1. Footing OF REFERENCE
1. 1
The study has been prepared to cover the demands of the AAT Unit “Internal Control and Accounting Systems” .

1. 2
The aims of the study are to analyze the accounting map at Inkwell Ltd and to place any failings. so that recommendations for the execution of a new and improved system can be put in topographic point. in order to understate mistakes and to forestall fraud.

2. Executive Summary
2. 1
The purpose of the study is to analyze and measure the current internal control system and histories receivable leger of Inkwell Ltd.

2. 2
The findings of the probe highlighted the streamlined failings: The Retail stores use stand-alone computing machines which are non connected to the web. Lack of security steps put in topographic point to safeguard the sensitive personal informations held on persons. and non-compliance with the Data Protection of 1998. Non-compliance with company policy. as updates merely carried out one time per twenty-four hours. Data lost due to infrequent back-ups are dearly-won in both clip and money. The retail stores have a sloppy attack to hard currency direction.

Cash merely banked twice per hebdomad. The company does non bring forth or supply any direction and aid ushers. which employees can mention to in order to happen aid and advice. The company do non hold eventualities in topographic point for staff absences due to illness or one-year leave There is no encouragement for employees to go to preparation classs. Passwords used are non sufficient to keep an equal degree of security. The company uses a merely in clip system of production. and any unanticipated upholds in bringing can do holds and may hold an impact on the company’s repute. There are deficient control and monitoring processs carried out by senior forces. The company allows clients to pay by check.

The company does non carry on public presentation assessments.
The company does non carry on regular staff meetings.
Management non upholding moralss and unity. and non practising their ain policies therefore making an ideal environment for fraud and unethical patterns to be committed. Staff shortages lending to treating holds of gross revenues bills.

2. 3
Suggestions and recommendations have been made to assist do betterments which will increase the company’s public presentation and efficiency and to assist make anti-fraud environment.

3. Methodology
3. 1
The research conducted to make this study was chiefly obtained from informations provided from the AAT web site. the Internet. and mention text editions.

3. 2
A period of four months was taken to supervise the Internal Controls system and Histories Receivable Ledger to garner sufficient informations in order to roll up the study.

3. 3
A meeting was arranged with Inkwell’s Finance Director and Company Accountant to discourse the countries of concern and the processs that needed to be implemented to do suited betterments.

4. Introduction
4. 1
Inkwell Ltd is a big private limited company within the private sector. providing a complete scope of re-manufactured inkjet and optical maser toner cartridges to its clients. Merchandises can be purchased from either the company’s 60 countrywide concatenation of high street stores. which are situated in most of the UK metropoliss and big towns. or from their online store installation which is accessible 24 hours every twenty-four hours of the hebdomad.

4. 2
The company is run by three managers who are the chief determination shapers. Inkwell Ltd was created seven old ages ago by two of the managers. Mr Paul Farnon ( Managing Director ) and Ms Victoria Dawson ( Gross saless Director ) . Mr Anil Gupta ( Finance Director ) joined Inkwell after puting in the company two old ages ago. The company portions are owned by internal stakeholders merely. 100 % of the portions are split between the managers. with the Managing Director being the bulk stockholder with retentions of 40 % and the other managers each keeping 30 % of the portions.

4. 3
Their caput office is situated in an industrial estate. based in Birmingham. where the direction squad. histories section. online store and big cardinal warehouse are all located. The company has increasingly grown since it was ab initio set up and presently employs one 100 and eighty full-time employees. and has reported gross of over 16 million lbs. .

4. 4
Inkwell has a mission to go environmentally friendly and promotes this by guaranting that they continue to endeavor towards accomplishing a greener environmental hereafter. without endangering or consisting the quality of their merchandises and repute. The company ensures that merchandises meet with 100 % quality satisfaction warrant. and has made a promise that should certain conditions non be fulfilled ; that the company’s policy of replacing the merchandises without rejection. will be adhered to without impacting the customer’s statutory rights. The company assures their clients that the recycled cartridges. which are cheaper than the echt. original merchandises by up to 20 % . will run into or transcend the quality of the original cartridges.

4. 5
80 % of Inkwell’s gross revenues are purchased by non-trade clients. Trade clients represent the staying 20 % . and these clients are supplied goods on recognition footings of between 30 to sixty yearss.

4. 6
The Finance Director. who owns 30 % of the company’s portions and studies straight to the Managing Director. is qualified to BSc and FCMA criterions. and has worked for the Inkwell Ltd for five old ages on a full-time footing. This Director is entrusted to guarantee that all the fiscal schemes. back up the purposes of the concern and to place chances in order to accomplish greater efficiency and cost nest eggs. every bit good as driving sustainable and profitable growing and optimizing profitableness and stockholder value

4. 7
The Company Accountant. who reports straight to the Financial Director. is AAT and ACCA qualified and has worked for Inkwell Ltd for seven old ages on a full-time footing. The Accountant complies. analyses and produces the company’s quarterly and one-year fiscal statements

4. 8
The Accounting Technician. who reports straight to the Company Accountant. has worked for Inkwell Ltd for six months on a full-time footing. This employee possesses relevant experience but does non presently have any accounting makings. However. the Technician is presently analyzing for the AAT making. with the purpose of go throughing the test within the undermentioned twelvemonth.

4. 9
The General Ledger Clerk. who reports straight to the Company Accountant. has worked for Inkwell Ltd for four old ages on a full-time footing. This employee’s chief duties are to input fiscal informations into the computing machine system. in order to bring forth monthly test balances. This clerk does non possess any accounting makings.

4. 10
The Accounts Collectible Clerk. who reports straight to the Company Accountant. has worked for Inkwell Ltd for three old ages on a parttime footing. and already holds a degree two AAT making. but has expressed an involvement in come oning on to the following degree.

4. 11
The Accounts Receivable Clerk. who reports straight to the Company Accountant. has worked for Inkwell Ltd for three old ages on a parttime footing. This clerk has worked antecedently within the accounting industry. but does non presently possess any relevant makings.

4. 12
The Costing Technician. who reports straight to the Company Accountant. is extremely experient and competent within this function and has worked for Inkwell Ltd for seven old ages on a full-time footing. This employee does non presently possess any relevant makings and has expressed their reluctance and involuntariness to take part on any preparation activities

4. 13
The Payroll Clerk. who reports to the Company Accountant. possesses a degree two AAT Accounting making. and is enthusiastic about come oning farther. This employee has worked for Inkwell Ltd for four months on a full-time footing. and has really limited experience of working within a paysheet section.

5. REVIEW OF THE ACCOUNTS SYSTEM
5. 1
Inkwell’s policy for their big concern clients is by and large to merchandise on a cash-with-order footing for the initial three months of usage. and uses the services of a recognition mention bureau which conducts the necessary recognition cheques. The Accounts Receivable Clerk is responsible for transporting out the recognition checking processs. and after interceding with the Gross saless Director sing histories which require a recognition bound of more than ?1. 000 per month. recommends suited recognition footings.

This is a strength of the accounting system in that by utilizing the recognition mention bureau it will find the ability of new clients to pay their debts. This will forestall fraud in that clients would non be able to buy goods wittingly that they could non afford to pay for them. so increasing hard currency flow. This will besides hold an impact on the unity of the client. However the failing should be that a full bound should be set. in that the client is non allowed to travel over a entire bound. otherwise the client could make four or five months merchandising up to ?5. 000 and this would intensify farther if they were non remunerators. intending the debts are more likely to travel bad. This would hold an impact on the hard currency flow of the concern.

5. 2
All new recognition bounds and alterations to bing bounds of more ?5. 000 per month. hold to be approved by the Financial Director. Risk direction is indispensable for a company’s endurance and success. This is a strength in the company as any addition in bounds have to be authorised by a senior member of the finance squad. This will cut down the hazard of fraud. in that no person has control over the client histories. and can widen bounds for clients for their ain personal addition.

5. 3
A possible client may desire to cognize the monetary value of the goods before make up one’s minding whether to continue with a proposed dealing. and will bespeak a quotation mark either by phone. electronic mail or in composing. As a agency of forestalling fraud. due to either party contending the quotation marks given. the company’s preferred method of publishing these quotation marks is by electronic mail. Written quotes are supplied on a customer’s petition. nevertheless. Inkwell likes maintain this method of issue to a lower limit. as paper use has an impact on the environment and goes against the beliefs of the company.

Inkwell. besides prefer non to give a quotation mark over the phone. as a record can non be kept sing the quotation mark given. and there would be no written grounds to back up against any differences that may originate in the hereafter. Before continuing with the order a client can do comparings between the monetary values given by different providers. If the client accepts the monetary value given by Inkwell. and returns with the order. the monetary value quoted is fixed and can non be changed. which is contrary to that of an estimation being given. This has an consequence on the ethical rule of objectiveness. in other words the client would be free from biased.

5. 4
Once an order is placed it needs to be checked by the appropriate gross revenues representative. This is of import. as the recorded information may incorporate mistakes which require rectification and cheques must be made to see if any information that has been omitted. demands to be added. The order signifier is so passed onto the Gross saless Manager for extra checking. blessing and mandate. This is good pattern and transporting out this process. helps to understate the opportunities of fraud being committed and over bear downing being recorded on the order signifier. However. there is still the chance of fraud and abuse of financess and assets taking topographic point as other unauthorized members of staff still have regular and easy entree to the system. so is a failing in the accounting system.

5. 5
It is of import that the client produce an order figure as this will hep track the order. but the most of import thing is that the purchase order must be authorised. Without this signature the order will non be processed. This is a great strength in that it will forestall fraud. in that goods could non be obtained for employee’s personal addition. so making fraud. This helps heighten the ethical rule of unity.

5. 6
Once an order has been processed. it is sent to despatchs. ready for transit. Once the goods have reached their finish. both the client and the bringing driver are required to subscribe the bringing note. This confirms that the goods are been delivered and received. This will forestall fraud. in that the client could non deny that they have non received the goods. .

However. if the bringing force collects the signatures from the receiver in paper signifier instead than roll uping these signatures straight on a smartphone or digital tablet. in order to corroborate cogent evidence of bringing and reception. there is a danger that the paper signifier verification may be lost in theodolite or may go misplaced. hence supplying no cogent evidence that bringing of all time took topographic point. The result to this is that the client can mistreat this state of affairs by contending that any goods were received. Besides the usage of paper has a negative impact and significantly endangers the environment. Having the bringing note in paper format is non sustainable to the environment. .

5. 7
Gross saless bills are created and issued via the usage of a goods dispatched listing. which are so sent out to the clients on a hebdomadal footing. The individual responsible for the issue of these bills is the Accounts Receivable Clerk. The clerk besides has the duty for inputting the gross revenues bills into the histories receivable leger system. which besides incorporates the general and histories collectible legers. which all run on the Windows Vista package bundle. There is a terrible failing in this process as the purchase orders. despatch notes and gross revenues bills are non reconciled against each other. This is a failing in the accounting system in that bills could be sent out for the wrong sums. or wrong clients are invoiced for goods that may hold non been received. The impact on the company would be the hold of payment which would hold an inauspicious consequence on the company’s hard currency flow. This would besides hold an impact of the company’s repute of professional competency.

5. 8
Inkwell chooses to publish bills by electronic mail. unless a client requests a posted version. The electronic mail method is easy to utilize and quick to present. As electronic mails do non utilize paper they are environmentally friendly. However. a job with utilizing electronic mails is that viruses can be transmitted. but with due attention and attending. and a strong security package in topographic point this can be minimised. This is a strength of the company’s system.

5. 9
The package for publishing bills is Sage Line 50 and the bills are sent out to the trade clients on a hebdomadal footing as instructed by the Finance Manager. As the bills are processed electronically this helps to understate the opportunities of mistakes and disagreements. Many handwritten bills contain mistakes in the computations. Another strength of processing bills utilizing the electronic method is that minutess can be traced. One positive portion of the system is that all gross revenues bills are checked for mistakes by the Company Accountant. by the usage of the dual entry look intoing system. This means that there are no clip holds encountered by holding to do amendments to bills returned due to incorporating disagreements in the recorded informations so increasing hard currency flow. This besides upholds the company repute of professionalism.

5. 10
Inkwell issues recognition notes. in order to recognition all or portion of a gross revenues bill. for goods which have been returned by the clients. The recognition notes have to be counter checked. approved and authorised before they can be issued. However. the Retail Shop Managers’ actions are non controlled nor monitored. The company has placed trust in these Directors. so they have been given the authorization to publish refunds on any returns they consider necessary. This gives a Branch Manager the chance to perpetrate deceitful activities and to pull strings figures. by mistreating their place of power in order for personal and fiscal addition.

5. 11
To better the profitableness of aggregation by exciting payments and understating the happening of bad debts. client statements demoing the payments made. gross revenues. gross revenues returns and computations. are dispatched every month. by the Accounts Receivable Clerk. This method can be used as a reminder to clients that payment is expected and hence motivate them into doing a payment on their histories. The statements inform the clients of the position of their histories. and enables them to do comparings between the records they hold and that of the provider.

If a client discovers a disagreement sing any of the minutess recorded. they can reach the provider to inquiry this. These statements can be used as an effectual method to foreground any delinquent payments. which need to be chased. The statements prevent fraud by the company in the client is able to look into all the bills and recognition notes issued. This would forestall the company signifier over saying their history or adding deceitful bills to their history.

5. 12
Large trade clients have recognition footings histories held with the company. Each client is given between 30 and 60 yearss depending on their history position. Trade clients can besides profit from a cumulative price reduction. each one-fourth. based on the value of their orders. This inducement is to seek and maintain a steady flow of concern and increase gross revenues. whilst at the same clip increasing Inkwell’s hard currency flow due to the prompt payments that would be generated. This is a strength of the company in that increasing gross revenues will finally increase the net incomes of the company. making sustainability of the company.

5. 13
All hard currency and checks received are compiled and recorded in the hard currency reception book. These sums are so entered into the system utilizing the Sage Line 50 bundle. in order to update the applicable client histories. The Accounts Receivable Clerk. who receives the payments. has the duty of banking them on a twice hebdomadal footing. The hard currency and checks are held in the company’s safe for security whilst waiting to be banked. This is a strength as it prevents the chance for the financess to be stolen. making fraud.

However. there is an increased hazard that the hard currency or checks may be lost or misplaced. peculiarly in the event of the office being in confusion. during times of low staffing degrees. break and holding to run into tight deadlines. If there is a oversight in internal controls sing the checking and monitoring of the histories receivable leger. this creates the chance for employees to perpetrate fraud utilizing recognised fraud strategies such as lapping. skimming/hiking. the kiting of hard currency and checks. the improper poster of checks and besides cash/cheque permutation. This would non protect the company’s repute of professionalism and unity.

5. 14
Customers can attach a remittal advice faux pas with their cheque payment to inform the company that they have made a payment on their history utilizing the BACS method. This faux pas inside informations the sums that have been paid. the sums that are left outstanding and what is being paid for. By summarizing the dealing inside informations. the faux pas ensures that the correct sum has been paid. Any disagreements can be questioned with the client. The remittal advice faux pas will be kept with the customer’s records. as cogent evidence that payment has been received. and can be referred and used as grounds in the hereafter.

This is a strength as clip is non unnecessarily consumed by holding to calculate out what portion of the bill the payment relates to. as this has already been clarified by the client. The advantage to having payment in the signifier of a BACS transportation is good. because this is instant hard currency and helps to increase the hard currency flow. However. the reception by check delays the entree to hard currency. This method of payment is slow as the check needs to travel through the glade system. and there is a danger that it may be returned by the bank. if the client has deficient financess.

5. 15
The company has implemented a policy that should be followed when covering with delinquent histories. If an history is seven yearss delinquent. the client is telephoned to bespeak immediate payment. If after 14 yearss of the telephone call. the payment is still outstanding. the client will be sent a missive bespeaking the immediate payment. in order to convey their history up to day of the month. This is a strength of the company as recognition control is an of import portion of the concern. and roll uping monies would increase the hard currency flow and sustainability of the company.

5. 16
The company is being proactive in seeking to roll up payments before they turn into bad debts and intensify out of control. An effectual attack to the aggregation of debt helps to hike the company’s hard currency flow and avoids the aid of debt aggregation bureaus. which costs the concern money. Accounts more than one month delinquent are inspected by the Company Accountant. Histories which are delinquent by more than two months are reviewed by both the Finance Director and the Gross saless Director. However. this process is non executed. which is a major job.

Both Directors avoid any engagement as the Finance Director has the sentiment that the undertaking is of a boring nature and the Gross saless Director is dying that her engagement will damage her dealingss with the clients. The liquidness of a company is really of import. Without financess. measures can non be paid and the company may meet fiscal trouble. There is danger that Inkwell’s hereafter may be put at hazard if debts are non being actively chased. No money coming in whilst money is traveling out has a terrible impact on the company’s hard currency flow. If it is known to the clients that the company would non travel to a debt collection bureau. so they may take advantage of this and receive goods wittingly that they could non pay so making fraud

5. 17
The computing machines which are located in the retail mercantile establishments are stand-alone computing machines. These computing machines are operated by Windows Vista package and all have Microsoft Office 2007 installed. However. there is a failing in this system. Although. store employees utilizing these computing machines are non allowed to
upload. download or link any external devices. which have non been purchased or approved by the company. as per company policy instructions. issued by the Finance Director on 23rd May 2010. there is no manner of monitoring this.

All the computing machines have full cyberspace entree including electronic mail utilizing the Firefox Internet web browser. Although it is advantageous to hold all the computing machines running on the same package and web browser systems. there is a downside. in that each computing machine must be updated and configured separately. which is dearly-won to the company. Had the systems been networked. this could hold been done all at the same clip. remotely. therefore salvaging the company clip and money. This would hold an inauspicious consequence on the company’s informations and hence would non be secure and compliant with the Data Protection Act ( 1998 ) . This would besides hold a negative impact on the ethical rule of confidentiality and unity.

5. 18
The company’s full computing machine systems are password protected which is a strength. However. the job is that when the computing machines were installed seven old ages ago. they were all given the same watchword. which is “Go Green” . and no action has been taken to do any alterations to this. This has created a monolithic failing sing all facets of security within the accounting system. Trade customers’ history and bank inside informations are unfastened to exposure and this increases the hazard of being abused. This information can be accessed and stolen by dishonest and untrusty individuals who use this information with the purpose of obtaining fiscal and personal addition. so making fraud.

The company’s policy handbook clearly provinces that each computing machine must be separately password protected and merely authorised users are permitted entree. Staff are required to keep the confidentiality of such watchwords used in order to protect security. However. the policy is being ignored and abused by staff. who continue to ignore and follow the regulations and ordinances. which is apparent. when store employees are leting unauthorized individuals to utilize the computing machines for societal media etc. . without seeking the authorization from senior direction foremost. This is a serious breach of the computing machine policy and security. as this leaves records. bank inside informations and other valuable information of other staff members. clients and providers. unfastened to exposure. which in bend could take to individuality larceny. fraud and hence the Data Protection Act of ( 1998 ) is being breached.

5. 19
The computing machines are protected by Windows Firewall that helps to protect the web. against hackers’ or viruses. When the accountant leaves the workstation unattended. they are required to log off. nevertheless. if they forget to make this. each computing machine has an automatic timeout installed that has been set at five proceedingss. If no activity has taken topographic point within this continuance. the computing machine will return to standby manner ( hibernation ) . This saves on energy which is good for the environment. Whilst in the standby manner. any sensitive and confidential information is hidden from prising eyes. forestalling fraud such as individuality larceny. and without the correct watchword. prevents any entree to derive such information.

At the terminal of the on the job twenty-four hours. all computing machines are required to be shutdown. Protecting sensitive and confidential information is following with The Data Protection Act of ( 1998 ) . To disenable the standby manner. the accountant has to come in the correct watchword. which is “Go Green” . As this watchword is known and used throughout Inkwell. any employee is able to derive entree to this information. and hence the confidential information is non being protected or secured. It is the company’s moral responsibility to protect confidential information. and they are transgressing the Data Protection Act ( 1998 ) . which carries with it brawny mulcts and can ensue in prosecution. This does non continue the company’s repute for confidentiality and unity.

5. 20
The Finance Director issued instructions refering the updating and backup processs of all the IT systems as per the infusion of the company policy enchiridion. dated May 2010. These instructions required that all of the IT systems are to be backed up twice per twenty-four hours. one time at tiffin clip and once more at the stopping point of concern. The Company Accountant instructed the histories section to endorse up information one time merely. and merely at the terminal of the on the job twenty-four hours. This demand has been in force since the Accountant joined the company. hence wholly ignoring the Finance Directors updated policy. This breach of company policy has already resulted in unneeded losingss in clip and money. A power cut that took topographic point in October of 2010 at the caput office premises. tardily in the afternoon. resulted in the loss of most of the day’s work. The bulk of this information has been re-entered into the system but came at a cost. due to the figure of hours that had to be paid in overtime. This is a failing and was non cost effectual for the company. as these excess labor hours could hold been used making other responsibilities.

5. 21
Care of the recorded stock degrees in mention to the company’s pressman cartridges which are held as stock list in both the warehouse and stores are non controlled by a watchword protected. Microsoft Excel dispersed sheet. Due to the skip of watchword protection being implemented in this country means that there is an increased opportunity of the informations being altered. whether by accident or by purpose. The chance for fraud to take topographic point is heightened and there is no manner of forestalling this happening go oning once more. unless the system is password protected. This means that the company is non staying by the guidelines laid down by the Data Protection Act ( 1998 ) . It means besides that the company is non handling its informations with the ethical rule of unity and confidentiality.

5. 22
The Finance Director noticed that the company did non hold a proper system in topographic point to enter any of the company’s concern traffics associating to any of the old years’ minutess. so the determination was made to buy an archiving bundle. However. the Financial Director has lost involvement since and no longer considers this undertaking a point of precedence any longer. Therefore the execution of this bundle has wasted valuable clip. attempt and money. This is a failing of the accounting system. in that all records must be kept for six old ages. By buying an archiving system that is computerised would intend that the company would be proactively following the guidelines of the Data Protection Act ( 1998 ) . but it would greatly assist the sustainability of the environment. and would cut down the usage of paper.

5. 23
The Payroll and Personnel Clerk completes the one-year VAT returns utilizing Her Majesty’s Revenue and Customs ( HMRC ) guidelines. This highlights the difference between the input revenue enhancement charged on the company’s purchases and disbursals and the end product revenue enhancement which is charged on the supplies and goods sold to the clients. The net difference indicates whether payment is due to or from HMRC. It is of the topmost importance that the VAT 100 signifiers are completed quickly and accurately and that payment is made before the deadline is reached.

Punishments for subjecting a return signifier tardily are terrible. The Company Accountant is responsible for look intoing that the inside informations recorded are right and so passes this signifier to the Finance Director for re-checking. This is a strength as it minimised the opportunities of disagreements happening or any deceitful activities being committed. It is against the Law to distort or exclude any information that should be recorded on the VAT 100 signifier. The company are following with the VAT Act 1994. s72 ( 1 ) . ( 2 ) and ( 3 ) and The Fraud Act 2006.

5. 24
The Income Statement and Other Comprehensive Income shows the public presentation of the company over a given period. This statement shows the company’s income. disbursals and the attendant net income or loss figure. The net income or loss can be calculated by subtracting all of the disbursals incurred including finance disbursals and revenue enhancement costs from the gross earned to demo the profit/loss made. This statement shows entries made utilizing the accumulations method.

This means that gross and disbursals are matched with each other and recorded when they are recognised ( earned/incurred ) and non when they are realised ( hard currency received/payment made ) . Users can analyze the statements and do comparings with old old ages or with other rivals. Both Private Ltd companies and Public Ltd Companies are required by jurisprudence to subject this statement with the other attach toing statements to Companies House. Assorted accounting ratios to mensurate the profitableness of the company can be calculated utilizing the fiscal information as shown on the statement. such as the Gross Profit % . Operating Net income % . and Expense and Revenue % .

5. 25
The Statement of Financial Position besides referred to as the Balance Sheet shows the company’s assets. liabilities and equity at a given day of the month. and is utile for interested parties to determine the fiscal wellness of the concern. A expression which is associated with this statement is Assets – Liabilities = Equity. Assetss are what the company owns. liabilities are what the company owes and the equity is the residuary involvement after the liabilities have been deducted from the assets. This statement used in concurrence with the other fiscal statements can assist to help users when doing economic determinations. such as puting. loaning. or acquisition etc.

This statement can be compared with those of the old fiscal old ages or with the statements of other rivals. The chief users are chiefly. investors. loaners and creditors. and like the Income Statement. the Statement of Financial Position besides needs to be submitted to Companies House. if the coverage entity is a Private Ltd Company or a Public Ltd Company. Financial information recorded in this statement can be used to cipher assorted accounting ratios used to mensurate the Company’s liquidness. effectual usage of the company’s resources. their fiscal place and their geartrain ( the measurement of how much the company is financed by debt ) .

5. 26
The Statement of Changes in Equity is portion of the set of the fiscal statements that accompany each other and shows how the equity has changed over the specific twelvemonth. The statement links information contained in the Statement of Profit and Loss and Comprehensive Income with that contain in the Statement of Financial Position. The Statement of Changes in Equity shows the entries for ordinary capital portions. portion premium. maintained net incomes. dividends. and unfulfilled additions on assets etc.

5. 27
The Statement of Cash Flow shows the alterations in influxs ( money coming in ) and escapes ( money traveling out ) over the fiscal accounting period in mention to Operating activities. Investing activities and Financing activities. The fiscal information recorded on the statement gives a user the chance to see how executable it is for the company’s to bring forth future hard currency flows. and to measure the company’s ability to run into its duties and to pay its stockholders their dividends.

5. 28
The company does non keep any regular staff meetings and is a failing in the accounting system. Staff meetings are an effectual manner to acquire employees to prosecute and pass on with each other ; sharing and interchanging information and new thoughts. Such a meeting would besides give staff the chance to flag up any jobs or issues which need to be addressed. When of import determinations sing the company have been made without the engagement of employees. they can be left feeling frustrated that they have non been given a voice.

When the staff members feel undervalued and de-motivated. public presentation and productiveness are affected. Employees may perpetrate fraud as they feel justified by their actions. The figure of employee absences may increase and the company will happen it hard to provide their clients as staff deficits may do holds. due to increased work loads holding to be performed by fewer staff members. bing the company money and may damage their repute.

5. 29
The lone signifier of treatment between the sections is via electronic mail. Although there is an advantage to utilizing this method of communicating. such as convenience. speedy bringing. deficiency of paper ( sustainable for the environment ) . and cost effectual. there are besides several disadvantages to utilizing this method. as it creates less societal contact. messages can be misinterpreted. viruses can be downloaded. unwanted Spam. and security issues. Another job that could hold a negative consequence on the company is the tenseness that exists between the Finance Director and the Company Accountant. which has been on-going of all time since the Finance Director joined the company two old ages ago. The Company Accountant was resentful that he was overlooked for this place and feels like he had been demoted.

5. 30
The staff members do non acquire any signifier of assessment which would foreground any public presentation issues associating to each employee. Therefore there is no manner of filtrating the staff that is underachieving to those that are transcending demands and should be considered suited for publicity. This is a failing of the company. and non be effectual as employees feel undervalued and would non work every bit difficult as they should. This will hold an inauspicious consequence on the ethical rule of professional competency.

5. 31
The company has an issue with respects to staff preparation. Rather than puting in preparation classs that would be advantageous to both new and bing employees. the company merely provides a one twenty-four hours clang class for new employees. This gives cause for concern as there is no to the full trained staff available to cover in the absence of their equals. Besides the company does non actively seek to promote staff to foster their accomplishments by promoting them to take part on any preparation programmes or classs.

This can go forth staff feeling demotivated and demoralised. Therefore the employee may go unproductive and uncooperative. which has a negative impact on the company. The company may hold an inordinate turnover of staff. as employees resign due to the deficiency of future chances being made available this can ensue in a lessening in the overall efficiency of the company. which can be them in a heartfelt way. This is a failing of the system. and is non following the ethical rule of professional competency

5. 32
The company does non hold any eventuality program in topographic point when it comes to staff absences and so is a failing of the system. Staff members who are non familiar with the responsibilities of their equals can non assist. This is due to the fact that they can non acquire entree to utile stuff such as direction manuals. counsel tools. aid bill of fare. direction sheets and helplines. as the company have non produced nor made any available. Therefore work does non acquire done and this has a terrible impact on the company as workloads addition. holds occur and mistakes are made. This can be dearly-won to the company and can damage their repute of professionalism.

5. 33
The company does non hold any staff that are adequately trained on work on other patterns. This became apparent in the month of September when jobs linked to the initial phases of the new incorporate paysheet and forces system was doing trouble. The Payroll and Personnel Clerk. who was merely given one day’s intensive preparation on the system. confessed that she was still fighting to run the system. even after a month of holding worked with it. As no other member of staff was trained on the system. the Payroll and Personnel Clerk had no 1 to attack who she could inquire for aid and advice. Another issue that could do farther jobs is in the event of the clerk going absent from work due to sickness or one-year leave. this would hold a negative impact on the company because they would hold no 1 who could temporarily cover their function. This is a failing of the accounting system.

5. 34
There is a set of aid bill of fares for staff to utilize on the Sage Line 50 bundle to assist them run the system right. There are measure by measure ushers. on-line tutorials and PDF guidelines made available. and if any staff member still requires aid. they have entree to a farther phone and email support service. This is a strength as it is cost effectual for the company significance that staff are non tied up shadowing a new employee and are able to still transport on with their ain responsibilities.

5. 35
Without giving quality. and working towards guaranting a greener environment. Inkwell chooses to utilize merchandises that are environmentally friendly. This includes the use of recycled paper that is purchased from specializer providers. All employees are required to adhere to the company’s policy of flinging any of fresh paper in the recycling bin. which is so sold to a recycling company. Inkwell encourages clients to convey in their old fresh ink cartridges in exchange for buying re-manufactured 1s. and as an inducement Inkwell offers these clients a 10 % price reduction. The company besides recycles its ain fresh ink cartridges. and sends these along with the old cartridges brought in by the clients. to a little figure of makers for replenishing. This is a strength of the company’s system.

5. 36
As an effectual manner of exposing their being and bettering their image within the community. Inkwell Ltd sponsors the local vicinity clean-up strategy. This helps put in pride within the community. Inkwell besides receives an inducement from the Government for their engagement. The clean-up strategy brings members of community together. in their quest to unclutter the streets of safety and litter. Walls and marks remain free from graffito. Children can play safely in the streets. and wildlife remains out of injuries reach. The clean environment is pulling new place searchers. and visitants hence conveying more money into the community. Employment is lifting due to the inflow of visitants and the increasing consumer demand that comes with it. ensuing in a happy and satisfied community who look favorably upon Inkwell Ltd.

6. WEAKNESSES
6. 1
The company’s high street stores use standalone computing machines that are non connected to the web. A job is encountered when installing of new package is required. as this can non be installed at the same time but must be installed on an single footing ; this operation is clip devouring. Frequent upgrading coupled with regular care is common. and this comes at a monetary value. therefore this is non cost effectual for the company. It is hard to command and supervise the activities performed on these computing machines so there is a hazard of fraud traveling undetected. A oversight in the equal security of maintaining confidential information protected is go againsting the Data Protection Act ( 1998 ) .

6. 2.
Inkwell uses the watchword of “Go Green” throughout the whole company. which is common cognition. The company is non adequately protecting the privateness of the sensitive information held on persons. and this increases the hazard of fraud. Employees are non showing good ethical patterns as they are leting unauthorized users entree to confidential informations. which increases the chance to perpetrate fraud by maltreatment and abuse. The company is lawfully and morally obliged to protect confidential information under the Data Protection Act ( 1998 ) . but this is being breached. Conformity with the company’s own IT policy is non being adhered to either. as this policy specifically contains clear instructions that all company computing machines must be separately password protected.

6. 3
Inkwell’s policy that was updated in May 2010 by the Finance Director. gives clear instructions that all IT systems must be to the full backed up twice per twenty-four hours. This action should be performed around noon and besides at the stopping point of concern. The new company policy created by the Finance Director is non being complied with. An incident occurred when the company lost informations and this came at a cost to the company in both clip and money. and therefore they were negligent in their actions. This is non showing good professional concern patterns.

6. 4
The Microsoft Office Excel plan used to hive away and command stock list degrees is password protected but is still expecting set up processs necessary to curtail entree to authorised users merely. At present entree is available to all users. which is non following with the Data Protection Act of ( 1998 ) . as confidential information is non being adequately protected. Unrestricted entree to confidential information increases the hazard of fraud. as it creates an chance for individuality larceny and gives a culprit the freedom to change or pull strings the information. The company is non showing good concern moralss of unity and confidentiality. through its carelessness to protect confidential information. and they are go againsting the Data Protection Act ( 1998 ) .

6. 5
On the bringing of goods. the driver and the client are required to subscribe a bringing note that shows cogent evidence of bringing and reception. The company uses a paper based cogent evidence of bringing. The use of paper has a detrimental consequence on the environment. and goes against the company’s beliefs. and this is non sustainable to the environment

6. 6
Tension and struggle between the Finance Director and Company Accountant. who are non working together. is holding an negative impact on the planning and organising of work that needs to be carried out and completed. As a consequence the Accounting Technician has non been able to finish all the undertakings that have been given to him. by both parties. but this has gone unnoticed. Work that demands precedence and that must run into tight deadlines is left incomplete and put to the side. Payments are non being collected in a timely mode and this is bing the company money.

This is non cost effectual for the company. The Finance Director no longer has involvement in the undertakings that he gave to the Accounting Technician to finish. which had ab initio been considered a affair of importance. Any work that has accumulated sing these undertakings has resulted in valuable clip. attempt and money being wasted. which is besides non be effectual for the company. Delaies are increased as employees are unable to transport out work until others have finished theirs. These holds have a negative impact on the company’s repute because they are unable to provide a professional and dependable service.

6. 7
Eventuality programs are non put in topographic point for the absence of employees who carry out undertakings that require twenty-four hours to twenty-four hours processing. Gross saless bills were non processed for the period covering the last two hebdomads of July as the Accounts Receivable Clerk was on one-year leave. The company’s carelessness in adequately covering this station has resulted in the recognition control activities non being carried out. so monies due during this period were left ungathered. This has an impact on the company’s hard currency flow and is non cost effectual for the company.

6. 8
Inkwell accepts payment in the signifier of check every bit good as other methods. Payment by check delays the entree to financess. as it must travel through a three twenty-four hours uncluttering rhythm procedure. which does non run on Saturdays. Sundays or Bank Holidays. Even at the terminal of this procedure there is no warrant that payment will be granted as the check may be returned to drawer has deficient financess in their bank history. This is non cost effectual for the company and can hold a serious impact on the company’s hard currency flow and profitableness.

6. 9
Any client histories delinquent by three months should be referred to a debt collection bureau who works on the behalf of the company to retrieve any debts owed. This is in conformity with the company’s policy. However. in world. this policy is seldom followed. The Gross saless Director. concerned that the active pursuit of any of these outstanding debts may endanger the good dealingss she presently has with the clients. has decided to avoid the engagement of the debt collection bureau. Consequently. Inkwell’s hard currency flow is negatively wedged due to the deficiency of money coming in and this is non cost effectual for the company. Trade receivables are mounting up significantly and bad debts are progressively that will finally ensue in holding to compose them off. This loss in net incomes will hold to be borne by the company as the financess may go unrecoverable.

6. 10
The company do non hold regular meetings that give the staff the chance to portion and exchange information between each other. Regular staff meetings could guarantee that better determinations are made through effectual communicating. and enable staff to unwrap any section issues. Because regular meetings are non put in topographic point. this has a negative impact on the company because they are unable operate in an effectual and efficient mode. The company is non showing good concern patterns as employees get demoralised when they feel thankless. undervalued and disrespected. This is non cost effectual for the company.

6. 11
Inkwell Ltd does non hold a public presentation assessment plan put in topographic point in order to supervise the professional development of their employees. Performance assessments can assist to actuate staff and better company morale. as staff become aware that good public presentation can ensue in publicity and acknowledgment. Due to the non-existence of these plans. direction are unable to place and turn to any issues or basic preparation demands of the staff. and hence are non in a place to offer suited preparation that would assist staff go better at executing their occupations. This is non doing the company cost effectual or competitory within the industry

6. 12
Inkwell do non offer developing programmes to either new or bing employees. nor do they actively encourage staff to prosecute and take part on any suited classs. in order to derive new accomplishments. cognition and makings. In a quickly altering environment. Inkwell needs to be witting that functions and duties are continually germinating. and should react to this by guaranting that employees are provided with appropriate job-related preparation to guarantee that they have the necessary accomplishments and cognition in order to transport out their occupations in an effectual mode. The company is non guaranting that the staff are moving with professional competency.

6. 13
The company have non produced. nor have they provided any on-site direction manuals that can be used by employees as counsel tools that are a valuable beginning of mention. In the absence of staff at short notice. due to sickness. other employees can non be relied upon to transport out undertakings of an unfamiliar nature. as they do non hold equal certification to manus that contains information that can assist steer and teach the employee to transport out a peculiar undertaking. This will hold a negative impact on labour efficiency in that staff would be shadowing new employees and could be pretermiting their ain work.

7. RECOMMENDATIONS
7. 1
Inkwell needs to take the standalone computing machines and replace them with a full networked system. The accounting squad would so be able to portion informations. entree information and automatically update all the systems at one time. This would salvage the company money in the long tally as one time installed it would be far more efficient and increase productiveness. A quotation mark can be arranged one time determinations have been made refering company demands. His is a major inspection and repair which would be good for the company in the long tally. but would necessitate farther probe guarantee that the best merchandise was purchased for the best monetary value.

7. 2
To follow with The Data Protection Act ( 1998 ) . Inkwell must do regular updates to password protection every one-fourth and watchwords should be a mixture of alphameric characters. Each watchword should be checked for complexness. Merely the employee and the line director are to cognize the watchword. Once in force this will follow with the Data Protection Act ( 1998 ) . This would non be the company any money. merely for the IT section to put this in topographic point as most computing machine package has the installation to procure the information. This would heighten the AAT’s codification of professional moralss of unity and confidentiality. and besides do them compliant with the jurisprudence.

7. 3
The Accounts Department and Company Accountant must follow with the company policy on endorsing up the IT system twice daily. This will forestall any possible informations loss by accident or otherwise. This will in bend entice other staff to follow suit which will guarantee ethical behavior within the company. This will non be the company any money as a process would necessitate to be typed up or the Finance Manager would set a Rota in the day-to-day agenda. It would be a few labor hours. but as the staff are on salary this would be portion of their day-to-day modus operandi. The benefit to the company would be that they would non hold to pay excess rewards for re-inputting the information doomed and hence do the company more cost effectual and competitory within the industry.

7. 4
An accurate and updated list with authorized signers to do entries in the general leger is of topmost importance to vouch security of customers’ histories and prevent fraud. All gross revenues staff should come in dealing information on the relevant gross revenues informations spreadsheet and mark it so pass it to the director for counter checking and watchword protection before it is forwarded to the Accounts Receivable Clerk. This action will forestall fraud and be undistinguished in respects to the cost of execution. This would non be the company anything. but the IT section could set up this system. or it could be written up in the company policy doing it compulsory for the employees to make this. The benefit for the company would be that the company would be able to see who made certain minutess and would be able to observe any deceitful activities and who done them.

7. 5
The company should see puting in electronic signature gaining control equipment which would take the job of paper bringing notes when goods are delivered. It will be the company ab initio but will pay for itself in the long term as it would vouch a traceable signature of the reception of goods including the information and clip and besides take the impact on environmental sustainability. An on line quotation mark from Topaz Systems INC revealed a monetary value of ?86. 00 Excluding VAT per device ( see Appendix 8. 2 ) . This would be good for sustainability of the environment.

7. 6
The attitudes of both the Finance Director and Company Accountant demand to be addressed. As senior direction. they should both pay more attending and involvement to reexamining the undertakings of staff and guaranting the undertakings are being completed right and on clip. Management should besides guarantee the undertakings are being distributed to the right staff which will better efficiency and public presentation with no costs to the company. It is of import that any differences between the senior caputs of direction are kept behind closed doors. This is being professional and the impact on the company would intend that it would be a happy topographic point to work in. and would take to better end product. doing the company more competitory within the industry.

7. 7
All bills must be raised twenty-four hours to twenty-four hours without fail as delayed bills create delayed payments from clients which reduces the hard currency flow. The company need to turn to staff one-year leave so as to avoid a state of affairs where there is no screen to go on the twenty-four hours to twenty-four hours invoicing. The company should besides advance staff preparation so that employees are trained on more than one occupation to let for any exigency staff absence. It could be that the company could use bureau staff for the screen. but this would come at a cost. depending on the bureau. This would necessitate farther probe to see if the benefits of using bureau staff would really better the hard currency flow of the concern. The cheaper option would be for better planning within the company guaranting that all occupations are covered when employees are on vacation.

7. 8
The company should look at phasing out the reception of checks and advance the usage of BACs transportations as the preferable payment method. This allows the company instant control and visibleness of all payments and aggregations. and allows reappraisal of the hard currency analysis. It is the most unafraid method of payment for the company and client. prevents fraud and is of no farther cost to the company as it is already a system in usage by most companies.

7. 9
The Gross saless Director and Company Accountant must reexamine any history that is more than two months delinquent and same once more when three months delinquent. By following with company policy on this. the Gross saless Director should quickly go through the affair on to the debt collection bureau in order to retrieve the money and cut down the debt going bad. It will be the company ?100 plus 25 % of any cured financess but will increase hard currency flow. However. if delinquent histories are reviewed sooner there is a stronger possibility of avoiding engagement of the debt collection bureau. The fact that this would increase hard currency flow would able the concern to be more competitory within the industry.

7. 10
The direction must get down regular staff meetings in which any demands or jobs can be addressed. Regular meetings will be valuable and of import as it will give the staff assurance that the company is listening and moving on any issues they have raised. These could besides include the consciousness of fraud and the importance of regulations and guidelines associating to the Data Protection Act ( 1998 ) . The costs incurred to present regular meetings will be minimum in regard of adult male hours but will profit the company in the long term as any jobs get resolved and will streamline the running of the concern.

7. 11
The company should implement staff assessments as this will let feedback associating to productiveness and public presentation of each employee. Appraisals have been known to better staff morale. efficiency. motive and occupation satisfaction. and can foreground any preparation demands needed. A professional company could be employed to supply this service. but is excessively dearly-won. A determination was made to invent their ain SWOT analysis signifier and a Performance and Development Plan signifier. which will be the company minimum hours of labor merely ( see Appendix 8. 3 ) . This would better on the AAT’s codification of professional moralss in professional competency.

7. 12
Regular preparation plans should be implemented for staff consciousness of their function within the company. Regular preparation will assist staff be more accurate and competent to make their occupation which helps the company and employee. and in the long term is cost effectual for the company. An on-line quotation mark was carried out to happen out the cost of a self-study paysheet bundle for degrees 1 and 2. The monetary value is ?125. 00 exempt of VAT ( see Appendix 8. 4 ) . This would guarantee that staff were up to day of the month with their cognition doing them professionally competent. The company could direct their staff to the local preparation supplier and this would heighten sustainability in the community.

7. 13
Staff should bring forth an direction manual detailing their duties and undertakings. This would be the company minimum labor hours in production but would assist the company by leting staff to concentrate on the undertaking in manus instead than being excessively focused on developing others. This would besides guarantee the undertaking would be accurately and efficaciously. This would do the company more cost effectual and competitory within the industry. As staff are salaried. this would merely be an excess occupation in their day-to-day modus operandi and the lone cost would be the printing of the manuals. nevertheless seting the manuals on the staff intranet would non be money in letter paper and printing doing it sustainable for the environment.