Case Study - Adam & Co: Evaluation of Internal Control System

Running head: CASE STUDY – ADAM & CO
CASE STUDY – ADAM & CO
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CASE STUDY – ADAM & CO
Executive Summary
In this report, all the process of the internal control system is being discussed as per the case
study of Adam & Co. The three cycles which are purchase system, cash disbursement system
and payroll system is evaluated with the risks and the weakness of each of the processes. All
the system of the expenditure cycle is being discussed with the help of a flow chart. Through
the flowchart, the different elements are taken separately in the process and described as per
the interrelationships in the system of the departments.

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CASE STUDY – ADAM & CO
Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
System flow chart of purchase system:......................................................................................3
System flow chart of cash disbursement system:.......................................................................5
System flow chart of payroll system:.........................................................................................7
Identifying the internal control weakness in the system and its associated risks:.....................9
Purchase System.....................................................................................................................9
Cash disbursement system...................................................................................................10
Payroll system......................................................................................................................10
Conclusion................................................................................................................................11
References................................................................................................................................12

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CASE STUDY – ADAM & CO
Introduction
This report provides the information about the expenditure cycle of the Adam & Co.
It mainly deals with the wholesaling of the industrial supplies. A centralized accounting
system is followed by Adam & co. which has different network terminals in various
locations. The expenditure cycle procedure which consists of the purchase system, cash
disbursement system and payroll system, the evaluation of these process are done with
respect to risks and the internal controls of it in respect to all. The process is discussed with
the help of a system flowchart. In the later part, the weakness of the internal control of each
of the system is discussed with respect to the Accounting Information System.
Discussion
System flow chart of purchase system:
The inventories are prepared according to the requirement of the firm needed for the
production process, after the process the consumers get the finished products. Most of the
organizations use different types of inventory methods, which is depend on the volume of the
production and sales (Muller 2019). The purchasing procedure involves many step, some of
the steps which are used in the case study is:
 Requirement of inventory: The purchasing clerk checks the inventory, if there
is any requirement in the inventory.
 Receiving department: The clerk will order to the vendor, if the quantity of the
item in the inventory is low. Then, the clerk will receive the goods and the
item will be recorded in the digital purchase order.