Corporate Credit Cards Risk Management

This assignment examines the potential risks associated with implementing corporate credit cards at Bucks Phyz, a business entity. It explores the benefits, such as simplified payments and reimbursements, while highlighting the inherent risks of fraud and misuse. The document emphasizes the need for robust internal controls to mitigate these risks, recommending the establishment of an authorization team within the finance department to scrutinize transactions before funds are debited from the business account. It also advises issuing corporate credit cards only to key personnel involved in core business processes and requiring proper authorization for all purchases.

Running head: ACCOUNTING INFORMATION SYSTEM
Accounting Information System
Name of the Student:
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Author Note

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Executive Summary
The issue that has been presented in the case study is that being the accountant of Bucks
Phyz. The reviewing of the sales processes of the company on the basis of the key information
that has been obtained by interviewing the key staff related to the sales process. The proposal in
relation to the introduction of the corporate credit cards for the purchase of smaller items for the
business has to be analyzed.
This particular study aims to provide an overview into the internal controls that may be
implemented into business for the purpose of essentially avoiding frauds. The implementation of
the internal controls that would be suitable for the particular business by Bucks Phyz has been
discussed and a review of the impact of the introduction of corporate credit cards has also been
discussed.

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Table of Contents
Introduction......................................................................................................................................3
Overview of the sales process..........................................................................................................3
Internal control issues in Bucks Phyz sales process........................................................................4
Introduction of corporate credit cards..............................................................................................7
References........................................................................................................................................8

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Introduction
Bucks Phyz is a medium sized company that derives an annual turnover of $2.5 million.
The issue that has been presented in the question is that being the new accountant of the
company the particular operation that has to carried out, is reviewing the sales process of the
company based on the key information derived from the staff interviews. The company has
undergone a restructuring program within the sales team due to the major changes that took place
in the operating environment of the company. The change in the structure of key personnel
authorities may also have impacted business (Almeida, KIM, & Kim, 2015). The particular
impact that has been mentioned in the case study is that the delegated responsibilities in relation
to the new tasks have become blurred. Bucks Phyz has also been facing fraudulent behavior in
the accounts department. Thus, the current circumstances of the company have been such that
the management of the company will not be able to allow any revenue leakage. Therefore, the
internal control that is required by business has been included in this study and the decision of
the introduction of the corporate credit cards has been analyzed. The study aims to provide an
understanding of the internal controls within an organization and the how these controls
effectively aid the smooth execution of the business operations (Sadgrove, 2016).
Overview of the sales process
The sales process that has been incorporated by business is that the new pricing tools that
had been introduced by the sales managers which can effectively calculate the prices of the
offers that are send out by the managers. However, the authorization policy has not been strictly
adhered to by the managers. This is evident from the opinion of the Head of Sales. The head of
sales, Barry has stated in his interview that in spite of the existence of a standardized process in
regards to the particular process of the sending offers by the managers to their customers, that
standardized process is not strictly adhered to as it has not been mapped yet (Bernstein 2015).
The other issue that persists with the sales process is that the standard contract template that is
available in the company intranet is not satisfactory in terms of quality. The credit check process
can be summarized as checking of the credit worthiness of the customer from the credit rating
agency’s web site. The credit rating being anything other than C results in granting of the credit.

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However, if the rating is C then a different payment method has to be negotiated (Wen caes et l.,
2015).
Internal control issues in Bucks Phyz sales process
The sales process has been effectively reviewed and a number of weaknesses that is
reflected in the business operation of Bucks Phyz have been identified.
Sales Process Internal control
weakness
Impact Recommendation
Data entry process Implementation of the
new customers into the
operative system of the
company is handled by
Alfred and Joy. The
particular area of
concern in entering the
data related to the new
customers is the
creation of a pricing
template. The review of
the customer data that is
entered into the price
template as it according
to the management
would be irrational in
terms of cost-benefit
ratio. Moreover, there is
no certain information
in regards to whether
the access to the ERP
system is restricted or
not. Even the billing
system that is available
to the staff does not
The particular impact
that lack of review of
the pricing template
may lead to is that data
as crucial as customer
information may be
wrongly entered into the
system hampering the
entire process of
business and in turn
affecting the total
revenue. The access to
the ERP system should
also be restricted. This
is because unrestricted
access to the ERP may
result in fraudulent
activities by the
alteration of potential
customer data. The
billing system should
also be designed in a
particular way that
provides enough
guidance to the user so
Segregation of duty in
reviewing the customer
data that is entered into
the pricing template will
also improve the cost
benefit ratio and remove
the chances of wrong
input of customer data.
Thus, other than Alfred
and Joy another
employee should be
trained in the particular
data entry process.
Moreover, the access to
the ERP system should
be restricted or
controlled and the
particular billing
software should be
updated in order to aid
the user

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provide any guidance to
the user in terms of the
irrelevant fields.
that no entry that does
not correspond to the
particular field is
entered as that may
hinder the process of
effective billing which
in turn may impact the
revenue incurred by
business (Yang, & Koo,
T. L. 2014).
New pricing tool The particular new
pricing tool that has
been implemented in
business requires the
managers to be properly
trained for the efficient
utilization of the sales
tool.
The lack of proper
training may result in
the wrong calculation of
the prices to the offers
that are sent out. This
may impact business
drastically (Cao,
Chychyla & Stewart,
2015).
Proper training in the
utilization of the new
pricing tool should be
provided
Authorization Policy The standardized
process that has been
established by the
management in regards
to the authorization
policy is not
mandatorily followed by
all the mangers. The
Head of Sales even
supports this fact as
according to him there
are times and other
constraints that may
hinder the process of
following the
The non compliance to
the standardized process
in case of the
authorization policy
effectively widens the
scope for the managers
to commit fraudulent
activities by sending
offers to the customers
at prices that are greater
than real value of such
offers (Goetsch &
Davis, 2014).
A new and modified
standardized process
should be established
and strict adherence to
such a process should be
ensured in order to
avoid fraudulent
activities

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standardized procedure.
Credit Check Process The credit check
process that has been
adopted by the company
does not have any area
of concern. However, it
has been accepted by
Lucinda that there had
been several instances
in which the credit
checks had been
performed on new
customers after the sales
contract was signed by
the both the parties and
that the invoices had
been issued. Thus, lack
of strictly adherence to
the credit heck process
may result in the huge
credit loss by the firm.
The particular impact
that the avoidance of the
credit check process,
before signing up a
particular customer may
be drastic and may lead
to potential loss of
business (Lam, 2014).
The checking of the
credit worthiness of a
customer should be
made mandatory. The
system should be
designed in such a way
that without checking
the credit worthiness of
a particular customer no
deals would be
permitted.
Employee code The non-existence of a
potential employee
behavioral code may
result in the generation
of personal relationships
between the employees.
For instance, the
marriage of the
Accounts Receivable
manger with the Head
of Sales might not be
healthy for business.
The non-existence of an
employee code may
result in the growth of
personal relationships
within the organization
that may effectively
result in the conflicts of
interest that will
potentially increase the
occurrence of frauds
within the organization
(Kuratko, Hornsby &
Covin, 2014).
An establishment of a
proper employee code
may mitigate the
occurrence of conflicts
of interest thus, lessen
the chances of
occurrence of fraud in
the organization

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Introduction of corporate credit cards
Next, the introduction of the corporate credit cards might be hugely profitable for business
provided that the particular transactions executed or the products or services purchased with the
corporate credit cards are really needed by business. Moreover, the providence of corporate
credit cards increases the risk factor of business by leaps and bounds. The numerous advantages
however, provided by these corporate credit cards cover for the risks that the business is exposed
to due to this facility. The corporate credit cards will reduce the hassle of transferring the
payments by business to the particular account of a supplier. Moreover, the process of
reimbursement will be hugely simplified thus, reducing the cost of operations incurred by
business (Gallemore & Labro, 2015).
The specific internal control that should be implemented by Bucks Phyz in order to
minimize the impact and occurrence of the risks is that a particular team should be created in
order to authorize the transactions before real cash is debited from the business account. The
finance department personnel may be delegated with the task of authorizing the transactions that
are incurred with the corporate credit cards so that misuse or fraudulent activities are minimized
(Doppelt, 2017).
The particular recommendation to the CEO in regards to the issuance of the corporate
credit cards is that the corporate credit cards should only be issued to those key personnel who
are involved with the core processes of business. For instance, the situation in regards to the
booking of the training course must be particularly handled by purchasing the course by using
the corporate credit card that is allotted to the key human resource personnel after the proper
authorization by the finance team.

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References
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Evidence from the Asian financial crisis. The Journal of Finance, 70(6), 2539-2586.
Bernstein, M. H. (2015). Regulating business by independent commission. Princeton University
Press.
Cao, M., Chychyla, R., & Stewart, T. (2015). Big Data analytics in financial statement audits.
Accounting Horizons, 29(2), 423-429.
Doppelt, B. (2017). Leading change toward sustainability: A change-management guide for
business, government and civil society. Routledge.
Gallemore, J., & Labro, E. (2015). The importance of the internal information environment for
tax avoidance. Journal of Accounting and Economics, 60(1), 149-167.
Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper
Saddle River, NJ: pearson.
Harmon, P. (2015). The scope and evolution of business process management. In Handbook on
business process management 1 (pp. 37-80). Springer, Berlin, Heidelberg
Kuratko, D. F., Hornsby, J. S., & Covin, J. G. (2014). Diagnosing a firm's internal environment
for corporate entrepreneurship. Business Horizons, 57(1), 37-47.
Lam, J. (2014). Enterprise risk management: from incentives to controls. John Wiley & Sons.
Sadgrove, K. (2016). The complete guide to business risk management. Routledge.
Wen, M., Gao, J., Liang, L., & Lu, Q. (2015, June). Study on the moderating effect of top
management team characteristics on the relationship between equity incentive and
internal control quality. In Service Systems and Service Management (ICSSSM), 2015
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Yang, M. H., & Koo, T. L. (2014). The impact of information technology adoption on internal
controls adaptation. International Journal of Business and Systems Research, 8(1), 14-33.