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Case Study 3-Jounta

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Strengths and Weaknesses in the Internal Control Procedures of Jounta Enterprises

Jounta Enterprise is a wholesale company that purchases and sells goods. Their major activity consists of purchasing consumer merchandise from many different suppliers and selling them to many different retail chain stores. Thus, the internal control procedure is very important for the enterprise and needed to be always tracked on the strengths and weaknesses of the procedure and improved as the result.

One of the major strengths of the internal control procedures is its consolidation among all the departments along with the constant control of the operation activity. The level of each merchandise item is always controlled by determining the availability of goods in the whole and remains in stocks. All the departments cooperate with each other by providing the relevant information of the condition of the required goods at each level of supply.

Another important strength of such procedure is that any movement of the item is always documented and samples of each sold good are saved along with copies of the receiving report. This step is very important for every company that uses the given internal control procedure because it allows not to miss any item or even the smallest operation, but to be aware of the company’s own expenditures.

The major weakness of each company lies in an intense competition among all the competitors that forces any logistic company to diversify their services, develop and promote new services to customers. Jounta Enterprise is not an exception. Thus, the main priority for the company is to ensure the reduction of the terms of realization of competitive advantages by using new technologies and active personnel time management. Therefore, the optimization of the processing and transferring of information between a logistics provider and the client is one of the most effective ways to conserve resources and reduce costs.

A Document Flowchart of the Expenditure Process

According to Boczko (2007), “the expenditure cycle could be categorized as organizational controls, documentation controls, access controls, liability management controls, management practice controls, and information systems controls” (458).

Thus, organizational control at Jounta Enterprise is established at four levels that cooperate with each other. These are the level of warehouse employees, which monitor the level of each merchandise item, the purchasing department that completes the purchase order by buying the item from the vendor. The receiving department receives the order, compares the packing slip with the purchase order and forwards the received details to the accounts payable department. The accounts payable department receives the invoice from the vendor and compares this purchase order, the receiving report and the invoice. If all the documents match correctly, a cash disbursement voucher is prepared.

Documentation control is provided by saving of copies of the purchase order, the receiving report and the invoice. All these documents are gathered step by step according to the stage of supply chain.

Liability management control implemented at Jounta Enterprise allows gathering appropriate control records of all the operations between the vendors and the company, or between the company and the consumer. It mainly includes details of financial operations and gives the company to track the movement of all the goods and calculate the profit and expenditures.

Management practice control, access control and information system control are provided by the technological side of all the internal control procedure and reflect the company’s general information.

Benefits from a Newer IT System Established for Processing Purchases, Goods Received, Accounts Payable and Checks

On average, the logistic operator of 2PL and 3PL level has not less than 250 customers in the database. The main difficulty of integrating of its own CRM-system in the customers’ base is based on identifying the key customers of the company. Each logistic company always has its own group of key clients. Thus, they are the force group, on which the implementation of new technologies into the logistic should be directed. 

The establishment of online service is one of the implementations that the company can do. It will provide customers with the possibility to receive information via the Internet while the use of the service quality of logistics service provider may collect customers’ feedback and suggestions about the work and the form of the system.

This implementation has many advantages. First is the ability to obtain information from anywhere 24 hours a day. Second is the access to the website from any terminal. Third is a flexible adjustment of the report form in real time. It is possible to track information on each order individually throughout the entire period of its execution or a summary of all orders. Fourth is the direct access to the CRM database of the order of an executive. This implementation has its own provisions of development and benefits over the other methods. These are mutual savings of resources of a client and a contractor, systematic control of the movement of cargo within CRM database, the speed and accuracy of reporting to the client performer on completed stages of the performance, flexible configuration of the system for the client by supplementing the ERP-system of a customer with the provided files and forming of official documents on the basis of the received information (Waters, 2003).

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