Expenditure Cycle Report for Accounting Information System | Desklib

This assignment talks about the accounting system of Adam and Co.’s three important processes, which are cash disbursement, purchases and payroll repeating their flowcharts to explain the flow of the work and the way the data is handled and utilized by every level in the said departmental process.

Running head: ACCOUNTING INFORMATION SYSTEM
Expenditure cycle report
Student name:
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ACCOUNTING INFORMATION SYSTEM
Executive Summary
This assignment talks about the accounting system of Adam and Co.’s three important
processes, which are cash disbursement, purchases and payroll repeating their flowcharts to
explain the flow of the work and the way the data is handled and utilized by every level in the
said departmental process. The following flowcharts that illustrate the inputs and the outputs of
all the procedure that is significant to the working of the subsequent section in procession.
The internal controls of such departmental procedure are based on setting up to classifying
any possible fault that may exist in the abovementioned departments. These solution aims to
eradicate any risks that associate witch such problems and faults or any risks that may arise in
the future because of some unforeseen events.

ACCOUNTING INFORMATION SYSTEM
Table of Contents
Executive Summary.....................................................................................................................................2
Introduction.................................................................................................................................................4
Purchase System.........................................................................................................................................4
The flowchart..........................................................................................................................................4
Internal control........................................................................................................................................8
Cash disbursements system........................................................................................................................9
The flowchart..........................................................................................................................................9
Internal control......................................................................................................................................11
Payroll System...........................................................................................................................................12
The flowchart........................................................................................................................................12
Internal Control.....................................................................................................................................14
Conclusion.................................................................................................................................................15
References.................................................................................................................................................16

ACCOUNTING INFORMATION SYSTEM
Introduction
Centralizing accounting system is influential to the stability of data and process flow in
any association, but on the account of the comprehensive variety related with such accounting
system, it is very important to have a cognitive presentation for each system. This will boost the
higher tiered management to prepare its results based on clear areas resulting through the
presentation that needs instant notice.
The firm measured for the intention of this assignment is Adam and Co, who is known to
be the industry wholesaler based out of Perth who brings in necessary purchase requirements
internationally from Thailand, Vietnam, and China. The entire cycle of expenditure has been
divided into various departmental level processes that are based on the purchase system, the
payroll system, and the cash disbursement system.
Purchase System
The flowchart
The whole purchase systems of Adam and Co. have programmed to a definite quantity
with value to sourcing in materials for sale to its customers (Bahn and Gandhi, 2015). The entire
purchases systems are illustrated by the following flowchart:

ACCOUNTING INFORMATION SYSTEM

ACCOUNTING INFORMATION SYSTEM

ACCOUNTING INFORMATION SYSTEM
The flowchart that abovementioned is to show the various processes that are vital towards
the implementation of the entire purchase system as a whole. The flow of entry is the inventory
that starts the entire process (Goodarzi et al., 2017). The purchase department looks after the
inventory receipt to find out an inventory deficiency that if any, is swiftly ordered and accounted
for by cross-checking the account subsidiary ledger and consequently match with a potential
vendor is generated. It later results in a very good inflow (that can be seen in the above-
mentioned flowchart) that goes along with a packing slip and a dealer statement.
In the next level, the flowchart shows an inspection of the goods that are received by the
department through an understanding of the packaging slip and the dealer statement which

ACCOUNTING INFORMATION SYSTEM
further results in the making of a receiving report. The same copies are printed into two where
the inventory clerk sends one of the copies to the department of the inventory for filling it
subsequently (Cho and Lee 2016). The second copy is sent to the account payable department
that is in charge for the settlement of the receiving report, the statement of the suppliers, the
order of the digital purchase is to remove any disagreement that may arise, and after this, a
double process is treated on. In the first place, there is an update of the system in particular
general heads of both the secondary and control accounts payable ledgers and the inventory
maintenance ledger (Libby, 2017). Lastly, it is updated service copies, and after omitting all the
material faults it is further sent to the cash disbursement team.
Internal control
Most of the section in this is computerized; effective inner control needs to be into place to
guarantee unremitting flow throughout the work. Many potential solutions can arise here are the
solutions:
 In the close days, an incorrect feed could flow over to wrong data feeds in all the
forthcoming days- control mechanisms for every department are supposed to be placed
into place even though control accounts are being maintained for specific ledgers
(Masum et al., 2018). A control system is supposed to be checked as to whether any
department’s efficiency has been compromised since there is a verification of all details
indulged into by different departments at least twice.
 Generation of the demand of materials for which a vendor subsystem does not exist- a
sustaining ledger consist of the extensive information of the entire possible seller in the
area that comprises of the services and the cost of the products offered by them. They are
supposed to be maintaining the system in such a way that a cross-reference is likely in
case of new demand. The problem of the vendor will be solved if any faults arise in the
system (Berlinger, Bihary and Walter 2018).

ACCOUNTING INFORMATION SYSTEM
Cash disbursements system
The flowchart
The cash disbursement system plays as a mediator and acts an important role between
adequate compensation delivery to both the vendor and the next system incorporating
employees who are working very efficiently and delivering the products that are delivered by
the vendor (Mukherjee, 2017). The system is illustrated in the flowchart mentioned below:

ACCOUNTING INFORMATION SYSTEM
This flowchart demonstrates the receipts by the cash disbursement system from the
purchases system in the structure of the supplier invoice, the receiving report and the digital
purchase order. This system is in charge of sufficient and appropriate payments to the sellers to
uphold good reputation relations (Nakano and Kondo, 2018). The system’s clerk will recognize
the due date of the payment from all of the abovementioned statements, and after merging them
will arrange a cheque in the name of the seller. This check will be further sent to the company

ACCOUNTING INFORMATION SYSTEM
treasure who confirms it, the cheque will be further sent to the vendor for the final payment
agreement.
The last step of this system carries more of an accounting work where there take payments
to the seller. The system’s clerk will put in an on-system update in the cheque register, accounts
payable additional and control ledger (Prasad and Green, 2015). This final output is the making
and succeeding filing of the final seller statement, physical purchase order copy and receiving
report and cheque that was issued in the name of the seller.
Internal control
Since the whole scheme, rotates around the outputs and the inputs of the cash
disbursement clerk, any matter with errors on the clerks part will include this system’s output as
a whole. Hence, certain problems arise which can be resulting in the following:
 The entire system contains no mechanism for continual adaptation towards the payment
procedure- it is very uncommon that the same payment mechanism for every seller as it
will follow for the lifetime in the life of an organization. There can be safety-based
changes that could a higher level. The last payment approval runs or newer government
system to make sure any possible cash embezzlements indulged into by the company’s
employees (Qing, 2017). So to control the flow of the whole system without interfering it
when any of the specified situations come up the external party can be appointed towards
doing the procedure of audit of this system on a particular date for a precise period
constantly.
 Conscious or unconscious manipulation of the account payable control ledger by the
clerk- the outcome can be an inaccurate figure booking for the seller who may still be
highlighting a creditor of the company in spite of the cash outflow. To protect this
different control, the area requires being established (Mahajan, Shukla and Soni 2015).

ACCOUNTING INFORMATION SYSTEM
Payroll System
The flowchart
This system is the end of the association that means that it aims at effectively rewarding
the organization resources that amuse the sustainability of the company as a sum (Sledgianowski
et al., 2017). The system flowchart encompasses various levels:

ACCOUNTING INFORMATION SYSTEM
In the first level, the flowchart shows the entry in which it talks about the hours worked
by the employees entering into their time card that will form the foundation of the performance
of the entire system (Tursunbayeva et al., 2016). The payroll clerk who will then put in input into
the digital employee record and subsequently generate a paycheque in the name of the employee
will severely check the above time card. An adaptation in the way of the time card will occur
into the second level where the head or a supervisor gets mixed up and will do a reconciliatory
verify of the paycheque requirement and the time card on the foundation of which such
paycheque has been produced. The final level of this flowchart consists of the payroll clerk
producing the payroll register and sending it back to the accounts payable department (Herrera-
Cáceres and Ibeas 2016). They will generate a payment voucher and for that, reason an overall
paycheck surrounding all the payments is done by the company’s employees and is put forward

ACCOUNTING INFORMATION SYSTEM
in the same into the company’s bank accounts. At last is the step where the flowcharts conclude
with the common ledger clerks, one who place an update in the scheme concerning the payroll
and the voucher on getting their register in a corresponding manner (Mahajan, Shukla and Soni
2015).
Internal Control
Since all the system revolves on sufficient payments that are made by the employee, this is
the only system that goes all the way through more than three sub-levels as compared to other
systems. However, there can arise some deficiencies and hence the solutions to such problems
are shown as follows:
 Extensive negligence- the payroll outline the last portion of the whole system of the
company and integrate a sensation of dull and ordinary repetitive work, there can be an
inclination by the higher-ranking managers in the company to shove over such tasks on
inexpert or unskilled employees. It further will result in the negotiation of the intact
payroll system as a whole (Komala 2017). To prevent the option of any such occurrence,
it would be sensible to contract out the failure to notice the entire payroll management to
oversee the payroll process and consequence in an overall optimization of the HR section
of the corporation.
 Classification errors- the company may have both self-regulating contractors and
employees running at a similar time, organizing them in the payroll system would fail the
whole accounts department and result in inaccuracy with relation to privilege to meet the
expense of to such individuals. For this reason, different systems are put into place to
account for workers working in unusual abilities (Tursunbayeva et al., 2016).
 Timecard diligence- a scenario may arise where the employees may put incorrect hours
that are particularly true in the case of salesperson of the organization that has lithe
working hours. So to secure the interest of the employee and the system of payroll as a
whole, cards known as digital time cards are placed in way of biometric attendance
systems. That would accurately record any employee’s time of entry and time of exit
(Taha and AbdulRazzaq 2019).

ACCOUNTING INFORMATION SYSTEM
Conclusion
After the survey throughout the project in the accounting system of Adams and Co., there
is a complete and outward analysis as it shows that there are certain areas of deficiency that can
result in the problem in the overall operation of the company. It can be said that the accounting
system of the company is created for supporting any established or recurring processes that form
a daily part of the cycle of the organization. To take out the financial credit for any prospective
possibility in the future it may affect widely in the sustainability of the company. Accounting is
done internally in an organization that is defined for each division of the accounting system that
is slot in potential solutions. If Adams and Co. applies the same, it will affect an overall
optimization of the expenditure cycle persistent in the accounting system of the company.

ACCOUNTING INFORMATION SYSTEM
References
Bahn, K.D. and Gandhi, N., 2015. Quality Consistency: A Predictor of Generics Pruchase?.
In Proceedings of the 1987 Academy of Marketing Science (AMS) Annual Conference (pp. 305-
309). Springer, Cham.
Berlinger, E., Bihary, Z. and Walter, G., 2018. Corporate cash-pool valuation: a Monte Carlo
approach. Studies in Economics and Finance, 35(1), pp.153-162.
Cho, Y. and Lee, S., 2016, February. Detection and response of identity theft within a company
utilizing location information. In 2016 International Conference on Platform Technology and
Service (PlatCon) (pp. 1-5). IEEE.
Goodarzi, M., Makvandi, P., Saen, R.F. and Sagheb, M.D., 2017. What are causes of cash flow
bullwhip effect in centralized and decentralized supply chains?. Applied Mathematical
Modelling, 44, pp.640-654.
Herrera-Cáceres, C.A. and Ibeas, A., 2016. Model predictive control of cash balance in a cash
concentration and disbursements system. Journal of the Franklin Institute, 353(18), pp.4885-
4923.
Komala, A.R., 2017. Cause and effect of accounting information system: A study in national
Zakat management organization. JABS, 3(2), pp.69-76.
Libby, R., 2017. Accounting and human information processing. In The Routledge Companion to
Behavioural Accounting Research (pp. 42-54). Routledge.
Mahajan, K., Shukla, S. and Soni, N., 2015. A Review of Computerized Payroll
System. University of Lingaya, Department of Computer Science.
Masum, A.K.M., Beh, L.S., Azad, M.A.K. and Hoque, K., 2018. Intelligent human resource
information system (i-HRIS): a holistic decision support framework for HR excellence. Int. Arab
J. Inf. Technol., 15(1), pp.121-130.

ACCOUNTING INFORMATION SYSTEM
Mukherjee, K., 2017. Technology at point-of-purchase-a journey from electronic cash registers
to all inclusive point-of-purchase systems. Asian Journal of Applied Science and
Technolgy, 1(8), pp.1-4.
Nakano, S. and Kondo, F.N., 2018. Customer segmentation with purchase channels and media
touchpoints using single source panel data. Journal of Retailing and consumer services, 41,
pp.142-152.
Prasad, A. and Green, P., 2015. Organizational competencies and dynamic accounting
information system capability: impact on AIS processes and firm performance. Journal of
Information Systems, 29(3), pp.123-149.
Qing, Q., Ke, W., Wang, Q., Xu, J., Xiang, X., Li, H. and Liu, M., GRG Banking Equipment Co
Ltd, 2017. Cash distribution method, cash distribution apparatus and financial self-service
device. U.S. Patent Application 15/541,677.
Sledgianowski, D., Gomaa, M. and Tan, C., 2017. Toward integration of Big Data, technology
and information systems competencies into the accounting curriculum. Journal of Accounting
Education, 38, pp.81-93.
Taha, A.M. and AbdulRazzaq, A.A., 2019, July. Company attendance and access control system
based on radio frequency identification. In Journal of Physics: Conference Series (Vol. 1230,
No. 1, p. 012028). IOP Publishing.
Tursunbayeva, A., Pagliari, C., Bunduchi, R. and Franco, M., 2016, April. What does it take to
implement Human Resource Information System (HRIS) at scale? Analysis of the expected
benefits and actual outcomes. In Proceedings of the 31st Workshop on Strategic HRM. Segovia,
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