Internal Control and Fraud Mitigation at Bucks Phyz

This assignment examines the internal control systems at Bucks Phyz, focusing on areas vulnerable to fraud after recent restructuring. It analyzes employee interviews revealing potential data manipulation, lack of oversight, and undue advantage given to management. The report recommends mitigating strategies, including addressing pricing tool issues, restricting corporate credit card access, and implementing stronger controls for ERP access.

Running head: BUSINESS REPORT OF BUCKS PHYZ
Business report of Bucks Phyz
Name of the Student
Name of the University
Author note

1BUSINESS REPORT OF BUCKS PHYZ
Executive summary:
The newly employed employee of the Bucks Phyz has constructed this report and it has been
done in order to assess the internal control of the firm. The report has find various weakness in
the structure of the internal control of the firm and analyzed the sales process. From the analysis
it has been found by the accountant that the credit score of the firm is not great and highly
insufficient with the present market benchmark. The report has mentioned various
recommendations that the mangers need to introduce with immediate effect in order to reduce the
scope of fraud and bring in corporate credit card into the business cycle. To conclude, the report
has mentioned the importance of benefit of corporate credit card and summarized overview of
the report.

2BUSINESS REPORT OF BUCKS PHYZ
Table of Contents
Introduction:....................................................................................................................................3
Bucks Phyz sales process Summarised overview:...........................................................................3
Bucks Phyz internal control weakness:...........................................................................................4
Impact of weakness on the organisation:.........................................................................................7
Impact of introducing corporate credit cards in Bucks Phyz:..........................................................8
Internal controls to minimize the impact of corporate credit card:.................................................8
Recommendation:............................................................................................................................9
Conclusion:......................................................................................................................................9
Reference:......................................................................................................................................11

3BUSINESS REPORT OF BUCKS PHYZ
Introduction:
Bucks Phyz is one of the growing industries, a medium sized organisation that has been
gone through restructuring program since last two years. The restructuring program has been
taken place mainly in the sales team and operating environment of the industry. Besides this,
another considerable change has been taken place in the working force of the firm. Employees of
the firm have been shuffled and employees are now assigned with new tasks. Due to these
changes in the firm, it has been seen that there is redundancies in the functioning of the workers
and it has lead to blurred responsibilities (Johnson, 2016). Moreover, Bucks Phyz has recently
faced fraudulent activities in its accounts section leading to loss of revenue and deterioration in
its sales. Considering the fraudulent activities in the organisation, restructuring in the role of
operation of the employees and challenging operating environment for the Bucks Phyz, the
company has employed new accountant. This report is meant to analyze these various issues and
internal control of the firm to make it more productive.
Bucks Phyz sales process Summarised overview:
Bucks Phyz is a medium sized organisation that earn $2.5 million turnover annually. The
firm has recently gone through organisational restructuring to make it potent enough to grow its
business and overcome the issues related to internal control. New pricing tool introduced by the
firm is one of the major restructuring that has been taken place in last two years. Both the
standardized and particular process is present in the organisation; however, they are messed with
each other making the working environment of the firm complex (Goetsch & Davis, 2014).
Bucks Phyz has a outdated online template, which does not match with the market standards,
causing fall in revenue. Credit check out process of the firm is not credit worthy and it earn C
ranking.

4BUSINESS REPORT OF BUCKS PHYZ
Bucks Phyz internal control weakness:
Performing detailed analysis of the Bucks Phyz, various internal control weaknesses have
been found by the recently employed accountant. Weaknesses of the firm have been mentioned
below:
Sales process Internal control weakness Impact Recommendation
Data Entry Process Data entry process is one of the
main issues of the firm that
constrained it from facing
growth. Abundance of ERP
access and issues with billing
process has made the Bucks
Phyz face reduction in it sales.
Moreover, wrong data inserted
by the employees and the user
in the new pricing software has
failed the company to assess its
performance over the las two
years
Firm has
reduces
auditing
scope that
has
constrained
the growth
of the firm.
Additionally
ERP access
has given
the
employees
scope to
indulge
themselves
in fraud
activities
(Shen, Chen
& Wang,
Bucks Phyz, need to
direct its managers,
to segregate the
duties of their
employees in order
to reduce the
jeopardising effect.
Moreover, it would
be beneficial for the
firm to update their
billing cycle so the
benfit ratio can get
aggravated.

5BUSINESS REPORT OF BUCKS PHYZ
2016).
New Pricing Tool Pricing tool for Bucks Phyz
has been introduced recently
and it has complicated process.
Proper training wasn’t
introduced to the employees
that has lead to miss insertion
of data.
Lack of
knowledge
about the
pricing tool
has failed
the
company to
gain
competitive
advantage
(Almeida,
Kim & Kim,
2015).
Besides this
it has
complicated
the billing
strategy for
the firm.
Mangers of the firm
need to introduce
training process for
their employees. It
will aid the sales
associates to
understand the usage
and let the firm earn
desired income.
Policy Of Authorization Policy of authorisation is
present in Bucks Phyz,
however, the employees does
not follow it.
Non-
compliance
of
standardized
policy of
A modified policy of
authorization need to
be initiated, which
can act as the
handbook for the

6BUSINESS REPORT OF BUCKS PHYZ
authorizatio
n has leaded
the
employees
of the firms
to indulge
themselves
into fraud
activities
and
deteriorate
the internal
control (Cao
& Chychyla
& Stewart,
2015).
employees.
Process Of Credit Check Credit checking process is
ineffective and there is no strict
guidelines regarding this.
There are
various
instances,
where credit
checking
has been
done after
the
invoicing
There should be
strict rules for credit
checking prior to
generating invoice.
Mangers can bring in
policies of
remuneration cut that
will enhance the
efficiency.

7BUSINESS REPORT OF BUCKS PHYZ
has been
done.
Employee code There is no employee code in
the firm that has given the
undue advantage to the
employees to indulge
themselves into the fraud
activities (Kuratko, Honsby &
Covin, 2014)
Lack of
employee
code has
given rise in
fraud
activities
and let the
workers
indulge in
personal
relationship
(Audi,
Loughran &
McDonald,
2016).
Manager of the firm
need to bring in
employee code
immediately and it
will help the firm to
overcome the issues
with internal control.
Impact of weakness on the organisation:
Analyzing the interviews of the employees of the firm, various weaknesses regarding the
business process and structure of Bucks Phyz has been found. Initially there is lack of credit
worthiness in case of online template of sales and service. Lack of employee code has lead the
firm to face fraud activity and jeopardising task has reduced the efficiency of the employees
(Bernstein, 2015). Moreover, accounting section of the Bucks Phyz has low rating due to the low

8BUSINESS REPORT OF BUCKS PHYZ
efficiency in their task. The firm has failed to earn higher profit during the last two years and
write offs of $1 million has caused the firm substantially. Recent change in the duties of the
employees and introduction of new pricing software has hampered the sales strategy and has
effectively reduced the revenue earning of the firm.
Impact of introducing corporate credit cards in Bucks Phyz:
Corporate credit card is one of the stimuli for the medium sized firm like Bucks Phyz,
which earns 2.5 million dollar as its annual turnover. Corporate credit card can effectively
smoothen the reimbursement process and besides this transferring payment will become too
easy. Moreover, corporate credit cards provide their employees vested benefit that can enhance
the morale of the employee and save their crucial time, reducing the overall time induced to
single customer (Harmon, 2015). It will not only benefit the firm’s efficiency, moreover aids to
make the employees efficient and simplifies their duties.
However, when it comes to the Bucks Phyz, then the managers need to consider the
history of fraud activities by the employees of the firm. If all the employees of the firm are
assigned with the corporate credit cards, then there is scope of under utilization of the card and
enhance the scope of fraud activities of the firm (Gino & Ariely, 2015). Thus, it will be
beneficial for the firm to introduce the card with limited access to the core management team
with clear usage policies. Moreover, firm can introduce a penalty scheme in case of any mal
usage of the card.
Internal controls to minimize the impact of corporate credit card:
Internal control is an important factor for every firm that facilitate the firm to have better
accounting expenses of corporate credit card (Gallemore & Labro, 2015). As mentioned above, a
credit card policy needs to be there in the firm to ensure usage of the card and reduce the scope

9BUSINESS REPORT OF BUCKS PHYZ
of fraud activities with the firm. Considering organisational structure of Bucks Phyz, it can be
stated that the firm should only introduce their credit cards to the employees, who are associated
with the core management team. However, as the mechanism of internal control to minimize the
impact of corporate credit card, firm needs to follow these steps (Doppelt, 2017):
 Determine the eligibility criteria of holding a corporate credit card
 Set credit limit
 Control the revocation and issuance norms
 Need to check annual credit of the employees, who have been issued a card
Using these mechanisms Bucks Phyz can control its credit card issues in future and
provide a scope to enhance the growth of the firm.
Recommendation:
As the possible ways to control the issues of Bucks Phyz, the report highlights the
following recommendations:
 Code of conduct of the employees is an important part for the Bucks Phyz. Introducing it
in the organisation, will help the firm to control the fraud activities of the employees
 Appraisal mechanism will be beneficial for the firm to motivate their employees to work
honestly rather than using dishonest means
 Issues with the new pricing tool need to be mitigated with immediate effect and managers
should look into the fact that whether the employees are filling data wrongly
 Corporate credit card must be issued, but the distribution need to be restricted to the core
management team in order to reduce the scope of fraud

10BUSINESS REPORT OF BUCKS PHYZ
Conclusion:
The report has analyzed various aspects of Bucks Phyz related with the internal control of
the firm. It has analyzed the scope of fraud in the firm and highlighted the recommendations in
order to reduce its scope in future. Considering all the interviews of the employees of the firm, it
has been found that the restructuring has gone rough on the firm’s internal control and it has
provided some of the core management team undue advantage to curtail the policies of the firm.
Moreover, analyzing the interview of the employee of Bucks Phyz, it has been found that access
to the ERP and lack of employee code, has given rise in fraud activities of the firm. In order to
control the dwindling situation of the firm, the report has mentioned various strategies and
argued in favour of corporate credit card with restricted control.