• Posted on March 14, 2023
• Harshita

MN7262 Accountability, Representation and Control Assignment Sample 2023

1.Accounting representations

The condition of any industry can be reflected with the accounting representation and which segments needed development as also be found by this accounting representation. The financial report has been presented as the statement that helps to reflect the present negative condition of any industry. Patisserie Valerie is a well-known UK coffee chain management industry that has to suffer from fraudulent misstatements.

As more than 3000 staff are working under this cafe chain management the misstatement occurred frequently. the main miss statement has been observed in the balance sheet and also the account of loss and profit record. This factor mainly affects the company’s economic condition. Overnight the whole financial statement has been changed for which Patisserie Valerie has taken some steps to eliminate such exhausting elements from the business. due to the accounting representation, some negative points have smoothened the part of misstatement in the Patisserie Valerie.

The disadvantages are damage to data service, inappropriate information, system mess, fraud, and high cost in the execution department. In Patisserie Valerie all these problems have been observed continuously for that would like to shut down some stores. Braghiere et al. (2021) exercise cost cannot at all be affordable for this industry in the present time and in a short period not at all possible for this industry to identify such strategies that can reduce all this mess.

overnight this industry has faced this massive fraud in accounting and some black holes are arising suddenly. This situation directly affects the management change of this industry and suddenly closed stores and the employees who are working in that store are also faced problems.

But it cannot be said that the responsibility is only on the industry. Sudden breakdown of the management changes due to financial fraud observe in the business management chain is not at all tolerable for the business advisors.

The accounting mirror provided some principles and ethics that will help the industry to maintain the accuracy and efficiency in the statements. The cafe chain management has observed that less effectiveness in the business statement and the financial report is the main reason for the fraud and the accounting mismatch.

For that reason, it has two identify which compound strategies will provide the ability to make proper financial statements for which these black holes can be eliminated from the financial report. Busco and Quattrone, (2018) said that sudden challenges are a very common thing with every industry has faced for that reason some backup plans have to be made to resist all the barriers and make a proper structure of the business.

  Patisserie Valerie has led many stores in Ireland and UK and this diversity in location is also one of the reasons that make fraud in the business and management.

Every industry intends to follow some consistent believes like prudence, objectivity, consistency, and lastly materiality. all four parts are very important to reduce all the black holes from industry and spatially from a business chain management process. Objectively representation of economic reality is the process by which the transparency of all the departments can be maintained and along with each racist all the external force that slows down the growth of any business.

after analysing all these reasons, it can be said that this accounting representation is the main reason for which fraudulent statements can take place in the business process. It is highly needed that industries should analyse and monitor all the accounting sectors especially Patisserie Valerie which has a wide range of stores in two different areas.

2.The role of accounting institutionalizes 

Financial data classification analysis collection interpretations are indicated by the accounting of any business. Implementation of accounting the managers and the owner of any restaurant or Cafe business will have that opportunity of documentation of all the financial transactions made in the business. There are many roles of accounting institutionalises in a Cafe business.

Metcalf and Moss, (2019) mentioned that solid financial management Is required to run a successful business in the competitive market and if anyone owns a restaurant business then it is very much important to have an accounting for the payment segment of the business. Without a proper accounting system, the administrative area will fail to provide proper facilities to all the employees equally.

In the case of Patisserie Valerie, it has been observed that for not having a proper accounting function a financial black hole took place in the business. Djanegara et al. (2018) mentioned that accountability is needed for having a better tracking of the cash flow that is happening in the business because of valuable accounting practices and provide the opportunity to the cafe owner to manage and fat the business record transaction and cash flow as well.

Accountability also plays the role of providing information about forecasting and planning about the needs of the business. Tracking inventory is also a major part of accountability. Because it can easily track the account at any time and the orders that are currently in the record of the business. tracking inventory is effective to reduce the wastage of food, maintain the budget and reduce the risk management in the budget, as well as customer dissatisfaction, can also be reduced by tracking inventory.

It can also reduce the risk factor in the business because after reducing the waste of food and the risk management in the budget the organization can keep the black hole that has been taking place in the business financial segment. In the case of Patisserie Valerie, a well-known Cafe change of the UK that’s all in 1926. It is a business of baking foods and cakes and other varieties of foods.

An entrepreneur Luke Johnson owned 37% of this industry. After the acquisition of Luke Johnson, this business has 200 stores in the UK and Ireland. In the year 2018 in this industry, a financial black hole has been observed. This essay is based on some questions about accounting in the industry.

Different forms of accountability

As accountability can help the business to maintain the financial growth of the business it has to segment that can be effective for the business. One is external accountability and the other is internal. That came from the others in the business is called external accountability; it is not owned by anyone but can be counted. Internal accountability One of the major disadvantages of Patisserie Valerie is external accountability.

The external accountability is related to the external factors but this problem is mainly offered in the internal infrastructure and mainly harms the internal sectors that can be improved. The industry has to hire such employees who can easily identify the problems that occur and which will rise in future for that in present time the important strategies have been included. As a precautionary step Patisserie, Valerie can involve some strategies that can bend the problems as a positive impact-full action.

The organization should observe the foreign farms and the problem resisting method for that for the domestic business these practices can be applicable and in a strategic way, all the problems will be eliminated from the business model. In the case of Patisserie Valerie, this effect is not sold because this form is not at all concerned about the foreign problem tackling methods but it has launched its new techniques. this technique will be applicable for the future but at the present time, these are not at all appropriate for that the problems arising continuously.

Patisserie Valerie is a British bakery and snacks company that used to operate in Britain and Ireland. In 2018 the company was valued at 94 million euros. In October 2018, the company’s accounts were found to be fraudulent and approximately 30 million euros were missing from the accounts and also 10 million euros were not in a place where there should be.

Luke Johnson the CEO and chairman and also is a stakeholder of the group said that he was being framed as the for drill Whereas he has nothing to do with the false accounts that have been done in the company. He also added that he would flee from great Britain and seek Asylum in other countries to protect himself from prosecution. The company has been in the UK for around two decades and it has always paid 18% corporate tax drafted by the British government in the early 2000s.

According to Bbc.com (2019), the company was lately running into some losses and also was performing badly economically due to its male competition. the Brexit situation was being played out as EU so they have to pay more than 18% of the tax that was set by the EU that set them very bad financial losses. The company has proved to their investigative team in order to find out who is the main brain behind this.

In the UK when such incidents happened of fraud accounting the company has every right to prosecute whoever this feat and they can also ask help from the courts the company has should the chairman Luke Johnson in the British court. The company has discovered that its businesses have been running in bad shape and losses since early 2017. but the accounting department has manipulated the data and also implanted false data in order to show that the company is in good health.

The company now face the challenge of a very low reserve of cash which is affecting their business and also being a hindrance to run their physical shops that needs cash in order to run properly and make a profit. They have almost 30 to 40 million euros in losses that they have been perceiving as reserve cash. The company’s chairman had an all-access control to the finance department which he used to audit and manipulate data to show that the company was running in profit.

According to Bbc.com (2019), Luke Jhonson also made his fortune from the manipulation data he almost grasped 10 million euros from the company’s reserve cash. The company also has 30 million ghost cash as they thought this was in their accounts. The chairman had manipulated the data to show the shareholders that the company is running in profit but there is no such cash actually in their accounts. This crime done by the chairman is prosecutable by the business and fraudulent law by the UK Government.

The main problem the company faced was the British establishment decided to leave the European Union and also not allow the Euro to flow in Britain and interactively. This was very bad for this business as they sold a lot of their products across the European Union and made a very good profit there was not enough and no transportation charge for the British bakery.

as Britain break from the European Union, they had to pay more to sell the same product but they had to keep the prices the same as they had to be competitive in the market. The company e needs to investigate this matter only in order to see which of the managers and the finance audit employee is but involved in this so that they can present evidence to the courts to prosecute the culprits.

3. A)

Accounting control systems refers to the concept of methods and procedures to draw the validity of the financial report within the organisations. Every organisation needs to pay attention to the accounting system as it helps to accurate the financial statement of the organisation. The financial statement of an organisation defines how much the organisation is to control its economic structure. According to Kewo (2017), the accounting control system needs internal control as it makes the structure of audits strong for the company.

The extreme focus of managers on the accounting controlling system negatively affects its development as the audit needs to be dependent on the financial statement, not on any particular person. Excess management of managers can bring issues like manipulation and unethical practice or management of the managers can affect the financial statement and destroy its accuracy.

That is why the development process of the auditing and accounting control system has been damaged over time by the excessive management of the manager. The auditing and accounting control system depends on the balance sheet, expenses, investment and profit of the organisation and in this case if any manager gives extreme focus on efficiency that can restrict the accounting financial report from its authentic value.

In this scenario, Luke Jhonson the CEO of the company provides excessive management manipulation towards effective management strategies that is why it creates a decline, auditing becomes unauthentic and Patisserie Valerie faces risk.

B)

Control defines a strong term in accounting and being an accounting researcher it provides that the exact and proper methods need to be implemented within the organisation to create a valid and accurate financial statement. An accounting control system or auditing system within an organisation is very important as it provides all the annual reports or weekly reports regarding the finances of that particular organisation.

The principle of control defines the concept that with different techniques and methods a manager has the power to control and monitor the business activity which helps to effectively grow the organisation. According to Khurana and Wang (2019), the principle of control deals with some elements such as assets, resources and liabilities. The understanding of control is clear for a financial statement as control is which provides a seal towards the unethical concept or misunderstanding of the auditing process.

There are some controlling factors through which accounting experts can implement an effective control process that helps to develop the internal accounting sources. Regarding this case study of Patisserie Valerie, it can be stated that due to uncontrolled management of the auditing system of the company says a huge black hole in its financial sector. There are several types of internal accounting controls through which an accounting expert can provide a better perspective of accounting financial statements.

On the other hand, Chalmers et al. (2019) have stated that separating the duties among the people is an effective way to implement control over the accounting process. The accounting process is huge and risky and for this separation of the duty, accessing the controls over the auditing process, easy approvals requirement process and balance asset auditing is important to implement within the financial structure of a company to create better and effective control over the auditing process.

Templates, trial balances and reconciliations are helpful to manage the internal control accounting systems and being an accounting practitioner the contribution of controlling the financial statements can be achieved by implementing all these factors. Another way to control the risk over the accounting process is data backup.

If a company is constantly backing up its financial data then whenever it faces risk in its financial structure through the backup data it can identify the risk factors. In the  Patisserie Valerie financial decline case, it can be observed that the manageable and controlling process is missing and that is the reason the company faced a huge financial loss.

Reference List

Bbc.com, (2019), Patisserie Valerie scandal: Five people arrested, BBC, Available at:

https://www.bbc.com/news/business-48736447 [Acssed on: 19 August, 2021]

Kewo, C.L., 2017. Does quality of financial statement affected by internal control system and internal audit?. International Journal of Economics and Financial Issues, 7(2), pp.568-573.

Chalmers, K., Hay, D. and Khlif, H., 2019. Internal control in accounting research: A review. Journal of Accounting Literature, 42, pp.80-103.

Khurana, I.K. and Wang, W., 2019. International mergers and acquisitions laws, the market for corporate control, and accounting conservatism. Journal of Accounting Research, 57(1), pp.241-290.

Braghiere, R.K., Wang, Y., Doughty, R., Sousa, D., Magney, T., Widlowski, J.L., Longo, M., Bloom, A.A., Worden, J., Gentine, P. and Frankenberg, C., 2021. Accounting for canopy structure improves hyperspectral radiative transfer and sun-induced chlorophyll fluorescence representations in a new generation Earth System model. Remote Sensing of Environment, 261, p.112497.

Busco, C. and Quattrone, P., 2018. Performing business and social innovation through accounting inscriptions: An introduction. Accounting, Organizations and Society, 67, pp.15-19.

Djanegara, M.S., Mulyani, S., Putra, D.M., Zahra, N.A.K. and Mauludina, M.A., 2018. The effect of institutionalization isomorphic pressures and the role of knowledge management on investment decisions of the accounting information systems. Polish Journal of Management Studies, 18.

Metcalf, J. and Moss, E., 2019. Owning ethics: Corporate logics, silicon valley, and the institutionalization of ethics. Social Research: An International Quarterly, 86(2), pp.449-476.

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