Accounting Information Systems Case Study

Accounting Information Systems Case Study – Adam & Co

Executive summary

The research is based on the analysis of the purchase system, cash disbursement system and payroll system of Adam & Co. which is the wholesaler firm based in Perth. The documents have been exchanged among the executives and the next tracking has been processed after evaluating the prior one.

The system flowchart of the cash disbursement system also comprises with the payroll system as the compensation and wages of employees are provided from the financial fund on a due date.

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It also connects the departments of business by sharing the receipt or hard copy associated with the transaction. However, the loopholes of the systems along with the risks associated with the processes reflect the delay in the project and other factors.

Introduction

The businesses have applied an accounting information system for processing the continuous and stable calculation of financial data related to the operation of the business. The strategies of the business have been developed through evaluating the monetary data which also ensures productivity and fluent profit generation in the competitive market (Becker, et al., 2015).

The accounting information system has depended on the factors of the purchase system, cash disbursement system and payroll system which ensures the documentation of all the records of the business. The purchase system refers to the process which assists the businesses in documenting the details associated with procurement, inventory and the raw ingredients.

The basic details related to the purchase system such as product description, type, quantity, and date are required to be included for maintaining the clear and spontaneous record. On the other hand, a cash disbursement system refers to the distribution or allocation of funding in the diversified field of business operation which assists in processing the regular business function (Fletcher Jr & Rose, 2019).

Moreover, the payroll system also focuses on the disbursement of the compensation and wages of employees for completing their regular jobs. Adam & Co. is a wholesaler company of industrial suppliers that have sourced its manufacturing inventories from Thailand, Vietnam, and China. In this report, the system flowchart for three systems is demonstrated in the context of the firm.

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Body of the report

System flowchart of purchase system

The purchase system refers to the approach of managing information related to procurement, suppliers and other raw ingredients through maintaining records in all the business departments for maintaining financial stability (Ballaro & Sabino, 2016).

The purchase system assists the businesses to focus on tracking records of suppliers, inventory and procurement which help them to maintain the documentation of all the transactions. In this process, economic order quantity and purchase to pay processes are also demonstrated under the purchase system.

The main motive of the purchase system is to remove the complexity in the data management process and collecting, storing or managing suppliers’ data has been executed through a particular approach. Establishing a stable relationship between the employees of Adam and Co. and the suppliers for managing the operational cost for the business and continue the regular business functions.

In the context of Adam & Co., the approach of managing the purchase system has been initiated by checking the inventory subsidiary ledger every day from the machine terminal of the associated clerk. Before the checking process, the clerk has selected the vendor for distributing the online order of purchase.

The vendor is to be selected from the list of vendor files which has been decided by the clerk himself (Herrera-Cáceres & Ibeas, 2016). So, the digital order has been prepared and the goods are placed at the receiving department through comparing and surveillance of the products or services concerning the digital print copy.

The invoice of the system has been transmitted for ensuring the genuineness and confidentiality of the files of the accounts payable system. After sending the invoice to the accounts receivable, the checking of the product with the invoice also assures the quality deliverable which fulfills the goal of the business.

Both the hard copy and the soft copy has been introduced for removing the future conflict related to the subject and the digital purchase documents hard copy is printed for updating the associated department accounts. Thus, the purchase system for Adam & Co. has been achieved through progressing the records of payable account control, inventory control account, and subsidiary ledger.

The clerk of the purchasing department had sent the invoices, purchasers’ order copy and the receiving report for approval of monetary resources under the cash disbursement process.

According to the system framework of the purchasing system, four departments are associated with the process which is considered as the purchasing department, inventory control, receiving department and accounts payable department.

The documentation of all the stages and maintaining records of all the processes help to compensate for the requirements for managing the business process (Clement, et al., 2017). It also connects the departments of business by sharing the receipt or hard copy associated with the transaction.

The executive of accounts payable department assists in the distribution of invoices to the vendor which indicates the closing of the purchase process of Adam & Co.

System flowchart for cash disbursement system

The cash disbursement system is defined as the payment process for the business liabilities which help the business to perform diversified business operations(Herrera-Cáceres & Ibeas, 2016). The allocation of budget and the current expanses of the business are compared for disbursing the cash which indicates the rate of profitability for managing the system.

The businesses have followed minimum 5-6 stages for disbursing cash into a particular field as the cross-checking for the justification of expenses are included in the process. The process has been initiated from the purchase system operation after sending the invoice to the payable and receivable department of the business.

The clerk or executive team of the cash disbursement system had filed all the documents of the expenses list and sanction the funding in due date. The accumulation of the verified data has been processed through the regular checking of the expanses for making the process smooth.

Moreover, the executive of the cash disbursement department has sanctioned the cheque for the invoiced accounts that must demand approval of the treasurer before sending it to the vendor via email.

From the system flowchart of the cash disbursement system, the process has been initiated by opening AP file with the payable voucher and due liabilities. Checking register with all payment details and evaluation of all the documents continues the cash disbursement process.

The AP records have also been updated by the sub-ledger and closing the voucher file which is progressed through checking number, payment date, and voucher packet.

Moreover, the expanses of the employees are also considered as the liabilities of business which have progressed to the payroll department for concentrating the management of the complex processes. The voucher register or the sub-ledger records also justified the management of the business data in all the departments.

The system for Adam & Co. had receded the chance for error or other drawbacks as the checking of the documents are accomplished with comparing to the invoices received in other sectors.

The business has processed by verification of the documents associated with diversified business operations which simplifies the job for the clerk of cash disbursement process(De Mattei & Emeth, 2016). It has also been stated that the signature of the treasurer has acted as the approval for the disbursement of the monetary details.

The cheque of the transaction has been mailed to the vendor and the cheque register has been updated for filing the invoice, order copy of purchase, receiving report and department cheque copy.

System flowchart for payroll system

The payroll system of the employees refers to the management of the compensation, wages and other flexibilities that are required to be delivered for maintaining sustainability in the context of the business process(Clement, et al., 2017).

The payroll system is also considered an integral part of the cash disbursement system as the expanses of employees are also processed through the system. From the aspect of Adam & Co., it has been found that the employees have maintained their records related to their regular attendance and work process. The review process of the data provided by the employees has been verified by the supervisor with the interval of one week.

The data processing department of the business had focused on the system of central payroll which has utilized the time card data and performance reduced to disburse the allocated compensation without any conflict. As the employees are considered as the pillar of the organizations, managing the aspects and perspective assists the business to engage them more into the work which justifies the concern of profitability generation of business.

So, managing the payment of the employees is recorded systematically for the continuous execution of the business process.

The clerk or the executive of the payroll system has evaluated the details for making two copies related to the details of employees. These copies have been sent to the payroll register and digital employee record respectively for maintaining the information in both the departments (Valacich, et al., 2017).

Before this, the payroll clerk had sent the register copies to diversified departments of business which assures its genuineness and validity for the disbursement in cash. The employees can review the hard copy which has been sent to the departments and it also supports the conflict-free and sustainable approach.

The operational payment and transaction policies are modified in such a way that the connection between the supervisors, cash disbursement executives, and payroll system has been established.

Internal control weakness and risks associated with each system

The record maintaining of the financial data or the money management process has been executed for managing the regular business functions(Schaltegger & Burritt, 2017). The internal control weaknesses are to be expressed and the risks related to the business process must assure the continuity in the business process.

The purchasing system, cash disbursement system and the payroll system are considered as the main financial stages which help to execute the business goal without facing any issues.

Purchase system

The purchase system of the firm is well-structured which assures the checking of inventory and data related to vendors, the quantity of purchase and delivery details. The risks related to the inclination of low-cost materials do not justify the goals of the business and the records of the purchase system also reflect the factual details (Schaltegger & Burritt, 2017).

The budget allocation for the different departments has also been raised due to a lack of surveillance process which is included as the risks related to the purchase system. The damaged products must be checked which is not included in the operation of the firm which is indicated as the internal weakness of the system.

Cash disbursement system

The cash disbursement system of Adam & Co. is distributed through three departments by exchanging all the financial documents. As the executives have to deal with all types of invoices after evaluating those, the time consumption has also been risen for completing the process which is demonstrated as the internal weakness of the system and risks related to the process.

However, managing financial data has been executed by skilled professions and lack of having standard employees is also considered as the risks associated with the cash disbursement system.

Payroll system      

The payroll system of the firm is not so much strong and updated as the employees have to track their records daily about the work progress which reduces the time for executing the work process.

The approach for weekly checking of the documents also causes conflict and the time associated with business operation has decreased. Moreover, the approval of the payroll department has been on time for the continuous process of cash disbursement system which provides an opportunity for making the field of perfection.

Conclusion

Based on the above study, it has been concluded that three types of systems are processed for managing the accounting information of the business which is purchased system, cash disbursement system and payroll system. The main motive of the purchase system is to remove the complexity in the data management process and collecting, storing or managing suppliers’ data has been executed through a particular approach.

The clerk or executive team of the cash disbursement system had filed all the documents of the expenses list and sanction the funding in due date. Moreover, the internal controls and risks associated with consuming extra time and lower productivity are also identified from the application of the system.

 

References

Ballaro, C. & Sabino, P., 2016. U.S. Patent. Method, medium, and system for purchase requisition importation, 9(245), p. 291.

Becker, J. et al., 2015. Semantic business process modelling and analysis. In: In Handbook on Business Process Management. London: Springer, Berlin, Heidelberg, pp. 187-217.

Clement, J., Lanne, F., Porta, M. & Truntschka, C., 2017. International Business Machines Corp, U.S. Patent. Purchasing data management method and system, 9(727), p. 851.

De Mattei, M. & Emeth, S., 2016. Interactive point of purchase system, 9(289), p. 018..

Fletcher Jr, E. & Rose, J., 2019. A Note on Using UCA Cash Flow Analysis to Discern the Purpose (s) of a Firm’s Short-Term Debt. Journal of Accounting and Finance, 1(19), pp. 147-158.

Herrera-Cáceres, C. & Ibeas, A., 2016. Model predictive control of cash balance in a cash concentration and disbursements system. Journal of the Franklin Institute, 18(353), pp. 4885-4923.

Schaltegger, S. & Burritt, R., 2017. Contemporary environmental accounting: issues, concepts and practice. London: Routledge.

Valacich, J., George, J. & Valacich, J., 2017. Modern systems analysis and design. London: Boston: Pearson.

 

 

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