The Inadequacy Of Agency Theory And Labor: A Study Of Internal Controls In Business

Overview of the sales process

Discuss about The inadequacy of agency theory and labor.

Bucks Phyz is a company that has a medium size and obtains an annual turnover of $2.5 million. The particular issue that has been highlighted in the question is that the accountant of the company has been asked to review the sales process of the company on the basis of the key information that has been derived from the staff interviews. As mentioned in the case study the company has gone through a restructuring program within the sales team which hugely impacted the operating environment of the company. It has been further mentioned in the case study that the change in the key personnel might have affected business. Bucks Phyz also has been going through fraudulent behavior in the accounts department.  Therefore, the present circumstances of the company are such that it cannot afford to incur any kind of revenue leakage. Thus, the internal control that is needed to be implemented within business has been evaluated in this particular study. Moreover, the decision of the introduction of the corporate credit cards has been analyzed. This study aims to provide an understanding of the internal controls that are an essential part of corporate governance and the how these controls effectively enhance the successful carrying out of the business operations.

The particular sales process that has been adopted by business revolves around the new pricing tool that is utilized by the sales managers for the accurate calculation of the prices of the offers that are sent out. The particular fact that should be noted here is that the authorization in regards to the sales process is not adhered to, strictly by the managers. The Head of Sales, Barry has evidently stated in his interview that tough there is a standardized process in relation to the authorization policy, it has still not been mapped. The other issue associated with the sales process is that the standard contract template is not of desired quality. Lastly, the credit check process that involves the checking of the credit worthiness of a particular customer appears to be error free. The credit worthiness of a customer is checked from the agency website and the credit is granted to the customer if the rating is anything other than C. If the rating is C then a different payment method has to be negotiated.

The effective reviewing of the sales process has led to identification of the following weaknesses in the business operation of the firm.

Internal control issues in Buck Phyz sales process

The introduction of the corporate credit cards may turn out to be hugely profitable for business stated that the transactions for the purchase of services or products that are processed via the credit cards are applicable and really necessary for business. The introduction of the corporate credit cards broadens the risk scope of business by leaps and bounds. However, the numerous advantages that are enjoyed by business due to the providence of the corporate credit cards cover up for the potential risks faced by the business. The introduction of the corporate credit cards will effectively reduce the hassles that are related to the transfer of payments by the company to the supplier’s account. Furthermore, the introduction of the corporate credit cards will also hugely simplify the process of reimbursement thus, reducing the cost of operations (Knechel & Salterio, 2016).

The particular internal control that should be implemented by the management of BucksPhyz in order to minimize the impact of the risks related with the introduction of the corporate credit cards is that a particular team should be formed in order to monitor the transactions that are conducted via the corporate credit cards. The finance department staff should be selected in order to form the group for the purpose of authorizing the transactions that are incurred with the corporate credit cards so that no fraudulent activities are carried out (Wu & Tuttle, 2014).

The particular recommendation to the CEO of the company would be that the issuance of the corporate credit cards should only be restricted to the key personnel, who are involved with the core processes of business. For instance, the situation that has been mentioned in the booking of the training course could be paid for, by the corporate credit cards that would have been allotted to the core human resource personnel after proper authorization by the finance team (Abbott, 2016). 

References

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