CHAPTER 1 INTRODUCTION. major role in the last decade, without any minimization sight towards politic and

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1 CHAPTER 1 INTRODUCTION 1.1 Background In spite of dynamic and competitive climate, competition in economic sector is apparently flowing to an unfriendly phenomenon. The sector itself is indeed taking major role in the last decade, without any minimization sight towards politic and social sector. Economic sector is considered as the trendsetter for any institutions; either for private or government institution such as state. Good economic source management is hoped to bring a positive effect to the sector. This is even more applied to profit based institution like a company. In fact, financial management in one company has a main role that should be played professionally by the actors, of which, the management is tightly related to how a company conduct internal control and apply accurate accounting system. Internal Control denotes an important regulation to company activity performance. It is related to the company s mechanism that consists of; sales performance, services, payments, operations, cash management, and supplies availability, etc. Through the internal control, further decisions could be made such as company policy and long term evaluation for the company itself.(financial) 1

2 2 In accounting theory and organization, internal control is defined as a process which is determined by human resource and technology information systems that are designed to help the organization in achieving certain objectives. It could be a way to make an effort to particular direction, oversee and to measure resource of certain organization. In another part, internal control have much importance in prevention of fraud and to look after physical source such as estates or machinery, or non-physical source like company s reputation and copyrights. Another reference has also asserted Internal Control that plays as procedures to preserve company s assets from misapplication, as well as guarantees that business attempt information would be provided accurately and accordingly to the law. According to Accounting Information Systems (Romney), Internal Control is a process which determined by board of direction, management and other personnel, that is designed for giving reasonable assurance related to target achievement category as follows; operations effectivity and efficiency, financial statements reliability, and law conformity. Internal Control, thereafter, could also be interpreted as a controlling process which is designed and applied to gain sufficient confidence referred to specific business achievement. A great Internal Control needs to be attached with effective and efficient accounting system application. According system is appointed as method and record that are used to identify, collect, analyze, classify, to state organizations transaction and preserve obligations and assets accountability (Bodnar). On the other hand,

3 3 accounting system is a method and procedure to collect, classify, recapitulate, and make a statement of operation information and financial of certain company (Warren). Based on the before mentioned definition, it could be simplified that collaboration between accurate Internal Control and accounting system should be expected as a reference for company policy, in order to be expandable. Whereas this study of Internal Control is used for management tool for a company, accounting system is articulated as control tool by its budget execution. PT. POS Indonesia (Persero) is one of state-owned enterprise, which its accounting commission should have applied Internal Control and accurate accounting system. This company concentrates on mail delivery services. Viewing the occurrence presently whereas PT. POS Indonesia (Persero) takes form of limited company, therefore the accounting system applied in PT. POS Indonesia (Persero) should have stepped on new phase which is tighter, more discipline and considers internal control in order to maintain its recognition, as equal to the function of supervision. This new form is passed accordingly to Government Regulations of Republic of Indonesia, No. 5 of year That Government Regulation consists of the diversion of PT. POS Indonesia from public to limited company. It has noted statutes and household statutes in Sutjipto, S.H. of no. 117 notary on 20 th of June 1995 which has also changed as it is noted in the same notary of number 89 on September 21 st September 1998, and number 111 on 28 th October 1998.

4 4 The significance of global development specifically in business sector and the uncertainty of international economic situation nowadays has forced PT. POS Indonesia (Persero) to be more active, creative and more professional in playing its part. At the same time, it is charged to make balance of its functions with any interesting innovations that is expected to regain the recognition, in recalling the strict competition climate that has been urged by the competitors such as; JNE, DHL and TNT. Despite of that, human resource and other supporting resources are demanded to be able to innovate themselves. Professionalism holds an important role in this respect, as the other part of PT. POS Indonesia performance supposed to be adaptive with technology based accomplishment and effective management, that have become worldwide trending topic especially in the context of Internal Control and accounting system. Embracing those elaborations as an issues, in this thesis, author tends to discuss an analysis on the phenomenon of accounting, transpires at PT. POS Indonesia (Persero) especially in North Jakarta PT. POS Indonesia (Persero) that is entitled: Internal Control Evaluation in Revenue Cycle of EMS (Express Mail Service) at PT. POS Indonesia (Persero) of North Jakarta

5 5 1.2 Research Question This thesis is titled Internal Control Evaluation in Revenue Cycle of EMS (Express Mail Service) at PT. POS Indonesia (Persero) of North Jakarta, consists of the following formulations: 1. How is the implementation of Internal Control at PT. POS Indonesia ( Persero ) of North Jakarta? 2. What kind of evaluation could be attempted in the implementation of Internal Control in EMS (Express Mail Service) at PT. POS Indonesia (Persero) of North Jakarta? 3. How does Internal Control in Revenue Cycle of EMS (Express Mail Service) at PT. POS Indonesia (Persero) of North Jakarta, determines the recognition of the company as a mail delivery service enterprise? 1.3 Research Intentions and Objectives Intentions : 1. To evaluate Internal Control in Revenue Cycle of EMS (Express Mail Service) at PT. POS Indonesia (Persero) of North Jakarta. 2. To improve Internal Control in Revenue Cycle of EMS (Express Mail Service) at PT. POS Indonesia (Persero) of North Jakarta. 3. To identify the benefits that the company s obtain after the implementation of Internal Control in Revenue Cycle of EMS (Express Mail Service) at PT. POS Indonesia (Persero) of North Jakarta would bring positive effect.

6 6 Objective : This study may be beneficial to several parties such as to PT. POS Indonesia (Persero) of North Jakarta, to the author, and the other readers. Especially for internal control on Revenue Cycle of EMS (Express Mail Service) at PT. POS Indonesia (Persero) of North Jakarta. 1.4 Research Methodology The research will use descriptive comparative analysis method, which will apply quantitative normative method in viewing the phenomenon that is occurred practically. Any relevant scientific references and necessary debrief with compatible sources that will also be as supporting data in this research. This thesis is focus on Internal Control Evaluation in Revenue Cycle of EMS (Express Mail Service) at PT. POS Indonesia (Persero) of North Jakarta which had given significant effect to company policy making and company performance over its popularity and reflection seen by the society. The requirement of data in conducting this research will be: 1. Observation This research will collect any relevant and useful data to support the completion of this research, by viewing the object of research on its whole aspects of field performance practically.

7 7 2. Interview Direct face to face question and answer collection technique will also be used in gaining necessary data of this research, which the expected data sample will be mutual to the cohesion of the research. 3. Literature Certain theories from any relevant literature are going to be used as reference in this research, which are compatible, reliable, scientifically approved and can be supportive to the research completion. 1.5 Scope of Research In order to be specific, this research would take its scope over the Internal Control Evaluation in Revenue Cycle of EMS (Express Mail Service) at PT. POS Indonesia (Persero) of North Jakarta. 1.6 Structure This thesis will be consisted systematically in 5 chapters as follows : Chapter I : Introduction This chapter will be discussing the background of this research, problem formulation, scope of research, its objectives, methodology and systematization. Chapter II : Theoretical Framework Supporting theories and concepts that are referred relevantly to internal control and Revenue Cycle would be discussed in this thesis chapter.

8 8 Chapter III : Object of Research In this chapter research object of this thesis which explain on the general description and other necessary information would be stated comprehensively. Chapter IV: Analysis Topic discussions, research problem formulation and analysis result of this thesis will be elaborated in this chapter. Moreover, from this analysis, suggestions that emerged from the result could be offered in order to answer any obstacle or problems regarding to the subject of research. Chapter V: Conclusion and Suggestion This chapter would be the conclusion which based on the previous chapters elaboration, as a closing of analysis result achieved by the author. beside that, correlative suggestions in this thesis chapter would be expected to be useful to PT. POS Indonesia (Persero) of North Jakarta in implementing accounting information system professionally in the company s future.