AF121 Major

6/11/2021
Assignment
Critically designing / implementing /
evaluating accounting information
systems for RB Patel Group Ltd and
assessing the business processes and
internal controls structures.

Aleysha Chandra- S11199269

Introduction
RB Patel Group Limited had begun as a small family-owned business in the town of
Labasa sometime in the 1930’s and has grown as a retailer to their 10 supermarkets
and 700 smaller stores in Fiji and round the Pacific. The company now has a market
standing of 91 million. It caters for sales of household consumption products at a wide
range of variety. This is in terms of food, utensils and other household items. RB Patel
not only sells products in their retail stores but also does distribution of certain
products and home deliveries. The business processes are fairly simple and common
to the other businesses. It has revenue, expenditure, conversion and administrative
processes along with all the sub processes.

Internal control measures 

From the governance report it is stated that the company follows the separation of
duties and along with that the board has its own rules and regulations by which it is
governed (charter). They also have regular periodic audits, both internal and external
audits are conducted and the auditors are rotated to avoid any type of fraud and to
ensure the accuracy of the financial reports in terms of integrity. Annual reports are
also ensured to be timely as the entity is a public entity and the reports are verified and
declared to be fair and true. Company reports take care to be precise and include all
material and relevant information that shareholders and potential investors make
sound and wise decisions. RBG also has a Board Charter which states in a detailed
manner the functions and responsibilities of the Board. Along with that, Directors and
Senior management remuneration is quite concisely stately for the purpose of
shareholders to see and is disclosed in their financial reports.
Business Process Flowchart

Purchase goods from

supplier

Update Inventory Records

Issue selling prices for

goods

Wholesale (credit sales) Type of Retail / cash sales

sale

Receive order Verify prices

Prepare goods for

delivery / pickup Receive payment

Raise invoice Issue receipt

Update records
Purchase Processes 
Since a supermarket has a diverse range of products and needs just as many
distributors to coordinate with. When gauging the process, the same way many
businesses purchase its product is by calling suppliers, taking quotations for pricing
and goods are either delivered or picked directly from suppliers. Since there are many
suppliers, each distributing separate goods, the company may have many ledgers
accounts to record individually. In MYOB, each supplier could be recorded under
vendors heading and subset by their individual names to enter each one’s amount
and the amounts paid and calculate what is accrued. As for the physical part of
receiving the goods, it starts with the issue of a pick list to the warehouse to order
items and then the supplies are withdrawn from the suppliers warehouse and sent to
the business. A packing list is then issued to the personnel receiving the items and
processed by the business which in return a voucher is given to act as evidence for the
supplier of the collection of goods. Now the records are updated and the new
inventory is added to the report. 
Purchasing Department Receiving Department Accounts Payable Inventory Control General Ledger

Purchase
Requisition

Authorize Purchase
Requisition

Receive goods

Select Vendor
Prepare purchase Update receiving Update general
Store goods in Update
Receive accounts
vendor Update inventory
order and notify registers ledger
bulk payable
invoice records
vendor

Update Purchase
Journal
Sales Process 
There are two types of sales done by RBG; cash and credit. Cash sales are usually
done at the cashiers where the POS record sales. It is also done through pre-order bulk
buying and online buying process. Credit sales are noted by the sales department
through calls and emails. Prices are verified for individual products. The transaction
takes place where the goods are given to the customer. If it is a cash sale then cash is
received almost immediately, receipt is issued and records are updated. If it is a credit
sale then the sales order is made, authorization is requested from the credit
department. Inventory is then checked and inventory records are updated to state that a
certain number of goods has been taken or reserved by a certain customer. A packing
list is made and goods are either picked or delivered to the customer. Once that is
done an invoice is raised and sent to the customer signifying that they have taken the
goods but the amount is yet to be paid. The department then updates the account
receivable records and updates the general ledger. 
 Sales department and Credit Department Inventory Control Billing Department Accounts Receivable General
Ledger
Receive
customer order / Prepare sales
checkout at POS order

Authorize order Check stock and

Verify Prices
from credit update inventory
department records

Credit sale Prepare goods for Raise invoice and

Cash / Update accounts
Credit delivery / pickup send to customer receivable
sale

Cash sale
Receive payment Update general
ledger

Issue receipt

Update records
Record Keeping 
Since RBG is such a massive company, they have generalized their statement
components, like assets and expenses. Their annual report consists of four major
statements that are further explained in detail through the use of notes provided after
the statements. The profit and loss and position are two distinct statements while the
cash flow statement combines the two to provide the realized value of the cash inflows
and outflows occurring from activities of the business. The changes in equity
statement discusses the capital, dividends and income. The company believes in the
concept of going concern as they have plans and strategies that provide them
assurance of the funding of the company and the shareholders and lender provide
extensive support to ensure future success of the company. The directors also
supervise and make responsible decisions in terms of revaluation, impairment,
allowance and write offs to ensure the proper realization of the items. 

Possible Loopholes 
 With internal control measures of separation of duties in place, there are still
possibilities of fraud happening with the large quantity of stock and inventory of this
company whereby possibilities could arise in the form of shortage in supply of goods
while dispatching, bottom line workers could be involved in fraud and theft of items
for personal benefit.

There may also be a small window for fraud at the administrative area. This is where
the cashiers and other staff are. On days where discounts are provided on specific
goods, if the Point of Sales (POS) does not detect the change and the customer is also
unaware, then the cashier can easily pocket the excess amount and make changes in
the transaction. Even the cashier could scan a barcode twice and give the customer
only one product. The cash can again be pocketed and physical inventory check will
also show that it was a single product. In such large businesses, petty thefts are quite
easily possible with low risk of being caught. 

Alternative Process to Cater for Pandemic 

 Since this is a supermarket enterprise which falls under essential services as it is
committed to provide basic goods and edibles to the general public, this organization
can continue to operate amidst this pandemic and lockdown through means of online
buying. RBG currently has an online shopping method whereby customers can buy
and pay for goods online and the items can be delivered to their doorsteps.

Not only that, RBG can also help families living in overseas countries to provide for
their families through these hard times. Foreign Exchange outlets are not as accessible
during these times thus making delivery of goods and essentials more accessible and
helping families survive. Even for elderly people with lifestyle health conditions,
children will be able to send food to them instead of having them come to town and
pose a risk. 

Recommendations and Management for Non-current Assets 

Plant, property, and equipment (PPE) records are generally of ledgers and
depreciation accounts. The entity will be best able to preserve these records if it
maintains a consistent depreciation method and uses the same method for an extended
period of time. Additionally, the corporation can segregate each fixed asset record,
such as machinery and cash registers. Additionally, the selling of assets must be
explicitly indicated and recorded in the corresponding ledgers in order to remove the
item from the business records. The asset's management is mostly determined by how
the entity maintains it. Monitoring asset utilization will provide the business with a
better understanding of the asset's estimated life and revaluation amount. The
corporation can also employ dependable experts to manage non-current assets.
Especially important is the protection of intellectual property, such as company data.
Businesses can also equip themselves with appropriate technology to help them
govern their assets and defend themselves from fraudulent conduct.

Recommendations for Board to Reconcile two reports

Excel is a powerful tool for doing accounting and management duties. It can be used
for data entry, graphing, and other tasks. It aids firms in the organization of data into
usable information for decision-making. When it comes to determining the company's
success, the profit and loss statement is crucial. Profit is the major component that it
supplements. Cash Flow, on the other hand, provides a more detailed picture of the
entity's current financial situation. When comparing the outcome of statements, an
excel sheet could come in help. It can also be used to forecast by comparing the
quantities in both statements. The reports' reconciliation is a different story. Although
cash flow may present a diverse picture, it is largely a reflection of the profit and loss
statement. As a result, quantities from each statement must be examined and studied
separately in order to reconcile the statistics. Pivot tables are a well-known feature in
Excel. This tool is quite helpful when attempting to reconcile accounts since it uses a
data processing strategy that allows data to be merged into a single function for better
analysis. This allows the board to simply integrate data and reconcile both statements.