Mr. Paul was working as senior accountant of Jonathan LLC for the last five years. Two month
Question:
Mr. Paul was working as senior accountant of Jonathan LLC for the last five years. Two month before Mr. Paul has given resignation and agreed to work for three months until the management finds a suitable replacement for his position. The accounts department consists of 5 employees including Mr. Paul at present and the assistant accountant has been given signing authority of supplier cheques and some of the functions of senior accountant also assigned to him.
It has been noted that large amount of outstanding for the suppliers were pending and few of the suppliers have stop supplying goods to Jonathan LLC from last month. The credit period was extended to customers to improve the sales and most of the customers have not settled the dues on time. Few of the customers are disappeared and unable to find them in the market. The assistant accountant has suggested to the management that to meet the temporary financial difficulties, Jonathan LLC should approach the bank for additional overdraft facilities to overcome the cash-flow difficulties.
Managing director proposed to appoint an internal auditor to find out the reasons for present financial difficulties and rectify weakness in record maintenance by the staff in finance department. He further commented that the computer system that has been installed many years ago is not supporting increased number of transactions in present times.
You are required to prepare a report to the managing director by addressing the following two concerns raised by the managing director.
