A Grocery Store

...

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Figure 3. ORGANIZATIONAL CHART

The figure shows the organizational chart of the Central Enterprises. Accordingly, there are 2 bookkeepers who maintains subsidiary accounts by verifying, allocating, and posting transactions. The bookkeepers also balance subsidiary accounts by reconciling entries. There are 6 cashiers (shifting) who are responsible for receiving cash and issuing receipts to customers. They are also responsible for the remittance of money to the owner. There are 6 sales associate that will assist customers in their need, 1 security guard, and there are 10 laborers or packers for packing and assistance to the daily operations. The annual expenses to be incurred in these employees is around Php1,677,000.00 breakdown as follows;

Job Title

Number of Employees

Estimated Monthly Wages per Employee

Total Estimated Wages

Bookkeeper

1

8,300.00

99,600.00

Office Associate

2

7,500.00

180,000.00

Cashiers

6 (Shifting)

7,500.00

270,000.00

Sales Associate

6

5,500.00

396,000.00

Security Guard

1

6,000.00

72,000.00

Laborers/Packers

10

5,500.00

660,000.00

Total Wages

Php. 1,677,000.00

Figure 4. Estimated Wages Chart per Year

According to the owner/manager, the wages per year is not fixed because cashiers, sales associate, and laborers or packers are paid on a daily basis. Thus, the expenses in this job title cannot be fixed every year. Figure 4 is only an average estimation based on historical data made by the owner/manager.

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Figure 4. ANNUAL SALES

The figure shows the annual sales of Central Enterprises in year 2014-2016. [pic 5]

Figure 5. ANNUAL PROFIT

The figure shows the annual profit of Central Enterprises in year 2014-2016. According to the owner, there is a decline of 10% of profit from 2015 to 2016 because of the shift from one major consumer to another competitor.

The entity only uses point of sale system which only records sales, inventory, and gross profit. For the computation of the operational expenses, they do not use any system. According to them, they do inventory count for the past few years when they have no CCTV camera. Based on their previous counting, 5% to 10% of the inventories were lost. Today, they do not perform inventory counting because of the bulk amount inventory in their business. They rely only on the report of point of sale for the ending inventory and on CCTV footage for the theft. Thus, if there will be loss of inventory, it would not be accounted.

- Conclusion

The business is operating profitably and continuously provide quality services to

its customers. The system in place functions according to its purpose however, there are flaws in the system that needs improvement for efficient flow of business processes and mitigate errors. There is poor internal control including lack inventory control management, insufficient designation of accountability to its employees and intolerable safeguarding of assets. These weaknesses should be properly addressed to provide reasonable assurance that the internal control in place is effective and efficient, and its financial statement as a whole is not misstated due to fraud or errors.

- Recommendations

The researcher anticipates that this paper shall become a guide for entity’s management to consider the recommendations provided that will guide them in their decision making that will benefit not only for good internal control but also for sound compliance for financial reporting set by the standards. The researcher offers these following recommendations:

- The researchers recommend the following data flow diagram. It is suggested that warehouse should have its own inventory database in order to properly trace the inventory that goes in and out. We highly recommend 1 warehouseman. This is to minimize the risk exposure associated with the inventory loss and designate responsibility and accountability to the one in charge of the warehouse. Through this, the effectiveness and efficiency of the company would increase and thus, would increase profit of the company.[pic 6]

Figure 6. RECOMMENDED INFORMATION FLOW (LEVEL 0)

According to the manager, if there will be one warehouseman, he will be paid Php7,800.00 per month. Thus, an additional 93,600 wages per year. The addition of new database account in the warehouse would incur additional cost of Php30,000.

- Accounting information system (over the counter) is recommended for efficient and effective financial reporting such as “simply accounting”, “Peachtree”, or “QuickBooks”. This would ensure that operating expenses especially the wages and salaries are properly accounted and reported. Accordingly, prices of over the counter accounting system ranges from Php. Php30,000-Php40,000. Over the counter accounting system is sufficient because the system of the enterprise is so general. It does not need to be specialized. If accounting system would be implemented, 2 office associate will be removed. Thus, a saving of Php 180,000.00 per year will be expected.

- Things aren’t perfect. There are always