Sy Risk Analysis Essay

651 Words Nov 20th, 2014 3 Pages
Sy’s Fish Company Risk Analysis & Recommendations

As Sy’s business grows there are certain risks and that must be acknowledged and addressed in order to make operations run smoothly and efficiently. Below are the risks that have been identified and recommendations to mitigate them.

Risk: Sending documents to Sy via mail.
There is a high probability that the documents could be lost and therefore the transactions never recorded. Mail can take up to a week to receive so the timing would be affected. Transactions would be recorded in the wrong period and adjustments would have to be made to correct this.

Sy should implement an information technology system so documents can be recorded in a timely manner and not lost
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She records the document being received on the same day she issues payment. This is a risk because it effects what period the documents are recorded.
Natalie pays all fishers in one lump sum instead of separating each payment. This is risky because it could be recorded incorrectly and there is no way to know which order was input wrong.

She should record each miscellaneous payable document on the date received and the date paid should be when the check was written.
She should record each fisher payable document individually.

Risk: Bad Debt
Sy does not know how much each customer owes or when they will receive payment. This is a risk because he will not be able to account for bad debt.

He should make an accounts receivable ledger to study which customers have not paid and how long they are past due.
By keeping records it will be easier to account for bad debt.

Risk: Payables checking account
Money in the payables checking accounts that has not been claimed cannot be traced back to the vendor. This affects revenue recognition and is a risk because Sy does not know where this money is going.

There should be a record of what vendors have cashed their checks.
Implement a direct deposit system to pay vendors and fishers.

Risk: AFS securities
There is no documentation on Sy’s AFS securities. There are no footnotes or explanations on the beginning balance sheet (Appendix 1).
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