Internal Controls For An Effective Sales Process

Question:

Discuss about the Regulating business by an independent commission.

Bucks Phyz is a medium sized company that derives an annual turnover of $2.5 million. The issue that has been presented in the question is that being the new accountant of the company the particular operation that has to carried out, is reviewing the sales process of the company based on the key information derived from the staff interviews. The company has undergone a restructuring program within the sales team due to the major changes that took place in the operating environment of the company. The change in the structure of key personnel authorities may also have impacted business (Almeida, KIM, & Kim, 2015). The particular impact that has been mentioned in the case study is that the delegated responsibilities in relation to the new tasks have become blurred. Bucks Phyz has also been facing fraudulent behavior in the accounts department.  Thus, the current circumstances of the company have been such that the management of the company will not be able to allow any revenue leakage. Therefore, the internal control that is required by business has been included in this study and the decision of the introduction of the corporate credit cards has been analyzed. The study aims to provide an understanding of the internal controls within an organization and the how these controls effectively aid the smooth execution of the business operations (Sadgrove, 2016).

The sales process that has been incorporated by business is that the new pricing tools that had been introduced by the sales managers which can effectively calculate the prices of the offers that are send out by the managers. However, the authorization policy has not been strictly adhered to by the managers. This is evident from the opinion of the Head of Sales. The head of sales, Barry has stated in his interview that in spite of the existence of a standardized process in regards to the particular process of the sending offers by the managers to their customers, that standardized process is not strictly adhered to as it has not been mapped yet (Bernstein 2015). The other issue that persists with the sales process is that the standard contract template that is available in the company intranet is not satisfactory in terms of quality. The credit check process can be summarized as checking of the credit worthiness of the customer from the credit rating agency’s web site. The credit rating being anything other than C results in granting of the credit. However, if the rating is C then a different payment method has to be negotiated (Wen caes et l., 2015). 

Internal control weakness

The sales process has been effectively reviewed and a number of weaknesses that is reflected in the business operation of Bucks Phyz have been identified.

Next, the introduction of the corporate credit cards might be hugely profitable for business provided that the particular transactions executed or the products or services purchased with the corporate credit cards are really needed by business. Moreover, the providence of corporate credit cards increases the risk factor of business by leaps and bounds. The numerous advantages however, provided by these corporate credit cards cover for the risks that the business is exposed to due to this facility. The corporate credit cards will reduce the hassle of transferring the payments by business to the particular account of a supplier. Moreover, the process of reimbursement will be hugely simplified thus, reducing the cost of operations incurred by business (Gallemore & Labro, 2015).

The specific internal control that should be implemented by Bucks Phyz in order to minimize the impact and occurrence of the risks is that a particular team should be created in order to authorize the transactions before real cash is debited from the business account. The finance department personnel may be delegated with the task of authorizing the transactions that are incurred with the corporate credit cards so that misuse or fraudulent activities are minimized (Doppelt, 2017).

The particular recommendation to the CEO in regards to the issuance of the corporate credit cards is that the corporate credit cards should only be issued to those key personnel who are involved with the core processes of business. For instance, the situation in regards to the booking of the training course must be particularly handled by purchasing the course by using the corporate credit card that is allotted to the key human resource personnel after the proper authorization by the finance team. 

References

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Bernstein, M. H. (2015). Regulating business by independent commission. Princeton University Press.

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Gallemore, J., & Labro, E. (2015). The importance of the internal information environment for tax avoidance. Journal of Accounting and Economics, 60(1), 149-167.

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