The Accounting Systems of the Company - Brand Learning Partners: the Companys Organizational Structure - Research Paper Example

1.0.Terms of Reference : This project report has been prepared to fulfill the requirements of the concepts in Unit 10 . this unit deals with ‘ Managing Systems and People in the Accounting Environment , of the technician stage for the Association of the Accounting Technicians. The report deals with the Purchase Order System and communication of the finance department of the company Brand Learning Partners. The project looks into the present system of purchase procedure and analyses methods to improve the present purchase order system. 1.0. Executive Summary : The advent of Information Technology has revolutionized all fields including the financial sector. Management of people and systems in an accounting environment is a critical task for any company to earn profit . To have good profit and customer satisfaction , a company has to adopt to new methodologies and accounting procedures. This report deals with the issues with manual accounting system of the Brand learning Partners Ltd. Company . The existing system of manual purchase order procedure has been analyzed and potential weaknesses have been identified. Based on this analysis a set of recommendations have been made to improve the Purchase Order processing and to improve the internal communication of the finance department of the company. 2.0. Introduction : This report aims at analyzing the accounting systems of the company - Brand Learning Partners. Special focus of this report is towards the purchase order procedure and the communication of the finance department with other departments and the client network . The report initially discusses about the existing manual purchase order processing procedures . The major problems associated with the current system of manual purchase order processing are to be highlighted . A research methodology has been discussed later to evaluate the existing system . Based on the data collected in the research methodology , some specific recommendations have to be detailed . These recommendation are then evaluated according to the performance criteria specified in Element 10.1 – Manage People within the Accounting Environment and Element 10.2. – Opportunities for Improving the Effectiveness of an accounting system of the Unit – Managing Systems and People in the accounting Environment . The company under focus is the Brand Learning Partners ( BLP ) . This company - Brand Learning Partners ( BLP ) Limited is based In United Kingdom . It was founded in July 2000 and it started trading as BRAND LEARNING ( www.brandlearning.com ) from November 2000 . The client network base is rapidly expanding and the trading with first clients include Unilever, Diageo, Barclays and Astra Zeneca , Aviva , Bayer , Cadbury , Heinz , Camelot , Kerry foods , HP Invent , Microsoft , Nestle , Pfizer , Novartis , Diageo , Rolls - Royce , Sony , Tesco , and many more. These clients are located in over thirty four countries globally and there are around forty multi-national clients . Ninety percent of the work for Brand Learning Partners comes from existing clients and their referrals. Typically these companies brief themselves to Brand Learning Partners through their senior Marketing Managers, Strategy Directors, Marketing Directors, Learning & Development , HR Directors or Managers and the central Marketing Capability at various levels like global level , regional level , national level. The administration of this Brand Learning Partners include an operating board comprising six members . Among them are Andy Bird and McEwan who are the Managing Director & Founding Partners . The executive team has five members . The Marketing Capability team has around twenty four staff . There are also two learning directors , six Associate directors and twelve members in the client support team . The other disciplines include the Human Resource capability or support team , business operations support team and other specific consultants . The Finance Department of the Brand Learning Partners company includes Financial Controller , Finance Controller Assistant and four Finance Assistants . The company has been divided into some four clusters . Each finance assistant takes care of the activities of one cluster . The clients are also divided into four cluster under the four finance assistants . The services offered by the company include a good marketing analogy that is tailored to the business needs and culture of the client company . Providing an efficient strategy for marketing plan , marketing investments , marketing decision making . To train a more focused and integrated marketing personnel . Providing more strong , relevant and distinguished brands which pave way for maximum growth of the client company . Thus the Brand Learning Partners company provides a broad set of services and marketing support to clients at every stage of marketing capability . The skill set areas that are covered by Brand Learning Partners are functional skills , inter – personal skills and cross – functional management skills . This type of efficient service has been offered to clients with the brand learning 3D approach , which concentrates on proper Diagnosis of issues and needs , Development of excellent marketing practices with desktop tools and toolkits and finally the Delivery of interactive training courses , live action programmes , workshops , etc . 3.0. Problem background : Every activity of the Brand Learning Partners company has been working fine when the company was small , but now due to the rapid growth, it’s co – ordination and control management has become more complicated . The present financial operations of the Brand Learning Partners are manual , specifically the purchase order system. Being a service company , the clients are charged for all that is needed to facilitate a workshop or a live action programme or an interactive course . The items that are charged include travel costs, accommodation, subsistence, workshop materials , etc . Most of these are booked by PECs (Project and Event Coordinator) , who are assistants to directors . They work on different projects for different clients . Their job is to book flights, materials and prepare other tangible products that are needed for the workshops. They raise Purchase Order ( PO ) which could be the next number from a spreadsheet and manually fill the form by adding the purchase order number . Also they have to state whom the order is for and for which supplier . This information becomes essential to match the invoice with the purchase order . They then send or email the purchase order template to the finance department. Most items are then charged to a client. If the forms are not done due to lack of time or if it is forgotten then the payment to the company by the clients gets omitted . This leads to loss for the company . Thus the accountability of the purchase order and invoice and the associated communication . 4.0. Research design and methodology : This project research has been based on the procedure of questionnaire . The company that is chosen - Brand Learning Partners has around eighty employees and forty specialists consultants in its international network . The finance department which is under focus has a Financial Controller , Finance Controller Assistant and four Finance Assistants . The client network is also expanding . These core people have been chosen as the participants of this questionnaire method of research used in this project analysis . The questionnaire method seems to be more effective as it could collect all the relevant opinions of the different people who are involved in the purchase system . The questionnaire has been based on the concepts related to the purchase procedures that is existing in the present manual processing of the company. The questionnaire discusses the possible errors that occur due to the present procedure , the possible ways that lead to the misuse of the system . It also discusses the possible methods of improving the system against these possible errors and possible fraud . The question pattern has been chosen to be descriptive , instead of being objective . An objective questionnaire gives a limited or pre defined answer , whereas the descriptive questionnaire could give a more in depth opinion from the participants of the survey. Sample questions from the questionnaire have been attached in Appendix A . Care has been taken to maintain confidentiality of the participants of the survey. Also ethical considerations have been taken care . 5.0. Analysis and Evaluation of the current system : This section analyses the existing accounting practices , major problems , weaknesses , contingency plans of the Brand Learning Partners company . 5.1. The current system : The current system of accounting practice with respect to purchase order processing , of the Brand Learning Partners , shows the following sequence 1. An order has to be raised for any service request and an order number has to be allocated from a purchase order log. 2. Orders above £500 have to take the authorization of the financial director. 3. A copy of the order has to be sent to the finance department. 4. Invoice corresponding to the raised order has to be received by the finance department and both of them have to be verified . 5. If there is a no discrepancy then the order can be sent for payment , else the order has to be declined . 5.2. Major problems or weaknesses : Based on the questionnaire survey , the information collected reveals that the major problems that are associated with the current system have been found to be 1. A person who raises the order may forget to send it to the finance department . This lack of communication can lead to loss of payment . 2. An invoice could not be tracked and allocated . This could lead to unnecessary delay in finding out the relevant order to that invoice and consequently delay in the payment. 3. Due to lack of communication of specific information between finance assistants and the project and event coordinators ( PEC ) , there is no accountability of resources and raw materials . 4. Since there is no mechanism of allocating a particular responsibility to a particular person , control of work flow can not be determined . 5. There is no co-relation between the different logs or registers maintained at different stages in the order processing sequence. 6. Accountability of existing stocks – workshop related materials , has been lacking . 7. Procurement of new tangible products have not been accounted in co – ordination with the existing stocks . 8. Work flow from reception of service request till the billing has not been defined and co – related . 9. Pre – defined pricing or charges for the basic services have not been quoted in advance . 10. A centralized module to optimize all activities related to sales / service , delivery and billing has been lacking . The above mentioned weaknesses could be the evidence for performance criteria in element 10.2.A. 5.3. Contingency Plans : The contingency planning for this company have been done , based on the existing facilities available for uninterrupted computer facility , staff absence and change in work patterns . From the data collected on Q8 , a fully functional computer system is not available at present . This situation seems to be very critical and hence manual ledger procedures are to be followed accurately . Also frequent – daily basis - back up of the accounting activities are being done to overcome failure of the existing computer systems . The other contingency plans that are effective include plans for staff replacement . Data analysis from the survey reveals that in the absence of specific Program or Event Coordinator , certain staff are to replace them who have knowledge about those specific tasks. If there are problems due to staff absence , then actions are being taken to substitute that staff immediately . Also the change in work pattern or change in demand are being managed by allocating competent staff who are trained in those tasks . These contingency plans satisfy the range statement for the Element 10.1.C. 5.4. Training : The training facilities for the staff as collected from the data to Q14 , include basic operating skills to manage the purchase order procedures like storing all relevant information , maintaining back up of these data for future reference . Training to staff also include management of indent , preparing for the Request for Quotation , Quotation Registration , Purchase order Raising , Invoice handling and Vendor management . This requirement satisfies the performance criteria set in Element 10.1.B. The information from training enables the staff to recognize their role in the BLP environment, thus satisfying element 10.1.D. 5.5. Possible Fraud : In the existing manual system there are many potential areas for fraud . Based on the information collected for Q10. The possibility for deliberate fraud can be seen in the process of matching invoice or improper communication to finance personnel about a raised purchase order. Deliberate inaccurate entry to the ledgers , quoting a lower value for high value items , manipulating the number of items in the purchase order are all possible in the existing manual accounting system . 6.0. Recommendations for Improvement : As discussed earlier , there are many drawbacks in the manual purchase order processing procedure . Automating the purchase order process seems to be more efficient than manual procedures because the activities can be carried out using digital technology , can be managed more efficiently and the purchase can be tracked more efficiently . In an automated accounting system, there are many alert mechanisms that act as control points to check the compliances of the purposes and work flow records detailing the staff activities from start to finish . Also any associated report , can be easily generated as there is good connectivity of the data within the purchase database . Thus the benefits of automating the accounting procedures include support for compliance , the generated reports provide evidence of controls in the work flow , integrates all related activities and eases work scheduling in the accounting environment to manage systems and people more efficiently . 6.1. Recommendation for work flow management : The work flow for the BLP company can be described by the following sequence - client sends purchase request to client support – PEC raises a Purchase order based on purchase request – if the order value is more than £500 , then PEC sends it for director’s approval – PEC sends information to manger - PEC sends information to Finance department - manger identifies the resource personnel for the task – manager checks for supply capability - PEC checks for air tickets and other tangible materials needed for the workshop or marketing course - the manager checks for availability of all resources for the proposed task – finance department sends invoice to client based on the service that is to be provided – finance department receives invoice receipt from client – the received invoice receipt is verified with the purchase order - payment is accepted if there is no dispute – payment is rejected if there is discrepancy in the received invoice receipt . Manager reviews performance of resource personnel other staff - training programmes for resource , satisfying the requirement of element 10.1.E . The overall representation of the work plan can be as in fig.1. Fig.1. Work Flow of the purchase activity in BLP . The above recommended structure for work scheduling satisfies the requirement for Element 10.1.F for managing work activities and work flow . 7.2. Recommendation for automating the Purchase process : The existing system uses a spread sheet log to allot a purchase order number for any new order . It is recommended that in the same database , there must be connectivity to pricing list , client identity , resource availability, etc so that the Programme and Event Coordinator can allocate the exact charges to the client . This could be done by an extended data base connectivity software or using the Object Linking and Embedding principles . Also there are automatic data capture software says Readsoft International ( www.readsoft.com ) which use OCR (optical character recognition) to automatically extract information from the manual document to databases in spread sheets . Once the information is extracted, it is interpreted, verified and transferred into any computer system. No more tedious and time-consuming manual handling of purchase order processing is required then . Another software from Microsoft named Microsoft Dynamics GP ( www.microsoft.com )helps in stream lining the business processes . This software utilizes a work flow approval process for purchase orders over some values as required by the system in BLP. Automating the PO process reduces error during data entry , setting up pre – defined parameters that automatically replenish the inventory items such that customer orders are fulfilled in a timely manner . other advantages include mapping of order line numbers to line items , track and update all costs related to inventory , easy replacement of line items . Alerts generated helps in preventing invalid purchase orders . Another integrated Purchase Order Processing module from Sage named Sage 200 (www.dmcsoftware.co.uk ) , integrates purchase ledger , sales order processing , purchase order processing modules. This helps to match client orders to purchase orders enabling fast and efficient service to clients . This Sage 200 uses 2 – way and 3 – way matching and calculates a running total when matching invoice line items to orders. This eases the mechanism to identify and correct the accidental errors and assures a fraud proof system . These methods of automated purchase order processing enables easy identification of problems . This automated environment could enable the colleagues to share the problems in the system and solve them easily. This satisfies the performance criteria of element 10.1.G. If the problem is beyond the scope , then it can be referred to higher authorities to solve the problem which satisfies criteria for element 10.1.H. The above mentioned automated PO processing also enables reliable and fast method of order processing as required by criteria 10.2.C. 7.3 Recommendation for resource management : In any purchase process, Resource management is a critical task that decides the lead time in the purchase process. In the work centre , many internal activities like work force planning , capital utilization have to be done to efficiently manage the purchase process. A general perspective of resource planning could be as shown in fig.2. Fig. 2 . Resource Planning. For the BLP , the resources are the skilled people who are to impart the learning and marketing course or workshops. The marketing capability directors , learning directors and associate directors are the keys resource personnel . These people are under four clusters , they need to be trained frequently . The other resources for this BLP would be the tangible materials that necessitate the need for inventory control in some form to account for the used , existing , required items . Also the other major resource would be the airlines that is closely associated with the BLP company . This resource could be identified by a database of associated airline from which the PEC can choose to book flight tickets .while the resource planning activity is under the control of the manager , the flight booking activity is under the PEC. The manager has to coordinate with the finance and the PEC in deciding the pricing for any task as requested by the clients. This strategy for resource handling enables to satisfy the criteria for element 10.1.A. 7.4 Recommendation for Financial Accounting : The major task in financial accounting procedures is the maintenance of ledgers that contain inter – linked data. A general manual accounting procedure would have many ledgers or logs , data entered in one log may not be updated in another log. This could lead to many accounting problems . Computerized financial accounting with some financial accounting software enable to overcome these problems . A recommended procedure for automated financial accounting could be as outlined in Fig3. Fig. 3. Elements of automated Financial Accounting system . This system of accounting becomes entirely fool proof leaving no way for any deliberate fraud . The potential of fraud due to improper data entry , resource manipulation , malfunctions in stock verification , etc. can be avoided by this type of automated financial accounting procedure. This satisfies the performance criteria of element 10.2.B. 7.5. General recommendations : One general recommendation to the Project & Event Coordinator would be to have a clear strategy in coordinating with the manager and the finance department . As he / she has to communicate to both the sections he needs to maintain a clear database of his activities that could answer the enquiries of both finance personnel and managerial personnel . Also he needs to have some basic training and knowledge about the accounting procedure so as to avoid unnecessary errors. This satisfies element 10.2.D. The benefits due to the automated processing in terms of financial benefits , efficiency in work , time saving have been made clear to the financial staff and the management executives . These satisfy element 10.2.F. The BLP has been recommended to go for an automated purchase processing procedure based on the assumption that the staff have adequate basic computing skills , the company has sufficient infrastructure facilities , the management has a broad perspective to adopt to new technologies . these assumptions seem to be satisfied naturally as the BLP company’s service is IT based management oriented . Thus the recommendation made above are supported by a clear rational as required by element 10.2.E. 8.0 Cost – Benefit analysis : The above research has identified the major weaknesses and potential areas of errors and frauds in the existing manual purchase order processing system . Among the recommendations are specific software that could be beneficial to the accounting environment . They are , one named Readsoft , which gives OCR readable automated software . This helps in efficient document management but less with respect to data management . The cost is more compared to the benefits . The next software dealt was Microsoft Dynamics GP , this has many facilities that not only manage data but also manage alerts to avoid errors and document management facility along with work flow management facility. The cost is reasonable as compared to the cost and compatibility. The third software explained was from DMC named Sage 200 suite. This suite has certain limitations with respect to document management. Hence the cost – benefit analysis reveals that Microsoft Dynamics GP is more beneficial and it would be compatible with the existing spread sheet system. 9.0 Evaluating Evidence or Mapping : The evidence for the discussion or recommendations made as above could be evaluated against the performance criteria required in elements 10.1 and 10.2 of this unit 10. Performance criteria element number. Paragraph number in report 10.1.A 7.3 10.1.B 6.4 10.1.C 6.3 10.1.D 6.4 10.1.E 7.1 10.1.F 7.1 10.1.G 7.2 10.1.H 7.2 10.2.A 602 10.2.B 7.4 10.2.C 7.2 10.2.D 7.5 10.2.E. 7.5 10.2.F 7.5 10.0 Conclusion : This report has presented an analysis of the accounting systems of the company - Brand Learning Partners. After a brief introduction of the company’s organizational structure , the present system of manual accounting procedure has been discussed. Special focus has been made on the purchase order procedure and the communication of the finance department with other departments . The weaknesses of the existing system have been dealt and the research design methodology has been explained . The research has made recommendation of a suitable automated accounting system to overcome the difficulties of the existing systems and to enhance the performance of the financial accounting procedures . contingency plans , training methods have been quoted . Recommendations for improving the system in terms of work flow management , resource management , financial accounting , automating the purchase order processing procedure have also been made . the software that has been recommended is the Microsoft Dynamics GP , which would be compatible with the existing spread sheet system . Finally the recommendation and discussions have been evaluated against the performance criteria as outlined in the elements of Unit. 10. 11.0 References : Brand Learning Partners Limited . Registered 2000 . http://www.brandlearning.com/brochure_download.asp Microsoft Dynamics GP , http://www.microsoft.com/dynamics/gp/Default.mspx Readsoft International , Document Automation Powering your Business efficiency http://www.readsoft.com/ Sage 200 Commercials , http://www.dmcsoftware.co.uk/sage-200/sage200-dmcreports.aspx 12.0 Appendices Appendix A - Questionnaire Sample Questions from the survey questionnaire . Q1. Is the work flow planned for optimum use of resources ? Q2. Are the staff activities reviewed and proper training given ? Q3. Are there efficient Contingency plans for emergencies? Q4. Are the staff informed about their work schedule ? Q5. Are there frequent checking of the staff activities for standard ? Q6. Is the work scheduled managed properly by a competed authority? Q7. Are there competent authorities who take responsibility to solve critical problems? Q8. Are there contingency plans for computer systems , staff , change in work patterns ? Q9. In your view what are the weaknesses of the existing system? Q10. What are the potential areas of fraud in the existing system ? Q11. What is the frequency for the review of activities with respect to reliability and speed of operation? Q12. What are the recommendations to improve the present system ? Q13. What is the nature of the recommendations, are they oral or are they written ? Q14. What are the training opportunities for the staff? 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