Question

Accounting Information System

Yakin Sama Sdn. Bhd is a company dealing with building material. Since the recent previous years the company suffered huge loss and experienced shortage in their cash flow. Results from the investigation conducted showed that certain cash collected is not deposited into the bank accounts, credit notes issued without authorization, payments simply issue to suppliers and etc. Beside that staffs are in conflict with one into each other due to unstandardized salary scheme. Bagi menyelesaikan masalah dan ketaksekataan tersebut, anda sebagai akauntan yang baru dilantik telah menyediakan tugasan kerja kepada empat akaun eksekutif syarikat seperti yang tersenarai di bawah ini:- In order to solve the above mentioned problems and irregularities, you as the newly appointed accountant have assigned duties to all its four accounts executive as listed below:- Nama /Name Duti/Duty Adam (akaun eksekutif account executive) Memasukkan jualan untuk akaun penghutang sahaja. Key in sales for debtors accounts only Selepas Tidak dibenarkan/Not dil After Being allowed Memasukkan penerimaan Disah dan bayaran, nota kredit, dilulus oleh diskaun dibenarkan dan pengurus melihat Laporan jualan. Kewangan. Verified and To key in payment received, approved by the credit notes, discount sales manager. allowed and view the Financial Reports.

Answer 1

Answers:

1. What documents are being verified and approved by the relevant departments heads in respect to all the above transactions.

I. Account executive in sales for debtors accounts only:

Purchase Order,

Goods Receipt Note (Airway bills / transport bilss ETC) / Service Agreement or contract

Inspection report if service is rendered

Quality report from production department

II. Account executive in purchases for creditors accounts only:

Purchase Order or purchase requisition

Goods Receipt Note (Airway bills / transport bilss ETC) / Service Agreement or contract

Inspection report if service is rendered

Quality report from production department

Sales Invoice.

III. Account executive in payments received from debtors and payments to suppliers and other expenses:

A. For payments received from debtors:

Invoice,

Purchaser details from Invoice,

Bank details

B.For payments to suppliers:

Invoice,

purchase order,

GRN,

relevant outstanding history received from supplier

IV. Account executive in all the other expenses bills:

Bills,

written authorisation

written approvals etc

V Accountant –key in the salary, EPF and SOCSO:

Employee history,

Job offer letter,

written approvals.

Relevant statutory deductions etc

2. Identify the types of data that might be entered by account executive concerning with the verified and approved documents:

Below are the basic data checked by each department

• A description of a business transaction
• The date of the transaction
• A specific amount of money
• An authorizing signature

I. Account executive in sales for debtors accounts only:

Name of the purchaser, address, telephone number and email address

Purchase quantity, price. Shipping address and billing address. Date of shipping and place of shipping. Bill date and due date. Taxes applicable and any statutory refunds etc.

Apart from the PO #, GRN #, Invoice # Contract details in case of service provided

Any written approvals if any for any exceptional cases.

Match the above details with each PO, GRN and Invoice.

II  Account executive in purchases for creditors accounts only:

Name of the supplier, address, telephone number and email address.

Bank details.

Purchase quantity, price. Shipping address and billing address. Date of shipping and place of shipping. Bill date and due date. Taxes applicable and any statutory refunds etc.

Apart from the PO #, GRN #, Invoice # Contract details in case of service provided

Any written approvals if any for any exceptional cases.

Match the above details with each PO, GRN and Invoice.

III. Account executive in payments received from debtors and payments to suppliers and other expenses:

For payments received from debtors: Invoice #, Purchaser details from Invoice, Bank details, Account Head, Previous History, Outstanding history

For payments to suppliers: Invoice #, purchase order#, bank details, account head, relevant outstanding history

IV. Account executive in all the other expenses bills:

Amount, bank details, supporting documents for the expenses, written approvals if any required. Account head under which the payment is to be posted, clear the postings if posted in any control account.

V: Accountant – key in the salary, EPF and SOCSO: Employee Name, DOJ, Number of days worked, Time sheet, Job cards if any. Active Employee or not. Amount of taxes to be deducted from salary. Amount of taxes to be paid to government etc.

3. State the two internal control procedures that can be taken for the verification and approval actions and briefly explain how the internal control procedures benefit the company.

Internal Control procedures for verification and approval actions:

1. Internal control procedure taken while verification and approval actions of posting credit purchase: Doing the three way verification : for example – verifying Invoice, Purchase order and GRN to ensure, whatever has been stated in GRN is actually showing in Purchase order and Invoice hence correctly validated the purchase posting. Since Purchase order is from procurement department, and invoice is from supplier and GRN is from the warehouse. This is a good procedure for verification.

2. For payment of purchase, the Internal control procedure taken while verification and approval actions can be done by the getting the list of outstanding invoices from supplier, then verifying with the department’s open purchase order for payment has been requested. This will ensure, payment is being done to the correct supplier for the actual goods received.

3. Each cheque should be signed by two signatories.

  It is advisable to have 3 or 4 possible signatories known to the bank, ie some spare in case the main signatories are not available. It is common to have ‘A list’ and ‘B list’ signatories, where the A list are principle signatories who much sign first (usually staff), and the B list may only sign second (often Board members).

Internal controls benefit the company in following ways:

1. Internal control procedures for the receipt of cash help your business prevent loss due to employee fraud and accounting errors. These controls are intended to limit access to cash to specified employees and verify that all receipts, refunds or transfers are documented correctly and in a timely manner.
2. Check that the business’s actual cash balances equal what is recorded in its financial records.
3. Ensure that there is enough cash available to pay a business’s debts on time. The advantages of internal control are obvious, since they lead to a more efficiently run organisation. Strong internal controls will ensure a company's resources are utilised only for their intended purposes, greatly minimizing the risk of resource misuse. Internal control also prevents any financial irregularities by detecting them quickly and thus resolving any issues that arise in a timely manner. In addition, having strong internal controls in place can prevent a company's employees from being accused of any irregularities or misappropriations of funds.