Coursework 1 Case Study: Fabrik Clothing Ltd (FC Ltd)
Company background
Fabrik Clothing Ltd (FC Ltd) was established as a private limited company in 2015. Susan
Stimmer, the Founder and Director of FC Ltd, studied Business Management in a London
based university. After graduation, Susan created this brand combining the knowledge she
gained from the University and her passion for fashion.
Su
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Coursework 1
Case Study:
Fabrik Clothing Ltd (FC Ltd)
Company background
Fabrik Clothing Ltd (FC Ltd) was established as a private limited company in 2015. Susan
Stimmer, the Founder and Director of FC Ltd, studied Business Management in a London
based university. After graduation, Susan created this brand combining the knowledge she
gained from the University and her passion for fashion.
Susan believes in supporting local businesses and start-ups like herself. Therefore, the company
works with local talented designers. All items are sourced and produced in the UK.
Susan started the business by selling locally sourced accessories at one of the stalls at a Sunday
Market in St Albans when she was a student. Her unique taste in fashion gained her a group of
loyal customers and a steady growth in turnover. In year 2015, Susan signed a rental lease for
a shop based in St Albans High Street. The business was doing well, so she hired two sales
staff to help her with stocking and dealing with customers.
The business has been growing steadily due to exceptional customer service, high quality of
products and competitive pricing. In 2016, Susan hired three additional staff and rented another
store in St Albans as a result of the expansion.
Task 1
FC Ltd currently uses Microsoft Excel to meet its information processing and reporting needs.
The current organisation structure is presented in the organisation chart below:
Chart 1 – organisation chart
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Susan receives a weekly sales and expenses report from store managers: Rachel and Caroline,
and a monthly Statement of Income and Expenses from Accounts Assistant: David. The
reporting process is presented in the information flowchart below:
Chart 2 – data flow diagram
Susan is feeling uneasy with the information she currently receives, due to errors made on
numerous occasions. She doesn’t believe the information she receives can adequately support
her decisions.
Required: identify and explain the attributes of useful information in a business (you may
find lecture 1 and chapter 1, Romney textbook useful in completing this task).
Task 2
Sales
All the sales are made in cash or credit card. All store assistants are expected to balance the till
with cash at end of the shift daily. All the credit card sales are checked by David, accounts
assistant, at end of every month.
There had been numerous occasions when the cash tills did not balance, hence the differences
had to be written off as losses. Susan suspects that an employee is stealing from the till, but no
investigation has been launched.
Credit card sales are manually checked by David comparing bank statements to credit card
receipts every month. It is a time consuming process. Due to time pressure, and lack of training,
a number of errors have been made.
Required: identify threats to the various processes in the revenue cycle (you may find
lecture 3, 4, 5, 7 and chapter 5-10&12 of Romney textbook useful in completing this task).
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Task 3
Despite the loss in sales, Susan is reluctant to launch an internal investigation into the potential
fraudulent activities, as she feels it is a waste of money to make any changes to the existing
practice, and the loss is not significant.
Tom is a newly recruited member of staff, he joined FC Ltd two weeks ago, after he completed
the induction week. He still feels he lacks adequate information to perform his job and asked
Rachel, the branch manager, if he could have a copy of the customer’s refund policy. Rachel said
there is no formal policy in place, and asked Tom to speak to her whenever customers ask for
a refund. Tom is frustrated with this answer, but didn’t say more. He feels he is not learning
much from this job.
Required: comment on the company’s internal control environment (You may find lecture
4 and chapter 7-10 of Romney textbook useful in completing this task).
Task 4
In 2019, the company’s turnover meets the VAT registration threshold. Therefore, Susan hired
you to help her complete the company’s first VAT return.
Fabrik Clothing Ltd has a manual record system; all the receipts and invoices were filed away
in storage. Susan recorded all sales and expenses since December 2016 onto Excel, but her
Excel skills are limited. Therefore she needs your help in preparing the VAT return.
Required: complete the VAT return using pivot table function in Excel, in the format
required. (you may find 3 Excel videos on My Learning and weekly computer lab useful in
completing this task).
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