Control Weaknesses in System Flowchart

This document discusses five control weaknesses depicted in the system flowchart of an accounting information system. These weaknesses include issues with transaction records, billing processes, general ledger data processing, cash receipts, and inventory management. The document also includes a discussion on arguments related to payroll and HR departments, as well as procedures to find fraud and indicators of personal fraud. References are provided for further reading.

Accounting
Information
System

Question 4........................................................................................................................................2
Describe five control weaknesses depicted in the system flowchart...........................................2
Question 5........................................................................................................................................2
Discuss both the arguments.........................................................................................................2
As a student of accounting information systems, how would you respond to Peter...................3
Question 6........................................................................................................................................3
Discuss two procedures that can be applied to find Mr Peter's fraud..........................................3
Discuss indicators of personal fraud that can reveal the possibility of such fraud......................3
REFERENCES................................................................................................................................5
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Question 4
Describe five control weaknesses depicted in the system flowchart
 The record of transactions in the Sales Journal must not be produced by the Sales Clerk
prior to the shipment of products (B Romney, 2018). It was meant to be done by
after Billing. The credit review has still not been carried out.
 Before the delivery of goods and no acknowledgement of the shipment and the amount
delivered, the billing department shall invoice the customer. The billing process must be
facilitated by notification of the shipment.
 The billing, AR, inventory management, cash receipts and journal vouchers should not be
continued to receive by the General Ledger Data Processing Department. Rather, General
Ledger changes GL accounts by misappropriation of source records.
 The collection of cash receipts and the management of AR subsidiary documents should
not be handled by Receivable Accounts.
 Warehouse Clerk, who is accountable for overseeing the physical inventory, does not
perform other functions, such as managing the inventory records of the subsidiary.
Question 5
Discuss both the arguments
Many payroll tasks are linked to HR problems, so the payroll and human resources
departments need to manage common functions (Hariyati, Tjahjadi and Soewarno, 2019). This
includes hiring, wage raises, incentive bonuses, benefit reductions, vacation time and dismissal
of workers. The HRM must be attentive to the time spent on payroll processing because, as an
advocate of employee relationships, it will face problems directly if cheques are not processed
accurately and on time. The payroll and HR divisions are often stripped of sensitive employee
records, like financial information, social security numbers and personal information. The two
agencies must work hard to achieve that this data does not come under the hands of unauthorised
persons or corporations.
Background check of employees is essential for the organization to identify their past
history and also ensure that, the provided information was correct or not. Details such as the
history of drug violations or DUIs may also be sought by the agency. After all, they want to
make sure they are working with a responsible person. Bear in mind that, if someone has tried to
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conceal this knowledge from an organisation, that shouldn't be an automatic disqualification of
confidence. People with criminal records, DUIs, or some other blemish that stems from their
history may actually be ashamed or worried that this knowledge may lead others to leap to
conclusions.
As a student of accounting information systems, how would you respond to Peter
A separate payroll account restricts the organisation's exposure to just the amount of
money transferred in the payroll account (Hosain, 2019). It also is simpler to track and identify
any mistakes or anomalies in a separate account. Peter was wrong because separate payroll
accounts offering many benefits such as helps in calculating financial freedom to each
participant. Eliminates the removal of two individuals from the very same account and it fits well
in a family with two incomes. It also provides the facility of checking account diversity in
emergency situations.
Question 6
Discuss two procedures that can be applied to find Mr Peter's fraud
 Fraud identified through background checking of each supplier: In case of Mr Peter,
organization needs to check every supplier’s background along with proof. It helps in
identifying that supplier is exiting or not.
 Periodic meeting with all the suppliers which help the organization to identify any fraud
related to suppliers: If organization conducts any period meeting to check the availability
of suppliers, that will helps in identifying actual suppliers of the company and number of
fake suppliers as well.
Discuss indicators of personal fraud that can reveal the possibility of such fraud
Missing documents: Organizations may frequently experience cases of missing
documents relating to critical departments. Whenever the level of incidence becomes too regular,
it can be an indication of active fraud inside the company. Missing records that are red flag fraud
involve sales and purchase lists, chequebooks and inventory reports.
Multiple payments: There are situations where the finance department of an
organisation can improperly process duplicate payments to a supplier or service provider
(Langfield-Smith, Thorne and Hilton, 2018). If the error was real, the people involved should
recognise and disclose such errors in order to take immediate action.
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Spikes in invoice volume: A company in its rising phase can undergo significant
increases in the number of payslips as it seeks to create a unique identity on the market.
However, the large number of receipts creates space for fraudulent conduct, as specific internally
and externally parties can attempt to benefit from the rapid growth of the company.
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REFERENCES
Books & Journals
B Romney, M., 2018. Accounting information systems. Pearson Education Limited.
Hariyati, H., Tjahjadi, B. and Soewarno, N., 2019. The mediating effect of intellectual capital,
management accounting information systems, internal process performance, and
customer performance. International Journal of Productivity and Performance
Management.
Hosain, M. S., 2019. The Impact of Accounting Information System on Organizational
Performance: Evidence from Bangladeshi Small & Medium Enterprises. Journal of Asian
Business Strategy. 9(2). p.133.
Langfield-Smith, K., Thorne, H. and Hilton, R. W., 2018. Management accounting: Information
for creating and managing value. Sydney: McGraw-Hill Education.
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