PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION – MANILA

826 R. Papa St., Sampaloc, Manila

FH COMMERCIAL, INC.
(Your One Source Of Gaskets, Packings and Seals)

April 10, 2017 - May 26, 2017

SUBMITTED BY:
Fadriquela, Donnabelle B.
Accounting 17
Synthesis Report 1
BRIEF HISTORY OF THE COMPANY

FH COMMERCIAL, INC. was established in 1983 as a single proprietor and

incorporated after three years. The company’s main products are gaskets,

packings & seals, and other industrial items, such as high temperature textile

rope, tapes, cloth for heat protection, packing and insulation, sight glasses,

level gauges and accessories, compression tube fittings, pipe couplings, ball &

needle valves for instrumentation, lubricants, engineering plastic, felt, rubber,

metallic and fabric expansion joints, bolts and nuts, industrial valves, blanket

and preformed insulation for pipe and equipment and many others. Their major

customer includes oil refineries, petrochemical industries and power plants. We

also cater to food processing plants, construction companies, cement plants,

sugar centrals, mining and other industrial plants. After two decade in the

business, their network of distribution has covered the whole Philippines with

branches and dealers in different parts of the country. At present, FH

COMMERCIAL, INC. has an asset of more than 86 million pesos and

manpower resources of 50 people. Their head office is a four story building,

built on a 220 sq. meter lot, just 600 meters away from Bonifacio Monument.

Second floor is their sales and technical department while accounting and

finance occupy third floor. Ground floor is their receiving and dispatch area,

fourth floor is use as warehouse. Their main warehouse is a 3 story building

built on 550 sq. meter lot, located about 300 meters away, along Manga Road.

Our fabrication shop is still on a 300 sq. meter lot along Orange road. They

have a pool of technical and dependable work force that respond to urgent call

of customer twenty four hours 7 days a week (24/7).

 NATURE OF PRODUCTS OR SERVICES

FH Commercial, Inc. is a licensed gasket manufacturer of Lamons Gasket

Co., USA. Today, they already have their own in-house machining facilities and

materials that enable them to make standard Spiral Wound Gaskets and

Double Jacketed Heat Exchanger, machined gaskets and other gaskets

materials. They also have stocks of semi-finished and raw material for

manufacture of fabric expansion joint. Gasket is a mechanical seal which fills

the space between two or more mating surfaces, generally to prevent leakage

from or into the joined objects while under compression. Their main products

are metallic products such as, double jacketed gasket, the most commonly

used style of gaskets in heat exchanger applications, ring joints and spiral

wound gaskets. Their Non-metallic products includes compressed asbestos

and non-asbestos gaskets, it is specifically formulated to provide an effective

seal against most acids in the process industries, cork gasket, which it exhibits

good oil, solvent and fuel resistance and graphite gasket, which is especially

noted for dimensional stability in high temperatures and pressure fluctuations.

They offer equivalent for high performance packings such as, Fluograf®, a

highly versatile product that adds a new dimension to compression packing

reliability and performance, and liongraf, a highly reliable pump and valve

packing based on graphite and PTFE yarn that is thermally stabilised then

lubricated with a silicone-free compound. They also manufactures expansion

joint gaskets, which is use to reduce mechanical noises and isolate mechanical

vibrations, and insulations, to avoid electrical charge continuity and it is mostly

used at above ground & U/G interphase to avoid cathodic protection.

ORGANIZATIONAL CHART
 BRIEF DESCRIPTION OF THE CURRENT ACCOUNTING SYSTEM/DATA

PROCESSING

A. THE ACCOUNTING APPLICATIONS CURRENTLY UTILIZED IN DATA

PROCESSING

FH Commercial Inc. is a manufacturing company who manufactures large

numbers of products. After staying in their company for two months, I’ve

learned that their accounting system is really important in their daily operations

in order to achieve their daily goals. They are using MS Access to employ their

daily operations. It provides database properties and start-up options to meet

most of the customization needs. Because the company is producing large

number of products, MS Access is capable of storing a much larger volume of

data than any other database systems. It facilitates easy creation of data

tables, retrieval of data, creation of forms, and generating of reports in different

ways. Their payroll accountant uses Access to create a database of

employees, allowing them to review salary information, demographic data and

budget numbers at a glance. They use Access databases as well to track

invoices, review accounts receivable and keep track of company finances.

Once the underlying information is entered into the Access tables, accountants

can create custom queries and forms that make finding the needed information

a lot easier. They also use MS Excel in undertaking extensive mathematical

calculations, budgeting preparing financial statements, and creating balance

sheets. Advanced features such as subtotals, power pivot tables and pivot

charts, analysis toolkit, and many templates make it easy to accomplish a wide

range of tasks.
B. IMPLICATIONS OF THE USE OF THE FOREGOING ACCOUNTING

APPLICATIONS TO THE QUALITY OF EXPECTED OUTPUT

The growing use of technology had a significant impact on accounting

system. It has enabled businesses to develop and use computerized systems

to store and record financial transactions. It also makes the accountant’s role

more convenient and efficient. With the use of these databases, the

accountants can make statistic analyses, financial forecasts and calculations

with great efficiency. It has allowed the accountant to move from a desk,

covered with papers making calculations that took hours to be completed, to

more dynamic ways of performing and, it has allowed the accountant to find

new challenges and much more to offer than in the past. By using these

accounting system, it allows the company to create individual reports quickly

and easily for management decision making. It also increased functionality of

the employees, improved the accuracy of the information, faster data

processing, and better external reporting.

C. OBSERVABLE STRENGTHS AND WEAKNESSES/PROBLEMS OF THE

CURRENT ACCOUNTING

FH Commercial, Inc.’s current accounting system is consumer-friendly,

easy to install, learn and use. It enables accountants to manage accounts and

perform accounting operations using computer software applications. It keeps

the work force more focused and efficient. Faster and more efficient processing

of financial reports simplify the process of management decision-making.

Employees are able to automate cumbersome and labor-intensive accounting

processes, and focus on other important and strategic activities. Advanced

accounting software, with its inbuilt mechanism, ensures stringent risk and

compliance procedures to meet the regulatory standards. Comprehensive

business performance and sales reports help management take important

decisions on revenue-generating strategy.

But everything in this world has its own downsides. All of their accounting

software require data be entered manually. If the data are not examined for

accuracy and completeness, the reports generated by accounting software will

lead to misconception. Many of the accounting software needs to be

customized to match business requirements. It is necessary for management to

train employees specifically to access and use the accounting software, which

involves huge cost and time. If tax rates and rules change, accounting software

used to calculate taxes must be rewritten accordingly to avoid errors. Power

failure, computer viruses and hackers may affect computerized systems if

proper precautionary and security measures are not in place.

D. INTERNAL CONTROLS AND DATA SECURITY MEASURES

FH Commercial, Inc. will maintain an adequate system of internal

accounting controls to provide management with reasonable assurance as to

the safeguarding of assets against losses from unauthorized use or disposition

and the reliability of financial records for preparing financial statements and

maintaining accountability of assets.

The characteristics of an adequate system of internal control will include

the following:

 Segregation of duties, when possible, within the organization

based on functional responsibilities.

  A system of authorization and record retention.

 A degree of personnel competence commensurate with

responsibilities.

To achieve these objectives, the following controls will be in place:

 No one person shall have complete control over all phases of any

significant transaction.

 Whenever possible, the flow of work will be from one employee to

another so that the work of the second, without duplicating that of

the first, provides a check upon it.

 Record-keeping will be separated from operations or the handling

and custody of assets.

 Responsibilities in the accounting department will be clearly

established and followed as closely as possible

E. RECOMMENDATIONS ON SYSTEM IMPROVEMENT

Delivering a core function that lies at the heart of the company, all of their

departments, especially accounting department, always has to be efficient.

Making errors and creating delays in their work should not be an option. As I

was staying in their company for two months, I’ve seen some of their

shortcomings when it comes to meeting their deadlines. I believe that the

company established deadlines for an effective operations. But I think it is

better if the departments commingles with one another. Their accounting

department does not function in isolation and they often depend on other

divisions for their data which is same with other departments, such as sales and
technical department. It is better if they find ways in which the data can be

submitted on time. If there is friction between various departments and the

accounting team, find ways to solve these issues. Let the department head

explain concerns to the other department heads and let them explain theirs.

The company has to ensure that data flows smoothly between the various

divisions. The performance of all the departments have to be constantly

monitored, as they have access to essential data that can turn around a

business. Whenever they feel that one department is lagging, take action

quickly and make sure that they get back on track again.

SUMMARY OF THE COMPANY’S ACCOUNTING PRACTICES

FH Commercial, Inc.’s accounting practices are intended to enforce their

accounting guidelines and policies in various financial-related areas. It exists as

the daily recording of financial data that is important to the evaluation and

monitoring of the firm's economic activities. It refers to the normal, practical

application of accounting or auditing policies that occurs within a business.

The following are some of the FH Commercial Inc.’s accounting practices in

fulfilling its fiscal responsibility and in maintaining its accountability to its funding

sources:

1. FINANCIAL REPORTS - All monthly, internal financial reports will be

completed and distributed to FH Commercial, Inc.’s accounting department by

the 15th day of the following month.

The monthly, internal financial reports consist of the following:

 Trial Balance

 Balance Sheet

 Statement of Cash flows

 Profit or Loss Statement

In order to satisfy these reporting requirements, FH Commercial, Inc. shall set

up and utilize a report tickler file. The tickler file will identify the funding source,

type of report, due date and date filed.

2. CASH MANAGEMENT - FH Commercial, Inc. require a significant amount

of cash to operate smoothly. To avoid cash shortages, the accounting

department needs to assess how much cash is needed at any given time. It is a

best practice to know their cash needs well enough to anticipate and plan for

cash shortfalls. After knowing their cash needs, they can put together a long-

and short-term plan for generating cash in advance of running out. If they can

anticipate your needs well enough in advance, equity or debt issuance are

good options. Shorter-term, useful strategies for generating cash quickly

include slowing cash outflows through delaying payment of invoices and

reducing inventory.

3. ACCOUNTS RECEIVABLE MANAGEMENT - Establishing an effective

account receivable management strategy is a crucial part of running a

successful business. FH Commercial, Inc. maintains accurate customer data

to ensure the accuracy of customer accounts and the information is a crucial

part of establishing and maintaining an effective accounts receivable process.

Customer accounts should be audited on a consistent basis to check for

anomalies like unusual or inappropriate payment terms, credit limits, discounts

and the like. Changes to customer data should be properly documented, and

controls should be put in place to prevent unauthorized people from being able

to access or edit data. They also asses their accounts receivable regularly.

They establish a specific schedule for monitoring and assessing the state of

their accounts receivable.

4. ACCOUNTS PAYABLE MANAGEMENT - All invoices, check requests,

and travel vouchers must be approved for payment by the accounting head.

To establish FH Commercial, Inc.'s obligation for payment of invoices, all

invoices are matched with Purchase Orders and signed receiving slips. Copies

of code sheets and invoices coded are to be reviewed by the Accounting Head

to ensure that the proper expense account is charged to the proper

program/grant in the appropriate accounting period. Code sheets and invoices

must be reviewed by the Accounting Manager for accuracy before the vouchers

are posted to the general ledger. All support documentation must be intact

before any invoice, check request or travel voucher is entered into the "open"

A/P files. Open invoices are to be filed by vendor name and payment due dates.

5. INVENTORY MANAGEMENT - FH Commercial, Inc. Uses inventory control

to maximize the use of their inventories. The goal of inventory control is to

generate the maximum profit from the least amount of inventory investment

without intruding upon customer satisfaction levels. The company assures that

there must be enough raw materials inventory on hand to ensure that new jobs
are launched in the production process in a timely manner, but not so much that

the company is investing in an inordinate amount of inventory.

6. PAYROLL - Employees are paid twice a month, on the 15th and the last day

of the month. The payroll is processed using FH Commercial, Inc.’s in-house

computer system. Employee signed time sheets must be submitted to the

payroll head for approval prior to payment. In no instances, will an employee

receive a paycheck if he/she has not submitted a properly signed detailed time

sheet for the prior pay period. All employees who have access to any payroll

information will be required to sign a Payroll Confidentiality Form.

THE TECHNICAL SKILLS AND “SOFT SKILLS” THAT AN ASPIRING

ACCOUNTANT SHOULD POSSESS TO SUCCEED IN THE WORKPLACE

1. Writing and Oral Communications

English class may not have been your favorite, nevertheless writing skills

that convey intelligence are mandatory for success in today's

communication-intensive workplace. The effectiveness of words is not

measured by volume; in fact, just like with so many other things, less is more.

This is especially true for busy work colleagues. Emails can be shorter and

stronger, and presentations more direct and engaging. When you get to the

point in your writing, you’ll find it positively influences your speaking, as well.
2. Critical thinking

This catch-all phrase gets a little muddy when scholars talk about it, but

critical thinking skills are essential. Think of it this way: When you look at a

spreadsheet, what do you see? Just a series of numbers, or a deeper story

inside?

Spotting patterns, trends or coming up with a coherent strategy is critical

thinking. Developing a long-term financial plan for a client requires critical

thinking. This is a soft skill that you can develop over time, through experience

and actively seeking information about how others do what you do. Try to think

outside the box when you encounter a problem. Rather than doing the first thing

that comes to mind, search for a creative solution. You may have thought of the

best solution first, but you’ll never know until you explore.

3. Persuasion

Human resources professionals will commonly say that "building

consensus" is a key characteristic for a leader. The fact is that, whether you're

on a management track at work or preparing to sit for your CPA exam for the

first time, you need to be adept at persuasion. This isn't about always being

right or being a salesperson. Instead, think of persuasion as an ability to gain

trust and build relationships.

Accountants need to persuade their clients throughout their relationships

and expertise. Good managers persuade team members to work together to

achieve a goal. Persuasion is as much about your own self-confidence as your

ability to analyze a situation and come up with a plan.

4. Technology/Computer Skills
 Knowing the laws and how to pull insightful data out of a balance sheet are

critical to an accountant’s success. However, if you can't use the software and

other tools necessary to do your job – advancing in your career will be tough.

Think about the people in your own office. Chances are good that the

employees who are comfortable with technology, who embrace change and are

constantly on the look out for better tools appear to be more confident in the

workplace. Training, whether at home or through a structured program, can

help give you the technical know-how you deserve.

5. Leadership

All of the accounting soft skills come down to this collective term –

leadership. This quality is not just about being a good boss or a trusted

advocate, it's about earning respect through effort. Good leaders communicate

well; they think about their audience and how their words are interpreted. They

are also big-picture strategic and think about the long-term. It’s important to

have a balance of “quick wins” while maintaining the patience to wait for

rewards down the line.

Leaders are valued by supervisors, coworkers and clients alike. To develop

your leadership soft skills, think about taking management courses, getting a

mentor or just making it a life priority this year until it’s second nature.

THE COMPANY’S ETHICAL AND PROFESSIONAL STANDARDS AND

THEIR PERCEIVED IMPLICATIONS TO PEOPLE IN THE WORKPLACE

 FH Commercial, Inc. established company policies that define their

standards for behavior and govern the conduct of the management and their

employees. These guidelines extend beyond their internal organization as the

basis for how we do business with their customers, suppliers, and business

partners.

The following standards of conduct will be enforced at all organizational

levels. Anyone who violates them will be subject to prompt disciplinary action,

which may include dismissal for cause.

 COMPLIANCE WITH LAWS, RULES AND REGULATIONS

It is the company’s policy to be a good corporate citizen.

Wherever they do business, employees and head officers of the company

are required to comply with all applicable laws, rules and regulations.

Employees are also responsible for honoring and abiding by the contracts that

they have entered into with other parties, including intellectual property licenses

(e.g., software licenses related to software packages used in their business),

confidentiality agreements, contracts with our customers and suppliers, and

undertakings and other commitments they may have. The standards in this

policy must of course be interpreted in the context of applicable law and

practice in the Philippines, as well as good common sense. Any suspected or

actual violation of any applicable law, rule or regulation or our contractual

obligations or undertakings should be reported immediately.

 CONFIDENTIAL INFORMATION

Information is a valuable corporate asset.

All employees and head officers have an obligation to safeguard

confidential information about the company and confidential information that

their suppliers and customers have entrusted to them. Generally speaking,

confidential information is information that has not been disclosed to the

general public or that gives our business an advantage over our competitors or

could expose them to harm or liability if released prematurely or

inappropriately.

Employees and head officers must remain conscious at all times of their

obligation to protect confidential information against unauthorized disclosure. In

no event should confidential information be disclosed to third parties in violation

of the company’s Policy and Procedure on Confidential Information. This is an

obligation not limited to the duration of employment or service; the obligation

continues after an employee or head officer leaves the company.

 PROTECTION AND USE OF COMPANY ASSETS

Safeguarding the company’s assets and the assets of others entrusted to

the company is the responsibility of all employees and head officers. Theft,

carelessness and waste have a direct impact on the company’s profitability.

They should use such assets efficiently and maintain such assets with care and

respect, while guarding against waste and abuse. Look for opportunities to

improve performance while reducing costs. The use of company time,

materials, assets or facilities for purposes unrelated to the company’s business,

or the removal or borrowing of company property, is prohibited, except where

such use or removal is for purposes of supporting the occasional community

service activity that has been endorsed by the company and where such use or

removal has been approved by our supervisor.

 CONFLICT OF INTEREST

Every employee and head officers, is expected to make decisions in the

best interest of the Company and not for personal gain.

A conflict of interest can arise when an employee, officer or director takes

action or has a personal interest that may make it difficult to perform his or her

work for the Company objectively and effectively. This may include outside

business interests, outside employment, outside investments and business

relationships with friends or relatives that could cause a conflict of interest.

Employees and head officers should report potential conflicts of interest and

are prohibited from taking for themselves personally opportunities that are

discovered or may be available through the use of the Company's property,

information or position. Employees are prohibited from accepting meals,

entertainment, travel, gratuities, merchandise or promotional material that

could influence objectivity in making business decisions.

 FAIR DEALING

Employees and head officers, should endeavor to deal fairly with the

Company's customers and suppliers and each other. No one should take unfair

advantage of anyone else through manipulation or misrepresentation of

material facts.