Reference no: EM132297107

Jonathan LLC

Mr. Paul Has working as senior accountant of Jonathan LLC for the last five years. Two month before Mr. Paul has given resignation and agreed to work for three months until the management finds a suitable replacement for his position. The accounts department consists of 5 employers including Mr. Paul at present and the assistant accountant has been given signing authority of supplier cheques and some of the functions of senior accountant also assigned to him.

It has been noted that large amount of outstanding for the suppliers were pending and few of the suppliers hint stop supplying goods to Jonathan LLC from last month. The credit period was extended to customers to improve the sales and most of the customers have not settled the dues on time Few of the customers an disappeared and unable to find them in the market The assistant accountant has suggested to the management that to meet the temporary financial difficulties, Jonathan LLC should approach the bank for additional overdraft facilities to overcome the cash-flow difficulties.

Managing director proposed to appoint an internal auditor to find out the reasons for present financial difficulties and rectify weakness in record maintenance by the staff in finance department. He further commented that the computer system that has been installed many years ago is not supporting increased number of transactions in present times.

In the meantime, the managing director has informed the assistant accountant that there is a new project is going to be awarded to Jonathan LLC in three months' time. There is an immediate fund requirement of RO 1,000,000 to be raised. The assistant accountant to evaluate the options available for raising funds to meet the financial obligation of Jonathan LLC.

You have been appointed as senior accountant to Jonathan LLC to function from the next month to take over many tasks handed over to the assistant accountant.

Task 1

The reason for the internal control weaknesses and what are the actions that you can proposed to the management improve the existing internal control system. You also need to state in your report what are the consequence of having weak internal control system in the organization. (Your report should be supported with proper explanations with reasonable number of examples).

Task 2

There are many ways to fund any projects in businesses. Based on the given case identify what are the possible ways of funding Jonathan LLC to meet the requirements of RO 1.000.000. Justify what is the best method of obtaining finance for the new project and justify your suggestion with proper reasons.