YNF Project

The report should include:

1. 2022 Q1 revenue and income (before tax) for each YNF store (you need to choose a proper chart)

2. Changes/Trends of Q1 revenue and income for YNF (not each store) over time by using the 2022 and historical data (you need to choose a proper chart)

3. Store analysis to show each store’s performance (you do not need to include all 12 stores) – Find any interesting stories/comparisons

4. Potential risks/threats of employees’ fraud or errors & possible Control Activities mitigating them (Risk analysis begins with stating what the goals/objectives are – COSO framework). You need to include the goals/objectives of YNF

Do the work on Excel the upload into a word document with all the charts

Store#
Store Location
FS001 Boston
FS002 New York
FS003 Philadelphia
FS004 Washington DC
FS005 Miami
FS006 New Orleans
FS007 Austin
FS008 Phoenix
FS009 San Diego
FS010 San Francisco
FS011 Portland
FS012 Seattle
Totals
All
Income Statement
Totals
revenue
$178,463.50
$153,733.00
$165,484.50
$189,996.00
$201,815.00
$175,805.50
$166,982.00
$193,946.00
$197,704.00
$187,508.00
$145,201.00
$148,972.00
$2,105,610.50
cogs
$94,050.13
$80,190.83
$87,341.93
$100,950.66
$107,818.44
$91,526.95
$89,433.40
$100,441.32
$103,883.28
$99,858.90
$76,082.31
$78,395.24
$1,109,973.39
gross profit
$84,413.37
$73,542.17
$78,142.57
$89,045.34
$93,996.56
$84,278.55
$77,548.60
$93,504.68
$93,820.72
$87,649.10
$69,118.69
$70,576.76
$995,637.11
total revenue
$2,105,610.50
total cogs
$1,109,973.39
total gp
$995,637.11
payroll expense
$42,370.47
$38,889.70
$41,396.37
$40,941.33
$41,056.70
$42,307.05
$44,232.53
$45,152.42
$46,897.79
$44,157.78
$44,307.40
$43,398.66
$515,108.20
admin expense
$1,224.00
$1,240.00
$1,906.00
$1,303.00
$1,363.00
$1,145.00
$1,237.00
$1,296.00
$1,194.00
$1,231.00
$1,253.00
$1,119.00
$15,511.00
qtrly truck dep
$1,100.00
$600.00
$4,150.00
$1,050.00
$1,175.00
$850.00
$1,225.00
$1,150.00
$1,100.00
$750.00
$500.00
$650.00
$14,300.00
qtrly store dep
$468.75
$612.50
$355.63
$471.88
$281.25
$675.00
$600.00
$693.13
$840.63
$499.69
$515.63
$643.13
$6,657.19
total pay expense
total admin expense
$515,108.20
$15,511.00
total truck dep
$14,300.00
total store dep
$6,657.19
total sg&a
$45,163.22
$41,342.20
$47,808.00
$43,766.21
$43,875.95
$44,977.05
$47,294.53
$48,291.55
$50,032.42
$46,638.47
$46,576.03
$45,810.79
$551,576.39
income before tax
$39,250.15
$32,199.97
$30,334.58
$45,279.14
$50,120.61
$39,301.50
$30,254.07
$45,213.14
$43,788.31
$41,010.63
$22,542.67
$24,765.98
$444,060.72
gp%
47.30%
47.84%
47.22%
46.87%
46.58%
47.94%
46.44%
48.21%
47.46%
46.74%
47.60%
47.38%
47.28%
sg&a%
25.31%
26.89%
28.89%
23.04%
21.74%
25.58%
28.32%
24.90%
25.31%
24.87%
32.08%
30.75%
26.20%
inc%
21.99%
20.95%
18.33%
23.83%
24.83%
22.36%
18.12%
23.31%
22.15%
21.87%
15.53%
16.62%
21.09%
total sg& expense
$551,576.39
total income
$444,060.72
gp%
47.28%
sg&a%
26.20%
inc%
21.09%
Store#
FS001
FS002
FS003
FS004
FS005
FS006
FS007
FS008
FS009
FS010
FS011
FS012
YNF Total
Revenue 2021-1
$167,395.23
$141,656.67
$160,683.25
$172,993.12
$183,351.40
$169,008.44
$152,142.24
$182,929.92
$189,177.16
$178,625.28
$136,213.85
$136,121.36
$1,970,297.92
Revenue 2020-1
$155,677.56
$130,324.14
$154,255.92
$162,613.53
$176,017.34
$155,487.76
$146,056.55
$168,295.53
$175,934.76
$173,266.52
$126,678.88
$129,315.29
$1,853,923.78
Revenue 2019-1
$143,223.35
$125,111.17
$146,543.12
$159,361.26
$170,736.82
$147,713.37
$135,832.59
$161,563.71
$168,897.37
$168,068.53
$119,078.15
$121,556.37
$1,767,685.81
Revenue 2018-1
$137,494.42
$118,855.61
$140,681.40
$151,393.20
$158,785.25
$137,373.44
$133,115.94
$151,869.88
$157,074.55
$161,345.78
$114,315.02
$113,047.43
$1,675,351.92
Revenue 2017-1
$131,994.64
$115,289.94
$130,833.70
$146,851.40
$149,258.13
$129,131.03
$61,233.33
$142,757.69
$72,254.29
$150,051.58
$112,028.72
$105,134.11
$1,446,818.56
Income 2021-1
$36,654.18
$30,670.32
$27,876.98
$43,172.79
$46,651.52
$35,599.94
$27,873.20
$41,504.37
$39,973.80
$36,967.43
$20,597.98
$23,803.59
$411,346.10
Income 2020-1
$35,188.02
$29,136.80
$26,761.90
$40,582.43
$44,785.46
$34,531.95
$25,643.34
$40,259.24
$37,975.11
$34,749.38
$19,362.10
$23,327.52
$392,303.25
Income 2019-1
$32,372.97
$26,805.86
$24,620.95
$39,364.95
$43,889.75
$33,150.67
$25,130.48
$37,441.09
$36,076.36
$33,011.92
$18,587.61
$22,627.69
$373,080.30
Income 2018-1
$31,078.05
$25,733.62
$22,897.48
$37,396.70
$41,256.36
$30,830.12
$23,371.34
$35,569.04
$34,633.30
$32,021.56
$17,472.36
$21,270.03
$353,529.96
Income 2017-1
$29,524.15
$24,189.60
$21,065.68
$34,404.97
$39,606.11
$29,288.62
$11,101.39
$33,079.21
$16,104.48
$29,780.05
$16,074.57
$20,844.63
$305,063.46
Y Not Flowers Project
Summary of Interview with Forrest
Forrest Green followed in the footsteps of his Father, Tony Green, and spent most of his adult life
working with flowers. He worked for a large commercial flower grower while he got his online degree in
horticulture for Colorado State University. After graduation, he traveled extensively to see how flowers
are grown around the world. He spent a year at the Dutch Flower Auction where European flower
growers, members of the Dutch Flower Wholesale Association, assembled their flowers in a 2 million
square meter warehouse for buyers from around the world. He then spent some time in Kenya, which is
surprisingly the 3rd largest exporter of cut flowers in the world. Kenya enjoys a sunny climate that
enables high-quality blossoms to be grown year-round. After working with large flower distribution
organizations, he recognized the inherent problems created by shipping flowers around the world from
remote locations. First, it was getting more expense as the cost of jet fuel and transportation increases.
Second, consumers were becoming more demanding. They wanted fresher flowers that lasted longer.
Forrest returned to the U.S. intent on establishing his own flower distribution business with a goal of
delivering high quality, long-lasting cut flowers to his customers. There is already a large network of
greenhouse growers in the U.S. As of 2015, the top 100 greenhouse growers operated greenhouse
facilities encompassing over 228,900,000 square feet. Forrest planned to use his knowledge of flowers
and flower distribution processes to open distribution centers that could deliver fresh-cut flowers from
growers to customers in one day. To honor his Father, he opened his first Y Not Flowers Inc. store in
2009 (Y Not is Tony spelled backward). Y Not Flowers (hereafter YNF) serves wholesale customers, such
as flower shops, in major metropolitan areas around the U.S. Each YNF location (Forrest refers to them
as stores) offers customers over 20 types of fresh cut flowers, such as roses, carnations, tulips, etc. Their
motto is Fresh is Best.
On the advice of counsel, Forrest incorporated Y Not Flowers just before he opened the first store. He
invested $1,000,000 in the business (contributed capital) and is currently the sole shareholder. His board
of directors include Abby, his sister-in-law, who also works at the Seattle store, and Herb, who works at
the San Diego store. The board meets annually to discuss expansion plans. They are currently concerned
about managing any expansion, creating incentives for the employees to deliver the freshest flowers,
and finding new ways to leverage technology in the expansion. Abby recently pointed out that the
employee handbook is seriously outdated and not all stores were consistent in their business processes.
Forrest recognized that his supply chain was critical to his success. Therefore, each YNF store works with
local growers in each metropolitan area. They buy from smaller, more responsive, growers that produce
the best flowers. Each YNF store is really just a small warehouse designed to expedite delivery from
growers to customers. YNF operates a fleet of trucks used to pick up flowers from growers daily. At the
YNF store, the flowers are carefully bundled for delivery to customers each afternoon. Thus, YNF
maintains no inventory and flowers move from growers to customers in less than one day.
Most recordkeeping takes place locally. Each store keeps track of its purchases, inventories, sales, etc.
The only centralized functions were writing checks, receiving payments from customers, and processing
payroll. The stores regularly email records to Mia and then forward hard-copy documents each month,
so she can monitor operations and provide updates to Forrest. Since, Forrest plans to continue
expanding YNF, he wants to improve his accounting systems. He believes that eventually he should use
an online accounting system (cloud computing) and have each store submit transactions daily via the
internet from various smart devices, such as smartphones and tables. First, he wants a thorough
evaluation of the costs and benefits of this change.
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Y Not Flowers Project
Summary of Interview with Eli, AP Clerk, Philadelphia PA Store
Eli prepares checks for payments to growers and other vendors. The stores email purchase documents
to Eli each week (and at the end of the month). He pays all vendors at the end of the month for
purchases during the month. If there are multiple purchases from the same grower or other vendor
during the month, Eli writes one check for all the purchases. After processing the payments through
YNF’s online banking application, Eli updates his AP spreadsheet and emails the cash disbursement
records to Mia, the accounting clerk. Eli is a little worried, though. He has no ability to verify that the
checks are going to valid vendors. He just pays the vendor listed on the purchase documents. He felt
that YNF should have an approved vendor list. Additionally, he wanted Forrest to consider using a
company credit card for most purchases. It would reduce the workload, errors, and delays involved with
emailing documents between stores.
Summary of Interview with Paul, Supervisor, Portland OR Store
Paul is the supervisor for the Portland store, and his duties are similar to supervisor duties at all the
stores. Being supervisor is only a part-time responsibility. Most of the time, Paul is just another
employee at the Portland store, buying flowers, preparing flowers for delivery to customers, making
deliveries, etc.
Customers call to place orders for future flowers deliveries. Usually, they order about one week in
advance. One order can (and typically does) involve several types of flowers. The store employees know
most of the customers by name and the types of flowers they prefer. They also know what types of
flowers may not be available, so they try to steer the orders to other flowers. They record customer
orders in our Excel-based order log. Around 4:30 AM each morning, Paul reviews the log to determine
what they need to purchase for the day.
Store employees then use YNF trucks to pick up flowers from the local growers. They carefully select the
freshest flowers, load the truck, and return to the store. They usually give the grower a purchase
document that identifies the purchase number (sequential), the grower number, the purchasing
employee, the truck VIN (to track mileage), the type of flowers, the quantity purchased, and the
purchase price. The price can fluctuate depending on the time of year and demand for that particular
type of flower. On occasion, one purchase can involve multiple types of flowers, although typically one
purchase is for one type of flowers. Occasionally, the employees forget to take the purchase documents
with them. In that case, they mail the document to the flower vendor after they return to the store.
When the truck(s) returns to the store, there is a flurry of activity. Paul collects the purchase documents
to check them for any errors. Then, he scans them and emails them to Eli for payment. While he does
that, an employee unloads the truck, inspect the flowers, cull out the less desirable flowers, and package
them for delivery to customers in the afternoon. Paul then prepares the delivery documents. Those
documents list the customers’ original order number, the order date, the delivery (sale) date, the truck
VIN used to deliver the flowers (to track mileage), the types and quantities of flowers to be delivered,
and the sale price. YNF sets flower prices for all stores. Those prices are updated periodically based on
expected purchase prices. Sometimes, because of weather or other factors, the wholesale prices spike,
and Forrest does not get information in time to raise prices. Paul did not come out and say it, but he
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Y Not Flowers Project
seemed a little frustrated. When Forrest was not available, it was sometimes hard to check policy and
get a quick decision. Nevertheless, Paul was happy working for YNF.
After the flowers are packaged, employees load them into the truck(s) for delivery, normally early each
afternoon. Customers receive the flowers and the corresponding delivery document. Customers pay for
all their deliveries at the end of the month, sending payments to the address listed on the delivery
document (currently the address of the San Diego store). After delivery, Paul updates the order log with
the delivery information. Then each week, he emails copies of the updated order log to Mia and Kate.
For routine administrative purchases, Paul places orders over the phone. Then, the vendor supplies the
products or services and sends an invoice (or a monthly bill in the case of utility charges). Paul stamps
the invoice as received, scans the document, and emails it to Eli. YNF is considering getting some
business credit cards for the store supervisors. That might allow them more flexibility in purchasing
minor items. Paul thinks that would be a great improvement.
Summary of Interview with Kristine, Payroll Clerk, New York NY Store
Kristine maintains the payroll records. Each employee fills out his or her timecard each day. Supervisors
check the timecards for accuracy and update the timecard spreadsheet. At the end of each month, each
store supervisor emails the timecard spreadsheet to Kristine at the Baltimore store. Kristine then
prepares the payroll checks and sends them to the addresses designated for each employee. She creates
a spreadsheet to record the payroll. Once the payroll is processed through the YNF online banking
application, Kristine emails the timecard and payroll spreadsheets to Mia. Each quarter, Kristine
summarizes the amounts due to the IRS and state tax authorities and makes those payments. Those
checks are classified as miscellaneous purchases.
Kristine recently noticed that the payroll emails were not always coming from the store managers.
Often, other employees would send the spreadsheets. She was a little concerned about the accuracy of
the information. She thought that the timekeeping could be easily automated, which would improve
accuracy and reduce any possibility of fraud. She had mentioned that to Forrest, but he has been too
busy to look into it.
Summary of Interview with Kate, Accounts Receivable Clerk, San Diego CA Store
Kate receives payments from customers at the end of each month. She assigns sequential cash receipt
numbers to each incoming payment, recording the customer number, the receipt date, and the receipt
amount in her spreadsheet. Each day, Kate deposits all checks received in the bank and then emails the
list of cash receipts along with a copy of the deposit slip to Mia. Kate says that she is not a true accounts
receivable clerk, because she never knows how much the customer owes; she just knows how much she
received and deposited. Kate thinks that YNF should start accepting credit cards for their sales. This
would eliminate late payments, bad debts, and potential fraud. She admits that credit card fraud could
be an issue, and YNF would have to safeguard customers’ credit card information. Although the credit
card companies charge a fee, YNF could have almost instant access to the cash and the related sales
information.
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Y Not Flowers Project
Summary of Interview with Mia, Accounting Clerk, Austin TX Store
Mia had recently taken over the accounting duties for YNF and she was a little lost. She did have a
degree in accounting, but she received that degree several years ago. Anyway, it was her job to get all
the documents from Forrest and prepare the financial statements each quarter. YNF had grown so
rapidly that they still used Excel to assemble the statements. Mia hoped that soon they would have a
real accounting system.
To prepare the financial statements, Mia assembles and summarizes their financial performance as
follows.
Income Statements
1. Extend the sales items amounts by multiplying the quantity sold times the sale price. Restrict
transactions to the quarter.
2. Accumulate sales by store during the quarter.
3. Extend the flower purchase items by multiplying the quantity purchased times the purchase
price. Restrict transactions to the quarter.
4. Accumulate flower purchases as cost of goods sold by store during the quarter.
5. Extend the payroll records by adding gross pay plus employer FICA (Social Security) plus
employer MC (Medicare payments) for each employee each month.
6. Accumulate the total payroll expense by store during the quarter.
7. Accumulate total miscellaneous (administrative) purchases by store during the quarter. Note
that bills are often received on the 1st of the following month for services so they need to be
adjusted so they will show as expenses during the quarter.
8. Compute and accumulate depreciation expenses for stores and trucks. Quarterly depreciation
expense is one quarter of the annual expense.
9. Compute income for each store as follows:
a. Revenue minus cost of goods sold equals gross profit.
b. Payroll plus administrative expense plus depreciation for trucks and stores equals total
selling, general and administrative (SG&A) expense.
c. Income before tax equals gross profit minus SG&A.
d. Calculate gross profit, SG&A, and income before tax as percent of revenues.
10. Accumulate one combined quarterly income statement for YNF by summarizing the store
income statement.
Balance Sheet
1. Accumulate the cash balance at the beginning of the quarter.
2. Accumulate cash receipts from sales during the quarter.
3. Accumulate cash disbursements for flower purchases during the quarter.
4. Accumulate the cash disbursements for net pay from payroll during the quarter.
5. Accumulate the cash disbursements for miscellaneous purchases during the quarter.
6. Compute the ending cash balance by calculating beginning plus cash receipts minus cash
disbursements for flower purchases minus net payroll cash disbursements minus miscellaneous
cash disbursements. Check that figure against the bank statement.
7. Compute accounts receivable as sales minus cash receipts for each customer and accumulate
the total accounts receivable as of the end of the quarter.
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Y Not Flowers Project
8. Compute the accumulated depreciation for each store and truck. Accumulate fixed asset (store
and truck) original cost and accumulated depreciation.
9. Compute total assets as ending cash plus accounts receivable plus net fixed assets.
10. Compute trade (flowers) accounts payable as purchases minus cash disbursements to each
grower during the quarter. Accumulate total trade accounts payable.
11. Compute taxes payable by summing both the employee and employer shares of FICA and MC
and both state and federal withholding. Accumulate total taxes payable.
12. Compute miscellaneous liabilities as miscellaneous expense minus corresponding cash
disbursements during the quarter. Accumulate total miscellaneous payable.
13. Compute total liabilities as trade accounts payable plus taxes payable plus miscellaneous
payable.
14. Compute total equity as contributed capital ($1,000,000) plus retained earnings. Compute
retained earnings as total assets minus total liabilities minus contributed capital.
15. Compute average equity by adding beginning equity and ending equity and dividing the result
by 2. Ending equity is obtained from number 14 above. Beginning equity is ending equity minus
income before tax from the income statement.
16. Compute return on equity by dividing income before tax by average equity.
After preparing the statements, Mia also prepares some limited performance reports comparing current
performance against previous performance. She also checks to see which flowers have been the most
popular and profitable in the quarter.
5