1. Business Description, Products and Customers
This report majorly covers the processes that shall be used to strengthen the internal controls at Xavier's pharmaceutical company. The report discusses a work that is to be started and completed by Xavier's company that deals with the manufacture of drugs. The main parties involved in the preparation of the report are Mr. Bob Johnson (the company Chief Executive Officer) and myself (The chairman). The preparations of this report are based on the control methods and various information from the parties involved in the process of internal control from Xavier's pharmaceutical company and also regarding the request by the senior management for an internal audit work.
Basically, the report premises on the rules in France published in the year 2007 January by the French Financial Markets Authority. The rules are subsequently considered based on their use by the management to perform the following functions: comply with the laws and regulations, fix instructions by the senior most management, ensure up to date the company internal processes are active and to publish reliable financial records by the Xervers pharmaceutical company. The report is also useful in ensuring that the company controls its activities, carry on efficiently and even manage its resources adequately taking into consideration the need for compliance and risks management. Therefore, the internal audit is deemed very necessary for the company. The audits are to be conducted in the main groups and other departments involved in the business’s sales and production. This detail includes the internal audits to be carried at the production laboratories and the support sectors. Audits will also be transported in the distribution companies affiliated with Xavier's and even to the fewer details compared to the labs. However, we are aware that the internal audits cannot provide us with a sure guarantee of the achievement of Company’s goals and that risk of failure do not occur.
Conceivably, Lille France, a town that has a total population of about 230,000 people is the target market for the drug. The company’s products include Maropitant which is a drug used to control too much vomiting among the cattle, Marbofloxacin which works as an antibiotic in the livestock and finally the Metacom drug which is utilized in the animals to reduce skin swelling and irritations plus pain. Our primary customers are the veterinary Doctors who buy such drugs from us and the nearby Pharmaceutical shops who buy in large scale for retail services. Other services that we offer include a center to train on the usage of our products, demonstrations on the drugs usage and drug storage awaiting sales.
2. The Accounting Cycle
Considerably, the accounting cycle comprises of the business owners, the units from the government, creditors and even the financial analysts, the managers who provide plans, controls and makes decisions from the reports, budget, and costs at the start and end of production regarding handling finance. The person involved in the accounting process require having an operating licence as Certified Public Accountant. The cycle entails the auditing process, tax provisions, and even the consultation services. The audit functions include the examinations in the various financial transactions, and financial report systems with the aim of providing accurate statements. The tax provision step comprises the preparation of the tax and filing the tax records and telling the management of any consequences of any evasion. The final step includes the evaluation of the production services by check on the financial information systems used to make the products. They will work to help in evaluating product cost, budgeting, pricing and other investment alternatives.
3. Detailed explanation of the accounting records, Format and Personnel Responsible
The nature of accounting involves the use of fundamental financial equation which states that assets are equal righted. The liabilities plus capital; the property or assets refer to the cash, drugs which are the inventories, land, buildings, machines and equipment and even any other copyrighted products. The liabilities apply to the loans, credits and other needs arising during the production process. The interests also form part of this equation. The documents created include the balance sheet which the most important in the accounting system and tells how the business progresses and performs as per a given financial year. The income statement summary of revenues and expenses for a particular period are kept by the business yearly. The declaration of the retained earnings in the balance sheet annually by the enterprise, the statement of cash flows held by the firm and illustrates how money flows in and out of business and general ledger maintained by the merchandise to show the particular company cash, assists, equity, liabilities, revenues, and dividends. The company manages its records through a hired manager, that is a general accountant and the financial managers. The record kept include the balance sheet which has the title as the business name, the period of the firm, the date of preparation and the two columns where the recording of the assets occur is on the right and first column, and the liabilities plus the capital recorded on the left side of the Column.
Logically, the ledgers are documents prepared to illustrate the individual items in the business and when they were bought, sold or received developed by the general and financial managers. They have a title, date, debit and credit columns to show the type of transaction the company undertook. The cash flow statements have title, date and two major parts which illustrate the amount of money spent out and that which enters into the business.
About business roles, it also keeps the journals which are controlled by the general manager to keep the assets and liabilities history. It has three major parts from the title and the date, which includes the item description, debit column, and the credit column. The other document kept by the financial manager is the trial balance which helps to detect any error in the assists and liabilities balance. It has three primary columns apart from the date and the title which include the item, assets and the liabilities column.
4. Good documentation practices in pharmaceutical industry
Normally, just like any other commercial institution; there are financial officers in charge of receiving receipts of sales and payments from the debtors. Ones this is done, recording and proper documentation is done on the appropriate ledgers so as to balance the accounts and for the sake of transparency, accountability and for further accounting summary. Additionally, within a similar department there are heads who process the financial issues at a different level in order to come up with a clear judgement pertaining the profits or losses of the institution based on the comparison of revenues and expenses involved in the process of producing drugs.
5. Accounting Methods utilized for inventory and other Asset management and control.
The store managers keep the company's inventories through the data recording officials who keeps on tracking the number of drugs on the shelves, their dates of production and expiry, quantities, and nature. The inventory data sheet contains all these records. The procurement office regulates and controls the value of exports through tracking the number of drugs going in and out of the store.
6. Descriptions of objectives of external and internal audit function
The company has a coordinated website through which issuance of receipts for any sales made by cash is done; the finance manager first signs any cheque received before acceptance as valid payments. The auditing officer follows these steps at the end of every year, takes cheques, match them with the records on the bank statement, compares to find if there is any difference in figures. In the case of the existence of any value differences, it implies there is an accounting error. The cheques are then cleared in the register after which a cross checking is done on the miscellaneous account debit column and the credit column on the statements; then they are added or subtracted to find the differences after which stapling for filing is accomplished. The external audit functions are carried on the companies records to ensure that the statements made are nor altered in either way by misquotations from unfaithful employees. It is also important to ensure that the audit functions meet the accounting policies and frameworks.
The internal audit control contends with a lot of difficulties not limited to the lack of general internal control requirements and guidelines to manage the different processes by the board and managements services. There is uncertainties in the focused issues which are considered more important, unclear objectives, lack of means to assess the internal control procedures and performance and finally the lack of records to follow compliance and performance of the company employees. Nevertheless, the company is determined to put in place the comprehensive system of internal control to make it easier in assessing the management and the board to strengthen the weaknesses mentioned above.
In emphasis, it is important to ensure that the focus remains on the most crucial issues during an internal audit and finally to ensure that all company management and departmental levels become assessed. The evaluation is to determine whether theere are procedures put in place and controls are all functional.
In summary, Proper maintenance of internal controls are some of the essential mechanisms in ensuring success and future growth of the business.It is therefore important for the business to carry out proper financial recording and auditing in order to ensure transparency and accountability; at the same time be able to come up with clear financial summary that is helpful to the business as far as investment and loaning from other financial institutions are concerned.
Cite this page
Internal controls financial reporting. (2018, Feb 14). Retrieved from https://speedypaper.com/essays/101-internal-controls-financial-reporting
If you are the original author of this essay and no longer wish to have it published on the SpeedyPaper website, please click below to request its removal: