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1.1 Scope and Purpose

The project is being undertaken to establish more understanding of the accounting
aspects of the companys processes, specifically in their general-ledger process. This is
intended to understand thoroughly how this particular process is operated.

In connection to this, the following specific purposes are developed:

To understand the Accounting Information System used by the company and
the manner it is operated
To understand the flow of their general-ledger process and its significance to
the companys external and internal reporting functions
To analyze control issues and control plans associated with the process, its
application and implementation
To propose changes to the process to improve companys operational and
information process effectiveness.
To be able to provide assurance to end users as to the credibility of the
output generated by the management through its Accounting Information
System
To be able to evaluate the usefulness of the information provided by the
companys accounting system in the decision making of the management
To know of the controls the management are implementing towards their
employees, especially accountants, as to the quality of their work

In order to have a thorough understanding of this, the group conducts interview
with the client. The group expects from the client to participate in the project and agree
on the process to be studied and to disclose the necessary information needed. This
includes providing a detailed information of the general-ledger process through giving
narrative examples of specific activities this process is applied. The flow and the way it
is operated may be pictured out. The people involved, and the controls placed may be
ascertained.

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After considering the accumulated data gathered, the group will formulate
proposals which may possibly help the management on improving the flow of their
operations.The recommended actions if implemented may result to a more efficient and
effective accounting process. Additional controls may be proposed when a need to do
so is sought.

The implementation of the recommendations we provide to the company is at
their discretion. They may either take it into consideration or undergo further study
about it to ascertain whether it will benefit them or not.






















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1.2 Planned use of company resources
Interviewees:

Ms. Lourdes Bett - Accounting Supervisor
Ms. Charity Castro - Purchasing Staff
Ms. Shella Marie Lee - Branch Inventory Assistance

Questions expected to be asked:

Firm-wide related
What are the vision, mission and business objective of the
organization?
How does their company realize these goals?
View of the companys organization structure
o Purpose of the question
1. Knowledge about the long-term and short-term goals of the
organization
2. Reason why the organization does what it does
3. Overview of the responsibilities delegated and the rationale
of such position

Industry-related
What are the problems faced by the company in competing with other
business on the same line of industry?
How do they respond to these challenges?
o Purpose of the question
1. Awareness of problems and the course of actions they
undertake in the survival of its business in the industry
2. Explanation of the actions done by the organization


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Management / Operations related
How important business process is in achieving the business
objectives and in achieving competitive advantage?
How far their company has gone by the business process and
operations set by the management?
o Purpose of the question
1. Learning how the company value business processes
2. Whether the organization is appropriately supervised with
its management in the business process
Purchasing/General Ledger
What are the process in purchasing
What is the internal control created and implemented by the company
over purchasing
Whether they have plans of changing the system on execution and
recording of purchases
o Purpose of the question
1. Assessment of effectiveness and efficiency in the
purchasing department
2. Determination of application of internal control over
purchasing
3. Idea of the reliability of the organization on the system of
purchasing related activities

The aim of the guide questions is to have a grasp of how the organization is
operating within its industry particularly on transactions related to purchasing.

Relevant Sources of information about the client organization
www.suzuki.com.ph/automobile/dealer/visayas/suzuki-auto-south-cebu/
www.servicecenterphilippines.com/suzuki/suzuki-repair-service-center-
cebu-city.ph
www.jobstreet.com.ph/jobs/2012/9/default/80/3557930.html
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2.1 Company Description

ORGANIZATIONAL HISTORY

Sakura Autoworld Cebu is a family-owned and controlled entity of Borromeo
family which has been operating for about two years. It is located at Centro Maximo
Building, Jakosalem Street, Cebu City. It is primarily engaged in dealing and selling
exclusively of Suzuki vehicles and its spare parts. Reservation from its valued
customers is accepted. It is operating independently from other Suzuki branches.

VISION

Excellence in everything that we do through consistent customer care and
service

Sakura Autoworld aims for greater achievements in conducting its activities
which is evidenced through their constant responses to the concerns of valued
customers and the quality service they provide.

MISSION

To provide a harmonious working environment for a total customer satisfaction

Sakura Autoworld is primarily engaged to meet the needs of the customers and
provide fulfillment through its strategic plans. A key factor of achieving the objectives is
to create a pleasant working atmosphere for better cooperation among workers for more
efficient and effective performance of every function.




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CORE VALUES

God and Family - Sakura Suzuki provide the opportunity for all to know God and to
treasure everyone as part of the whole family
Accountability - The willingness to take responsibility for one's own actions.
Discipline - The obedience in company policies and acting appropriately.
Transparency - The availability of full information with its accurate and timely
disclosure if appropriate.
Integrity - Promoting ethical standards in the performance of the employees
tasks.
Meritocracy - Employees are given opportunity to obtain a higher position based on
their intellect and abilities.

PRODUCTS
Grand Vitara

The Suzuki Grand Vitara is a small SUV that attempts to deliver a great attribute which
gives comfort in every travel. In its first generation, the Grand Vitara featured a trucklike
chassis, V6 power and low-range gearing. The model is unique with its structure of
blended car and truck chassis designs. The original set of production attracted less of
its customers but the current model is greatly improved. This makes it a good choice for
those who like to engage in adventures.

Celerio

The Suzuki Celerio is a city car manufactured by Maruti Suzuki in India and launched in
February 2014. This model fits most to those who want a small car but does not
sacrifice both style and comfort in it. It possesses a body style of a 5-door hatchback.



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Swift Dzire

The Maruti Swift Dzire was launched in 2008 and over the past four years it has seen a
lot of changes and improvements. Its great demand all over the country is impressively
continuous, so Maruti has come with a variety of changes in the features as well. The
latest diesel variant of the car was released on 9th May 2012.

Jimny

The Jimny is extremely driver friendly. Its high-performance features make handling
easy for professionals and novices alike. The Jimny stops as smoothly and surely as it
goes. High-performance brakes are utilized on all four wheels, and the front disk brakes
are of a large diameter for efficient heat dispersion. These qualities of Jimny truly attract
a number of customers.

COMPETITIVE/OPERATIONAL CHALLENGES

It has been a challenge to the management on how they would obtain their ordered
items from their supplier because of the existence of other Suzuki dealers having the
same objectives. In a case in which other dealers have acquired their needed item
ahead of them, it would require them to locate another source for them to meet the
needs of their customers.









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ORGANIZATIONAL CHART

Exhibit 1 Country Wide Organizational Chart of Sakura Autoworld Incorporated








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2.2 Business Processes
The General Ledger is considered as the heart of financial system. It is a primary
tool in recording the business transaction, calculating its profit or loss, and tracking its
assets, liabilities and owners equity. It has the complete record of all business
transactions and thus because of these reason that involves accounting information
system, weve decided to study the general ledger and process of our client which is
Sakura Autoworld Incorporated.

Sakura Autoworld Incorporated is a dealer exclusively of Suzuki cars and
vehicles from the foreign company supplier. Its head office which is located in Centro
Maximo Building Jakosalem Street had gathered and maintained all necessary files and
records of the branches operations here in the Philippines.Through analyzing the data
gathered and recorded in general ledger, the management can easily identify the
occurrence of problem in every branch. Such in case there are few supplies of cars in
every branch, the management can easily decide on purchasing additional cars and
vehicles from the supplier. Maintaining a general ledger of all the branches daily
operations help management to keep intact of the information needed in making
decisions especially the important ones.

ACCOUNTING INFORMATION SYSTEM

The company has its own internally develop accounting system built by their
companys IT expert. The accounting information system that the company maintained
is also shared in all sister companies of Sakura Autoworld like Yamaha, Ford and BBI
which also have the same owner as Sakura Autoworld Incorporated. The in-house
developed accounting system of the company will automatically receive data from the
branchs inputted transaction. As the branch already inputted the data in the system, the
data will be reflected spontaneously in the information system of the Sakura Autoworld
and therell be no need for the company to manually input it to their system itself. Their
only main task is the confirmation of the correctness of the inputted account in order to
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give accurate and timely report to the head of the organization. All the data stored is in
one master data and they called it shared.

DATABASE

Sakura Autoworld used Microsoft Excel as their Database in storing their
accumulated data from the operation of the business.

OPERATING SYSTEM

Sakura Autoworld used WINDOWS in running their in-house ERP system. All of
their transactions are operated through desktop. AOS is the common brand of the
desktop used by the company.


















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Exhibit 2: Relationship of the Business Process to the larger operation of the company.








ACCOUNTING
DEPARTMENT


General
Ledger
Order
Entry
Purchase
Orders
A / R
A / P
Bank
Inventory Control
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2.3 Narrative of the Operation of the System
Operating system of Sakura World Incorporated serves as the catch basin of all
its branches nationwide. Data and reports are sent to the company from the different
areas of the Philippine trough email. As the email was received by the company from
the different branches, the system of the company will automatically process the report
and store it to the database. The employees dont need to key in the information to the
computer manually.

The system produces three types of report which are submitted to the
management of the company. First type of report that the system produced and
submitted to the management is the daily inventory update report. Since the line of
business of the company talks about small volume but high value product, the system
was develop to prepare a daily inventory update report. This type of report is prepared
daily so that the purchasing department of the company can anticipate on how many
units will be purchase. Arrival of the ordered units take a long time since it is imported
from another country. In order not to paralyze the operation, the company develops a
system which will provide information about the update on the inventory. Second type of
report is the weekly operation report. This type of report pertains to the accumulated
reports prepared by the different branch managers of Sakura nationwide. The weekly
operation report is used by the management to develop strategy and to monitor the
different branches of Sakura. The last report prepared through the use of the
Accounting System is the financial statements. This report talks about the position and
standing of the company.

Three types of report produced by the system are sent to the management
through email or through printed copies. Reports are submitted through email it is
because the owners and the management are not always in the companys premises.
Most the officers stay in the offices of other businesses by the owner the company.



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2.4 Table of Entities and Activities

Exhibit 3: Flow Chart showing the Entities and Activities in the Entity
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2.5 Context Diagram








Exhibit 3: Context diagram showing the general function of the entity.








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2.6 System Flow Chart

Exhibit 4 : Flow Chart showing the activity of information process of the entity
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4.1 Executive Summary

Information system plays a vital role in most of the businesses in the present
generation. It serves as a pillar of the business entities in order for the business to -
survive in the complex business environment. At present, businesses that are well-
established are those who maintain a good information system. They make used of the
benefits given by the information system in order for their company to grow even bigger.
On the other side, businesses who have taken for granted the information system suffer
a great loss and some even lead to bankruptcy.

In order to fully understand the benefits and disadvantages brought by the
information system to different businesses, we, the fourth year accountancy student of
University of San Jose- Recoletos conducted a study of a certain company that
maintains an information system. Our group performed an interview on the actual
business process and operation of a business entity. The performance of this activity
helps our group to appreciate the beauty of the processes brought by the information
system to the business entity. The report produced by the study will describe the
findings and recommendations of our group that the entity may opt to utilized for the
improvement of their information system.

After the thorough study and analysis about the information system of the
company, our group observed that some of the typical parts and steps of a business
process (e.g. purchase order) may not be included in the system structure.

This observation leads us to a conclusion that the kind and structure of
information system will depend on the convenience of the business entity using it. The
business entity that we have studied has in-house information but it was able to bring
the other business of the entity for decades of existence in the industry. The years of
existence of the entity are the proof of strength of information system. The only
weakness of the system is the lapses in the process that are so susceptible to fraud.
Thus, our group recommend for a thorough system review and process
revisions in order to lessen or eliminate the existence of fraud.
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4.2 Control Matrix
Organizational goals set by the management cannot be directly achieved as for
business operates because errors and often unexpected events may occur. Such
occurrence may either be planned or not so this has to be controlled. Business control
is a key factor for an effective business operation. Sakura Autoworld applies the
following business process controls:
a) Daily Inventory Count
The management assures the accuracy of their items by conducting daily
inventory count. They compare their recorded information about the inventory
with the actual physical count conducted daily. Through this way, they can check
the accuracy of the records and both the existence and completeness of the
inventory.

b) Three-day Rule
Management assures the existence of a customer before pulling out the
delivered unit. The client must have first a credit advice, deposit and a
reservation fee so its identity will be known. The sales executive will be contacted
by the branch controller himself for the order, and then the credit advice will be
scanned to ensure that the client has been approved. When the deposit is
reflected at the passbook, then the unit can now be released and ready for
shipment.
c) Segregation of Duties
In order to ensure the unauthorized access to the data of the entity,
separation of duties is strictly observe. Accounting department has its own room
which serves as its own office. Only the accounting personnel are allowed in this
area. IT employees can access the room only if the maintenance period has
come. With the proper segregation of duties, possible fraud and manipulation of
data are minimized.
d) Daily Inventory Report to the Management
In order to monitor the performance of the branches and to check the
completeness of the inventories, daily inventories report are provided to the
officers and to the management to aid them in their decision making. Through
this control the management can assure the progress and can anticipate the
possible actions needed by the entity to undertake

.

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e) Regular checking of manual and computer-generated information
To assure that no error are committed by the system, the accounting staff
regularly check the data recorded by the system and the data embodied in the
documents of each business transactions. With this control, completeness and
accuracy of the data used in decision making are assured.
Recommended Controls:
a) Regular printed report
With this control, manipulation of data by different branches will be
eliminated. Branch manager will not have an ample time to manipulate the data
of its transaction since printed reported will be submitted regularly.
b) Always having a proper purchase process ( e.g. inclusion of purchase order in its
purchase process)
This control will give the business entity the trail when auditing period
comes. Without a trail in its operation, entity-owner may have a hard time finding
a possible fraud in the operation of the entity.
c) Observing an off-site back up data
With this control, the entity can assure that important data are secured
even a fortuitous event might come to the entity.



















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4.3 Control Analysis

With the vast advancement in technology in recent years, accounting information
system become feasible, perhaps essential, for use in small scale business operations.
Almost all entities now use computers to some extent in their accounting systems. This
widespread use of computers has offered new opportunities for professional
accountants and has also created some challenging problems to auditors.

Many of the control procedures used in manual processing also apply in
information system environment. Examples of such control procedures include proper
segregation of duties, and independent checking. The elements of internal control are
the same; the computer just changes the methods by which these elements are
implemented.

With the used and implementation of proper controls, the effectiveness and
efficiency of the business processes are secured. It minimizes the risks of fraud to the
entity. The data produced and provided to the decision makers are assured to be
reliable and useful. Also, with the controls implemented by the entity the risks of having
a loss to the transaction data are minimized.

In the end, regardless of the extent of computerization methods of data
processing being used, the establishment and implementation of appropriate internal
control system rest with the management and those charged with governance.

















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4.4 Managerial Recommendations
The organization has established a good internal control and policy. So far the
organizational goals are achievable in the run provided that circumstances are under
the conditions of normal range. The problem would come in if the organization would
face unanticipated situations like failure to respond to a need of a hot buyer involving
large monetary amounts of bulky orders. This streams from using the traditional process
of ensuring whether purchases to suppliers were received by the latter.
We propose that the company should take advantage of Accounting Information
System not only on recording of transactions but also in sending orders to its suppliers
for their benefit. The essence of advancement in technology in the business parlance is
to keep the organization abreast of current changes and to respond to the companys
needs in operations and to meet the demands of its customers. The use of conventional
means of communication like telephone and e-mail is found to be efficient few years
ago, but not that better compared to what most of the companies are employing now.
Our group believes that if they implement and make use of high technology-
based system, then they dont have to make constant phone calls. By this, lesser cost
for facilities and emphasis on time maximization for every day operations and dealings
would be achieved.
Though there are shortcomings, we assessed that there is not much to change
with the control other than the process of keying the purchases that the organization
makes. We have learned that they have created a lot of procedures and they have a lot
of ways enough to dispel schemes of fraud and error. This makes the penetration of
fraud more unlikely to occur than to happen.
The accounting supervisor said and I quote, No matter how sophisticated a
system is, still can be manipulated and circumvented by bad people. For any computer
systems are created by man and man can control it. The best thing to do is to set
standards on the human resource that the company could ensure that they get the best
employee to rely on in carrying out any operations like purchasing and recording. With
regards to our company, I believe that our utmost loyalty is something that we could
offer to the success of the business. We had faith to our management and co-workers
same that our management treats us well.
Least to say, we observed that in terms of access of computers, only authorized
personnel has control over different divisions of work though the organization is
centralized in nature. This makes chances for self-interest threat implausible. So in
general, they have efficiently and effectively set good standards within the organization.