Cabinet Belayachi Company - Essay Example

? Internship Report Table of Contents Presentation of company 3 2. Presentation of department 5 3. Presentation of your role and specific tasks 6 a) Description of position: Project manager Assistant 6 b) Description of tasks and objectives 7 c) Difficulties and challenges encountered 8 d) Work procedures 9 e) List and description of objectives accomplished 11 f) Analysis and synopsis of objectives reached (quantitative and qualitative 12 Quantitative evaluation 12 Qualitative evaluation 15 g) Relevance of internship with studies 15 4. Conclusion 16 Work Cited 18 Name of the Student Name of the Professor Subject Date 1. Presentation of company Name: Cabinet Belayachi Function: accounting and audit practice Workforce: 15 people Address: 12, rue de Port Mahon, 75002 Paris, FRANCE Sometimes organizations engage in fraudulent activities like tax evasion and account fudging. Most of the fudging is done in minute level and thus it becomes hard to be detected by someone who does not have knowledge and as well as experience to perform auditing and verification of the accounts. In order to perform account verification a small, family-owned organization is hired in order to verify the clients’ accounts’ reliability and transparency. The firm also it also tries to establish taxation strategies for its clients in order to reduce the taxes’ amount to be paid. The financial statements contain vital information pertaining to aspects like financial soundness and stability. Sometimes the companies and organizations are not aware of the unnecessary costs that bear down heavily on the revenue (Alchain 780). Application of specific techniques like ratio analysis and balance sheet analysis help the companies in developing specific strategies to increase the revenue and at same time decrease the costs. Financial diagnoses are performed by the firm by identifying the less productive functions of a given company. Based on the specific findings obtained from the analysis of the financial diagnosis specific strategies are formulated and integrated to optimize the company’s resources. It is active since 1997and has a client base of more than 250, from various economic sectors (Bethel 20). Its capital stock is of 100 000 Euros. Years of high quality service and hard work has helped the firm develop long standing relationships with various firms. This long standing relationship in turn has helped the firm to ease the process of account verification and auditing. The firm does not have a huge workforce. Its workforce comprises of 15 employees only. Although the total client base is more than 250, so for this reason sometimes it becomes necessary to work at the client’s premises. Another reason for which the employees had to work at the clients office premises is to keep the confidentiality of the sensitive information. The direct access to the sensitive information can be misused by perpetrators and this will give rise to cases of non compliance and subsequent legal proceedings in the court of law. So for this reason it becomes necessary to allow the employees, have a full and transparent access to all the documents needed to achieve the assigned mission. Cabinet Belayachi also looks at the tax problems of the companies. Taxation is a vast domain, with innumerable clauses and rules. Thus it becomes impossible for small and medium companies to keep dedicated in house tax consultants who will guide the companies to file for the taxes and returns. These companies most of the time approach 3rd party companies on an one-off basis or on demand basis particularly on those times of the year when the tax filing and return deadline approaches (Betty 604). Cabinet Belayachi, acts as a tax consultant offering expert advices on taxation. Sometimes Cabinet Belayachi is frequently asked to work closely with taxes inspector in case of clients’ tax adjustments. For that matter, the practice has built a long-term relationship with tax officials in order to ease the process during the mentioned situation. 2. Presentation of department The prime department of Cabinet Belayachi is the financial and audit department. The department is headed by 4 people who are senior auditing officer (HQ) and senior auditing officer (field). These 4 people report to the deputy chief auditor and additional deputy chief auditor. The deputy chief auditor and additional deputy chief auditor report to the chief auditor. Auditing and financial analysis involves a myriad of activities. Since it is not possible to manage all the activities by one person, the work is divided among the 4 departmental heads. Depending upon the work load or the target set the projects are divided accordingly among the 4 departmental heads. Sometimes it happens that the same project gets distributed in equal proportions among the 4 departmental heads. In other cases the departmental heads pursue different projects at the same time. There are altogether 5 different levels out of which 3 are stated (Boyd 27). The remaining levels of hierarchy are assistant auditing officer level and junior auditing officer level. The organizational structure shown in the diagram closely resembles the organization structure of Cabinet Belayachi. Although only the financial and audit department is described here. There are various other types of departments like sales and marketing department. Although marketing department is neither shown nor described here. The marketing department helps to create the contractual relationship between the company and the client. Fig1: Organization structure Source: (Dhalla 102) 3. Presentation of your role and specific tasks a) Description of position: Project manager Assistant The roles and responsibilities pertaining to the position as project manager assistant mainly involved detailed analysis and application of accounting and financial concepts. Detailed calculations are done as and when required to check the correctness of the accounts and at the same time to check any non compliance issues. Sometimes cross validations are also done. The cross validations are done in cases when doubts arise regarding the correctness of the facts. The nature of the entries and the characteristics of the accounting methods followed are tallied with other companies belonging from the same industrial sector. If large discrepancies are evident in the accounting entries then the nature of such discrepancies are investigated to check if the discrepancy is arising due to natural causes or due to un-natural causes (Henry 5). The position as project manager assistant involved working closely with the project manager and seeing to it that the objectives of each and every project are met accordingly. The project manager is approached only in those cases where expert advice is needed and in issues that are the out of purview of knowledge and experience. The main aim for acting as assistant to the project manager is to ease the work load on the project manager. This is done by executing the non mission critical operations like data entry and accounts processing. These in turn help the project manager devote the majority of the time to take care of those objectives which are critical for the success of the project. b) Description of tasks and objectives The tasks involved in developing an audit framework and process which are of high quality in order to ensure that the auditing of the financial statements is done effectively. The other tasks include conducting financial diagnosis of various organizations. Such a diagnosis involves the use of different types of formulas and ratio. The formulas and ratios are used to assess the financial health of the organizations, as well as the strength and weaknesses. One of the important projects handled at Cabinet Belayachi, is a company named F.A.R.C. it is a construction company and some of the main objectives of the project are reduction of the unnecessary costs and optimizing the use of resources. In order to make sure that the project is executed with utmost quality the various findings are arranged methodically and noted down following the GAAP framework (Hill 577). Some of the important tasks conducted while conducting the financial analysis of F.A.R.C. are calculation of different kind of ratios and cash flow statements. Some of the important ratios calculated in the project are profitability ratios and managerial ratios. Apart from these the other important tasks that are also carried out for completing the project are creating projection of the revenue and discriminative function analysis. Another important objective was to ensure that the auditing processes are carried out with the highest transparency and reliability. This process mainly involved the processing of the data and accounts. In order to make sure that the processing of the data and accounts are carried out with highest transparency and reliability, the accounting entries of the organizations are checked for the reliability and the presence of any kind of bias. The other objectives involved recommending strategies for reduction of tax and reliability. Apart from these tasks the other objectives are to check various kinds of risks like profitability risks and liquidity risk. c) Difficulties and challenges encountered I faced difficulties in adapting to the procedures for working and processes. The other difficulties that I faced arose mainly due to the difference in the accounting system of the American Accounting System and the French Accounting System. The main reason for the difficulty was the use of quantitative identification through the account numbers, which is the norm in the French accounting system. The same technique is not followed in the American accounting system. So I have to spend a considerable time and effort in order to get acquainted with the American Accounting System. Most of the difficulties arose in applying the theoretical knowledge of the text books in actual practice. This is because of the reason that there are vast differences in the way the theories are explained and applied in the textbooks and the way the same theories are applied in the actual field. Apart from these difficulties, there are other types of difficulties which I faced while coordinating with the client. In almost 50% of the projects I found that the client did not provide vital information which is crucial for the success of the projects (Kaufman 60). Due to this reason I had to make intermittent adjustments in the projects that elongated the completion time of the same. Again at the same time, the client did not wanted to provide any kind of extension for the deadline. So the challenge for me was to complete the projects within the deadline and at same time make the critical adjustments. Another difficulty is the preparation of the recommendations. The recommendations prepared gave more importance towards the improvement of the financial condition. Although most of the time the clients demanded recommendations on the non financial activities as well. The main objective of the firm is to provide auditing and tax consultant service, so these constituted the core activities of the firm. I faced difficulties in those projects where the client wanted recommendation on the non financial aspects of the firm specifically. This required the help of specialists who were conversed with strategic improvements in areas like distribution and operation. Thus the firm had to consult with the third party service providers who specialize in operational excellence services. This is an extra or additional cost to the firm. The firms have a loyal customer base although it is not significantly large in comparison to the customers. The loyalties of the clients are mainly due to the excellent service quality that comes at a significantly lower cost. If the service charges of the customers are increased then there is a high chance that the customers would go for another tax consultant. Thus it was necessary to include such additional costs in the service charge of the customer. The main difficulty is the process of negotiation. Thus besides acting as an associate who specializes in issues like accounting and taxation, it also became necessary to learn the tricks of negotiation and finalizing deals. These presented a challenge as well as acquire a new skill. d) Work procedures Depending upon the complexity and the type of client the projects are distributed to the project manager. The clients are divided into 3 main types, which are platinum (highest), gold (highest to middle order), silver (middle order to low order). The clients with high net worth are usually handed by project managers who had the highest work experience. The work process can be divided into 4 different stages. The first stage is meeting the clients and listing the requirements. We ask the clients specifically the exact requirements and any kind of request . We then analyze if the requests and demands comes in direct confrontation with the rules and laws. Then we recommended the client about the most suitable way to achieve the objectives. Thus in all the stages starting from assessing the requirements of the client and until the moment the report is delivered the client, we always takes precaution that the no unethical practice ever creeps in. Another very important part of the stage is the clear transparency between the client and the company. This is because of the reason that the if the client wishes to withheld any critical information from the company then the company may face difficulties in processing the financial data and prepare the reports. The second stage involves the actual preparation of the reports and presentations. The client’s financial and other non financial information are amassed and then preceded with preparation of the reports. At first we check the accounts to find any signs of discrepancy and data fudging. After that we prepare quantitative reports with the help of the data. Along with the preparation of the financial report, recommendations are also provided as to how to improve the stability and soundness of the same. The reports and recommendations are then submitted to the senior audit specialists for further approval (Langer 312). If the senior audit specialists approve the reports and the recommendations then only these are forwarded to the actual client. This is the last stage of the process. If the clients agree with the standard of the financial report then no further adjustments are made. On the other hand if the clients want specific changes or further improvements then the time limit is given to the clients for such amendments. Sometimes the clients are awarded free services but these are reserved only for the premium type of clients. Review meetings were held twice every week. The first review meetings are between the Senior Accounts officer and the Additional Accounts officer. These review meetings were done to exchange vital and crucial information between the senior levels. The senior members are advised by the deputy chief auditors on how to proceed with certain cases and which case needs special attention. The 2nd review meetings occur between the Additional Auditing Officers and the junior or the group D staff members. These review meetings are done to update the junior members on the proceedings of the current projects. The updates forwarded by the clients are passed on to the deputy chief auditors. The deputy chief auditor then passes the information onto the additional chief auditing officers. The additional chief auditing officers then advises us to make the adjustments. In the first review meeting the next week the adjustments and progress made are announced to the additional accounting officers and the deputy accounting officers. e) List and description of objectives accomplished The financial objectives mainly consisted of calculation of ratios, building strategies for tax reduction as well as reduction of costs. The other objectives of the analysis for us included ensuring the reliability as well as the transparency of the process. We checked the balance sheet to make sure that the total amounts in the balance sheet tally with the accounting entries. We calculated different types of ratios like inventory turnover, average credit customer, average credit providers, short term liquidity status of the company and financial autonomy. The other type of financial indicators are inventory turnover, day sales outstanding, time payment providers, working capital days, use of capital, cash in days. We chose the ratios not on random basis and each one of them had special purpose. Moreover as the company belongs from the cement manufacturing sector or more particularly from the manufacturing sector so industry specific ratios are chosen (Lindblom 80). Three different kinds of ratios are calculated, which are profitability ratios, liquidity ratios and gearing ratios. The ratios of each year are compared with the values obtained from the previous and subsequent year. This kind of comparative analysis helps to provide a rough guide as to in which direction the company is heading. In other words this kind of comparative analysis helps to find out if the results are anticipated or they are below expectation. We reviewed the balance sheet to check for any kind of errors in accounting entries as well as chances of intentional misrepresentation and misinterpretation of the values. The final review of the balance sheet is included under the heading Synthetic review. Apart from balance sheet analysis, other types of analysis are also done like the transport score, industry score and wholesale score trade. The transport analysis is done to indicate the costs incurred in various operations of transportations. Transportation incurs a significant part of the analysis. Since the company manufactures cement a significant amount of the operational cost are due to the fuel costs, lease and rental costs of the transportation vehicles and the labor costs. The different heads under the transportation costs are analyzed and then a specific weight is assigned to each heads of cost. The actual costs are then multiplied with the specific and then summed to create a score. This score is tallied with the score from the previous years, to find out if the company is witnessing increased costs of transportation. f) Analysis and synopsis of objectives reached (quantitative and qualitative Evaluation) Quantitative evaluation Table 1: Calculation of the Financial Ratios Exercise N 30/09/2011 12 Exercise N-1 30/09/2010 12 Inventory turnover 3.22 113.89 Average credit customer 108.08 0.86 Average credit provider 0.11 2.95 Short-term liquidity 93.63 84.98 financial autonomy 0.69 0.09 Source: (Author’s Creation) Table: Management Ratios Exercise N 30/09/2011 Exercise N-1 30/09/2010 Difference Inventory turnover 3.22 2.95 0.27 Days sales outstanding 113.89 93.63 20.26 Time payment providers 108.08 84.98 23.10 Working capital days 14.77 11.81 2.96 Use of capital 20.91 17.99 2092 Cash in days 9.41 6.76 2.65 Samples / results Source: (Author’s Creation) Table 3: Ratio Calculation Source: (Author’s Creation) Table 4: Profitability Ratios and Structure Source: (Author’s Creation) The ratio analysis indicates that F.A.R.C. has been able to improve most of the ratios over time. The analysis includes specific calculation of the profitability ratios and management ratios. The profitability ratios indicate that the company is suffering from decreasing levels of profit. Most of the profitability ratios like the financial profitability, economic gross profit, weight of financial expenses, gearing ratio indicates that compared to the year 2010, the company was able to gather considerably less amount of profit. The management ratios indicate that F.A.R.C. is taking longer time to convert credit sales in cash in 20111 in compared to 2010. The analysis also indicates that 50% of the management ratios have shown poor performance in year 2011 compared to the year 2012. Qualitative evaluation We found that direct subcontracting is too high in relation to the final outcome of the exercise. We also found that the problem of internal communication like delay in billing causing an accumulation of work in progress. A decrease of 210,433 Euros on the final net income between 2012 and 2011 due to high loads, much of which is explained by the use of temporary staff. Apart from that we also found that the entire production chain needs to be trained in order to avoid or reduce the use of subcontractors and strengthening internal skills. Apart from that we also recommend that an internal communication system should be used in order to allow a constant flow of information within the company, from the bottom up and top down, which will result in optimization of sending invoices and constant knowledge of ongoing projects (Kaufman 60). The marketing company of F.A.R.C. should conduct a feasibility study of the clients as well as business and project management. In order to develop a marketing skill those institutional clients should be preferred those who are willing to offer less customized work, design and implementation of strategy. g) Relevance of internship with studies Accounting and finance is connected with every sphere of activity in the business organization. It is related to operational strategy as well as human resource strategy. Thus the internship has helped me to understand how deeply the various domains are interconnected with each other. The internship at Cabinet Belayachi has proved to be fruitful since it helped me to gather knowledge of the American Accounting Procedures as well. The internship has also helped me to gather understanding and knowledge about different topic of finance and accounting like managerial accounting, corporate taxation and corporate accountancy. It also helped to understand how financial data can be used as a means of performance management. The financial analysis of F.A.R.C included relevant analysis as well as aspects about planning, budgeting and forecasting (Boyd 20). I learned how forecasting can be done and how forecasting helped me to understand the different types of estimations that can be created and most importantly the variables and factors needed to be taken into account before preparing a forecasting. Thus on an overall basis the internship has helped me to develop an understanding of the way the financial theories are applied in the real world application and in trouble shooting various financial problems. 4. Conclusion I can say that the experience of working at an associate level with Cabinet Belayachi is beneficial. The experience helped me to advance the knowledge base in managerial accounting. Working at Cabinet Belayachi has helped me to realize that adaptation is the most vital aspect for any employee as well as business. In other words nothing can be considered as static. I realized that everything needs to be updated, molded and transformed according to the needs of the business. I benefitted greatly from the interaction with the real world application of financial knowledge and skills and this in turn helped me to realize that the theories stated in the books does not factor in the uncertainties of the business environment. The uncertainties and the impediments faced while completing the project made me realize that the theories in the books are applicable only when everything is in optimal condition. I also understood that in the real world the uncertainty are many and keeps on coming one after the other. The books do not advice or teach how to factor in the uncertainties while applying the theories in the real world. Working with Cabinet Belayachi has helped me to inculcate the understanding and the ability to incorporate the financial theories along with the uncertainties in the environment. I learned how what work place ethics really means. There are certain norms and practices that are neither specified in the textbooks nor in the rules and regulation books governing disclosures of account information. These norms have come into existence through repeated practices and thus have come to be recognized as normal and safe practice. Without any kind of I would have never gathered the knowledge and capability to apply the theoretical concepts in troubleshooting actual problems. Work Cited Alchain, Demsetz. ‘‘Production, Information Costs and Economic Organization.’’ American Economic Review 6.1 (2012): 777-795. Print. Bethel, Liebeskind. ‘‘The Effects of Ownership Structure on Corporate Restructuring.” Strategic Management Journal 1.4 (2007): 15-31. Print. Betty, Jemison. ‘‘The Importance of an Integrative Approach to Strategic Management Research.” Academy of Management Review 6.4 (2006): 601-608. Print. Boyd, Robertson. ‘‘Confirmation, Semantics and the Interpretation of Scientific Theories.” The Philosophy of Science 9.3 (2005): 3-36. Print. Dhalla, Yuspeh. ‘‘Forget the Product-Life Cycle Concept.” Harvard Business Review 5.4 (2010): 102-12. Print. Henry, Hedley, ‘‘A Fundamental Approach to Strategy Development.” Long Range Planning 7.2 (2009): 2-11. Print. Hill, Snell. ‘‘External Control, Corporate Strategy and Firm Performance in Research Intensive Industries.” Strategic Management Journal 9.6 (2008): 577-590. Print. Kaufman, Englander. ‘‘Kohlberg Kravis Roberts & Co. and the Restructuring of American Capitalism.” Business History Review 6.7 (2010): 52-97. Print. Langer, Jackson. ‘‘The Illusion of Control.” Journal of Personality and Social Psychology 32.2 (2004): 311-28. Print. Lindblom, Stevenson. ‘‘The Science of 'Muddling Through'.” Public Administration Review 20.2 (2008): 79-88. Print. Read More