Accounting Information System Retailing and Wholesaling

Question: Discuss about the Accounting Information Systemfor Retailing and Wholesaling. Answer: Introduction: Fruito is a grocery store who is retailing and wholesaling the fruits and vegetables in Australias retail market. This case study is revealing the work and risk involved with accounts payable department of this store. This study is done by me to understand the accounts payable and accounting benefits in an organization. This study is describing an audit done by the accounts payable officer in regards of Chief financial officer of Fruito to tell him about the risk which might face by the fruito in near future. This study is revealing about risk, their potential effect on the store, internal control system and some suggestion which will help the store to mitigate the risk. This study helped me in understanding the practical part of accounts payable. Accounting Risk Involving with order and Receive the Goods: The stock ordered by Fruito is of perishable nature. So while making an order of stock for fruito, many risk have been analyzed by me. The internal audit of fruito on accounts payable department is explaining many risks which are facing by Fruito or might face in future. This report is written to CFO of Fruito. The risks analyzed while auditing are credit risk, market risk, liquidity risk, legal risk, IT risk and many other risks. The credit risk is involving with Fruitos operation as while receiving the goods, store is only paying half amount and thus the credibility is increasing of the store. Debtors dont make the payment timely and because of the perishable nature of goods, it spoiled quickly and customer dont feel like but it and it causes a loss situation for store (Ewert Wagenhofer, 2005). Liquidity risk is involving with cash and quick asset issues. As store dont maintain quick asset so the liquid risk is always there. Market risk can be occur at any time as the factors of market risk like interest rate, suppliers etc are the external factors and store cannot have any control on it (Barnard, R. F., Cirulli, Flannery, Lanuti, Murphy, 2010). Ordering is also a big issue for store as the co ordination among all the departments is not good. Impacts of Risk: The risks which were analyzed while auditing the store can make a negative impact on the store at any time. Many of these risks cannot be controlled as these are related with external environment. But some of them can be mitigated by taking an action. Credit risk makes a negative impact on firms goodwill and credit points in the market and among the financers. As if the credit points are not good, nobody feel interested to give the loan to that firm. Liquid risk is impacting on firms cash, bank etc balance. As if there is not enough balance, it is a risk for Fruito to make payments to supplier and other stakeholders. Market risk is related to external environment. This can impact on fruito either by increasing the interest rate or by the suppliers. Legal and technology risks impact on Fruitos order making and receiving ways. Other risks are also involving with Fruito (Schuster, Dunaway, Keen, Vibbert, 2010). Implementing Internal Control: All the above risks are impacting negatively on Fruitos operations and other departments. There are many ways to make the risk keep away from the store. Internal control system helps an organization to make a control on all the challenges and risk which can be occur at any time. Following are the ways and techniques fruito can use to implement the internal control system. Another department must be built by Fruito for Risk management (Larcker, Richardson Tuna, 2007). This department must make such strategy that all the risk can be overcome. And this department must find out all the risk which can occur in future. Fruito is suggested to make an improvement in its documentation and update procedure. Fruitos departments must keep their eye on all the work which is going on (Hahn, Kuhn, 2012). New technology must be implemented in it. Thus these all internal control system will help Fruito to have a control on internal risk (Marinovic, 2013). Mitigation of Risk: Risk mitigation is important for all the organization. Firm cannot mitigate the external risk but it can have control on internal risk. Risk mitigation is important as if an organization will not make any effort towards risk control then it can impact badly and negatively in future. Same as with fruito, as if it will not control on risks, then it can lose its competitive advantage and market share (Biddle Hilary, 2006). Risk management team can help the Fruito to have a control as well as mitigate the risk. Changes in some policies and procedure can also help Fruito to mitigate the risk and overcome all the risk. Choose the best supplier in the market and make a deal with him can also help the organization. Preserve the goods in best manner and loading and unloading must be done in a better way to keep the fruits and vegetable fresh (Bartov Mohanram, 2004). The supplier must provide good quality product by charging less, it only can help the organization to maintain the good accounts and make profits. Maintaining good relation and liquidity of Fruito will also help it in mitigating. Technology aspect are also useful in mitigating the risk. Conclusion: After doing a research on this case study, it can be concluded that Fruito is facing many problem in its accounts payable department and other department also. All the departments must be work with a good co ordination and a risk management department must be introduced by Fruito. The accounting is the main part of every organization as it controls all the financial activity of an organization. References: Bartov, E., Mohanram, P. (2004). 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