Assessing Internal Control Issues In Bucks Phyz: A Medium-Sized Enterprise

Restructuring of Bucks Phyz

Prepare a business report to the CEO summarised overview of the Sales Process for Bucks Phyz.

Bucks Phyz can be considered to be a developing industry, that is to say a medium sized enterprise that is undergoing restructuring programs since the past two years. Essentially, the restructuring program occurs in the sales team and functional environment of the business. Apart from this, yet another considerable alteration also takes place in the workforce of the corporation. Workers of the corporation are regularly shuffled and new tasks are assigned. Owing to these kinds of alterations in the business concern, it can be observed that there are certain redundancies in the operations of the workers and this subsequently leads to blurred accountabilities. Furthermore, the company Bucks Phyz has currently encountered fraudulent actions in the accounting section of the firm directing towards revenue loss and deterioration in the firm’s figure of sales. Taking into consideration the fraudulent actions in the corporation, management of the firm intends to employ new accountants for restructuring processes and roles of employees and challenging operating environment for the corporation Bucks Phyz. Basically, this study is meant to assess diverse issues along with internal controls of the corporation in order to make it more productive.

Bucks Phyz is necessarily a medium sized enterprise that acquires an annual turnover of $2.5 million. The corporation has currently undergone organizational restructuring in a bid tom make it able enough to develop its business and resolve the issues associated to internal control. Basically, new tools of pricing introduced by the corporation can be considered to be a major process of restructuring that has occurred in the past two years. Both standardized as well as specific processes is existent in the corporation, nonetheless they get messed with one another making the operating environment intricate (Adenike & Michael, 2016). Bucks Phyz essentially has an obsolete online template that necessarily does not match with the standards of the market, leading to decline in the level of revenue. As such, procedure of credit check out of Bucks Phyz is not credit worthy and can earn the company a “C” rank.

Different internal weaknesses can be observed by the currently employed accountant of the firm by undertaking detailed analysis of operations of the firm Bucks Phyz. Essentially, the weaknesses of the corporation are hereby mentioned in a table below:

Procedures of Sales Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	Weaknesses of Internal Control	Influence	Recommendation
Data Entry Procedures	Data Entry Procedure can be considered to be one of the primary issues of the corporation that limited the same from attaining growth. Essentially abundance of ERP admittance along with billing issues has led to decrease in the sales of the company Bucks Phyz. Furthermore, wrong data that intentionally or unintentionally insert lead to failure of company to analyse its performance over the past two years (Srivastava & Lognathan, 2016).	The corporation Bucks Phyz has reduced overall auditing scope that has limited overall growth of the corporation. Also, the access of ERP has provided the employees the scope to engage in fraudulent actions.	Bucks Phyz has the need to direct the managers to segregate the duties of the employees in a bid to minimise the jeopardising impact. Furthermore, it can prove to be beneficial for the corporation to upgrade their cycle of business so that the firm’s benefit ratio can get aggravated (Simkin et al., 2014).
New Tool of Pricing	The management of the firm has brought in pricing tool for the firm Bucks Phyz currently and it has intricate procedures. There is inadequacy of Proper training processes for the workforce. Essentially, this has led to the improper insertion of requisite data.	Inadequacy of knowledge regarding pricing tool has led to failure of the corporation to acquire competitive advantage. Apart from this, it has complicated the overall strategy of billing for the corporation.	Managers of the corporation have the need to introduce innovative and advanced procedures of training for the workforce of the corporation (Fitriati & Mulyani, 2015).  As such, this can help all the sales associates to comprehend the overall utilization process and allow the firm to earn desired level of income.
Strategy of management	A specific strategy of management administration is currently present in the firm. Nevertheless the workforce of the corporation does not necessarily follow the same	It can be hereby said that non-compliance of standardized scheme of authorization has directed the employees of the corporation Bucks Phyz to engage into fraudulent actions and subsequent deterioration of internal control.	A modified strategy of authorization has the need to be introduced in the corporation. This in turn can act as a handbook for the workforce (Zhang & Ni, 2016).
Procedure of credit check	Procedure of checking credit can be considered to be ineffective and there exists no strict regulation regarding this matter	Essentially, there are several examples where credit checking is carried out after the process of invoicing.	The management of the firm have the need to implement strict regulations for checking credit before generation of invoices (Collier, 2015). Managers of the firm can introduce specific strategies of remuneration cut and this can subsequently lead to enhancement of overall efficiency of operations.
Employee Code	As such, there exists no code for workers in the corporation Bucks Phyz. This generate undue advantage to the workers to engage into different fraudulent actions	The non-existence of the employee code lead to increase in fraudulent actions and permit the workers to engage in personal association (Susanto, 2016).	Management needs to introduce employee code with immediate effect in order to curb internal control issues.

Analysis of the operations of the firm and evaluation of feedback from employees helps in identifying different weaknesses as regards processes as well as structure of business. Essentially, there is inadequate credit worthiness particularly in online template of both sales as well as service section.  Lack of code of firm’s employees has directed towards fraudulent actions that in turn jeopardise tasks and lead to decline in overall efficacy of the employees. Furthermore, accounting segment of the firm Bucks Phyz has lower level of rating owing to low efficiency in the activity. In essence, the corporation has nevertheless failed to acquire higher level of profit during the past two years and led to write offs of approximately $1 million. Recent alteration in firm’s accountabilities also has hampered the strategy of sales and decreased revenue of the firm (Ismail & King, 2014).

Internal Weaknesses of Bucks Phyz

Corporate credit card can be considered to be stimuli for particularly the medium sized enterprises such as Bucks Phyz that generates annual turnover of around $2.5 million. This can provide vested advantage that can augment morale of the workforce and help them save vital time, lessening the time to lone customer. This can prove to enhance the efficacy of the corporation and assist in making the employees efficient and subsequently simplify their tasks (Zhou, 2015). The management also needs to bear in mind past fraud actions by firm’s workers. However, in case if the workers are assigned with specific corporate credit cards, then this generates a chance of under utilization of card and augments probabilities of fraud.

As mentioned earlier, an effective credit policy can make certain proper usage of credit card and lessen the overall scope of fraudulent actions (Uyar et al., 2017). In view of the structure of the corporation Bucks Phyz, it can be hereby stated that firms have the need to bring in credit cards to the workers who are necessarily related to the core team for management. Nevertheless, management of the firm can follow certain steps and mechanisms of internal control to minimize influence of corporate credit strategy:

• Ascertain the eligibility criteria of specifically holding a corporate credit card
• Establish credit limit
• Control the overall revocation as well as issuance rule
• Examination of annual credit of workers who are issued the credit card (Prasad & Green, 2015).

In n bid to control the identified issues the management of the corporation Bucks Phyz can highlight the following recommendations:

-Introduction of code of employees is significant as this can help the firm to control and monitor fraudulent actions (Laudon & Laudon, 2016). 

-An appropriate appraisal mechanism can prove to be an advantage for the firm as this can help in inspiring employees to work sincerely

-Identified issues associated to new pricing tool can be mitigated with immediate effect and managers can look into the matter whether employees are inserting data faultily

-Corporate credit card also have the need to be issued, however the distribution need to be limited to the core management team for reduce possibility of fraud (Adenike & Michael, 2016).

Conclusions

The current study helps in analysing diverse aspects of the firm Bucks Phyz associated to internal control of the corporation. The study has assessed the likelihood of fraud and focussed on the suggestions in a bid to lessen the scope in the upcoming period. Bearing in mind the feedback of the employees, it can be inferred that restructuring has become forceful on the internal control, and it has delivered some undue advantage to core management team to curtail strategies. Analysis presented above also reveals that access to ERP, lack of code of employee lead to increase in fraudulent actions. However, for handling the dwindling state of affairs, this study has stated several effective strategies.

References

Adenike, A. T., & Michael, A. A. (2016). Effect of Accounting Information System Adoption on Accounting Activities in Manufacturing Industries in Nigeria.

Collier, P. M. (2015). Accounting for managers: Interpreting accounting information for decision making. John Wiley & Sons.

Fitriati, A., & Mulyani, S. (2015). Factors that affect accounting information system success and its implication on accounting information quality. Asian Journal of Information Technology, 14(5), 154-161.

Ismail, N. A., & King, M. (2014). Factors influencing the alignment of accounting information systems in small and medium sized Malaysian manufacturing firms. Journal of Information Systems and Small Business, 1(1-2), 1-20.

Laudon, K. C., & Laudon, J. P. (2016). Management information system. Pearson Education India.

Prasad, A., & Green, P. (2015). Organizational competencies and dynamic accounting information system capability: impact on AIS processes and firm performance. Journal of Information Systems, 29(3), 123-149.

Simkin, M. G., Norman, C. S., & Rose, J. M. (2014). Core concepts of accounting information systems. John Wiley & Sons.

Srivastava, P., & Lognathan, M. S. (2016). Impact of accounting information for management decision making. IJAR, 2(5), 171-174.

Susanto, A. (2016). The Effect of Internal Control on Accounting Information System. International Business Management, 10(23), 5523-5529.

Uyar, A., Gungormus, A. H., & Kuzey, C. (2017). Impact of the Accounting Information System on Corporate Governance: Evidence from Turkish Non-Listed Companies. Australasian Accounting Business & Finance Journal, 11(1), 9.

Zhang, L., & Ni, G. A. (2016). Research on Accounting Information System Based on Business Process. International Journal of Simulation–Systems, Science & Technology, 17(7).

Zhou, Y. (2015). Research on the System for Government Accounting Information Quality Based on Information Transparency. Journal of Accounting and Economics, 3, 001.