time for all 20 members of staff. This |able to lie that they had done xx hours of overtime,|Training would take place for half a day, |
|sales person responsible, she work out commission |approximately total to £460. |as they would have had to be in the office until |explaining to staff when this will come into |
|accordingly. | |then for it to have been clocked into the system. |effect, and how to use the swipe cards. An |
| | |This would save many hours of wages, potentially in |email would then be sent out reminding al |
|Clock cards system should be implemented. All staff| |excess of £2,500 per year as the system would not |staff of the upcoming change of policy. |
|would have a card that lets them in and out of the | |have to replaced or maintained often. | |
|building, which notifies a system that records who | | | |
|it is and when they entered and left the building | | | |
Note testimony provider.
If you are basing your report on your workplace you will have to supply a letter on headed paper with the finalised report to authenticate your work. At this planning stage please ask your line manager to review your plan to ensure they are happy for you to submit this.
Witness comments
| |
|I, John Cookridge, have agreed for Ade Adeleye to do this project and have no objection as matters of confidentiality have been |
|discussed. |
| |
| |
| |
| |
| |
Please ask them to sign below so we have a sample signature for our records.
Witness sample signature: John Cookridge.