Internal Controls and Accounting Systems
Malcolm Green MAAT TEP FInstSMM
Chairperson
AAT Birmingham branch
www.aatbirmingham.org.uk
Aims and Objectives
• To understand the learning outcomes and
assessment criteria
• To know what makes a good report
• To give ideas for a project theme
www.aatbirmingham.org.uk
The ICAS Project Report - Style
• Written formal report in the third person
context in business English to management
• Based on workplace or AAT case study
• Structured layout with numbered sections
and paragraphs
• abbreviations only to be used after the full
word has been used
• Cross referenced to mapping criteria
www.aatbirmingham.org.uk
The ICAS Project Report
• 4,000 WORDS(+/-10%)
www.aatbirmingham.org.uk
Eat The Elephant
www.aatbirmingham.org.uk
Eat The Elephant
www.aatbirmingham.org.uk
What does 4,000 words look like?
•One sentence contains an average of 11
words and one A4 sheet contains an average
of 32 to 35 sentences.
•An A4 sheet has an average of 350 to 400
words.
•Around 10 pages for just content
•15 pages+ in report format with section
headings etc
www.aatbirmingham.org.uk
AAT - ICAS Report Quick Start Guide
Total Word Count?
Excluding any Appendices
www.aatbirmingham.org.uk
Internal Controls and Accounting System
1. Report - Full coverage of Unit
2. Mapping of all evidence
www.aatbirmingham.org.uk
ICAS - Assessment Criteria
Principles of Internal Controls – 3 Credits 40%
Evaluating the accounting system – 4 Credits 60%
• One credit = 10 hours of notional study
• 70 hours +/- work required
• Considerably less possible with a focused PUSH!
• Sooner YOU start the sooner YOU finish
www.aatbirmingham.org.uk
Principles of Internal Controls (Knowledge)
1. Demonstrate an Understanding of the role of
accounting within the organisation (5AC)
2. Understand the Importance and use of
internal control systems (4AC)
3. Be able to identify and use the appropriate
accounting systems to meet specific
organisational requirements (4AC)
www.aatbirmingham.org.uk
Evaluating the Accounting system (Skills)
1. Evaluate the accounting system and identify
areas for improvement (5AC)
2. Make recommendation to improve the
accounting system (4AC)
www.aatbirmingham.org.uk
SMART- Project Planning
Specific – Title, theme and terms of reference
Measurable- Reviewing systems and processes
Achievable – Implementation of recommendations
Realistic – Benefit for the organisation ROI/CBA
Time bound – ICAS Project Time Management
www.aatbirmingham.org.uk
ICAS – Time Management
• Planning and background reading
• Researching testing and monitoring
systems
• Completing and collating findings
• Writing the first draft
• Checking and re drafting
• Final report numbering and mapping
www.aatbirmingham.org.uk
Identifying a Project Theme
•
•
•
•
•
•
Problem areas in the work place
Customer complaints
What could be improved?
Discussions with past students
Discuss ideas with a mentor or other colleagues
What would you do if you were the manager?
Identifying a Project Theme
Starting point ideas:
•
•
•
•
•
•
•
•
•
•
•
Improvements to the cash flow of XYZ organisation
Methods to optimise use and reduce levels of inventory holdings in a manufacturing company
Recommendations for the computerisation of a payroll department
Recommendations to move from HMRC payroll support to a commercial software package
Recommendations to move from weekly pay to monthly pay following the introduction of Real Time
Information (RTI)
Improvements to company documentation to aid customer satisfaction
Writing security procedures for protection against fraud for a large organisation
Reviewing working methods in a local council cash office
Reviewing the benefits of switching or upgrading existing accounts software package
Recommendations to reduce the debtor collection day average
Recommendation to move to online filing of tax returns
Getting Started
To produce a good report requires Effort
Content must be:
Clear, Concise and Accurate!
Convey an image of Total Professionalism
Great effort goes into the Preparatory Work
BUT the ‘Look’ of the document should not
be forgotten
www.aatbirmingham.org.uk
Report Writing Tools
Make use of what Microsoft Word™ has to offer:
•Spell check and Grammar check (UK)
•Thesaurus
•Report Templates
•Justify text to ensure a consistent look throughout
•Check font size, style and headings are consistent
•Get the help of a prof reader
www.aatbirmingham.org.uk
Grammar Check-what’s wrong?
I met the Managing Director at Heathrow
Airport where he showed me the Hose Jettison
Unit. Later we walked over the Waterloo
Bridge and bumped into the archbishop of
Canterbury and the Chancellor of the
Exchequer, who had just raised Income Tax in
the Budget
www.aatbirmingham.org.uk
Grammar Check- Corrected
I met the managing director at Heathrow
airport where he showed me the hose jettison
unit. Later we walked over the Waterloo bridge
and bumped into the Archbishop of Canterbury
and the chancellor of the exchequer, who had
just raised income tax in the Budget
www.aatbirmingham.org.uk
Grammar Check- Corrected
I met the managing director at Heathrow
airport where he showed me the hose jettison
unit. Later we walked over the Waterloo bridge
and bumped into the Archbishop of Canterbury
and the chancellor of the exchequer, who had
just raised income tax in the Budget
www.aatbirmingham.org.uk
Pa
Word Bank: Connections Between Paragraphs
Signposts/Cues for the Reader
Additional Info
And
Further
Moreover
Again
Next
What’s more
Also
In addition
Equally important
Conclusion
Therefore
Thus
In conclusion
Consequently
On the whole
As a result
Hence
In brief
Details/
Emphasis
In fact
For example
For instance
To illustrate
Indeed
In other words
In short
Obviously
That is
Contrast
However
But
Although
Nonetheless
In contrast
Meanwhile
Yet
On the other
hand
Conversely
Chronology
Soon
Afterwards
Finally
Then
Previously
Formerly
Next
Immediately
•
•
•
•
•
•
•
•
•
•
Layout of the report
Title Page
Executive Summary
Terms of Reference
Methodology
Introduction
Review of System
Weaknesses
Recommendations for Improvement
Cost Benefit Analysis
Appendices
Report Numbering Structure
An example: decimal notation system
1. Introduction (Heading first main section)
1.1 (Second order heading)
1.1.1 (Third order heading)
1.2 (Second order heading)
1.2.1 (Third order heading)
2. Methodology (Heading second main section)
2.1 (Second order heading)
2.1.1 (Third order heading) www.aatbirmingham.org.uk
References
It is important that you give precise details of all the work by other authors which
has been referred to within the report. Details should include :
• author’s name and initials
• date of publication
• title of the book, paper or journal
• publisher
• place of publication
• page numbers
• details of the journal volume in which the article has appeared.
References should be listed in alphabetical order of the authors' names.
Make sure that your references are accurate and comprehensive.
www.aatbirmingham.org.uk
Appendices
•Appendices not counted in your word count
•They allow you to add supporting information to your report.
•You can attach spreadsheets, questionnaires, tables, charts
•anything that will support the content of your report
•Appendices are usually numbered using Roman Numerals
•select the font style ‘Times New Roman’
•Appendix I
•Appendix II
•Appendix III
•Appendix IV
www.aatbirmingham.org.uk
What to include
The following areas must be covered in the review:
• Record keeping systems
– the purpose of financial reports, and the suitability of the
organisation’s current reports to meet organisational needs
• Internal systems of control
– identify how internal control supports the accounting system
and the types of internal control in place, and any controls
that are missing
What to include
• Working methods/practices
– including the use of appropriate computer
software, and the operating methods in terms
of reliability, speed and cost effectiveness
• Training
– Identify how training is or not used to support
staff
What to include
Weaknesses
• Identify weaknesses
• Potential areas for errors and fraud
– Time, money and reputational risk
• Impact upon the organisation
– Wasting resources, loss of revenue and customer
expectations
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
www.aatbirmingham.org.uk
SWOT Analysis
• Indentify what the organisation is good at
• Identify a weakness in the organisation
• What are the opportunities available to the
organisation
• Impact /Threat upon the organisation
www.aatbirmingham.org.uk
What to include
Weaknesses
Fraud – Definition
1. deliberate deception, trickery, or cheating intended to gain an advantage
2. an act or instance of such deception
3. something false or spurious his explanation was a fraud
4. Informal a person who acts in a false or deceitful way
[from Old French fraude, from Latin fraus deception]
Collins English Dictionary –Complete and Unabridged ©
HarperCollins Publishers 1991, 1994, 1998, 2000, 2003
Weaknesses
What to include
• Causes of fraud, common types of fraud, methods used to detect
fraud and potential areas for fraud within the organisation.
• Examples:
–
–
–
–
–
–
–
–
–
Falsely claiming to be off sick
Getting a friend to clock on and off for you
Claiming for overtime not worked
Claiming for expenses not incurred
Claiming for time/work not done/completed
Fictitious employees
Fictitious invoices/receipts
Theft of inventory/stock /materials
Theft of cash from tills/petty cash/vending machines
What to include
Recommendations for improvement
• For every weakness identified there should be a
recommendation
– The effect that the changes have on the organisation
– The effect that the changes have on staff and any
training that will be needed
What to include
• At least one recommendation made should have
a Cost Benefit Analysis (CBA)
www.aatbirmingham.org.uk
Cost Benefit Analysis (CBA)
• Not all benefits are quantifiable all costs are
• Assumptions or guesstimates allocate costs to
time unknown salaries or any other unknown
expense
• All benefits should be identified including
those which cannot be allocated a financial
figure
www.aatbirmingham.org.uk
ICAS - Competent or Not Yet Competent
You have up to five submissions to get it RIGHT!
• Average is around 2/3
Common Problem Areas for NYC
• Report not laid out correctly and numbered
• CBA not realistic and lack of monetary values (£)
• Fraud not fully covered or graded
• Mapping document not fully completed
All easy to fix and finish off you ICAS project
www.aatbirmingham.org.uk
Internal Controls and Accounting Systems
Malcolm Green MAAT TEP FInstSMM
Chairperson
AAT Birmingham branch
www.aatbirmingham.org.uk