The present report had been prepared to understand the working or functioning of corporate credit cards. It was important to verify the sales process of the company known as Bucks Phyz by playing the role as an accountant (Yigitbasioglu, 2016). Several important or significant facts are elaborated in the study that is properly illustrated by instances or examples in the entire report. The CEO of Bucks Phyz definitely knows the information or facts about Bucks Phyz but this report will help in illustrating several key points that are equally interesting for the readers. The report highlights the internal control weakness that is prevailed in the sales process of Bucks Phyz. Therefore, the report highlights the advantages and disadvantages of usage of corporate credit cards.
Brief background of the sales process for Bucks Phyz
The company that is explained in detail in this study is Bucks Phyz who had been blamed to get involved in certain fraudulent activities that are present in the accounting department. The company started thinking of ways where they can identify the risk and even understand the present state of internal controls that is prevalent in the sales process in a given challenging work environment (Worrell, Gangi & Bush, 2013). In that case, Bucks Phyz fails to pay for any of the surprises that took place recently.
Highlighting some of the internal control weakness that is present in the sale process of Bucks Phyz
- One of the internal control weakness that need to be highlighted is about the sales representatives who need to be accountable in all the decision-making process within the company
- The other internal control weakness that need to be highlighted is about the purchase orders and these are actually customary by nature where they have to meet with potential clients and the mode of communication is email (Sularto, 2016)
- The other internal control weakness that need to be highlighted is about the invoices that are collected from the customer while accepting any order from the customers
- On analysis, it was found that there was lack of internal control basically for client accounts as presented in the trade receivables ledger within the company
- The other internal weakness highlighted at Bucks Phyz is about the sales invoice dealings that should be recorded without any prior agreement from any of the financial manager appointed under Bucks Phyz (Meng, 2014)
Effect of this above-identified weakness that could have upon Bucks Phyz
- Bucks Phyz faces risk from bad debts within their operations. Here, the sales representatives of this company engage in funding ways where they can maximize sales and reduce level of risk that arose from bad debts.
- Bucks Phyz faces problem with customer data that had been derived from the sales contracts as it gets entered in the billing system as a new customer profile (Li & Bai, 2014)
- Bucks Phyz faces high risk at the time of making bonus payments that is derived from non-completed sales transactions within the operations
- Bucks Phyz faces risk from bad dents that is derived from sales creditworthiness of customers and further risk of loss
- Bucks Phyz faces risk from unauthorized transactions that should be properly entered in the accounting records that is derived from indefinite exposure of monetary information and further unavoidable disputes with the potential clients as well as goodwill loss
Illustrating the internal controls while implementing plan for Bucks Phyz for upcoming weeks as a medium to reduce risk as it is posed by internal control weaknesses
It is the responsibility of the auditor to look at the manual and electronic background controls. These are been designed to protect financial facts or information and that can further help in maintaining high level of accuracy as well as integrity of cash receipts and data disbursement at the same time (Jia & Sun, 2015). Furthermore, the auditor is responsible to look at the cash receipts and the disbursements controls that are aligned with supporting documentation requirements. Therefore, the duty of an auditor is to evaluate steps on matters related to protected corporeal and electronic cash as it is aligned with necessary facts or information.
Brief background of corporate credit cards
Using corporate credit card in recent time assist individual to reach their career goals and gets several personal benefits associated to it. These cards are given to a specific group of people where they get benefit if they fall in that category (Dillard, Yuthas & Baudot, 2016). These cards need to be handled properly otherwise it can trouble the individual who is holding the card for their usage. These cards are given to the employees by their company in order to track their transactions and even giving them additional benefits. These cards help these employees in compensation process and even minimize administrative hassles. Employees can use these cards as a means where they get a habit of bad spending and excessive impulsive buying activities. Therefore, these cards offer employees further financial advantages and flexibility in spending.
Evaluating the advantages and disadvantages of corporate credit cards within Bucks Phyz
- Introduction of corporate credit cards will give less stress for the employees (Abbasi, 2014)
- By using corporate credit cards, there will be shorter processing time as well as saving of data entry time as they can easily download the transactions
- By using corporate credit cards, employees will get additional card benefits
- The employer can track the spending of employees (Demski, 2013)
- Introduction of corporate credit cards at Bucks Phyz will lead to destroy privacy of employees as the details of personal expenses will be shown in the company card
- Introduction of corporate credit card will result to bad spending habits
- Increased credit card theft or fraud (Collier, 2015)
Highlighting the internal controls that takes place at Bucks Phyz for reducing the impact as well as incidence of risks
The duty of an auditor is to test the internal control that prevails at Bucks Phyz so that risk can be minimized as far as possible (Abduljalil & Zainuddin, 2015). On analysis, several internal controls can be seen over sales cycle at Bucks Phyz as it results in sales invoices and purchase orders. The responsibility of an auditor is to select random sample of transaction and highlighting the identified purchase orders, customer statements and invoices at the same time. The duty of an auditor is to look at the declaration statement and checking the purchase orders in a given challenging work environment. The company is in need for auditing own procedures and transactions in an effective way. The company needs to evaluate the internal control and aims at evaluating the daily operating procedures in the most appropriate way (Apostolou et al., 2014).
Suggestion to CEO on matters relating to who should be given these corporate credit card and reason associated with it
The CEO of Bucks Phyz need to be told about the importance of corporate credit cards and who should be given this opportunity to use it to avail all the benefits that are associated with this corporate credit card. These credit cards should be given to the employees of the company so that they can have all the benefits that should get while working under Bucks Phyz. The company needs to explain their employees about the procedures on how they can get these corporate credit cards. The employees need to be submits receipts of their spending to the company. Even though, the employees who will be given this corporate credit card had to abide by certain norms and regulation as set by Bucks Phyz. The employees using the corporate credit card cannot use this corporate credit card for their own personal funds for covering the expenses of business. The employers will get benefits if employees start using these corporate credit cards as they can easily track the spending of their employees. It is even suggested to the CEO that the employees who engages in doing regular purchase should be given additional advantages attached to it.
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