Gemstar Productions, Inc. Budget vs. Actuals: 2018 09-FY18 P&L September 2018 Se
ID: 2332120 • Letter: G
Question
Gemstar Productions, Inc. Budget vs. Actuals: 2018 09-FY18 P&L September 2018 Sep 2018 Total over %of over %of Actual Budget Budget Budget Actual Budget Budget Budget Income Event Revenue Total Income Gross Profit Expenses Depreciation Expense Equipment Rental Expense Insurance Expense Interest Paid Office Supplies Expense Payroll Expense Utilities Expense Total Expenses Net Income 11.400.00 1,500.00 9.900.00 760.00% 11,400.00 1,500.00 9,900.00 760.00% $ 11,400.00 $ 1,500.00 S 9,900.00 760.00% $11,400.00 $ 1,500.00 $ 9,900.00 760.00% $11.400.00 S 1,500.00 $ 9,900.00 760.00% $11,400.00 S 1,500.00 $ 9,900.00 760.00% 296.88 750.00 1,200.00 650.00 550.00 184.62% 1,200.00 650.00 233.33 666.67 3.200.00 600.00 2,600.00 533.33% 3,200.00 600.00 2.600.00 533.33% 220.00 250.00 46.88 118.75% 296.88 250.00 46.88 118.75% 300.00 450.00 250.00% 550.00 184.62% 300.00 450.00 250.00% 750.00 233.33 233.33 370.00 296.67 180.18% 666.67 0.00 233.33 370.00 296.67 180.18% 150.00 70.00 146.67% 220.00 70.00 146.67% $ 6,566.88 $ 2,320.00 $ 4,246.88 283.06% $ 6,566.88 $2.320.00 $ 4,246.88 283.06% S 4833.12-$ 820.00 $ 5,653.12-589.40% $ 4,833.12-$ 820.00 $ 5,653.12-589.40% 150.00 Wednesday, Sep 12,2018 06.09:24 AM GMT-7-Accrual BasisExplanation / Answer
1 Procedure and Authority of Payrolls: Payroll expenses is main area of concern because $2600/- is excess paid from the budgeted figure. It may be due to weak internal control so management should follow the following remedies to strengthen its internal control: In case of electronic payment system ensure system password should changed frequently. Payroll officer should not calculate their own pay. Segregate the payroll preparation from the disbursement. With this only the eligible staff can get their incentives correspondence to their work done.
2 Validation Control: In order to prevent physical stock internal control is required in this area i.e. proper goods for production are procure and to ensure that right goods at right price for optimum production management should consider following Purchase order should be matched with Supplier Invoices. Receiving Challans should be matched with Supplier Invoices. Available discount is considered before making a payment by authorized person. With this abnormal loss as well normal loss can be controlled which can be occur due to low quality products and payment can be granted only for right orders.
3 Document Control : lack of control at receiving Department may lead to financial loss so management ensure that: Receiving reports should be pre numbered and in sequence Copies of receiving challan should provide to accountants payable and purchasing department. With this work of one department will be check by another department .
4 Approval Authority level: Authority level for staff for Payments Such as Insurance Expenses are $550 more than budgeted Figure and management should ensure that there is proper authority is assigned for : The payment of insurance premium against the policy cover availed for organisation. Payment under insurance head should not involve personal insurance policies of employees. With this only relevant payments can be made by authorized person.
5 Physical Control : With this depreciation can be claimed only for asset exist for the organisation. Management ensure that excessive depreciation should recorded in books by showing fake machinery.
6 Exception Reports: Such as Interest is not considered in budget so there should be Exception Reports generated by system which gives an alert to management for an exception expenses i.e. such expense is real or fake.
7 Segregation of duties: cash receiving department should be different from cash deposit in bank department .so that embezzlement of cash can be prevented.
8 Assignment of responsibility: Responsibility of the staff should be properly assigned such as staff responsible to take equipments at rent should manage its expenses at budget level and in case of deficiency should given the written reason to management.
9 Employee knowledge and skill: Recruitment department should hire only employees who have specialized knowledge ,skill and competency in their respective field so that payroll made to right person for right job.
10 Management Supervision ,monitoring and review: management should regular check the crucial areas of the organisation and should also in routine contact with the personnel to compare the actual result with budgeted and take steps in case of deficiencies.
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