Internal Controls and Sales Process Review for Bucks Phyz

Sales Process

Write a Business report on Bucks Phyz.

The information that has been provided in regards to Bucks Phyz is that it is a medium sized company that derives an yearly turnover of $2.5 million. The issue that has been presented in the question is that as a part of delegating the role of the accountant of Bucks Phyz , the sales process of the company has to be reviewed. The reviewing has to be carried out on the basis of the key information that has been derived from the interview of the staff and other related personnel. It has also been mentioned in the case study that the company has gone through a restructuring program that has particularly taken place within the sales team. This has been majorly due to the changes in the operating environment that took place within the company. The impact of the change, as mentioned in the case study has been such that the employees do not have a clear view about the new responsibilities. There also have been fraudulent events in the accounts department. This further states that the current condition of the company has been such that it cannot allow any further leakage in terms of revenue. Thus, the identification of the particular areas of concern and the implementation of the required internal controls have been discussed in this particular study. The policy of introduction of the corporate credit cards has also been analyzed (Heise, Strecker & Frank, 2014).

The sales process in Bucks Phyz that has been adopted by business pivots around the new pricing tool that has been introduced by the sales manager. This tool can effectively impact business in a positive way as it can effectively compute the prices of the offers that are sent out by the executives of the organization. The authorization policy however, has not been complied with. This is further reinstated by the Head of Sales, Barry who mentions in his interview that in spite of the availability of a standardized process that states the particular way in which the managers can send the offers to the customers, it is not strictly followed. This is mainly because the standardized process has not been mapped yet (Chang, 2014)

The sales process that has been monitored and evaluated has helped in the identification of a number of weaknesses in the operational proceedings of the company. These weaknesses are as follows:

Sales Process	Internal control weakness	Impact	Recommendation
The process of data entry	Alfred and Joy are delegated with the responsibilities of entering the information about the new customers in the operating system of the company. The area of concern in regards to the data entry process is that is the creation of a pricing template. The review of the customer data that has been entered into the pricing template would be irrational according to the management. The management is of the opinion that implementation of such a procedure will also affect the cost benefit ratio. Furthermore, no information has been provided as to whether the access to ERP has been restricted or not. Moreover, the billing system that is available to the staff does not provide any guidance to the user in terms of the irrelevant fields.	The way the lack of review of the pricing template can affect business is that critical information in regards to customer data might be wrongly entered or lost. This might hamper the entire business and its goodwill might be affected. The access to the ERP system should also be restricted. This is because unrestricted access to the ERP system will broaden the chances of data manipulation and thus widen the scope of occurrence of fraudulent events. The billing system should be modified in such a way that it guides the user effectively in case the data has been entered into irrelevant fields. Entering data into the irrelevant fields may affect the business in a negative way.	The particular internal control applicable in such a situation is the segregation of duty. The appointment of a particular employee for checking the pricing template will decrease the chances of wrong input of data into the operating system. Moreover, the cost benefit ratio will also not be affected by such a change. Thus, other than Alfred and Joy another employee should also be trained in the usage of the pricing template. The access to the ERP system should also be restricted within the core comprehensive management so that the chances of fraud are mitigated (Osadchy, & Akhmetshin, 2015).
The pricing tool	The implementation in regards to the new pricing tool will only be beneficial for business when the managers are properly trained in the effective utilization of the tool.	The lack of proper training may lead to the sending of offers by the managers to their customers with a faulty price. This will put both the business and the client at stake. The organization in such a case will also be affected negatively	Imparting proper and effective training in the usage of the new pricing tool is the suitable internal control that should be provided here (Sari, Ghozali, & Achmad, 2017).
Authorization policy	The standardized authorization policy that has been established by the management is not strictly adhered to. This means that the managers have an option and can opt for not following the standardized process in case of situations that comes with certain constraints.	The fact that the standardized process has not been adhered to broadens the scope of occurrence of fraud in the firm. for instance, a manager may send an offer to a customer with a price that is higher than its real price.	The standardized process should be modified and its degree of suitability should be increased in order to mitigate the occurrence of fraudulent activities (DeFond & Lennox, 2017).
Credit check process	The credit check process that has been incorporated within the company has been without any error. However, it has been accepted by Lucinda in her interview that there has been several instances in which the credit checks have been done n the customer after the signing of the sales contract and issuance of the invoice.	The non-compliance to checking the credit worthiness of a customer before signing a deal can be can impact the business drastically and result in a huge business loss.	The particular system should be designed in such a way that without checking the credit worthiness of the customers, a particular deal could not be carried forward (Farkas, & Hirsch, 2015).
Code of Conduct	There should be a behavioral code for all employees which restrict them to act in some specified ways inside the organization. For instance, the marriage of the Head of Sales with the Accounts Receivable manager might not turn out to be healthy for business.	The growth of personal relationships within the boundaries of the organization might lead to the generation of conflicts of interest, which may potentially increase the occurrence of frauds inside the organization.	A proper code of conduct is mandatory. This will make the employees aware of the particular ways in which they need to act inside the organization Parker, (R. J., Huang & Yan, 2017).

Internal control weakness

The introduction of the corporate credit cards might bring huge profits into business. However, the particular point that should be noted here is that the specified transactions that are proceeded with the help of the corporate credit cards should be strictly monitored and evaluated as to whether the purchased service or product was really needed by business or not. The facility of corporate credit cards exposes the business to high amounts of risk. But the particular advantages provided cover for the proposed risks. The corporate credit cards will free the business from the unnecessary workload of transferring the payments from the business to the supplier account. In fact, the reimbursement process will also be simplified by the incorporation of the corporate credit cards (Al-Matari, Mohammed& Al-Matari, 2017).

The management of Bucks Phyz should consider the formation of a particular group that will monitor the transactions that are incurred with the help of the corporate credit cards. To be more precise, this team will authorize the transactions before debiting real cash from the business account. The finance department personnel may be chosen for building the particular team.

The recommendation to the chief executive officer in regards to the issuance of the corporate credit cards is that the proposal apparently is brilliant and will benefit business. However, it is highly recommended that the corporate credit cards should only be issued to the key personnel of the management of the organization. For an instance, in case of the training course mentioned in the provided case study, the service should be purchased with the corporate credit card allotted to the human resource manager post the authorization by the finance team.

References

Al-Matari, Y. A., Mohammed, S. A. S., & Al-Matari, E. M. (2017). Audit Committee Activities and the Internal Control System of Commercial Banks operating in Yemen. International Review of Management and Marketing, 7(1).

Chang, S. I., Yen, D. C., Chang, I. C., & Jan, D. (2014). Internal control framework for a compliant ERP system. Information & Management, 51(2), 187-205.

DeFond, M. L., & Lennox, C. S. (2017). Do PCAOB Inspections Improve the Quality of Internal Control Audits?. Journal of Accounting Research, 55(3), 591-627.

Farkas, M. J., & Hirsch, R. M. (2015). The effect of frequency and automation of internal control testing on external auditor reliance on the internal audit function. Journal of Information Systems, 30(1), 21-40.

Heise, D., Strecker, S., & Frank, U. (2014). ControlML: A domain-specific modeling language in support of assessing internal controls and the internal control system. International Journal of Accounting Information Systems, 15(3), 224-245.

Kieseberg, P., Malle, B., Frühwirt, P., Weippl, E., & Holzinger, A. (2016). A tamper-proof audit and control system for the doctor in the loop. Brain informatics, 3(4), 269-279.

Osadchy, E. A., & Akhmetshin, E. M. (2015). Development of the financial control system in the company in crisis. Mediterranean Journal of Social Sciences, 6(5), 390.

Parker, R. J., Dao, M., Huang, H. W., & Yan, Y. C. (2017). Disclosing material weakness in internal controls: Does the gender of audit committee members matter?. Asia-Pacific Journal of Accounting & Economics, 24(3-4), 407-420.

Sari, N., Ghozali, I., & Achmad, T. (2017). THE EFFECT OF INTERNAL AUDIT AND INTERNAL CONTROL SYSTEM ON PUBLIC ACCOUNTABILITY: THE EMPERICAL STUDY IN INDONESIA STATE UNIVERSITIES. Technology, 8(9), 157-166.

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