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Chic Paints Ltd
‘’This is a report analysing the internal controls in place and evaluating the
accounting system’’
Student Name: William Jordan
AAT Number: 20009737
I testify that the following report is my own unaided work and a true reflection of the
organisation.
Signed: Dated:

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Table of Contents
1. Terms of Reference ............................................................................................................. 3
2. Executive Summary............................................................................................................. 4
3. Methodology......................................................................................................................... 5
4. Introduction to the Organisation........................................................................................ 6
4.1 History .............................................................................................................................. 6
4.2 System Overview ............................................................................................................. 6
4.3 External Standards and Regulations ............................................................................... 6
4.4 Significant Stakeholders of the Company .......................................................................7
5. Information on the Accounts Personnel and Department ............................................ 7
6. Review of the Accounting System..................................................................................... 8
5.1 Training............................................................................................................................. 8
5.2 Working Methods and Practices...................................................................................... 8
5.3 Record Keeping Systems ................................................................................................ 9
7. Ethical Evaluation of the Accounting System..................................................................9
9. Internal Controls and Analysis of Fraud ......................................................................... 10
9.1 Internal Systems of Control............................................................................................ 10
9.2 Analysis of Fraud ........................................................................................................... 11
10. Recommendations to Improve....................................................................................... 11

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1. Terms of Reference
This report examines the accounting system thatis currently utilised by Chic Paints with respectto constructing
recommendations to develop and evolve the system and the controls in place to safeguard it, as well as to
moderate the system’s exposure to fraud.
Primarily,this report will investigate the systems in place atChic Paints ,but as well as this the reportwill give an
overall insightinto the company and how imperative the system’s information is to the companyas a whole.
Furthermore,significantstakeholders,both internal and external, are very importantto companies so this report
will look into the requirements ofthem.Recommendations will also be discussed to make improvements to the
ethical and sustainabilityissues.
The costs and benefits are imperative to making recommendations on making improvements with a company’s
internal systems,so these will be analysed along with the potential risks to Chic Paints in terms of fraud.
The aim of this report is to complete the learning outcome required to complete the Internal Controls and
Evaluating Accounting Systems Paper in accordance with AAT Level 4 Diploma in Accounting.

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2. Executive Summary
This report evaluates the accounting system ofChic Paints Ltd and the internal controls with recommendations
on how these can be developed and improved to safeguard the company.By improving the internal controls this
can help provide provision to the accounting role by diminishing the threatof fraud and safeguarding the
operations used within the accounting function to work appropriately,efficiently and also so that the controls are
adaptable to changes within the environmentand industrythat Chic Paints Ltd operates in. The fundamental
outcome from this reportis that the companyinvests in a more reliable sophisticated accounting software
package rather than the Microsoft package currently being used which is simplydoes notsafeguard the
company.In addition to this, training should also be funded so all staffcomprehend the system sufficiently
enough to improve the company’s internal controls.
By realising the improvements and recommendations advised in this report,Chic Paints should see many
positive influential changes to the whole accounting function.Not only will the reporting of the company’s finances
become much more user friendlyto staff, the ability to improve the working capital cycle will also make the
companymuch more liquid as the new system will improve the creditcontrol system which increases cash inflow.
Staff morale will also increase as employees become more engaged with the companythrough training courses
which adds to Chic Paints intangible assets and also possiblymostimportantly,the improved internal controls will
minimise the risk offraud.
The companystill refrains from using BACS payments as much as possible for both suppliers and wages so a
further recommendation in this reportis that the new system mustintegrate the ease ofuse of BACS payments to
pay all staff and suppliers where possible,curtailing the reliance on cash and cheque payments which are often
the main cause offraud, and paying immediatelyinto suppliers and staffbank accounts in turn improving
controls.

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3. Methodology
To enable research and gather information to structure this reportmany source where used,these sources can
be see below.
To research around improving internal control and systems manyreference books and online contentwas
reviewed.
To discover the efficiency of the accounts departmentwithin Chic Paints,stafffrom other departments where
asked several questions via a questionnaire to see whatissues have arisen from the current accounting function
and find out ways to improve this.
As a resultof the questionnaire,bybasing the results over a substantial period oftime,more accurate results
could be produced ultimatelymeaning a thorough review of the company’s strengths,weaknesses,opportunities
and threats.
Integrity, objectivity, confidentialityand professional behaviour are all main principles behind a company’s ethical
values and these were used to analyse the company’s ethical accounting systems and controls.

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4. Introduction to the Organisation
4.1 History
Chic Paints Ltd is a large manufacturing companywhich now focuses on producing in the niche marketof
specialistpaints for cars,boats and industrial machinery.It is a limited companywhich underwenta management
buyout six years ago. Strategic plans have meanta massive shiftin philosophywhere previouslythe company
manufactured manyproducts as a conglomerate including household paints which resulted in huge competition
from competitors and resulting in low profitmargins.
Due to a change in philosophy,sixyears on from the managementbuyout,the company’s turnover has
progressivelydeclined 40% from £200 million to £120 million,buton the contrary, the gross profitmargins have
risen from roughly12% to around 30%. Staffing levels have also been cut 30% from approximately 500
employees to 350 and the companyhas seen a rise 25% in its net assets from £20 million to £25 million.
4.2 System Overview
The accounts system currentlybeing used by the companyis a centralised system.There are eightcomputers in
the accounts departmentwith every full time employee having their own personal computer,and parttime
employees having to share PC’s.
The main accounts system used by the accounts departmentis MicrosoftOffice 2010 Excel spreadsheets,which
allows the staff to record and accounts for all the transactions which take place.On top of this, the accounts
departmentincorporate an inventory control system which monitors the receipts ofgoods into the company’s
warehouse and issues outto the various production capacities .
Furthermore,with the companybeing manufacturing based,costing systems are implemented to help the
companyreview monthlyfigures.A stand-alone full absorption costing system was installed three years ago,
along with a more traditional standard costing and variance analysis system.
A Sage 50 payroll system is also used bythe company.
4.3 External Standards and Regulations
The Companies Act 2006 – The Companymustabide by this rule which sets the standards for the preparation of
the financial statements.
UK Accounting Standards – These provide more distinguished standards for the companyto follow in order to
prepare the financial statements.
International Accounting Standards and International Financial Reporting Standards are also regulations which
are mandatoryfor the companyto accept.
The Data Protection Act safeguards the company’s use ofpersonal information whether itis customers,suppliers
and employees.The systems used byChic Paints mustbe capable of storing this sensitive information
confidentiallyand not misused otherwise various fines and penalties will be charged to the company.
Late PaymentLaw means the companymustnotdeployprocedures to defer payments to creditors beyond
acceptable periods.

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4.4 Significant Stakeholders of the Company
Internal stakeholders are groups thatare a part of Chic Paints or staff who work specificallyfor the company,
such as employees, directors,and shareholders.Employees have a high interest to receive high wages butalso
to be motivated in their job and mostimportantlyto have securityin their jobs. Shareholders are concerned with
the companymaximizing the profit that the companyproduces as this means theywill be able to receive a
substantial rate ofreturn on their investments through dividends.
External stakeholders are organisations separate from the companyor people who are not directly working within
the companybut are influenced in one way or another from the results ofthe company,such as customers,
suppliers,creditors,community,and the government.The governmentwants the companyto pay its taxes
correctly and on time,employmore staff in order to improve the Governments income tax it can receive and also
to reduce unemploymentfigures,abide byall governmentlegislation changes,and honestlyaccountfor its
financial state.Although the companydoes notsell to the general public,the manufacturing and repair
companies have an interestwith the business to create superior specialised paints atmuch more affordable
prices.They will wantthe company to issue respectable creditterms,financial information such as monthly
statements,price lists and changes in paintprices and also how much ofa credit limitthey will receive before the
accountis put on stop. Suppliers have a vested interestto make sure that the companywant to remain buying
their goods and services and they are paid on the agreed credit terms,the main suppliers ofChic Paints are
producers ofpaintpots for the paintto go into.
5. Information on the Accounts Personnel and Department
There are several members ofstaffthat are employed by Chic Paints Ltd. There is the Finance Director, Dave
Whistler, who has a 25 per cent stake in the companyand is responsible for the end of year reports and also the
statutory accounts.In addition to this he is also employed for all accounting,finance and legal issues.Despite
this,he believes in using delegation practices to control the accounting department,and as such manyof these
issues are delegated to the ChiefAccountant, Hazel.
The responsibilities undertaken byHazel are predominantlythe day to day running of the department,by
supervising the entire accounts clerk employed by the company.She also produces monthlymanagement
accounts,which are signed off by the Finance Director, and consequentlyreviews the variances which are then
discussed with the various other departmental managers. She produces the annual budgetfor the company,but
this is created on a bottom up basis with the departmental managers having an inputwhich can mean bias in the
budgets with conflicting interests from manager to manager.Finallyher other major role is to ensure that the
companyhas a good working capital cycle and that it is maintained to the level setby Dave Whistler.
There are five members ofstaffwhich report to Hazel. The accounts payable clerk,who enters all the supplier
invoices and credit notes on the payable ledger and reconciles supplier statements in order to control creditor
payments. The accounts receivable clerk,who raises sales invoices and creditnotes,chasing debtor’s that
become overdue on the sales ledger butdue to weak systems this has to be exported to a spreadsheet,and
setting the creditlimits and checks on potential new customers as this has been delegated by the Finance
Director. The general ledger clerk who enters all the necessarydata straightto the general ledger,he also
produces all the monthlyprovisions,prepayments,accruals and inventory provisions to the Chief Accountant, as
well as maintaining the cashbook and petty cash. The costing technician,who costs all products and declares the
minimum selling prices for the sales team based on the costs.Finally,the payroll clerk, who runs the monthly
payroll for salarypaid staff and weekly payroll for hourly paid staff and also for issuing the mandatoryHMR C tax
forms.
See Appendix 1 for a diagram of how the companies accounts departmentis structured.

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6. Review of the Accounting System
This report will study the systems deployed byCPL in the accounts departmentand how weaknesses and threats
can be improved by using a SWOT analysis.This piece ofthe report will investigate the system in place, and take
into accountthe financial information thatthe stakeholders ofthe companyrequire from the currentaccounting
system,and whether or not the current system is meeting these requirements ofthe stakeholders,and the restof
the employees ofthe company.
5.1 Training
In respectto the SWOT analysis in Appendix 2, the main points in regards to weaknesses are;
Some staff do not having any relevant formal qualifications for the job they are doing,such as the receivable
clerk, and as a resultcontrol procedures within the sales ledger side ofthe accounts seem to be failing,on top of
this staff may not feel quite as motivated to do their job and as such this may lead to a lack of accountability
within the accounts department.
A lack of expert cover due to not training all staff to cover jobs in the accounts receivable departmentmeans that
when other staff members help outit becomes a slow procedure due to lack of experience on the systems being
used and consequentlythis is causing unnecessaryovertime expenses and also staffthatcover the work are
then not being able to complete their own workload on time.
The staff within the accounting departmentlack specific training qualifications for the systems thatare used
specificallythe main financial accounting system which operates using MicrosoftOffice spreadsheets to record all
transactions;this increases the risk of mistakes and errors.
5.2 Working Methods and Practices
The systems in regards to IT in Chic Paint’s accounts departmentconsistofeight computers which mainlyrun on
a stand-alone basis running independentlyfrom each other and each full time accounts personnel having their
own personal computer.The accounting system uses MicrosoftExcel spreadsheets which includes an inventory
control system.Sage Payroll is used to maintain the payroll system.
Weaknesses in the working methods and practices within the systems atChic Paints which can be seen in the
SWOT analysis from Appendix 2 are;
Over worked credit controller due to too much time being spenton ledger work means a lack of time to do credit
control procedures and thatoverdue customer accounts are notbeing managed efficientlyenough and this will
cause serious cash flows problems in the future as many companies maynotpay their debts until they are
chased for payment, this is a distinctlack of communication as there is no control over when staff are becoming
overloaded with work.
The system are supposed to be backed up every day, however, the companyloses ledger work as these
methods are notbeing put into practice often enough this was realised when the companysuffered a power cut.
With the companyusing manual systems for doing all transactions within the accounts departmentthis is very
inefficientand could potentially lead to mistakes,even more so when staffare either absentor need to be
covered due to simplyhaving too much work to do.
Despite the current systems using moderatelyuser friendlysoftware such as MicrosoftOffice, this can be very
time consuming due to a lack of integration with the rest of the systems and as such work becomes very delayed
and due to the this system having no extensive controls this increase the risk ofmajor mistakes in the accounts

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The need for overtime in the accounts departmentshows thatthe currentsystems like any sort of contingencies
when work suddenlyincrease,this is due to a lack of control in the planning ofthe work.
5.3 Record Keeping Systems
Detailed in the SWOT analysis in Appendix 2 are the main weaknesses ofthe record keeping systems and the
points include;
The heavy dependence on the cheaper MicrosoftOffice software for all transactions means thatmistakes could
go completelyunnoticed and manystaff within the accounts departmentseems to lack the relevant skills to
become competentwith this system
Unusual records were found within the general ledger which were notauthorised by the required staff, so there is
a distinctlack of securityand control over the accessibilityof the systems,this could have gone completely
unnoticed and as such the main hub of the financial data would have material misstatements
The inventory records in the system were overstated to that of the physical stock; this could have led to the
company’s profits being distorted.
Due to staff being over worked many transactions affecting the ledgers are notcompleted on time,this could lead
to mistakes as staffmayrush to catch up with work and not take care when recording these transactions
7. Ethical Evaluation of the Accounting System
In this report is a review of the potential breaches ofthe accounting system and as a resultbestpractice
recommendations have been made in order to reduce the risks ofthis happening.The findings can be found in
Appendix 4. The main points thatcan be summarised from the findings are;
Supplier payments are being delayed at the time when managementaccounts are due to be issued to various
stakeholders and as a resultthis window dresses the accounts by improving the company’s bank balance and
making the companyseem more liquid and ultimatelymore attractive to potential investors,this is a breach of
integrity in the ethics code of practice.
Due to a worsening situation in the company’s debtors days the creditcontrol procedure has being extremely
tightened and clients are being hassled for paymentafter justten days overdue, and with a very loyal regular
customer base this is notoffering a professional service especiallywhen in an economic recession and
customers mayleave the company.
Despite procedures in place in the payroll system to only give pay packets to the specific individual,due to a high
work load and ease of use,the payroll clerk has decided to make her life easier by giving pay packets to other
members ofstaff to give to the relevant person,this is a breach of ethics as it is a conflictof interestin business
relations.

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8. Sustainability Review of the Accounting System
Detailed in Appendix 5 is a review of the sustainabilityfindings ofthe Accounting System.The main focal points
of this are;
The mission statement ofChic Paints Ltd says that it will attempt whenever possible and feasible to focus on
sustainabilityby acting in an environmentallyfriendlyway by using recyclable materials in all products,but
despite this there does notseem to be any sortof companyprocedures and policies for employees to adhere to
and as such this does notreflect the true internal systems in place.As such this needs looking into to enable all
employees to be able to bring this statementinto fruition. Recycling paper,ink cartridges and plastics as well as
turning off all unused electronic devices are all ways in which the companycan become more sustainable.
The companyis currently operating in a supplier marketwhere new biodegradable materials are becoming
available at a slightpremium of20 per cent more than the products currentlyused.Although it is understandable
that they did not follow this up with a purchase due to the need of reflecting this in the selling price,itis important
that in the future the companydoes it’s upmostto purchase these materials when possible.
The companyagreed to sponsor Ashton Wanderers bypaying for a full team kit, however due to the team’s poor
performance they decided to pull out of the sponsorship.This is a major social responsibility issue because local
sports teams are atthe heart of societies and by not funded the team this could have a negative impacton the
income to the team.
9. Internal Controls and Analysis of Fraud
9.1 Internal Systems of Control
The internal controls set up at Chic Paints have been created to be adhered to at all times;the policies setout
are very strictand formal,but despite this,manystaff have evolved to work around these policies.
The SWOT analysis in Appendix 2 details the weaknesses ofthe internal controls and fraud. These points
predominantlyfocussed on;
Creditcontrol - The Companyonly uses a credit reference agency to get reference on a companybut despite one
reference being referred it was found that the credit controller issued the creditlimitat two thirds higher due to
controls allowing this to be done. Only having one control in respectto creditcontrol is very risky to potential
debts.
Access – A complete lack of control managed to lead to an unauthorised member ofstaffaccessed the general
ledger due to the system not having a listof authorised access users setup,all accounts staff withoutknowledge
of this had access to the general ledger.
Authorisation – A lack of strong authorisation process means thatdespite all cheques requiring countersignatures
from a director, the ChiefAccountant often has problems persuading them to counter sign the cheques,this leads
to cheques becoming left unsigned for a period of time.
Cash – There is a distinctlimitation on controls in respect to cash in the companyas around a quarter of the
hourly paid production workers are still being paid in cash despite the remainder being setup to be paid directly
in their bank accounts via BACS. Large amounts ofcash are withdrawn from the bank the previous day to pay
wages meaning cash is kepton the premises overnight.
Debt recovery – Debt collection procedures are generallynotfollowed up further than phone calls,emails and
letters due to prioritisation on ledger work,this often leads to debts building up over time and even not recovered.

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9.2 Analysis of Fraud
There is a wide range of potential frauds that may become apparentamongstthe internal systems thatare
implemented atChic Paints and ultimatelyprocedures mustbe putin place in order to prevent these from
occurring.
The SWOT analysis in Appendix 2 details the weaknesses involving potential fraud as;
Many members ofstaffare still being paid wages in cash and this will increase the risk oftheft of money if
another employee manages to get hold of the pay packet. Also, if the companycontinues to pay staff wages with
cash,this could potentiallylead to discrepancies between how much moneyhas been paid physicallyand the
amountshown on the Sage Payroll and this is likely to happen either by mistake or by staff coming to a secret
agreement. Furthermore,there is a lack of control in the payroll system as the companygives Sage 50 access to
the human resource department;this is riskybecause itis possible for an imaginaryemployee to be setup and
consequentlyanother employee could setup their own bank details in order to receive paymentwhen wages a re
processed. The main accounting system is notintegrated with the payroll system and as such this requires
journal entries to transfer the payroll costs,as a result,this could mean thatjournal entries are not correct and if
no reconciliation is completed between the system itmaymean more wages could be paid to whathas been
journaled to the wage nominals.
All these possible frauds,the controls implemented and the recommendations to solve these issues are detailed
in the fraud matrix in Appendix 3. The level of risk is also detailed in this.
10. Recommendations to Improve
In order to eradicate the weaknesses identified in the SWOT analysis in Appendix2 there are numerous
recommendations thatcan be applied.
First and foremostthe first recommendation is to sacrifice speed and low costs and purchase a more refined
integrated accounting package.For this to come to fruition the account departmentwill require an IT specialistto
re network all the eightcomputers in the departmentso that they can all run and access the same shared files,
password protected.This would eliminate the reliance on spreadsheets ,journals from the payroll system and
manual calculations.This is beneficial as the companywould have direct integrated accounting records.
Consequentlyby doing this the accounts staffshould become very engaged and thrive at the opportunity to learn
new skills whilstlearning the new system in place via training courses, ultimatelyboosting staffmorale and
motivation.
Too few employees in the accounts department have formal accounting qualifications and as such the company
should allow staffto attend courses in order to complete these relevantqualifications,by doing this staff will be
more motivated to learn in their workplace and will also feel value by the company.Not only this but by studying
these technical courses itwill teach the staff how to implementand understand the importance ofinternal controls
and this eventually will benefitthe companywith improve appropriate controls.
Staff meetings should become a regular occurrence,this is because itwould allow all accounts staffto analyse
and plan how to work more effectively in the future, figuring out and discussing who can cover who in terms of
absences and work overload will mean all jobs which are a priority will be completed within the required
deadlines.Ultimatelythis should improve staffmorale and in turn improve efficiency as they will have the comfort
of knowing if they have too much work to do then the workload can be shared.
With the introduction of the new integrated accounting software itshould become a priority to retrieve all suppliers
and employees bank details to enable as manyBACS payments as possible for both wages and paymentruns,
by implemented this,cash,apartfrom in petty cash,should become more or less notexistentin the companyand
ultimatelythis is going to benefit Chic Paints as it will massivelyreduce the risk of fraudulentactivities in the
company.

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The companymustputmore emphasis on doing more creditchecks on new customers before they are granted a
credit limit,this can be done by asking new customers for creditreferences,once these have been provided the
credit controller mustring these reference up to learn the new customers credit history.This will consequently
benefitthe companyas will be mean the companyreduces itchances ofbad debts as creditwill only be offered
to customers who have a good credit historyand are more than likely to pay their accounts on time.
The companyhas an ethical issue in that the payments to suppliers are delayed atthe quarter end to improve the
company’s position atthe bank. By introducing the integrated accounting system this will enable the accounts
departmentto produce enhanced financial reports.In terms of eliminating this ethical issue,by been able to
produce cash flow forecasts this will mean the accounts departmentcan plan whatmoney is coming in from
debtors and also outto creditors.This will be beneficial as the companycan chase debtors easier with the use of
an aged debtors listand also pay creditors on time by using an aged creditors listand stop making suppliers very
unhappy.

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Appendix 1 - Structure of Hierarchy
Dave Whistler
Finance
Director
Hazel
Richmond
Chief
Accountant
Imran Patel
Accounts
PayableClerk
Xu Hin
Accounts
Receivable
Clerk
Credit
Controller
Dan Hickman
GeneralLedger
Clerk
John Thatcher
Costing
Technician
Susie James
Payroll Clerk
Alan Turner
Accounting
Systems
Technician

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Appendix 2 - SWOT Analysis
Strengths
 Most customers payby BACS
 Creditscoring organisation used to grantcredit
 All creditnotes are firstapproved by sales managers
 Creditcontrol procedures are in place
 Trial period offered to customers before issuing creditterms
 Approved listof suppliers
 BACS payments require authorisation
Weaknesses
 Some accounts staff have no accounting qualifications
 Lack of cover in the department for absences
 No system training is in place
 Account receivable clerk overworked
 Despite procedures, computers not backed up sufficiently
 Manual spreadsheet system
 Main system not integrated – time consuming
 Hard to detect errors in spreadsheet transactions
 Security settings not set up correctly on general ledger
 Inventory overstated to actual inventory
 Basic credit check done with an agency
 Persuasion needed to get cheques countersigned
 Some wages still paid cash
 Basic debt collection
 Payroll not integrated to main accounting system
 Two separate departments have access to payroll records
Opportunities
 Accounts receivable clerk interested in completing formal qualifications which will help improve internal
controls with more technical knowledge
 The company is able to perhaps train accounts clerks to do each other jobs, this would cover any
potential problems arising from absences
 Large proportion of the company’s customer are regular so should be fairly confident of a low debtors
days period in the future to help the company’s cash flow
Threats
 Sales invoices are only produced when a goods dispatched note is realised, so if goods go out to a
customer without a dispatch note not invoice would be produced
 Spreadsheets being used for transactions poses a threat because errors can easily be made such as
accidently deleting values from the accounts
 Use of a debt collection agency when debts are more than 3 months old is likely to alienate large
customers and poses the risk of them moving their custom elsewhere.
 Not backing up data regularly will lead to the company losing vital data if power goes.

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Appendix 3 – Fraud Matrix
POTENTIAL FRAUD CURRENT CONTROL RISK TO COMPANY RECOMMENDATION
Some employees are still
being paid cash
Cash locked in the
accounts office safe
High Attempt to retrieve all
employees bank details
Discrepancies between
cash paid and amount
stated on system due to
staff agreements
Nothing of note – there
seems to be no other
member of staff checking
the amounts distributed
High Always double check
wages using two staff or
pay by BACS
Payroll access to HRM
department could lead to
set up of counterfeit
employees or bank details
Nothing of note – Needed
for use of maintaining
employees records
Medium Unannounced internal
auditing of the records
regularly will deter any
risk of this happening
No integration between
main accounting system
and payroll system could
lead to deliberate errors in
the journal entries
Journal are posted to the
main system to transfer
the payroll runs
Medium Directors or Chief
Accountant should do
regular reconciliations to
prove the physical wages
paid tally up to what has
been journaled to the
wages nominal code

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Appendix 4 – Ethical Review of the Accounting System
CURRENT PRACTICE PRINCIPLE BREACHED RECOMMENDED
PRACTICE
A director has instructed that
debts that become more than
ten days overdue are to be
chased even with businesses
struggling in a recession
Professional competence and
due care
You mustmaintain professional
knowledge and skill to ensure
that a client or employer
receives competentprofessional
service and by chasing debts
that are ten day’s overdue this is
not professional to clients
Try to negotiate tighter credit
terms with customers, or
possibly reduce credit limits
A director has asked for
suppliers notto be paid at the
quarter end in order to reduce
the company’s overdraft
Integrity
Delaying supplier payments in
order to falsify management
accounts to make them look
more liquid is nothonest.
Integrity is followed by a
member bybeing
straightforward and honestin all
professional and business
relations
Payments should be made when
due in order to allow accounts to
be prepared in a true and fair
light
The payroll clerk is not following
procedure to only allow
personal collection ofone’s own
pay packetin order to make it
easier for her working day
Objectivity
You mustnotcompromise
professional or business
judgmentbecause ofbias,
conflict of interestor the undue
influence of others and the
payroll clerk is giving pay
packets to staff other than the
relevant person
Pay packets should be keptin a
locked safe or locked draw until
the relevant member ofstaff
collects their pay packet
themselves
Other members ofstaff
collecting pay packets
Confidentiality
To respectthe confidentialityof
information acquired as a result
of professional and business
relationships and,therefore, not
disclose anysuch information to
third parties withoutproper and
specific authority, by releasing
pay packets to staff this is giving
strict confidential information
away such as a national
insurance number on the payslip
Pay packets should be issued to
the individual who is receiving
the pay directly regardless of
pastcontrols and procedures.

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Appendix 5 – Sustainability Review of the Accounting System
Sustainability issue Observation Recommendations
Corporate social
responsibility/environmental
Chic Paint’s mission statement
declares that‘it aims to reduce
impacton the environmentwhen
possible and to use recyclable
materials when feasible’
There appears to be no policies
or procedures for staff to follow
in terms ofkeeping to this
statement,turning electronic
devices off when not in use and
recycling all plastics and ink
cartridges are all ways the
companycould adhere to this
Environmental Despite onlycosting 20 per cent
more the companyfailed to act
on buying biodegradable paint
pots
When the opportunityarises the
companyshould do it’s upmost
to purchase these new products
possiblyby trying to negotiate
bulk trade discounts
Corporate social responsibility The companywithdrew their
sponsorship ofa local football
team due to poor performance
The companyhas a social
responsibilityto the football
team and could be seen as
charitable giving,the company
should continue to sponsor this
until it becomes unfeasible as it
could make a big difference to
sports in the area.