Sandwich_Master_Mapping

Internal Control and Accounting Systems – Report requirements Overview Your report will need to be between 3500 and 4000 words, excluding appendices. It must be in the third person narrative, be professional in appearance and content with no misspellings, and correct sentence and paragraph construction. It should have a title page which should include a suitable title in large, bold font, with your name and AAT registration number in normal text at the bottom of the page. The report should be separated out into the following sections: 1. Terms of reference 2. Executive summary 3. Methodology 4. Introduction 5. Analysis of accounting system 6. Evaluation of weaknesses 7. Recommendations 8. Cost benefit analysis 9. Appendices Each section should start on a separate page, with the section title and section number in large, bold font, at the top of the section start page. The report should be typed using either Arial or Calibri font size 12 and there should be a line space between each paragraph. Each paragraph within each section should be numbered as per the numbering system identified on the report content information on the next few pages. All pages should also be numbered. Within the report you will be expected to: • Provide an overview of the organisation your report is based on – identifying the important external relationships it holds. This may include – but is not restricted to – any of the following: customers, suppliers, shareholders, banks, trade organisations, government departments/organisations – depending on the type of organisation that is being reviewed. • Identify the relationship between other internal departments and the accounting function and clearly define the structure, purpose and organisation of the accounting function within the overall organisation. • Explain why financial reports are produced. • Identify what the organisation requires from its accounting systems, including suitable software systems. • Review the accounting system to ensure that it meets the above requirements. This can be done by identifying the strengths and weaknesses of the accounting system (not the organisation). It should include a review of the working methods used within the accounting system to ensure that optimum results are achieved especially in terms of cost effectiveness, reliability and speed. • Identify and explain relevant external regulations that influence the organisation’s accounting practises. (e.g. accounting standards, data protection, company law etc.) • Review and evaluate areas where there is a potential for errors and fraud. • Grade the risk of fraud and clearly explain the impact that any aspects of fraud will have on the organisation. • Explain ways in which fraud can be detected and the types of internal control that can be established to prevent fraud occurring. • Identify internal control mechanisms that are needed to meet organisational and/or statutory regulations. • Review the weaknesses that you have identified and explain their impact upon the organisation in terms of time, money and reputation. • Make clear and sensible recommendations to improve the weaknesses identified. You must have at least one recommendation to improve the system for every weakness. Identified. If your main recommendation is to introduce either a computerised system or a new accounting software package you should review at least 2 possible options and discuss the advantages and disadvantages of each, with a clear recommendation as to which is the most suitable for the company and why. • Explain the impact that your recommendations will have on the staff in the accounting function and identify any training needs and how these will be met. • Complete a cost benefit analysis on at least one of your recommendations, clearly identifying any costs that will be incurred, cost savings, qualitative benefits etc. There must be a monetary calculation in your cost benefit analysis. • Include appendices to support aspects of your report, as a minimum you should have in your appendices section the following: - Organisation chart - Accounting organisation chart - SWOT analysis - Any internet research relating to software systems, costs etc - Fraud matrix - Any relevant policies or procedures Each item in your appendices must be referenced in the body of your report. You will be expected to map your report to the assessment criteria using the mapping document which you will need to download from Learnplus. You should identify (page and paragraph number) through the mapping document where the relevant assessment criteria has been covered in your report. You may have covered the criteria more than once and should identify each instance where it has been covered. Section contents and assessment criteria covered. 1. Terms of reference This section explains why the report is being written and should contain 2 paragraphs: 1.1 The report has been prepared to cover the requirements of the AAT Learning and Assessment Area ‘ Internal control and Accounting Systems’. 1.2 Explaining that ‘The objectives of this report are to analyse the ………………….. function and to identify any weaknesses, and then to make recommendations for improvement.’ 2. Executive Summary This section is generally written last and should be a summary of the report. It is what managers will read first and will determine whether or not they read the rest of the report. It should include the following: 2.1 The reason why the report has been written. 2.2 A brief summary of the main weaknesses found. 2.3 A brief summary of your recommendations and how these will improve the current situation. 2.4 The cost savings to be made should your recommendations be implemented. You should also include any benefits relating to improved efficiency, effectiveness, customer satisfaction, staff morale etc. 3. Methodology This section should identify the methods that you have used to compile your report: 3.1 This report has been compiled by: - A review of the system over a period of time and completion of SWOT analysis (see relevant appendix number) - Interviews/discussions with relevant members of staff - Any relevant internet/library research (see appendix……) - Any other methods used Acknowledgements 3.2 You can thank any people who you feel have helped in the completion of your report. 4. Introduction This section should be an introduction to the company, the accounting function etc and it is where you should be able to start to cover the assessment criteria. The number of paragraphs you complete will be dependent on your writing style etc but as a minimum should be: 4.1 A brief introduction to the company, its business activities, it’s growth and development. 4.2 A summary of its structure (reference organisation chart in appendices), ownership etc. Main stakeholders, customer base, competitors etc. . (assessment criteria covered PIC 1.3) 4.3 An introduction to the accounting department, how it is structured (reference finance structure chart in appendices) its purpose and relationship with other internal departments. How the information that it produces is used in the production of the company’s financial statements, management accounts etc. How this information is used by the organisation and the external regulations applicable to its financial reporting mechanisms. (assessment criteria covered PIC 1.1, 1.4, 2.1) 4.4 An introduction to the accounting function under review, its purpose, the information it produces and how this is used by the organisation, the accounting software systems used, external regulations that impact on the production of its information (i.e. accruals, data protection, etc), internal policies and procedures (e.g. internet policies, credit control, etc). How it deals with changes, i.e changes in VAT, PAYE/NIC (if applicable), Bribery Act (assessment criteria covered PIC, 1.4, 1.5, 2.1) 5. Analysis of ……………….. system This section should be a factual description of the accounting function under review: • it should identify the staff who work on the function, their level of expertise, training to do the job etc, identifying any training manuals/policies relevant to the system (copies if applicable can be included in the appendices and referenced here) (assessment criteria PIC 3.3) • it should identify the record keeping systems used (i.e. manual records, spreadsheets, software) and discuss why these methods are used. (assessment criteria covered PIC 3.4) • it should explain what the accounting system under review needs to produce in order to provide internal and external stakeholders with accurate, timely, understandable and comparable data. This may be included with the above. (assessment criteria EAS 1.1) • It should explain the process in question from start to finish, i.e for the sales ledger, the process should be explained from receipt of the customer order through to payment of the invoice. (assessment criteria covered EAS 1.2, 1.5) • It should clearly explain the internal control procedures that are currently in use, the purpose of them (i.e. an explanation of how they can be used to detect fraud and also to aid in compliance with statutory and/or organisational requirements) and whether or not these are being observed. (assessment criteria covered (PIC 2.3, 2.4 and EAS 1.2, 1.5) • The final paragraph in this section should be a summary of the weaknesses identified through the review, this will then lead into the next section. • The section itself should be about 2 pages long and should NOT include any discussion of weaknesses or what needs to be done to improve the current processes and procedures as this is for the evaluation and recommendations section. 6. Evaluation of weaknesses This section should evaluate the weaknesses within the current system, linking them (where applicable) to a lack or non compliance with internal control procedures and clearly explaining why they are a weakness, how the weakness impacts on the organisation in terms of: • Potential for fraud • Potential for error, and/or • Non compliance with legal requirements • Loss of revenue/profit • Suspension of credit facilities with suppliers (late payment of supplier invoices) • Implications of poor cash flow (lack of credit control procedures) • Poor customer relations, etc You will need to include in your appendices and reference to it in this section a fraud matrix table which should identify the causes and common types of fraud, grade the risk and explain the impact on the organisation. You may also want to include in this section (if appropriate): • Lack of training for staff and implications of this • Lack of segregation of duties and implications of this Providing your evaluation of the weaknesses is indepth enough you should cover the following assessment criteria, PIC 2.2, 3.1 and EAS 1.3, 1.4 7. Recommendations This section should provide a clear and sensible recommendation for every weakness identified in your evaluation. Your recommendations should identify the types of control that need to either be complied with or put in place, clearly explaining how these will ensure compliance with statutory and/or organisational requirements and how they will improve the current processes and procedures, minimising the risk of human error and fraud and any other impact identified in your evaluation. You also need to clearly explain in this section the impact of your recommendations upon the staff in the accounting section and identify what systems will need to be put in place to ensure that staff have the necessary skills and knowledge to fulfil their roles. You should identify any training requirements and explain how these could be provided by internal or external courses, and could also include the use of manuals or other written guidance and help menus in computer software. Assessment criteria covered in this section should include, PIC 1.5, 2.3, 2.4, 3.2, 3.3, possibly 3.4 and EAS 2.1, 2.2, 2.3, and 2.4 8. Cost benefit analysis This section should review for one of your recommendations, the costs associated with the recommendation and the benefits to be achieved, both in terms of cost savings and efficiency/effectiveness. The costs incurred may not involve an outlay of cash but may be costs in terms of staff time required to set up new systems. You will need to calculate the costs involved and provide a breakdown of the monetary values concerned. You will then need to compare the costs incurred with any cost savings to be made, and again these will need to calculated in terms of both savings on cash outlay and efficiency savings in terms of time for staff, together with the qualitative benefits related to improved effectiveness, improved customer/supplier relations etc. The benefits must clearly outweigh the costs involved and this should be clearly summarised in the final paragraph of this section. Assessment criteria covered in this section will be: EAS 2.4 9. Appendices You will need to ensure that every appendix is numbered and titled and these should be clearly shown on either the report contents page or a separate contents page in front of the appendices section. The appendices must be uploaded as a complete document with the report and every appendix must be relevant and referred to in the body of your report.