Aat_Essay

Brand Homes & Developments Ltd Transition From Sage Line 50 To COINS Contents Page 1) Title Page 2) Contents Page 3) Project Theme 4) Introduction 5) Managerial Theories 6) Managerial Theories within Brand Homes 7) Staffing Issues 8) SWOT analysis for Sage Line 50 9) SWOT analysis for Sage Line 50 10) SWOT analysis for COINS 11) SWOT analysis for COINS 12) Fraud 13) Implementation 14) Recommendations 15) Managers Statement 16) Appendices – additional information 13) i) Brand Homes & Development Ltd Organisational Chart 13) ii) Introduction To COINS 13) iii) COINS Express Implementation Project Project Theme The following report is an examination of how Brand Homes has decided to invest in a new accounting system. It will show the inadequacies of the previous computer accounts system of Sage Line 50 and the improvement achieved by implementing the “COINS” (Construction Industry Solutions) in its place. The report will not only reflect on the system but also how it has changed the way a vast amount of staff now work. The main concentration of this report will be on the purchase ledger environment to Brand Homes accounting system Introduction Background Information Brand Homes is a building/construction firm that was started in 1997 by two directors, Andrew Jelf and Nick Crow. The progression from building just a few sites (mainly apartments blocks) has now progressed to many sites being constructed at one time and a huge increase in staff levels. A Southampton based company, they have mainly built in this area due to the expertise in the local market, however as competition has increased Brand homes now find themselves moving from the city and further a field. Competitors in the market are various and competition for land can come from any other house builder. Brand Homes also tries to spread it’s customer base to any type of individual The increase in staff and work levels means that an accounting system needs to be of high importance to ensure that the company runs smoothly. Steve Nile Financial controller came to the board and advised them to move to a new accounting system COINS. Managerial Theories It is important to understand the concepts which management covers, this is key to achieving high efficiency and good work ethics. Strong management is vital to success in all businesses; a good plan or outline is needed firstly. The manager of the department will have goals he wants his department to achieve, as his results will depend on the ability to reach these. Planning Planning will also entail a route of how to reach efficiency, this route will need the manager to select his objectives and define strategies and policies that the department must keep to. A manager also needs to have back up strategies or contingency plans for unforeseen events such as long-term absence. Organisation Organisation is a vital part of any manager, if a manager is not organised then the examples being set are not good. When organising a department a manager needs to assess what members of the team are best for certain areas and then look to see if all necessary jobs have been appointed and covered. This is called delegation and it is important for a manager to delegate his work to individuals that maybe better suited. Also in doing this the company can efficiently use it’s resources as it would be pointless having a high paid employee doing mundane jobs as it is ineffective and not using the employees full potential. Instruction and Commanding Instruction and commanding is another very important quality a manger must possess. They will be required to have strong interpersonal skills with their staff so as to keep morale levels high and gain good results from the team members. Also being able to command a team means strong leadership qualities which would involve “leading from the front”, meaning to work diligently as a manager would then motivate colleagues to follow suit. Delegation again becomes important in managing as one who is not working and passing all his work to others will lose respect and eventually results will fail. Alternatively a manager who fails to give enough work to others will be over-worked and lose the efficiency of the team. Co-ordination and Communication Co-ordination and communication, helps a team become close and increases camaraderie and again efficiency. Strong communication between management and staff helps reduce the feeling of a divide between the two. Staff meetings are a good way of letting all members know where the company is going but also allows managers to observe where staff members are unhappy or failing. Control Finally control is required to maintain discipline of the team. A manager with strong abilities in the area of control will be able to make sure the team reaches it goals as smoothly as possible. When deviations occur a manager must be able to rectify the situation and change working methods or initiate new ideas so the team can regain its focus. Management within Brand Homes Peter Angel who is the Finance Director manages the accounts department at Brand Homes, it is his role to oversee everything and decisions he makes are the foundations of the department. The department then falls on to another layer with Karen Cartwright and Steve Nile. Steve having a wide knowledge of accounts is consulted for advice on all issues, Karen is the accounts manager and works on more day to day tasks. Lewis Onslow’s line manager is Karen and most issues for all types of things are liaised through her. Planning The Directors within Brand map out a plan of how they want the company to progress, Peter Angel being one of those Directors then manipulates this strategy to fit in with the accounts team. As the board is considering using the new COINS system it is going to affect the accounts team the most, so planning is prerequisite. It needs to be clearly understood that with the possibility of a huge amount of data entry that the right members of staff are involved. Contingency plans must be in place if staff members are away, so making sure that at least two people can do each part of the new system. COINS will have it’s own server so planning for computer breakdowns or loss of data will not be a problem. Also the issues of how people’s job descriptions may change must be addressed, if someone is about to be told they must work in a different way it must be relayed to them with the offer of support so as not to suffer a drop in morale. Organising Organising the team to attend various meetings and training sessions will be required, this will involve a lot of time away from work so usual duties will have to be kept up to date, it is possible to draft in other staff members to help with some of the more mundane or easier tasks. Training must be attended as it is important staff members know how to use the new system well, and not need extra help which could cost the company money in extra training days. Monitoring More importantly the transition must be monitored carefully and should the system be taken on, then in the early stages the system must be tried and tested and used to it’s full capability. It is the role of the managers of the departments involved to set an example by using the system and making sure their team does this adequately. Communicating between the Directors, managers and then to the team will be needed to ensure the fast and efficient implementation of coins. Time Scales A time scale for each of the procedures of implementation should be clearly outlined. These targets should be realistic and allow for slippages but not too loose because whilst the transition is taking place a lot of other jobs will be left. The quicker the process is, the quicker Brand can progress and start reaping the benefits of the new system. Staff Affected By Transition Accounts Department Brand Homes has an Accounting Department, which consists of four people. Peter Angel (Financial Director) The accounts department is overseen by Peter Angel who manages everyone within the team. Steve Nile (Financial Controller) Steve is a CIMA qualified accountant and as such gives guidance to Karen and Lewis for all aspects of their jobs. He produces budgets and other monthly accounting figures for all the directors. Karen Cartwright (Accounts Manager) Karen is the line manager of Lewis and carries out day-to-day accounting. Lewis Onslow (Accounts Assistant) Lewis will be the main focus of the report as his job is to make sure the purchase ledger runs smoothly and effectively. This includes the data entry of all invoices as well as matching these to P.O.D’s (Proof Of Deliveries). It is also his role to make sure invoices are approved and then coded to correct general ledger codes. Building Department Shaun Mankey (Head Of Procurement) Shaun’s role is to order building materials at competitive prices, it is also his role to look at invoices received by Lewis and approve or dispute accordingly. It is also his role to provide a general ledger code for Lewis to post the invoice cost to. Sonja Tongs (Assistant Buyer) Sonja is an assistant to Shaun and it is also her job to liaise with suppliers to negotiate good prices for materials. Brand Homes Staff In the appendices there is an organisation tree reference i) this shows all members of staff and highlights the sections to which this report relates to. SWOT analysis for accounting with SAGE Line 50 Strengths Sage Line 50 is a widely used accounting system and can be used and manipulated for any type of business. Sage is password protected and each user is given a login name and a password that is personal to them. This is important in helping prevent fraudulent instances occurring. Even when used correctly though changing information in Maintenance is considered bad practice, as audit trails are not left clear. Sage is very easy to use and training time scales are very short due to this. This is a big plus when for when staff are on annual leave or away sick, it allows the accounts department still to function effectively. External support is on hand during office hours and is very quick and efficient, again highly important in making sure down time is kept to a minimum. Weaknesses Lewis Onslow currently receives invoices from numerous suppliers and has to register them on an excel spreadsheet which is not interlinked to the Sage system. These invoices are then matched to P.O.D’s received from site then given to Shaun Mankey to approve or raise queries on them. Sage does not have an invoice register system, it is possible to enter all invoices onto it however this creates problems, as it is hard to tell which invoices are approved and which are not. Other problems this generates can be invoices are hard to track and also it makes reconciliation of supplier statements increasingly difficult as two different programs most be used simultaneously. Other problems generated are the general ledger codes provided. Where Sage is not construction industry based the coding system is very limited and thus makes aspects of materials hard to distinguish one from the other. Invoices entered into Sage are not easily read, this is due to it being very difficult to see and find information in detailed form. For example to find which Department, you must enter a maintenance section. However only the administrator has access to this function as it allows users to change information after data entry. The report system for Sage Line 50 is extremely slow, with some reports having to be run over night as some can take an hour to produce. This means sometimes reports have to be left running over night due to the system not allowing any other information to be entered on that computer whilst this is on going. This again can lead to anyone being able to enter the system bypass the password protection Brand Homes use cheques to pay their suppliers; although Sage has the option to pay by BACS it is the decision of the Directors to not use this. As there are many suppliers, the number of cheques raised makes payments a very long process that is very susceptible to error Opportunities Currently Brand do not use the full potential of Sage Line 50, there are far more options that can be used. If used it would be possible to get more out of the system and gain more value for money. In staying with the current system there would obviously be no need for investment of money and staff resources. This extra finance could be used for re-investment in the business or help cash flow. Threats With huge amounts of invoices being entered to Sage Brand Homes have found that it “crashes” frequently and data corruption occurs. This also leads to delays and hold ups and creating long periods of the accounts department becoming unable to continue working. If Brand Homes continues to expand then Sage Line 50 unfortunately will not be able to grow with the business. Its limited capabilities and slow running will only continue to worsen and with figures and reports required at speed it would not be efficient enough. The poor coding system will also not allow the relevant people to see where they are overspending. It is important that the relevant people can see clearly which building materials are being over-priced and look at wastage levels to try and keep costs at a minimum. SWOT analysis for accounting with COINS Strengths COINS is an accounting system that is very much in tune with all aspects of the construction industry. Not only does it have a section designed for the account’s department but expands widely across the whole of the business and offers ordering for procurement, to a feature called house sales which allows the sales department to record many different pieces of information. COINS also allow you to use it as much or as little as you want so extra sections as explained above can be included or not. Purchase ledger will have a huge and dramatic change to deal with. COINS has it’s own invoice register so all information is stored in one place again making it easier to access information on suppliers invoices. A strong feature of COINS is the procurement section. With this being inter-linked to the purchase ledger it allows, when run efficiently the process of invoice approval to be made obsolete. Orders are place by Shaun or Sonja onto the coins system with quantities and prices listed for each individual item. The orders have a unique order number that is linked to the invoice when entered into the system by Lewis. Once the invoice is matched to the P.O.D and the accounts department can approve the invoice, providing the information on the invoice is correct to that of the order. COINS will be set up with it’s own network on the computer system, this means should there be a problem with the main Brand Homes network it will not be affected and data corruption will not occur. Another feature is that only one invoice number can be used once for each supplier and this stops errors of duplication occurring. Also with COINS being industry specific rules are implemented within the system that cannot be broken. For example a company that does not provide a VAT number will not be able to have a VAT invoice entered on the system until it does so. This can stop companies fraudulently claiming VAT. It also has rules regarding CIS tax that are very effective in the prevention of potentially law breaking payments being made for which Sage would not spot. COINS will have huge costs to be taken by Brand Homes should it be used. Not only is the actual purchase very expensive but the man-hours lost in the implementation and training. There will be the period of transition in which staff will be performing much slower than before as they adjust to the new system. Staff morale levels will take a short term hit as many people are never to forthcoming when it comes to change. Unity will have to be shown by all members in order to get the best out of the system and make the huge investment worthwhile. Weaknesses COINS will have huge costs to be taken by Brand Homes should it be used. Not only is the actual purchase very expensive but the man-hours lost in the implementation and training. There will be the period of transition in which staff will be performing much slower than before as they adjust to the new system. Staff morale levels will take a short term hit as many people are never to forthcoming when it comes to change. Unity will have to be shown by all members in order to get the best out of the system and make the huge investment worthwhile. Opportunities It has a very strong reporting system that can be manipulated to include certain sections of information. This is good for the business as budgeting and also cost maintenance can be kept very strictly under control. Time saving will occur once the system is up and running, with people able to perform tasks at a much quicker speed and thus giving them time to perform their other duties. Threats Cost is the main threat to the business, the directors need to be vigilant in ensuring it is not only used but used to it’s full potential. If this were not done then the investment would be wasted money that could have been used in other areas of the business. The staff will need to be open minded about the system. Old procedures they used to do will now have to be scrapped and they will have to adapt these to the new “COINS” way of thinking. Again if the system isn’t used fully the above problems again occur. Fraud Fraud can be perpetrated by many groups: third parties, a company’s employees, management, suppliers or customers. Due to the risk of embarrassment companies tend to not report fraud for every occurrence, thus causes a problem when trying to estimate the cost of this occurring. Estimation on information gathered though suggest several hundred million pounds are lost each year, and it is reported fraud is mostly committed by companies employees themselves. False accounting Examples of fraud are false accounting which can involve obtaining external financing by falsely improving results and obtaining more business by appearing more successful or less indebted. Theft Theft can be common in some business this could be direct theft of cash, assets or stock. Theft of intellectual property such as customer lists and contract prices. Third-Party This fraud can include, customers ordering good with no intention of paying, collusion with suppliers to accept under-deliveries of stock. Computer fraud This could involve hacking/unauthorised access to bank accounts to transfer funds and disguising the true nature of a transaction by manipulation of date records and programs held on a computer. With Brand Homes being such a relatively small company fraud would not be considered something to be done internally, however with so many of business transactions taking place a long way from the office this sort of thing could happen. However with COINS a stronger ordering system will be taking place and with any anomalies that may occur they will be highlighted to Shaun Mankey who will then check the authentication of the invoice. Bank statements are reconciled constantly and monitored, also cheques have to be signed by 2 people off which are directors so no falsification is allowed to g through. Detecting or preventing fraud can be done in many ways, the starting point is consider how someone would go about making money by defrauding Brand Homes. Someone who knows the business inside out and has a lot of knowledge would be able to pin point areas effectively and work out areas most susceptible to fraud. Implementation COINS seems to have a lot of benefits but with it affecting so much of the Brand Homes staff, another of its problems will be the implementation. With so many people being involved training will be a major factor, this will cost the company a lot in losing major staff members being unable to fulfil their duties. Also another main factor will be the transferring of data from Sage to COINS, this will require many hours of data entry. There will also be the issue of having to accounting systems. Other issues are those of people who are not computer literate being a lot slower than previously in completing simple tasks, and will have an affect on certain member’s morale. Recommendations The report has looked at all the various aspects of the two accounting systems. It has given a SWOT analysis on both systems and shown a detailed background on Brand Homes. It is now important to look at the systems comparatively against one another as well as from the perspective of the directors and how they wish their company to move forward. Sage clearly is lacking in its ability to progress, even if the system was used on a wider basis it’s far to broad and not building industry based unlike COINS. Sage seems to be gaining problems of not running properly and struggling to handle the increased amount of data being given to it. Slow running and down time are not be allowed in a business where decisions need to be made quickly and correctly. The massive investment COINS requires is a major downfall in a company where cash flow is vital as so much investment is held in work in progress. However the directors clearly wish to push the company forward, and this is clear in the size of estimated turnover and the purchase of bigger plots of land to develop on. With this type of mentality it will be important for Brand Homes to have an accounting system that not only runs quickly but also can speed up the day to day work of staff in all aspects of the business. Also for a business that has rapidly grown in size and is based on having strong teamwork, a system like COINS will again allow departments to improve communications and camaraderie, as everyone will be working together to produce the best results. COINS will not show immediate benefits and it may even take a while to really show it’s full potential, however if tolerance and perseverance can be maintained as well as patience, then it important that it is purchased. The report recommends this action due to the reasons explained above and throughout the report. Managers Statement Lewis Onslow has competently described the issue of Brand Homes Transition From Sage Line 50 to COINS and has covered the relevant sections and the organisations policies and requirements. The recommendations made are of value and potential benefit to the organisation, as are those covering the areas to potential fraud avoidance. Job Title: Signature: Date: