Kaplan Financial: BH1943
Student Number 10085003
Final Word count
Signed and Dated:
Section Page 1. Terms of reference 3 2. Methodology 4 3. Executive Summary 5 4. Introduction 6 5. Review of Current Systems 8 6. Recommendations 11 7. Appendices 13
1. Terms of Reference
2.1. This report has been prepared to cover the requirements of the Internal Controls and Accounting (ICAS) unit which is part of the level 4 qualifications for the Association of Accounting Technicians.
2.2. The report looks at reviewing the accounting/payroll system of Cookridge Carpets, currently in place to identify any areas of weakness that could lead to errors or potential fraud and to make recommendations for improvements.
3.3. It has been observed within the business that the costly and time consuming process of issuing cheques to pay suppliers and cash to pay employees should be updated to include BACS software.
3.4. The research for this report has been based on information from internal business users, and a selection of suppliers. This includes research for costs of new software and hardware to improve the security of the system see appendix 2.
3. Executive Summary
4.5. The current payroll system for Cookridge Carpets is not working efficiently and does not represent cost effectiveness for the company.
4.6. After identifying the weaknesses in the current payroll and book keeping system it was apparent there was a need for improvement in all areas. Following a full review of processed, procedures and staffing duties a number of recommendations have been put forward.
5.7. Cookridge Carpets is a large carpet, soft furnishings and bed dealership based in Southampton. . It is a limited company and has been trading since 2007. It was set up by two brothers: Peter Cookridge and John Cookridge. They decided to set the business up using John’s redundancy money, plus an inheritance left by their uncle to both John and Peter. Peter managed to secure a loan using his house as collateral.
5.8. Peter is a trained carpet fitter and has been in the soft furnishing industry for the past 20 years. Before going into business with his brother he was the senior manager of a national carpet chain. John, who is 3 years younger than Peter, was recently made redundant from his role as a mining engineer.
5.9. The business has grown steadily since it has been established in 2007. In February 2010 Cookridge Carpets was asked by Memo Beds to become the main dealership for Southampton.
5.10. The business employs 20 members of staff: 9 direct sales staff, 3 internet sales staff, 2 cleaners, 2 delivery drivers, 1 accessories salesperson, and 3 part-time staff in the small accounts department. See appendix 3.
5.11. The brothers purchased a large plot of land on which they developed and aircraft hanger sized building to use as the carpet and bed showroom. The started out selling carpets and then expanded into beds and soft furnishings. The expansion was organised by Peter, who had developed excellent working relationships with carpet manufacturers during his time in the industry. They having been very successful in direct sales and have recently started selling carpets and beds over the internet. His venture seems to have increased business
5.12. Cookridge Carpets use an accountancy firm to prepare management accounts on a monthly basis, which includes an Income Statement and Statement of Financial Position. This information is made available to both Peter and John in the monthly meeting with the accountants. With this information John and Peter are able to compare budgeted