Question

Eureka Limited is a family owned company with around 73 employees and sales revenue increased to more than $ 18.5 million during the past year. It has been in business for over 55 years and supplies beverages to a number of different businesses, including supermarkets and pub-chains. The company has experienced mixed fortunes over the years in terms of business performance, but in the last few years has experienced a growth in orders for some of its new healthy product ranges. However, Eureka has recently lost some key accounts because of being unable to produce some of its products at a competitive price. Although the company hired an accountant who was keeping their books for them and producing the financial statements each year, the company thought they needed much more information to run their business efficiently. They felt that they needed to make an investment in an accounting software to take their business to the next level. Required You are required to prepare a report to evaluate and recommend an accounting software for Eureka Limited. The report should include the following components:  Business requirements o What are the key business processes for Eureka Limited? o What are the major control risks for the business processes of the company? This is in relation to revenue cycle, human resource cycle-payroll cycle, expenditure cycle and conversion cycle.

The subject actually is System Information System for Business and Enterprise.

Answer 1

Answer
It is assume that Eureka limited is using tally software and all below controls are perform with the use of tally ERP
The key business processes , risk and control are explained as under for Eureka Limited :
Revenue Recognition
Sub Process	Risk Description	Assertions	Control Description
Customer master	Customer master created with inadequate documentation Inaccuracies in creation/ updation of customer master	Occurrence, Exsistence	1. Customer Master Form is raised by Marketing Department with details: customer name, address, TIN/ CST number, as required and contact details. The Customer master form is reviewed and approved by VP Marketing 2.Customer master is created by Accounts Manager as per the details mentioned in approved customer master form. Once the customer master is created, Accounts Manager signs off on the hard copy of the customer master and intimates to the requestor 3. Annual review of customer master is carried out by VP F&A to identify duplicate customer and on sample basis he verifies the accuracy and completeness of details mentioned in customer master.
Price Master	Inaccuracies in creation/amendment of price master leading to sales at incorrect prices	Accuracy, Occurrence	1. A manual sheet is prepared for changes to the price list which is product wise and region/zone wise list 2. The product wise region wise prices are mentioned in the price list and the same is approved by the WTD/VP Marketing
Sales Order	Sales order prepared at incorrect price resulting in errors in invoice preparation	Accuracy, Occurrence	1. At the time of creation of sales order, approved price list is referred to by the respective Area Sales Manager to process the transaction 2. Sales order is approved by Area Sales Manager (ARM) and Accounts Executive. 3. Accounts Executive checks the receipt of advance money/credit limit and prices before approving the order.
Revenue Recognition	Sales transactions are recorded in the incorrect accounting period	Cut off	1.The sales transactions for each quarter are reviewed at the quarter end by the Logistic & Marketing HOD of the respective unit from where the goods are dispatched and a check is made to determine whether goods have been received by the customer as at the period end date based on the estimated number of days required for the goods to reach their destination. Accordingly the Logistic & Marketing HOD of the respective unit determines the amount of sales made during such period to a particular location before the quarter end which is required to be reversed. All the sales pertaining to invoices meeting the above criteria are reversed.
Revenue Recognition	Revenue is misstated because of errors in recording sales	Accuracy	1. Reconciliation statement of sales, production, opening and closing stock quantities is prepared by Accounts Executive on quarterly basis 2.VP F&A reviews the reconciliation statement and matches the figures in the statement with the excise records and signs off on the same. 3. VP F&A also reviews quarterly reconciliation of sales as per books and as per sales tax/ VAT return prepared by the Accounts Executive and sign off the same.
Revenue Recognition	Revenue is recognized for goods dispatched even though risk and rewards have not been transferred	Accuracy	Agreement has been entered in to with all Channel Partners which clearly states that sale of goods is on principal to principal basis.
Payroll cycle
Sub Process	Risk Description	Name	Control Description
Creation/modification of new employee master and payroll master	Inaccurate creation or modification of employee master records may result in inaccurate payroll processing	Occurrence, Completeness, Accuracy and Rights and obligations	Employee master and Payroll master is created based on approved offer letter. Employee master and Payroll master details are created in Tally, same is also maintained maintained in Excel sheet. On monthly basis, HR Head reviews list of the new joiners as per the excel Sheet and sign off the same. HR head reviews the details (Date of joining, Pay structure and Bank details) of the new joiner with the offer letter and physical documents maintained in employee file.
Leave application	Leaves are not considered while processing monthly payroll resulting into inaccurate payroll processing	Occurrence, Completeness, Accuracy	For employees and staff : All leaves are approved by respective HOD in leave card and leave records are updated by timekeeper for the same For marketing employees, leave is approved over mail, marking copy of the same to Payroll Processing. HR timekeeper maintains details of leave records in excel sheet. HR Timekeeper update leave records on the basis of leave card/mail. At every month end, HR Head reviews leave records with attendance report and leave cards/email and signs off the same.
Resignation	Outstanding dues from leaving employees may remain to be recovered	Occurrence, Completeness, Accuracy	Full and final settlement statement is prepared for leaving employee and the same is reviewed and approved by HR Head. In case the amount is not recoverable, the amount is recovered from the guarantors of the employee loan.
Pay-roll process	Incorrect payroll processing Incorrect accounting entry for salary Unauthorized payroll payment Salary processed for employees who have already left the organization	Accuracy, completeness, Occurrence and Classification	HR Executive enters the details of employees attendance in Tally and generates the monthly payroll. HR Head reviews the payroll sheet generated from Tally and signs off the same. HR Head recalculates the payroll from the details maintained in excel (Employee wise pay structure and attendance details) and cross verifies with tally generated payroll sheet. He also verifies that the number of employees for whom the payroll is processed matches with the number of employees as per attendance records. In case of any differences, the same are investigated and corrective action is taken. Further, Reconciliation of current month gross pay with previous month gross pay is prepared by HR - Executive and reviewed and signed off by Manager - Accounts. Manager Accounts reviews reason for differences such as new joiner, deductions, resignation or any calculation error.
Attendance, Invoice Booking and Payment - Contract labour	Invoices for contract labour and payments to the contractors are inaccurately recorded	Occurrence, Completeness, Accuracy, Right and Obligation	Attendance is recorded in a manual register kept at the entry gate. Accounts manager reviews invoice posted in tally wherein he checks the correct GL used, amount matches with invoice, service tax and TDS deduction have been made, entry posted in correct period etc. and signs off the accounting entry voucher. Accounts executive posts the payment entry reviews Accounts Manager wherein he checks amount payable is after deducting TDS, debit note is considered(if any), correct GL used, posting period etc. and signs off the payment voucher. Cheques are signed by Managing Director/whole time Director. Authority of signing cheque is delegated via board resolution passed.
Other key process are Expenditure cycle, Inventory of Bevarages, Fixed assets, Cash and bank management. All of this can be kept in control with the use of tally ERP 9.