B-ACIS221 Final Project JULY 2020 Submitted by: Alberto, Dexter H. Cullado, Jannielle T. Monserrat, Patricia An Emmanuel Villanueva, Rodine Juverille M. BSA21
COMPANY PROFILE FGT ELECTRONICS CENTER AND RADIO COMMUNICATION SUPPLY is an authorized Radio Dealer located in Block 3 Lot 8 Almond St. Summerwind Village Phase 1, Brgy. Salitran III, City of Dasmariñas, Cavite. It is a sole proprietorship owned by Fernando G. Tolentino Jr. FGT's trained technicians are knowledgeable in all aspects of radio communication systems for a variety of industries. They understand the significance of radio communications systems, especially public safety radio equipment. As an Authorized Dealer, they supply only the highest quality radio communications systems to ensure clients the most efficient and cost-effective communications solutions. The products and services offered by FGT Electronics Center and Radio Communication Supply encompass a wide range. It includes undertaking the study, evaluation, and preparation of engineering/technical plans, bill of materials for diverse systems such as HS/SSB voice and data Network, VHF-UHF FM/AM two-way radio system from simple system to complex digital trunked radio systems, Paging System, CCTV, Building Security Management System, Weather Instrument, GEMS-Global Environmental Modeling Systems, Tower and others. FGT Electronics Center and Radio Communication Supply also have the capability to supply, deliver, install, test, In addition, and commission the system and equipment to conform to the requirement, FGT Electronics Center and Radio Communication Supply believes in the importance and value of a dependable pre-sales and reliable after service and support which will not only provide satisfaction to the users but will further enhance the prestige and reputation of the company that will eventually result in the increase in the potential volume of sales. Its mission is to expand and continually improve its services to meet customers' needs. COMPANY PROFILE 02
MISSION & VISION Mission To secure the life of people and to be one of the biggest distributors of Electronics Solutions in the country; To help Filipinos improve their living by bringing new technologies to the Philippines at an affordable price. Vision FGT Electronics Center and Radio Communication Supply continues to strive hard to become the country’s No. 1 and leading distributor in the wireless communications and security & surveillance industry, and truly, it keeps its vision of providing and making new technologies convenient and affordable to every Filipino. COMPANY HISTORY FGT Electronics Center & Radio Communication Supply is a company established by Fernando G. Tolentino in 1966. The business started with only three employees and focuses more on providing radio telecommunication equipment for security agencies. Today, the company has expanded and integrated surveillance products and IT equipment into the products offered. Moreover, they also offer installation services for the products that were acquired from the entity. As the business expanded, its human resources also increased and now has a total of 19 employees. COMPANY PROFILE 03
PRODUCTS AND SERVICES OFFERED A. Land Mobile Communication Systems VHF / UHF mobile communication unit VHF / UHF portable communication unit Voice and data terminals Voice and data communication systems VHF / UHF / HF base stations Conventional Repeater systems Leasing of communications equipment and systems Trucking systems / trucked networks / NexEdge systems and controllers Dispatch consoles / SCADA systems / alarm controllers Commercial trucked radio services Communication towers / masts (portable and fixed) B. CCTV Surveillance Solutions Home Surveillance Solutions Bank Surveillance Solutions Building Surveillance Solutions Factory Surveillance Solutions Vehicle Monitoring Solutions City Road Monitoring Solutions COMPANY PROFILE 04
PRODUCTS AND SERVICES OFFERED C. Access Controller System Solutions Prison Access Control Management System Solutions Intelligent Residential District Access Control Card System Solutions Building Access Control System Solutions Factory Access Control System Solutions Office Access Control System Solutions D. IT Equipment/Peripherals Branded Desktop/Laptop Computers Branded Network Servers Generic Desktop Computers E. Installation and Repair Services COMPANY PROFILE 05
ORGANIZATIONAL CHART FGT Electronics Center & Radio Communication Supply is a sole proprietorship owned by Mr. Fernando G. Tolentino Jr. The general manager, Mr. Gian Carlo B. Tolentino, is also in charge of overseeing its three different functions in their day-to-day operations. Employees are divided into three departments: Sales, Administration, and Technical. The Sales Department is handled by Ms. Clarence I. Genova, who is in charge of tasks such as canvassing and purchasing concerning FGT’s projects. The Technical Department, on the other hand, is responsible for the scheduling, delivery, and logistics. This department is headed by the project manager, Edgardo C. Boquiren, and is further divided under the supervisor and network engineer. Thus, the supervisor looks after two teams, each headed by senior technicians. The Administration Department, consisting of an accountant and office secretary, is tasked with the payroll function, petty cash, payments, contributions, and accounting records. The company also has a service driver assigned to accompany the personnel in meetings and depositing cheques. COMPANY PROFILE 06
FGT ELECTRONICS' CURRENT REVENUE SYSTEM Context Diagram FGT Electronics’ revenue system consists of two external entities: the local government unit or LGU and the bank. The system begins with the inflow of documents, namely the notice of award, contract, notice to proceed, and purchase request from the LGU. The system will then process these documents and schedule to deliver the goods and services required by the LGU. Once the project is delivered completely, the system will send proof of completion, allowing them to bill the LGU using a sales invoice. The LGU will then send a cheque to settle the invoiced amount together with a disbursement voucher. After a week of collecting payments in the form of cheques, FGT Electronics’ personnel will deposit these with their prepared deposit slip in the Bank, and in exchange, they will be given a validated deposit slip which will be recorded and filed in their system. SALES RETURNS The scope of this paper is limited to the services offered by the entity. Thus, sales returns are not applicable in the presentation of this revenue system. It only applies the concept of back jobs and repairs which is already included in the sales order processing of the company. Moreover, in case of any delay or unperformed portions of the project, there would be liquidated damages to the stated amount in the contract in accordance with the rules and regulations of PHILGEPS. CURRENT REVENUE SYSTEM 07
SALES ORDERS DFD Level 0 Diagram FGT Electronics' Revenue System begins with the external entity, LGU, whose inputs initiate the system consisting of five processes: Receive Project Confirmation, Prepare Delivery Schedule, Check Stock Availability, Deliver Scheduled Service, and Prepare Sales Invoice. It is important to note that FGT acquires projects through PHILGEPS, an online portal where the proposed projects by local government units or LGUs, national, and other government offices are posted. A bidding process is conducted, and if FGT wins the bid, the respective office provides them with the contract and other bidding documents, initiating the revenue system. CURRENT REVENUE SYSTEM 08
Process 1: Receive Project Confirmation FGT’s revenue system begins with the Sales department’s receipt of four bidding documents: the contract, notice of award, notice to proceed, and purchase request. Serving as proof that they won the bid, the project is then confirmed, and the bidding documents are filed in a folder. Finally, data, such as the specific LGU, project title, RFQ price, budget, contact person, delivery period, and purchase request details are extracted from the documents and flows into the succeeding process. CURRENT REVENUE SYSTEM 09
Process 2: Prepare Delivery Schedule The data from the four documents are used by the account manager to prepare the delivery schedule. The information regarding the LGU, project title, RFQ price, budget, contact person, and delivery period consolidate to form the project details and are used to update the master file. The master file is an excel file kept by the Sales department that provides a summary of all of FGT's projects. The new project is inputted into the file, and the account manager creates a schedule of deliveries. Apart from the master file, the project details flow into the following process as well. Process 3: Check Stock Availability The account manager checks on the availability of materials required for the project. A stock request is sent to the warehouse and in case of insufficient stock, the back-order file is updated to reflect the request. If stock is sufficient, the job order is created and sent by the account manager to the Technical department’s project manager. CURRENT REVENUE SYSTEM 10
Process 4: Deliver Scheduled Service Process 4.1: Check Personnel Availability The project manager from the Technical department receives the job order and checks on the availability of personnel. A personnel request is sent to the personnel log to determine which technicians are available for the schedule. A list of available technicians is created and sent to the respective project manager who handles the succeeding process. Process 4.2: Assign Service Personnel The list of available personnel is used by the project manager to assign a group of technicians who will deliver the goods and services for the project. CURRENT REVENUE SYSTEM 11
Process 4.3: Deliver Project Requirements The assigned technicians then deliver the goods and services. Depending on the scale of the project, it may take anywhere from one to two months. The duration of the project depends on what was agreed upon in the contract and the notice to proceed. Process 4.4: Update Project Progress The team leader provides delivery data to the account manager of the Sales department, who then uses it to update the project’s progress. The date of completion of delivery is inputted into the project summary of the master file. Process 4.5: Forward Delivery Documentation Once the delivery is deemed complete, the account manager produces a delivery receipt. LGUs also require extra documentation and so, proof of delivery pictures are gathered. Together, these are forwarded to the LGU. In addition, two more copies of the delivery receipt are produced, one for filing in the closed project file to finally close the completed project and the other copy flows into the billing process. CURRENT REVENUE SYSTEM 12
Process 5: Prepare Sales Invoice The copy of the delivery receipt is used as confirmation that the delivery is completed and has been received by the client. The account manager bills the client by creating the sales invoice. He writes the corresponding details regarding the goods and services delivered and the amount due. A sales invoice booklet is used, producing three copies: the original, a yellow carbonless copy, and a pink carbonless copy. The original is sent to the LGU and the two other 3copies are kept in the booklet for filing to be used later by the Admin department, where the accountant is positioned, to update the accounting records. CURRENT REVENUE SYSTEM 13
CASH RECEIPTS DFD Level 0 Diagram The cash receipts of the entity begins with the collection of cheque with a disbursement voucher from the LGU. There are a total of five processes: Collect Client Payment, Record Accounts Receivable, Post Total Receivable, Deposit Collected Cheques, and Record Amount Deposited. CURRENT REVENUE SYSTEM 14
Process 1: Collect Client Payment It may take anywhere from two weeks to a month upon completing the delivery before payment is collected. At the date of collection, the account manager will issue a collection receipt to honor the collection of payment. The LGU releases a cheque with a disbursement voucher to be signed by the receiver, the account manager from the Sales department, to pay the invoiced amount specified in the sales invoice. Upon receiving the payment, the account manager will update the master file by recording the date collected and the cheque number and the received disbursement voucher is filed on the disbursement voucher file. Process 2: Record Accounts Receivable Once the collection process is accomplished, the accountant will use the received cheque and the sales invoice copy from the sales invoice file to establish accounts receivable in the General Journal. CURRENT REVENUE SYSTEM 15
Process 3: Post Total Receivable Before every weekly deposit, the Accounts Receivable summary on the general journal is totaled and used by the accountant to post to the general ledger. CURRENT REVENUE SYSTEM 16
Process 4: Deposit Collected Cheques The cheques collected are held by the office secretary for one week before they are deposited. Before they are deposited to the bank, the office secretary will verify if the collected cheque matches the recorded accounts receivable. On the day of deposit, the cheques collected and deposit slip will be taken by the available personnel and the company driver. The account manager and office secretary are the people who may perform the act of depositing cheques in the bank. Because there is no designated depositor, the owner verbally assigns any available employee with the task of depositing the cheques. Process 5: Record Amount Deposited After depositing the checks, the bank will issue a validated deposit slip received by the 3assigned depositor who then gives it to the accountant for filing. The accountant also uses it to close the accounts receivable in the general journal and post the deposited amount in the general ledger. CURRENT REVENUE SYSTEM 17
CRITIQUE OF THE CURRENT REVENUE SYSTEM STRENGTHS 1. Maintaining a Manual and Automated Transaction Records FGT also stores company data using an excel file and specialized software. The company also maintains a master file wherein their projects for the year are indicated along with the quotation price, date of completion, and collection. Although the company keeps digital accounting records and files, they also maintain physical source documents and books of accounts as a backup. This reduces the risk of inadequate accounting records in case of the destruction of computer files. 2. Back-Up of Computer Files With files kept on the PC, there is a threat of data loss due to possible disk failures or file corruption. FGT is able to reduce this threat by syncing its computer files to Google Drive. Apart from this, having back-ups can also be helpful, especially when going out to business meetings, wherein they can use mobile phones to present and access documents and reports at ease. 3. Safeguarding of Assets FGT has CCTV cameras installed in front and inside of the warehouse. There are also cameras installed inside and outside of the main office. The owner has access to this equipment. Even if the owner is not present in the office, he would still oversee the business’s day-to-day operations. They also have a safe place inside the owner’s office, which they use to keep all their collected cheques before depositing them in the bank. This safe is watched by the office secretary in cases when the owner is not around. These practices are ideal to have a strong control measure against theft. CURRENT REVENUE SYSTEM 18
WEAKNESSES 1. Inventory Management There is no proper inventory management system in place, leading to inefficiencies whenever the Sales Department cheques and requests stock for a project. The stocks in the warehouse are kept track of manually by physical count. Apart from being a time-consuming process that decreases their efficiency, there is the risk of human errors in such manual processes. Furthermore, with no inventory management in place, the stocks are not updated automatically and real-time inventory data cannot be provided. 2. Segregation of Duties Due to the limited number of employees in the company, it is inevitable for them to assign employees to handle multiple tasks. This applies specifically to the account manager from the Sales Department who is in charge of the project, starting from the receipt of the bidding documents to the collection from the LGU. Hence, the employee is also tasked to issue the sales invoice as well as collect the payment. Moreover, the sales department/account manager has access to the accounting records of the entity. 3. Inaccurate Accounting Records The accounting records are not updated correctly. After the sales invoice copies have been generated and the cheque is received by Sales, these are passed down to the accountant from the Admin Department. Only then can accounts receivable be recorded in the general journal when the commonly accepted practice is to establish a receivable when the customer is billed. Hence, the accounts receivable should have been recorded when the Sales Department created the sales invoice. Afterward, the receivable is only deemed collected when the cheque is deposited, and the validated deposit slip has reached the accountant. Apart from this, FGT Electronics only maintains stock records for warehouse purposes and has no formal accounting records for controlling inventory. 4. Lack of Independent Verification 3 Because the company only has one accountant, she is the only person who assesses the records made by herself. Therefore, it induces a lack of independent verification in evaluating the reliability and correctness of the journal entries. This leads to the threat of undetected errors and, ultimately, inaccurate accounting records. CRITIQUE OF THE CURRENT REVENUE SYSTEM 19
5. Reconciliation The entity only applies reconciliation on the purchases and sales invoices, which the Sales Department handles. Moreover, the accountant does not perform any reconciliation on the company’s bank statement and the collection receipts that the company has obtained from accomplishing a project. Omitting this process can potentially lead to an inaccurate presentation of financial documents. 6. Inefficiency of the Scheduling Process The sales department is the one who is tasked to check the stock availability and initiate the assigning employees and scheduling of delivery service. The project details first go through the Sales department that processes the schedule and checking of stock before reaching the Technical department in charge of logistics and delivery. This can cause delays and incoordination in the delivery process. Since the schedule is created before informing the Technical department, it allows instances where a limited number of technicians and personnel are available for the delivery. Unfortunately, this setup can lead to bottlenecks and inefficiency of the company's operations. 7. No Designated Messenger to Deposit Checks There is no designated employee who is tasked with the depositing of checks to the bank. The owner is not physically present in the company’s day-to-day operations, so the designation of the person who will deposit the collections for the week is done through the means of online communication. Moreover, there are also some instances wherein depositing collections depends on the availability of the personnel. For example, if the office secretary is not available during the time of deposit, the account manager can fill in her duties. 8. Issuing Delivery Receipts Only Upon Completion FGT has no actual proof that the LGU has received partial deliveries. This can bring about 3issues in case of complaints of incomplete or inaccurate deliveries. FGT would also have no assurance or proof that the technicians actually delivered the goods to the LGU, allowing the possibility of fraud or theft. CRITIQUE OF THE CURRENT REVENUE SYSTEM 20
RECOMMENDED REVENUE SYSTEM FOR FGT ELECTRONICS Context Diagram Identical to the current system, FGT Electronics’ revenue system consists of two external entities: the local government unit or LGU and the bank. The system begins with the inflow of documents, namely the notice of award, contract, notice to proceed, and purchase request from the LGU. The system will then process these documents and schedule to deliver the goods and services required by the LGU. Once the project is delivered completely, the system will send proof of completion, allowing them to bill the LGU using a sales invoice. The LGU will then send a cheque to settle the invoiced amount together with a disbursement voucher. Upon receiving the payment, the system will issue a collection receipt to the LGU, validating that the payment has been received. After a week of collecting payments in the form of cheques, FGT Electronics’ personnel will deposit these with their prepared deposit slip in the Bank, and in exchange, they will be given a validated deposit slip which will be recorded and filed in their system. SALES RETURNS The scope of this paper is limited to the services offered by the entity. Thus, sales returns are not applicable in the presentation of this revenue system. It only applies the concept of back jobs and repairs which is already included in the sales order processing of the company. Moreover, in case of any delay or unperformed portions of the project, there would be liquidated damages to the stated amount in the contract in accordance with the rules and regulations of PHILGEPS. RECOMMENDED REVENUE SYSTEM 21
SALES ORDERS DFD Level 0 Diagram FGT Electronics' recommended Revenue System begins with the external entity, LGU, whose inputs initiate the system consisting of eight processes: Receive Project Order, Create Sales Order, Arrange Project Delivery, Schedule Delivery Date, Deliver Scheduled Service, Prepare Sales Invoice, Update Inventory Records, and Post Accounts Receivable. Likewise, it is important to note that FGT acquires projects through PHILGEPS, an online portal where the proposed projects by local government units or LGUs, national, and other government offices are posted. A bidding process is conducted, and if FGT wins the bid, the respective office provides them with the contract and other bidding documents, initiating the revenue system. RECOMMENDED REVENUE SYSTEM 22
Process 1: Receive Project Order The recommended revenue system will also begin with the Sales department’s account manager receiving the four documents: the contract, the notice of award, the notice to proceed, and purchase request which are proof that the company won the bidding. These four documents are filed in a folder and from these, the purchase request details and the delivery period are extracted. Then, the purchase request details will be retrieved by the account that flows to create the sales order. Finally, the delivery period stated in the contract will also be sent to arrange the project. Process 2: Create Sales Order The purchase request details that are extracted from the purchase request given by the LGU will be used by the account manager to create a sales order. The original copy of the sales order will be filed in a folder and later be used for referencing purposes. Two copies of the sales order will be generated, one will be used to update the master file and the other copy is sent to the succeeding process. RECOMMENDED REVENUE SYSTEM 23
Process 3: Arrange Project Delivery Process 3.1: Create New Project The delivery period taken from the contract and the sales order copy 2 will be used by the account manager to create a new project. The project details and duration of the delivery are sent to the project manager of the Technical department while the information regarding the required materials for the project will be used by the Sales department in the succeeding process. Process 3.2: Check Stock Availability Upon creating a new project, the list of materials required will be sent to the account manager, allowing him to check whether the materials needed in the project are available. Thus, a stock request will go to the inventory management system software to display the updated amount of stock in the warehouse. In case that the stocks are insufficient, the back-order file will be updated to reflect the request. However, if the stocks in the warehouse are sufficient, the availability of stocks is sent to the process of creating a job order. RECOMMENDED REVENUE SYSTEM 24
Process 3.3: Check Personnel Availability The project manager from the Technical department will check on the availability of personnel after receiving the details of the newly created project. The project manager will then send a personnel request to the personnel log to determine which technicians are available. A list of available technicians is created and received by the project manager who also handles the succeeding process. Process 3.4: Assign Service Personnel The project manager will assign technicians to deliver the goods or services using the available personnel list. The assigned personnel list is sent to the account manager of the Sales Department. Process 3.5: Create Job Order Upon confirming available stock in the warehouse and the assigned personnel to deliver the project, the account manager creates a job order that is then sent to the Technical department’s project manager. RECOMMENDED REVENUE SYSTEM 25
Process 4: Schedule Delivery Date The project manager will receive the job order to create a delivery schedule. Once the schedule has been prepared, the details will be sent to the team leader of the assigned technicians who will deliver the goods and services to the LGU. In the event of incomplete deliveries or defective installed units, the team leader will prepare a back job report, which will be forwarded to the project manager to schedule a new delivery date. RECOMMENDED REVENUE SYSTEM 26
Process 5: Deliver Scheduled Service Process 5.1: Deliver Project Requirements Upon receiving the schedule details, the Technical department, specifically the assigned technicians will deliver the goods and services to the LGU according to the schedule. A delivery receipt in two copies prepared by the team leader will accompany the delivery. The original copy will be sent to the LGU while the other copy is used in the next processes. RECOMMENDED REVENUE SYSTEM 27
Process 5.2: Update Delivery Progress After the delivery, the Technical department will use the delivery receipt copy to update the delivery progress. If the delivery was incomplete or if there are any reported defective installed units, the project manager would set up a new delivery schedule to fulfill the back jobs. In cases that the project has already been fulfilled, the team leader will submit the delivery receipts to the account manager as well as a report stating that the project is completely delivered. Process 5.3: Compile Delivery Receipts The account manager will compile all the delivery receipts relating to the project. These receipts will be filed in the closed project file. The master file will also be updated with the date of completion of the project from the last delivery receipt. Process 5.4: Forward Delivery Documentation Reports regarding the accomplished project will be used by the account manager to forward the proof of delivery to the LGU. This includes photos that serve as extra documentation and proof of delivery. RECOMMENDED REVENUE SYSTEM 28
Process 6: Prepare Sales Invoice Once the project is completely delivered, the compiled delivery receipts and sales order will be used to prepare the sales invoice. The account manager will verify if the amounts indicated on the sales order and delivery receipts are equal. Once the amounts are equal, three copies of the sales invoice will be produced by the account manager. The original copy of the sales invoice is sent to the LGU. A copy of the sales receipt will be used to establish accounts receivable and the details of the sale transaction will be recorded in the sales journal. Further, the billed amount which was obtained from the prepared sales invoices will be used in one of the next processes. RECOMMENDED REVENUE SYSTEM 29
Process 7: Update Inventory Records Using the total quantity of stocks released indicated in the sales invoice, the adjustment in inventory will be recorded in the general journal by the accountant. Process 8: Post Accounts Receivable The accountant receives the Accounts Receivable summary report prepared by the bookkeeper and posts it to the Accounts Receivable control account. RECOMMENDED REVENUE SYSTEM 30
CASH RECEIPTS DFD Level 0 Diagram The cash receipts of the recommended revenue system begins with the collection of cheque and disbursement voucher from the LGU and the entity’s issuance of collection receipt. The recommended process is composed of a total of 6 processes: Collect Client Payment, Record Received Payment, Update General Journal, Reconcile Collected Cheques, Deposit Collected Cheques and File Deposit Slip. RECOMMENDED REVENUE SYSTEM 31
Process 1: Collect Client Payment The billed amount is used to prepare 2 copies of the collection receipt. The original collection receipt is sent to the LGU while the copy is used in the subsequent process. The LGU will release a cheque along with the disbursement voucher and the account manager will give them a collection receipt as confirmation of receipt of payment. After the collection, the cheque number and date collected are recorded in the master file and the cheque will be utilized in the subsequent process. Meanwhile, the disbursement voucher is filed in its respective folder in case it is needed in the bidding process for future projects. RECOMMENDED REVENUE SYSTEM 32
Process 2: Record Received Payment The cheque is used by the accountant to record the amount paid by the LGU in the cash receipts journal Process 3: Update General Ledger The accountant also uses the amount paid by the LGU to update the general ledger. RECOMMENDED REVENUE SYSTEM 33
Process 4: Reconcile Collected Cheques Before the weekly deposit of the collected cheques, the office secretary, who is the only one who has access to the safe apart from the owner, reconciles the collected cheques. This is done by comparing the validated cheques with the cheque numbers saved in the master file to ensure that there are no missing cheques. Process 5: Deposit Collected Cheques The total collected amount from the previous process will be used to prepare the deposit slip. The personnel who will perform the deposit will record their name, amount to be deposited, the deposit date, and signature in the In/Out log. This measure will serve as a control for the entity in case of untoward incidents and accountability. After recording in the log, the cheque custodian will now go to the bank with the company driver and deposit the cheques along with their prepared deposit slip. Process 6: File Deposit Slip The bank will release a validated deposit slip, which will be sent to the office secretary of the Admin department for filing in the deposit slips file. RECOMMENDED REVENUE SYSTEM 34
DIFFERENCES WITH THE CURRENT SYSTEM AND RATIONALE 1. Inventory Management System Using Barcode Technology FGT Electronics does not implement an efficient means of maintaining and monitoring its inventory systems, considering the volume systems that they purchase and release in their everyday operations. As a result, the company still makes use of a manual system of recording inventory, which is labor-intensive. Integrating an inventory management system using barcode technology would aid the business in increasing the efficiency and productivity of the business cycle. Moreover, it can help reduce the chances of committing errors in recording the entity’s stock since the software generates the stock reports. There is also an ease of access in monitoring the stocks going in and out of the warehouse, making the data produced to be accurate in making accounting records. DIFFERENCES WITH THE CURRENT SYSTEM AND RATIONALE 35
2. Transcription of Customer's Purchase Request into Sales Order In the current system, the Sales department receives the four documents from the LGU and retrieves data to input the new project into the master file. However, a formal sales order is not created by the account manager. By modifying the system to include the transcription of the purchase request and other bidding documents, the project's details will be in a format that the system can use in the process. As part of the audit trail, sales orders are transaction files that may also be used in the billing process. In our recommended system, it is reconciled with the delivery receipt copy in order to create the sales invoice. This ensures that the project has been completely delivered and that the delivered goods match those ordered. This prevents problems related with incomplete goods that can cause confusion and require additional processing in order to make adjustments. DIFFERENCES WITH THE CURRENT SYSTEM AND RATIONALE 36
3. Hiring an Accountant The company has an accountant that does not have sufficient knowledge regarding the flow of business documents and accounting techniques applied in the ordinary course of the business. Moreover, the accountant of the company mentioned that she is not an accountant. Hiring a competent accountant is advantageous for the firm since business transactions and records play a crucial role in business operations. Therefore, it is essential that the person handling those records is knowledgeable and embodies professional ethics in dealing with business transactions. It is recommended that FGT hires one with a CPA license. The company is recommended to either keep the existing accountant and change their position to an accounting assistant, or replace them with another accountant who is more knowledgeable though without a CPA license or has at least taken up accounting-related courses. Processes 6 to 8 of the Recommended Sales Orders DFD In line with this recommendation, the recommended system revises FGT's recordkeeping processes to be more accurate and in accordance with commonly accepted accounting practices. In the current system, the receivable is recorded in the general journal after FGT has received the cheque from the LGU. Whereas in the recommended system, the receivable is recognized after the preparation of the sales invoice by recording the sales in the sales journal. This is the appropriate process because the receivable should not be recognized after receiving the payment. DIFFERENCES WITH THE CURRENT SYSTEM AND RATIONALE 37
Apart from this, the recommended system also includes accounting records for inventory control that the current system lacks. The adjusting of inventory accounting records is done after preparing the sales invoice and recording the sales in the sales journal. The reviewed stock release from the preparation of the sales invoice is used to update the inventory by recording the adjustment in the general journal. By maintaining formal accounting records for inventory, the entity would have accurate records, control over inventory, and be able to maintain the audit trail. Processes 2 to 3 of the Recommended Cash Receipts DFD After the check is received and a collection receipt has been issued, the received cheque is now used to record the payment received from the LGU. It is recorded in the cash receipts journal and used to update the general ledger. In the current system, the receivable is established upon receipt of the cheque. Recording the collection of a receivable upon receiving the payment is a more acceptable way of recording collections. By implementing these accounting processes, FGT will be able to have accurate and reliable accounting records and information. DIFFERENCES WITH THE CURRENT SYSTEM AND RATIONALE 38
4. Coordinating the Scheduling Processes In the current system, the project details first go through the Sales department that processes the schedule and checking of stock before reaching the Technical department in charge of logistics and delivery. This can cause a delay in the delivery because the processes are not coordinated with one another. Since the schedule is created first, it allows instances where a limited number of technicians and personnel are available for the delivery. The recommended system modifies the scheduling process by coordinating the processes of both the Sales and Technical departments. What differs is that project details would also flow to the Technical department as early as creating the new project in the master file. Therefore, the account manager would check on the stock availability while the project manager cheques on personnel availability and assigns technicians to the project. The list of assigned personnel and confirmation of available stock would then flow to the process of creating a job order. By coordinating the processes this way, the mentioned delays and bottlenecks can be prevented because The job order cannot be created without confirmation from both departments. DIFFERENCES WITH THE CURRENT SYSTEM AND RATIONALE 39
5. In/Out Log Considering how there is no designated messenger to deposit the checks in the bank and the assigning of the task has no formal records, it is recommended that an In/Out log is introduced to the system. It is especially crucial to maintain a log because the person who makes the deposit varies every time, making it difficult to trace who has access to the checks. Hence, the In/Out log will act as a control measure that can trace whoever is assigned to make the deposit to the bank and hold them accountable. 6. Reconciliation of Cheques The recommended system implemented the reconciliation of collected cheques before they get deposited to the bank. The cheques are compared with the cheque numbers listed in the master list as a way to verify the completeness. By doing so, any lost or misdirected cheques can be identified and action regarding them can be taken immediately. DIFFERENCES WITH THE CURRENT SYSTEM AND RATIONALE 40
7. Issuing a Delivery Receipt Every Delivery In the current system, a delivery receipt is only issued upon the completion of the project. FGT has no actual proof that the LGU has received partial deliveries. This can bring about issues in case of complaints of incomplete or inaccurate deliveries. FGT would also have no assurance or proof that the technicians actually delivered the goods and services to the LGU, allowing the possibility of fraud or theft. Hence, it is recommended that a delivery receipt is issued every delivery in order to have assurance that goods are rightfully received by the LGU and as proof in case discrepancies arise. 8. Hiring More Employees Aside from hiring another accountant, it is suggested that more employees are hired. Employees from other departments often have to fill in the duties whenever there is too much workload during the week. This action can also mitigate the possible collusion between employees. Moreover, it can also help in increasing productivity and efficiency in accomplishing the project. DIFFERENCES WITH THE CURRENT SYSTEM AND RATIONALE 41 41
RELATED COSTS Thermal Printer P 10,500.00 P 138.00 Barcode labels (60 mm x 40 mm) 800 pcs per roll, 3 pcs per pack Handheld barcode scanner P 3,500.00 Barcode inventory software P 200.00 (Quickbooks) per month Additional utilities expense related with P 20.84 the use of thermal printer and handheld per month barcode scanner Salary of w/ CPA license P 826.00 (Accounting Officer) per day Salary of w/o CPA license P 657.00 (Accounting Assistant) per day Salary of additional employees P 373.00 (Sales Department) per day In/Out Log Recordbook (150 pp.) P 49.00 RELATED COSTS 42
The implementation of an inventory management system using barcode technology requires a thermal printer, barcode labels, a handheld barcode scanner, and a barcode inventory software. Though there are plenty of inventory management softwares, Quickbooks is used as the recommended software because of the value it provides as well it is well known. The additional utilities expense related with the use of the thermal printer was calculated based on the assumption that it will be used an hour a day for three days every week, totaling to P20.26 per month. Meanwhile, the additional utilities expense related with the use of the handheld barcode scanner was calculated based on the assumption that it will be charged for 5 hours once every two weeks, totaling to P0.58 per month. With four to five hours of charging time, a full charge of the barcode scanner allows for twenty hours of use that can last two weeks. The salary of additional employees is the minimum wage in Dasmariñas City where FGT's office is located. Accounting Officer Qualifications: · Bachelor’s degree in Accounting required (CPA) · +1-3 years Accounting experience in any industry · Proficient in Excel & Quickbooks · Experience with financial · Ability to work with all levels of management and personnel · Strong written and oral communication and organizational skills Accounting Assistant Qualifications · Bachelor's degree in accounting or related field · 3+ years of experience in related field · Must be proficient in Microsoft Office suite and QuickBooks. · You must have good Excel skills. · You must have strong organizational and analytical skills. RELATED COSTS 43
APPENDICES APPENDIX A Picture with Ms. Clarence I. Genova, the Account Manager/Sales of FGT Electronics. APPENDIX 44
APPENDIX B Sample Forms and Reports Contract APPENDIX 45
Notice to Proceed 46 APPENDIX
Notice of Award APPENDIX 47
Purchase Request 48 APPENDIX
Disbursement Voucher APPENDIX 49
Delivery Receipt APPENDIX 50
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