Bait ‘N Reel Superstore a Comprehensive Review on the Internal Control System of the Company

Reconciling all sub-ledgers to the general ledger for accurate interpretation of the business activity. For example, Accounts Payable Aging Report will be compared to the General ledger for the Accounts Payable account. The auditor must scan future payable transactions to see if they affect the current company outcome.

Operations is separate from the accounting department. The employees in operations handle promoting the products. Also, Operations is in charge of making the products. The company’s accounting system is handled in-house by the cashier and the bookkeeper and by the accounting firm hired to handle the businesses’ financial reporting. The cashier handles all sales through the register. The register is balanced against the drawer each night by the bookkeeper and a deposit made the same day. The bookkeeper gives the accountant the drawer receipts and bank receipts for journal entries and later reports. The accountant checks all cash received and payments made against bank statements and collected paperwork. There is not a single person assigned to do all duties.

It follows a strong internal control system for cash. A separate person is appointed to approve all purchases, payroll and any disbursement of cash. At the end of each month company prepares bank reconciliation statement to reconcile cash book balance and bank statement balance. Company keeps proper inventory record system. All these prevent frauds and ensure smooth functioning of the business.

* Documents used: customer order, sales order, shipping document, sales invoice, sales journal, remittance advice, bank deposit list, cash receipts jornal, credit memo, sales return and allowance journal, uncollectable account authorization form, a/r master file, a/r trail balance, monthly statement

The accounting department supervisor compares and reconciles a copy of the daily sales invoice batch report to the daily accounts posting report indicating the individual accounts. The daily account posting report is prepared and sent by the accounts receivable department. Discrepancies are investigated and resolved to help assure that the customer subsidiary accounts are posted for the same total amount posted to the control account. Cash Disbursements

This links to the G.L. control account which in the purchasing cycle is accounts payable. However, the system allows a company to set up multiple reconciliation accounts. For example, a company may want to separate the vendors by geographic region. This is easily done by having different AP control controls for different geographic regions.

Each Friday, the cash clerk records the amount of cash receive and deposit the money in the bank account. Each quarter, the controller requests information from the bank necessary to prepare bank reconciliation.

It would be safe to assume that the head office also has different access levels and not all accounting staff would have access to make payments via the bank system. While I don't know this side it would be logically as a security mechanism to implement it this way.

Examine evidence that the accounts receivable master file to the general ledger for accounts receivable.

Since we have confirmed the cash balance, the beginning and ending A/R balance and the additions to A/R, we are reasonably assured that these reductions are free from material error.

Cashiers are responsible for verifying the accuracy of the amount of cash received as collections to the Disbursing Office and for ensuring disbursements made are accurate and proper for payment. Other customer services will be as directed by the Commander/Director, the Disbursing Officer, or other appointed Deputies.

Each debit entry should be corroborated by an appropriate sales invoice agreeing as to amount and customer.

The interview with Colin Smith, from Office Products Depot, meant I was able to identify the accounts receivable subsystem they used and their accounts receivable management. I focussed on their policies for the offering and checking of credit, managing credit levels, charging the credit customers, receiving payment from credit customers and the general management of credit customers. I will be using the information from the interview with Colin as well as information from fictitious accounts receivable to explain their policies.

The information about the products and quantity required is passed on to the stock control subsystem. Thus, their order will be process and will be delivered on their doorstep. The payment will be made right after they had checked their items are correct and doesn’t make any mistake. At the other side, Tesco will also using order processing system while order inventory from the suppliers. Tesco has around 1000 suppliers such as the Anglo-Dutch food manufacturer, Pedigree, the pet food part of the Mars Corporation and Colgate etc. It is so impossible that the Tesco to use the traditional order processing system which is fully utilize the hand-written notes with manual filling systems and reminders. This will drag all the organization business processes and might facing major losses. Therefore, Tesco is using the modern order processing system to place the order from their supplier in order to ensure that they have enough inventories to supply to their customers and will be delivered those items to the customer on time and thus it will be build a good reputation in their

Regarding to accounts payable, firstly, Cash Office Personnel processes invoices from supplier by checking invoices against purchase order details when goods are received, this is done through Woolworths invoice processing system. If the invoices don’t match the Woolworths system they will be sent back to suppliers for modification, if invoices meet requirements and match the orders, each departments and lines will confirm receipt and approve invoices. Where there is a quantity or pricing difference, Woolworths may process a claim based on the Trading Terms. Deductions may apply to