Accounting Information System: Evaluation of Purchase, Cash Disbursement and Payroll Systems

Running head: ACCOUNTING INFORMATION SYSTEM
Accounting Information System
Name of the Student:
Name of the University:
Authors Note:

ACCOUNTING INFORMATION SYSTEM
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Executive summary:
The systems and processes used within an organization determine the efficiency and
effectiveness of operations of such organization. It is important to institute strong and effective
internal controls to improve the quality of different systems and processes within the
organization. A brief look at the purchase system, cash disbursement system and payroll system
of Adam & Co. will enable the readers to understand the important elements needed to make
these systems efficient and effective to enable an organization to achieve its goals and objectives.
The weaknesses in internal controls the cash disbursement, purchase and payroll systems in
Adam &Co have been mentioned in the document below.

ACCOUNTING INFORMATION SYSTEM
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Contents
Executive summary:........................................................................................................................1
Introduction:....................................................................................................................................3
Systems:...........................................................................................................................................3
Evaluation of purchase system:...................................................................................................3
Risks and internal control evaluation of purchasing system:......................................................5
Evaluation of cash disbursement system:....................................................................................5
Risks and internal control evaluation of disbursement system:...................................................6
Evaluation of payroll system:......................................................................................................7
Risks and internal control evaluation of payroll system:.............................................................8
Conclusion:......................................................................................................................................9
Recommendations:..........................................................................................................................9
References:....................................................................................................................................13

ACCOUNTING INFORMATION SYSTEM
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Introduction:
An organization generally establishes a standard system within the organization to ensure that
the purchases and other expenditures are incurred efficiently to achieve the organizational
objectives. Optimum utilization of resources is closely related with expenditures incurred by an
organization. Thus, it is important to give necessary emphasis on creating a standard and
efficient expenditures cycle in the workplace to minimize the expenditures by reducing wastages
and other loopholes within the organization. A closer look at the purchase system and
expenditures cycle used in Adam & Co. will enable us to comment on the efficiency or lack of it
in the purchase system and expenditures cycle.
Systems:
It is clear from the facts provided in the case study that Adam &co. is a wholesaler of industrial
supplies and it collects its inventories from different parts of the globe. The manufacturers are
from China, Thailand and Vietnam that supply the inventories to the company. Thus, Adam &
Co. imports inventories from these countries hence, the assessment and evaluation of the
purchase systems and expenditures cycles must be carried out keeping in mind the requirements
of the company to import (Uka, 2018).
Evaluation of purchase system:
The very process of purchase is initiated by the purchasing clerk after he check the inventory
subsidiary ledger at the computer terminal. Only after it is found that any particular item in the
inventory is extremely low that the purchasing clerk prepares a digital purchase order. Only two
copies of such order is prepared with one sent to the vendor who is also selected by the
purchasing clerk and the other copy of the order is filed with the inventory department.