Audit Theory Accounting Work

Question: Discuss about theAudit Theoryfor Accounting Work. Answer: In the present case, Sally is a junior trainee who is involved into banking as well as accounting work. The accountability is of Max and Betty instead of Sally. Though Sally is responsible for doing all works related to banking and accounts however he is only a trainee and the management should always be responsible for reviewing the work of the junior trainee. The management should be reviewing whether the customers are giving payments on time, whether contracts are made with the customers on time or not. In the past 3 years, the management has only concentrated in growing their business. However, the reason for lower cash flow has yet not been diagnosed by them. The client statements have not been issued to the customers for the last four months (Horngren, 2011). This has resulted in lower cash receipts from the customers. The entries made are not in the manner it should have been. Proper journals should have been passed so that at a glance the data can be reviewed (Hopper Bui, 20 16). This clearly shows a poor control of the management and that the attitude towards the functionality of the staff is reluctant. Though the operational part and gaining sales is important for the business, however, to maintain the same the accounting part is equally important. There should be proper review structure in the management of the business. The duties of Max and Betty should be segregated. Work load of Sally should also be lessened. Betty or Max should take up the responsibility of reviewing the work that is whether the billing is done in proper time or not. Timelines should be set to complete a particular set of work. As in the invoice should be raised within 2 days of completion of service. Proper follow up process should be initiated to ensure that the payment is received on time. Proper accounts should be reviewed that is profit and loss account should be reviewed on a monthly basis to ensure the company is earning money to have a proper gross margin and a net profit margin. The customer wise data analysis should be done and a comparative statement should be made wherein the management can view and compare the sales and duration of time for receipt of payment. In this manner, the company will be able to maintain a positive cash flow also (Dru ry, 2013). The management will be able to devote its time to high paying customer too instead of doing small jobs which take more time and are paying less. The part timer who assists Betty with the sales should be allocated with the sending of contracts and invoices which are generated by Sally. So that the movement time of Sally is reduced and Sally gets more time in preparation of contracts and making statements of clients (Vause, 2009). In this case, even Betty will be able to know from which customer the payment needs to be collected. Thus the collection process will also improve as the payment will start coming at the earlier time as the statements will be submitted on time to the customers. References Drury, C. M 2013, Management and cost accounting, Springer. Hopper, T., Bui, B 2016, Has management accounting research been critical?. Management Accounting Research, vol. 31, pp. 10-30. Horngren, C 2011, Cost accounting, Frenchs Forest, N.S.W.: Pearson Australia. Vause, B 2009, Guide to Analysing Companies, Bloomberg Press