Accounting information system
Executive summary
The aim of the report was to understand about the sales process and the internal control and also the corporate credit card of the Bucks Phyz Company. The report below had described about the sales process of Bucks Phyz. It had also described the internal control weaknesses in the sales process of the company and also its impact on the company.
The repost also studied about the benefits and risks of introducing corporate credit cards. At last it was concluded that the sales process should be evaluated effectively so that the performance of the company can be enhanced.
Summarized overview of the Sales Process for Bucks Phyz
Bucks Phyz is a medium size company which has an overall turnover of around $2.5 million annually. The company’s sales process includes all those relevant and various activities which are related to the revenue of the company. It includes activities such as billing of the customer, creation of a sales contract, collecting of the cash of the sales, invoices etc.
Over the past two years the company had reframed its program within its sales team as the company had gone through major changes in its operating working environment. There are also many changes occurred in the key personnel, time and resource constraints which can create an impact on the company’s internal controls effectiveness in its key processes. Sales process should be given due consideration as it will bring rewards for all the other processes in the Bucks Phyz.
Internal control weaknesses and its impact in Bucks Phyz sale process
| Internal control Weakness | Impact |
| · For creating a sales contract in this company there is need to enter the customer data into the billing system and making up a new customer profile. After doing it, a price template is been developed which is then linked to the customer profile. Developing a price template can be risky as it requires a lot of data of high quality and which entered into the system manually (Kim et al., 2011). So it might happen that the data gets misplaced. This is one of the weaknesses in the Bucks Phyz sales process.
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The staff has to work more attentively if they misplace the customer data. |
| · The second weakness is that the data is not been generally reviewed regularly after its initial input until any particular reason to do this arise. Only few people were given the responsibility to create new customer profile no others are authorized to create new customers profiles. | The impact this weakness can have on the organization is that the performance of the organization might get affected. |
| · Another weakness was that some of the process in the company has also failed because the sales staff was not instructed sufficiently. | The staff is not been instructed about some of the process in the organization so it affects the performance of the staff. |
| · The earlier profitability calculation template was also not capable of considering the cost structure, the workload caused by the initial customer along with the EBIT targets. | Duplication error also will cause to increase the cost, time and other resources constraints for the company which will affect the profitability of the company (Costello, 2011). |
| The other internal control weaknesses can be like breakdown happened in the controls because the personnel might create some errors or misunderstand the instructions, sometimes it also happen that the management or the other staff are not able to make effective decisions or perform regular duties because of irrelevant information etc (Rice & Weber, 2012). | Irrelevant or inadequate information will also affect the decision making process of the company. The financial performance of the company can also be affected. |
Specific internal controls which could be implemented to mitigate the risks
The risks can be mitigated or minimized in the following ways:
- The company should always make sure that the customer master data contains all the relevant, important and approved data.
- There should be proper, true and valid prices and related terms in sales orders.
- The accounting staff should also ensure that the account receivables in the balance sheet of the company are evaluated and valued accurately (Johnstone & Rupley, 2011).
- The company can also make sure that the returns by the customers are booked or entered into the system and handled correctly.
- The creditworthiness of the customers must always be checked initially in advance so that it might not create any type of issue for the company.
A detailed review of the benefits and potential risks associated with the introduction of corporate credit cards within Bucks Phyz
Corporate credit cards are different from the personal and small business credit they are a group of arrangements that the company provide to its employees to charge the various business related expenses.
The benefits that are associated with the introduction of these corporate credit cards are there is less personal risk associated with this card, it makes easy for the accounts department to keep the track of the expenses made by the employees of the company, it also helps the employees as it makes the expensing process easy and efficient, it also helps to set the limits so that the employees can have a control on their spending, it also offers new attractive perks such as travel and any emergency assistance services to the employees (Altamuro & Beatty, 2010).
The potential risks associated are that corporate credit cards might be more expensive than the other cards. The employees cannot also accrue the points when they use the corporate cards. The corporate card policy should also aware the employees that they are personally responsible for their credit card balance (Ostry, 2012). Another risk is that the employees sometimes use the corporate credit cards for their personal uses.
There also exists the risk of double-dipping while using the corporate credit cards. Another potential risk is that these cards are only allotted to the trusted ones that depicts the company do not have trust in all its employees which might bring a feeling of conflict among the employees.
Specific Internal Controls which should be implemented to minimize the impact and occurrence of the risks
The ways to mitigate or minimize the impact and occurrence of the risks are that the company or the credit manager should always check the past-due records of the employees so that decision can be made in regard of credit-collection. The credit manager must also check that are the uncollectible accounts within the specified limit and also make sure that the credit policies are been frequently revised (Featherman et al., 2010).
The company should also review the existing system of internal controls. The company should also develop an effective risk management plan that will help the employees to safeguard from the potential losses that might result in losses.
The company can also appoint an internal control consultant that will also help the company in identifying the weaknesses in the company’s processes (Paquette et al., 2010). He / she being an outsider will look out for the areas of improvement more objectively.
The company can also use the previous reports to detect any fraud in the billing procedures or reports. The company can also conduct regular audits that will also help the company to identify the areas of improvement and the company’s financial position as well (Cereola & Cereola, 2011).
Recommendation to the CEO regarding who should be issued with a corporate credit card and why
The employees who should be issued with a corporate credit card are those who on which the company can trust, those who are honest and will not do any type of fraud with the company.
The employees whose creditworthiness is also strong not weak should be issued with a corporate credit card by the company. Those employees can be given those who are increasing the productivity of the company and those who are performing well in the organization can be rewarded with a corporate credit card. Those employees who regularly submit their receipts of their spending should be issued with the corporate credit card.
The most deserving and loyal employees of the company should be issued with the corporate credit card.
It can be concluded from the above report that the Bucks Phyz Company’s sales process has some of the issues which affect the performance of the company. It is also concluded that the company had adopted various measure to mitigate these issues been identified by the company.
It is been recommended to the company that the company should focus on their internal control process so that it might help the company to track the working of their operations and so that the company can also avid or reduce the opportunity of any frauds. The company is also recommended to frequently conduct regular audits that will help the company to look for the areas of improvement.
The company should also issue corporate credit card to the employees as it will help to track he expenses by the various departments.
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