Chic Paints Essay

1016 WordsApr 3, 20155 Pages
5. Analysis of the accounting system – Accounts Receivable (Sales Ledger) 1. This report reviews the Accounts receivable together with Sales Ledger in place within Chic Paints Ltd and makes recommendations to improve it. Managing your accounts receivable is a top priority. Business owners and senior managers should be highly involved on a day-to-day basis. In good times and bad it needs to ensured the A/R is as current as possible. 2. The weaknesses have identified with the aid of a SWOT analysis – see Appendix 2. This section of the report documents an investigation of the system and consideration of the information the accounts system should provide to stakeholders. It also considers whether the system is suitable to meet stakeholder needs, and the organisation’s needs. 3. Working methods and practices 1. The accounts system in use is a decentralised system consisting of eight stand-alone computers. The Financial accounting system operates using Microsoft Office 2010 Excel spreadsheet to record all transactions accounting. At the end of each month the Accounts department uses the spreadsheets to update the general, accounts receivable and accounts payable ledgers. These run on proprietary software, specifically written for CPL. Invoices to customers are completed using word processing software (Word). 2. Weaknesses in the working methods and practices within the accounts receivable system at Chick Pain Ltd are detailed in the SWOT analysis in Appendix 2. The main points are: • New Customers The current internal controls allow the AR clerk to create a new customer and set higher credit limits than those recommended by Experien. Further checks on customers should be completed before they are granted credit. This will benefit the organisation by reducing the risk of bad debts and ensuring that credit is only

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