1.The special ordering system is a part of the Platinum Industry as per which the company is offering products to the customers with the range of 3000 to 30,000 and the company has divided the overall payment into two categories less than $10,000 and more than $10,000. This is how the company is functioning. In this order system the department of the company has spent $13 billion in total. There are specific trails through which people can place these orders for the company and the management needs to keep a track of all such orders. In this assignment the overall issues with regards to the system would be discussed and accordingly recommendation has been provided that would suffice the company in the long run(Dichev, 2017).
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1. Analysis of the internal control of the company |
Internal control is the system that the management instills in the company to ensure that all the operations of the company are proper and there are no issues with regards to the same. It is very important that companies should have their internal control in place, this will help in keeping the management of the company free from errors and would lead to high returns and will also help to keep the company profitable. There are many issues that the company to face if the internal controls are not in place – · Disruption of the system can lead to more wastage in the future and this might affect the overall income of the company. In case the system is not regulated properly the company will end up suffering huge losses owing to the fact that the company is investing so much income in this program (Explaining auditors’ propensity to issue going-concern opinions in Australia after the global financial crisis, 2017). · No documentation or poor audit trails would make it difficult for the auditors of the company to give a genuine opinion on the overall functioning of the company. · It would also make it difficult for the management to manage the overall expenses of the company and make sure that this special-order system should be more economical in the times to come. If we closely analyze the given prospects of the new given system of the Platinum industry we can see that there are certain errors that are present in the system with regards to the overall process of ordering and delivering the products and these errors can lead to a lot of wastage for the company. Few of them are – · Most of the orders that are received by the company are verbal orders and there is no written documentation of the same. Thus, it will be very difficult for the auditor to keep a trail of the orders received. Most of the orders are received by the purchase department then they record the same on paper and place the same to the receiving department to process the orders for the company. It is difficult for the company and for the customers also to place the order over phone (Maynard, 2017). · The books and accounts of the company are not properly maintained. The accounts are debited before the order is completed. This shows that the books of the company are not properly maintained by the company and neither the company is following the accounting principles and policies. Thus, it is important in the long run that same must be followed as it ends up reflecting poor view of the overall company results. · One more issue with the system that there is no segregation of duties between the employee. People are giving unprecedent authority and that makes them powerful enough to make undue use of the company assets. The cashier has the power to both sign the cheques and authorize the payment. The purchase department takes the order verbally, accepts the same and debit the account, so that must be taken care off by the management of the company and proper authorization should be there so that employees have a check on their overall work. · One more issue with the new system is that there is no proper organized path followed by the company with regards to placing the order and taking decisions with respect to it. It is very important that the company should appoint experts to look over the entire process so that in the end it will lead to fruitful result for the management of the company. The issues in the new system can make the company more vulnerable to losses and that might lead to increase in the total amount of wastage for the company (Abdullah & Said, 2017) |
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Conclusion and Recommendations Optimization of the Internal Control system and management |
The first and the foremost step that the management should take is to remove the errors in the internal system for the company. Optimization of the internal control would help in removing the wastage and make the system more optimize and more better. It would accelerate the overall flow of products from one department to another by keeping a proper check on how the funds are transferred and products are purchased. The company should take help from experts so that they can provide better insights to the management on how they can make their internal system better. They can also appoint internal auditors who can manage the affairs of the company and give better results. Timely audit should be done so that in case there are any risk elements they can be corrected and changed (Alexander, 2016). The entire system should be transparent and free from errors and that can be ensured by these small steps taken by the management of the company. The management can also take feedbacks from the customer on the entire process of placing the order and getting the products and the errors that they have been facing in the same. It will help in getting insight on what the customer requires and how the company can deliver it to the customer. |
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IT Related Procedures |
Information Technology can grow a lot and it has led to large scale development and has helped in solving the problems that the companies have been facing. In case of Platinum Industries, the company can make use of IT procedures to make sure that the system becomes more efficient for long term growth (Alsagoff, 2010). The basic introductions that the company can do in the system are – · In place of verbal orders the company can initiate such a system where people can place their orders directly to the suppliers and that would be by means of an online platform or electronic forms. Electronic forms can be used to fill in the details of the requirements of the company and then management can suffice whether they want to accept the order or not based on the availability of the products. · For payment section the management can make use of electronic fund transfer system that can help in easily getting the money through sceured sorces. Cheques and cash are no secured ways of receiving payment and can hamper the progress of the company for long term development. It also gives chance to the employee to make irrelevant use of the money by falsifying the accounts. Hence the aim would be to make the entire system of receiving and payment secured and free from all kind of errors. · The company can also switch to taking help from IT experts for development of softwares that can trail the overall flow of products from one department of the company to another. It would also be helpful in the long run as the entire market s going towards digitilization so in case companies are able to introduce such steps they can ensure that in future the business will bloom. All thes would also help in removing the issues that the company faces with respect to the overall management of the company and the internal controls can also be checked to generate best results possible (Chariri, 2017). |
References
Abdullah, W., & Said, R. (2017). Religious, Educational Background and Corporate Crime Tolerance by Accounting Professionals. State-of-the-Art Theories and Empirical Evidence, 129-149.
Alexander, F. (2016). The Changing Face of Accountability. The Journal of Higher Education, 71(4), 411-431.
Alsagoff, N. (2010). Microsoft Excel as a tool for digital forensic accounting.
Chariri, A. (2017). FINANCIAL REPORTING PRACTICE AS A RITUAL: UNDERSTANDING ACCOUNTING WITHIN INSTITUTIONAL FRAMEWORK. Journal of Economics, Business and Accountancy, 14(1).
Dichev, I. (2017). On the conceptual foundations of financial reporting. Accounting and Business Research, 47(6), 617-632.
Explaining auditors’ propensity to issue going-concern opinions in Australia after the global financial crisis. (2017). Accunting and Finance, Carson,E;Fargher,N;Zhang,Y;.
Maynard, J. (2017). Financial accounting reporting and analysis (second ed.). United Kingdom: Oxford University Pres
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