ICAS Report Planning Template Essay
ICAS Report Planning Template
ABC Ltd supplies a complete range of carpets and furniture to the general public. ABC Ltd has over 75 nationwide high street shops in all major UK cities and many large towns. ABC Ltd also has a 24/7 online shop which is on the head office site in Aberdeen. Over the past seven years the company has grown steadily and now has revenue of over £29 million. It employs around 400 full-time staff. Who are the businesses major stakeholders (internal and external) and why?
Major stakeholders of the business could be anyone who has an interest in the business.
The business is the sole supplier of a range of furniture. The relationship with this supplier is crucial to the success of the business due to the competitive advantage that it offers ABC.
Accounts Department (PIC 1.1, 1.4)
How big is the Accounts department? What is the purpose of the accounting function? What type of organisational structure is there? Where does the accounts department get its information from? How does the accounts department inter-relate with other departments within the business?
At ABC Ltd the accounts department consists of the Finance Director, Company Accountant, General Ledger and Inventory Clerk, Accounts Payable Clerk, accounts receivable clerk, costing technician As well as payroll and personnel database clerk. The departments deal with the payments of invoices, comparing them to the purchase orders and the stock receipts. They also monitor the stock and requirement for purchase orders.
The department is also responsible for the credit control function, monitoring customers and the payment of the staff wages.
In order to carry out these roles Accounts are forced to interact with the whole of the organisation to gather information.
ABC use an account spackage which is fully integrated with the rest of the business software. The use an Enterprise Management System called PRONTO. This software allows for multi user access which can be restricted based on job roles. Non accounts users can see, but not change essential financial data, such as supplier and customer balances.
Describe (in relation to the organisation) the 3 main financial statements – Income statement, SOFP and Statement of Cashflow. (PIC What do they show? Who uses them? What decisions are made based on them?
Income statements illustrate ABC Ltd profit or loss over a certain periods of time. The income statement records all revenue, losses and operating expenses for the business. The IS can be used to show profitability of the company. Income statements are used by stakeholders, company accountants, financial directors and managing directors. The income statements compared with other income statements within ABC Ltd over a period of time or companies within the same sector will be able to determine the operating performance of ABC Ltd. Managers and the company
accountant may be able to find out what areas of the business are over budget or under budget and make necessary changes.
Statements of Financial Position (SOFP) illustrate a snap shot of the business financial condition. The SOFP includes the assets and liabilities of ABC Ltd. This is ia good indicator of the liquidity of the business. This statement will again be used by stakeholders, company accountants, financial directors and managing directors. Managers and the company accountant may be able to quickly get a handle on the financial strength and capabilities of the business, it’s also demonstrates if ABC ’s assets is enough to cover its liabilities, how liquid its assets are if ABC was to declare bankruptcy, if the business is in a position to expand etc.
Statements of Cash flow illustrate the amount of cash generated and used by the business in a given period of time. Again this gives an indication of liquidity and working capital management. This statement will again be used by stakeholders, company accountants, financial directors and managing directors. Managers and the company accountant may be able to determine whether the business has enough cash to cover payroll and other immediate expenses or liabilities, as well as allow potential lenders to decide whether or not ABC Ltd is able to pay of its liabilities.
What accounting regulations cover the preparation of the above financial statements? (PIC 2.1)
In the UK, financial statements are governed by UKGAAP (UK Generally Accepted Accounting Principles). They are also governed by the Companies Act What other accounting regulations and industry specific regulations does the company have to comply with? Does the company have to deal with Money-Laundering regulations? Does the company come under Sarbanes-Oxley? (PIC 2.1)
The company also has to comply with the data protection act as they hold customer and staff information. Non compliance with this act can have severe financial and reputational implications.
They are also required to comply with any rules set out by HMRC when paying employees and also calculating the tax liability of the business. The company does not have to comply with Sarbanes Oxley as this only affects companies registered with the New York Stock Exchange
When the company has to deal with a change to the above regulations how does it organise this? In what way are system users affected by the change How do they get to find out about the change? (PIC 1.5)
The Finance manger and HR manager monitor all regulations and alert the business when changes are made that will affect how the business operates. Changes are implemented by ensuring all staff are made aware of the change via internal communication methods. If need be employees are trained to ensure they fully understand the changes taking place.