Introduction
Planning Stage
Immaculate Flight is a nationwide aircraft detailing company located in many major airports across the United States. The company is comprised of a senior leadership team, location manager, and local aircraft detailers. They detail privately owned aircraft for a higher class clientele. Immaculate Flight is a service based company that does not sell products. However there are a few systems they use in order to accomplish the common tasks required of any business. The accounting transactions take place all in Grand Rapids, MI in a small accounting department with 2 people.
There are three main information systems that Immaculate Flight currently uses. There is a work order tracking and customer database system. This is used by the location managers for daily entry of new customers and work orders. There is the payroll system that keeps the employee files and processes the payroll. Both of these feed into the accounting system, Immaculate Flight uses QuickBooks.
The work order tracking system, from now on referenced as WO Flight, is for the location guys to use for many things. It is there to create new customer files. The new customers that are added to this system are also added to QuickBooks. Second, and most important, this system is a work order creation and tracking system. As soon as an order comes into a location manager, they add it to the system, whether the cleaning is that day or a week or two in the future. This allows the scheduling department and senior leadership to take a quick glance at any given time to see how busy a location is. This allows the schedulers to anticipate their availability and possible needs for a given time frame. The output part of this system is a billing spreadsheet that is generated weekly. Currently this is just a spreadsheet that is exported into an excel file. This file is then taken by the accountant and hand entered into QuickBooks.
The payroll system is called Paycor, and it tracks employee files and payroll. This system produces many reports that are essential for tracking employee information. This system creates paychecks, tax reports and payments, W2’s, along with the new Affordable Care Act reporting that has started this year. One of the most helpful features of the payroll system is the export of an IIF file that will be the general journal entry that gets imported into QuickBooks. This is where all of the payroll expenses is transferred from the payroll system to the accounting system.
Lastly, QuickBooks, is the accounting system used. This is where most of the management reports are derived as well as external financial reports. All the receivables, payables, and banking are handled in this system. QuickBooks is where management turns for the reporting it uses to make managerial decisions for the company. For example, the biggest expense for Immaculate Flight is payroll. They look at payroll percentages on a monthly bases and make sales initiatives as certain locations or scale payroll back in others depending on the time of year and area.
The most critical system that needs improvement is WO Flight. It is a very new, homemade system, which it is still in the beginning of its life. It is also available to all of our managers which increases the chances of our customer files falling into the wrong hands. Paycor is the second system that would need improvements, solely based on the user interface and training. Lastly, QuickBooks would need the least amount of improvements. This software has been around a long time and has stood the test of time. There would be minor issues that could be changed to make the system a little more user friendly.
Internal Controls are a weakness currently at Immaculate Flight, there are after all only two people in the business office performing multiple tasks. The five components of internal controls are:
1. Control Environment
2. Risk Assessment
3. Control Activities
4. Information and Communication
5. Monitoring
(Boyle, Cooper, & Geiger, 2004, p. 28)
Currently, the Controller is in charge of the bulk of the internal controls (which are scarce). The controller checks all of the other accountants work, has access to all duties, reconciles and audits those duties. The two checks that are in place are that the President of the company reconciles the bank daily, and the CPA office audits the books on a high level.
In WO Flight, there is a sequential work order numbering system, this disallows for duplicate work order entry. There is a locking mechanism put into place where at the end of the week work orders are locked and cannot be changed. There is also the inability to add tail numbers under multiple client files. In QuickBooks, there are all of the controls set in place that come with a canned system, sequential check numbers and the ability to segregate duties by giving and taking away employees access and permissions.
Overall, the internal control system is lacking quite a bit. One person as the ability to perform all functions and there is not too much flexibility in segregating duties down further as the accounting office is quite small.