Internal Control Analysis And Feasibility Of Introducing Corporate Credit Card For Bucks Phyz

Discuss about the Various Issue in Bucks Phyz Company.

Bucks Phyz is one of a medium sized organisation that possess annual turnover of $2.5 million. The question, which has been asked in this question, is to represent a business report of the Bucks Phyz reviewing the sales process of organisation. The report has reviewed the company profile closely and while doing so, it has been found that the firm has gone through major reform in the operating environment. The study of the Bucks Phyz’s internal organisation, it has found that account department of the firm has been facing fraudulent behaviour and if the trend continues, then firm will not be able to earn higher profit (Johnson, 2016). Thus, the manager of the firm has been asked to his newly employed accountant to check revenue leakage and analyze what can be done in order to control the situation. Besides this, the new accountant is also asked to perform risk analysis of introducing corporate credit card for the Bucks Phyz. This report is meant to provide the internal control analysis of Bucks Phyz and study the feasibility of introduction of corporate credit card for the firm.

Bucks Phyz is one of a middle-sized firm in the Australia that has recently gone through an organisation restructure in order to meet the market standards and overcome the issues of fraud in firm’s activity. Bucks Phyz follows the new pricing tool of the business process that can calculate offer prices accurately, which are introduced by the managers of the firms to attract more customers (Marinesi, Girotra & Netessine, 2017). However, the business has faced issues with the authorization policy, which is not aligned with manager’s policy making it ineffective. Barry, who is head of sales of the Bucks Phyz argues that due to lack of proper mapping of the introduction of the new pricing tool in the organisation, existence of standardized process and the particular process has meshed with each other. Besides this, standardized offer template of the firm available in the website of the Bucks Phyz is not up to the benchmark (Kumar & Arpana, 2016). In terms of quality of the credit checkout process, it can be said that there is lack of credit worthiness and it returns C quality rating of the credit. Customer template available in website is not alluring too leading the firm to face lower demand for their service.

Recommendations

Analyzing these factors, various internal control weaknesses of Bucks Phyz have found, which are mentioned below.

Bucks Phyz has various issues with its structure and business process. Primarily, the firm lacks credit worthiness, when it comes to their service and online template of the firm; it is not alluring enough to attract new customers. Moreover, the Bucks Phyz credit rating comes under the C category making it unworthy in the market (Kraft, 2015). Interviews of the staffs of Bucks Phyz has portrayed that the firm has serious issues in its account section leading to reduction in revenue earning. Thus, it is highly important for the firm to introduce new methods to check these issues and address the leakage in accounting section.

Introducing corporate credit card is a good option for the business to enhance their market share (Audi, Loughran &McDonald, 2016). This card will make the reimbursement process more simplified and the payment transferring will become easy. However, introducing the corporate credit card will bring higher amount of risk and in absence of proper code of conduct, it will lead the employees towards higher amount of fraud activities (Outwater & Redmann, 2015).

Corporate credit card need to be introduced to only those persons who are related with the core business of the Bucks Phyz. It will reduce the scope of fraud activities by the employees of the firm and enhance the performance of internal controls (Hilas, Mastorocostas & Rekanos, 2015). Finance department need to be tasked with authorisation capability and it will minimize the issues with internal controls.

Various steps can be taken by the manager in order to reduce the scope of fraud in the firm and make the control mechanism more sophisticated. Recommendation for the Bucks Phyz is as follows:

• Bucks Phyz need to enhance its internal control mechanism by introducing code of conduct for the employees
• Introducing appraisal mechanism would be beneficial for the firm to encourage its workers
• Need to upgrade its online template for sales and make it more alluring to attract more customers
• There should be a training and quality analysis team who will be tasked to maintain the performance of the workers

Conclusion:

The report has analyzed the internal control of the Bucks Phyz and has performed feasibility check to introduce corporate credit card for the firm. The findings of this report highlights that the firm is facing risk from their organisational structure and the chances of fraud activity is high due to lack of proper internal controls. In order to overcome this, the report has mentioned various recommendations that the firm need to implement with immediate effect. When it comes to the introducing corporate credit card for the Bucks Phyz, then the report finds that it will be a good opportunity for the firm to enhance its business, however, it need to be issues to the key human resource personnel in order to avoid the scope of fraud

References:

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