Accounting Information System - Desklib

This report focuses on the overall process of accounting information system which deals with different systems that are associated with the organization. It includes the system of accounting includes purchase system, cash disbursement system and payroll system which are shown in the study by the helps of system flowchart.

Running head: ACCOUNTING INFORMATION SYSTEM
Accounting Information System
Name of the Student
Name of the University
Author’s Note

1ACCOUNTING INFORMATION SYSTEM
Executive Summary
This current report has focused on the overall process of accounting information system which
deals with different system that are associated with in the organisation. Adam and Co has been
considered in this study which focuses on the implementation procedure as well as handling
techniques of the systems. This study includes the system purchase along with cash disbursement
system and payroll system. The internal control weakness and risk that are associated with the
above mentioned process is also included in this particular study.

2ACCOUNTING INFORMATION SYSTEM
Table of Contents
Introduction......................................................................................................................................3
System flowchart of purchase system..............................................................................................3
System flowchart of cash disbursement system..............................................................................5
System flowchart of payroll system................................................................................................7
Description of internal control weakness in each system and risk associated with the identified
weakness..........................................................................................................................................9
Purchase system...........................................................................................................................9
Cash disbursement system.........................................................................................................10
Payroll system............................................................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

3ACCOUNTING INFORMATION SYSTEM
Introduction
Accounting information system is important for a business as it points out the structural
information which would be implemented in the overall course of business of the company. In
this study, Adam and Co has been taken into consideration which mainly deals with wholesaling
of industrial products that are associated with the business. It includes the system of accounting
includes purchase system, cash disbursement system and payroll system which are shown in the
study by the helps of system flowchart. The internal control system as well as the risk that are
associated with the mentioned systems are also mentioned in this study.
System flowchart of purchase system
The purchase system is included with the business that is required to be maintained by
the help of products and services that are associated with the business. Certain formal nature of
the business that includes procedure and parameters are to be required by the clients along with
maintaining the services that are associated with the business organisations (Hübner, Kuhn and
Wollenburg 2016). The purchase system is to be initiated by the process of effective
measurement on the activities of the business. The company that deals with effective system of
purchase mainly checks the inventory that are included with the business. The quantifiable
inventories is pointed by the appointed clerk of Adam and Co that purchase new stock and
records the transaction in the file of purchase order. The file of purchase order mainly records the
transaction that are associated with arrival of goods to the receiving department along with
performing inspection and reconciliation of the goods (Jurnali and Siti-Nabiha 2015). The
following figure mainly points out the system flow chart of purchase system of the company that
is Adam and Co.

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Figure 1: System flowchart of purchase system
(Source: Created by Author)
The above figure points out the system flowchart of the overall system of purchase of
Adam and Co along with identifying the inventories and funds that are associated with the
business (Khamis and Salleh 2018). The new products that joins the company are to be adjusted
with the old or existing products and the accounts payable department is responsible for checking
the purchase order along with the invoices that are prepared by the management of the company.
different types of account are directly associated with the system of purchase such as accounts
payable, inventory control account, general ledger for the company by tracking the order of the
overall payment process. The purchase system of Adam and Co mainly tracks the quantities that
are involved within the company and invoices are being generated for ensuring the process of

5ACCOUNTING INFORMATION SYSTEM
payment (Asare and Wright 2016). Moreover, Adam and Co has the ability to pay off its
suppliers in which the purchases are done as per the requirement.
System flowchart of cash disbursement system
This particular system of cash disbursement is presented in the flowchart that consist of
different documentation along with effective functions of the process. The books of accounts of
the company mainly consist of financial records that points out the effective transaction of the
company in their normal course of business (Maas, Schaltegger and Crutzen 2016). The system
of cash disbursement helps in approving the transaction which mainly depends on the type of
transaction that includes different kind of paperwork and might differs with the actual transaction
of the business organisation. Recording of inventory of the purchased invoices mainly records
the inclusion of invoices that mainly acts as receipt to the customers. The following table mainly
shows the system flowchart of cash disburse system which points out the effective system of
cash disbursement.

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Figure 2: System flowchart of cash disbursement system
(Source: Created by Author)
The above figure points out the system flowchart of cash disbursement system that
highlights the liabilities which are included with in the business. It points out the tax rate
reference file that points out the amount of income tax that are required to be paid by the
employees to the government from their total amount of payment (Hribar, Kravet and Wilson
2014). The records in the accounts payable of the company that is Adam and Co included with
the closing voucher and records in the general ledger with the voucher file in the process of
checking the register. This particular amount is to be returned with the accounts payable records
that helps in preparation of overall system of cash disbursement. It also includes the process of

7ACCOUNTING INFORMATION SYSTEM
identification of liabilities for checking the providers of goods and services to the suppliers
(Fullerton, Kennedy and Widener 2014). The process of cash disbursement checks the providers
with the function of accounts payable along with approving the transaction for supporting the
documentation.
System flowchart of payroll system
The system flowchart of payroll system consist of payment of salaries and wages to the
employees that are associated with the business. The total working hours of the employees are
associated with the rate per hour that points out withholdings of tax which are to be paid by the
customers (Nallareddy and Ogneva 2016). The system of payroll mainly starts with hiring of
employees that are associated with the business along with maintaining the records that would
help the company in mitigating the overall procedure. The employees that are associated with
Adam and Co combines with the working hour along with rate per hour of the employees. The
computer terminal that are used by the clerk of the company maintains the correct record for
processing of data that is connected with the payroll of processing of data which is transferred to
the overall department. It also helps in preparation of disbursement of vouchers that are directly
proportional to the employees of the company (Güney 2014). The following figure shows the
system flowchart of payroll system that highlights the involvement of management.

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Figure 3: System flowchart of payroll system
(Source: Created by Author)
The above figure shows the system flowchart of payroll system with functions of payroll
with the system of remittance. It points out the employee work that mainly report to the
managers which is derived by the cost centres and the remittance is to be managed by the
remittance system (Ponisciakova, Gogolova and Ivankova 2015). The report that is prepared by
the managers includes the adjustments from the remittance system which points out the effective
cash receipt system and it has to be prepared by the overall system of payroll. Recording of
inventory of the purchased invoices mainly records the inclusion of invoices that mainly acts as
receipt to the customers. Gathering of funds is one of the important aspects that points out the

9ACCOUNTING INFORMATION SYSTEM
effective management of the payroll system which includes the effective payroll functions of the
employees. The payment of the employees are to be made on the basis of weeks or months which
is also to be recorded in the books of accounts of Adam and Co. it includes the payslip which is
provided to the employees that consist of particular of salaries and act as proof for the company
that is to be provided. It also highlights the amount that are required to be paid to the government
along with maintaining the performances of the employees (Uyar, Gungormus and Kuzey 2017).
The query about the payment mainly runs on the demand that includes the employees which are
to be initiated by the company in their normal course of business.
Description of internal control weakness in each system and risk associated with the
identified weakness
Purchase system
The purchase system is directly associated with the stock which is to be initiated in
recording the transaction for better allocation of resources. The orders that are cancelled might
be misplaced for the transactions that are associated with the business and the stock is to be
reordered or else it might be misplaced under the circumstances of the purchase transactions
(Gallemore and Labro 2015). It includes the suppliers that are associated with the business and
the suppliers is to be paid in advance as it would experience better delivery and actual time with
the process of delivery. It also includes the risk that are associated with the purchase system that
provides different types of errors in the system along with accessing the system that are
unauthorised with the system. The quantifiable inventories is pointed by the appointed clerk of
Adam and Co that purchase new stock and records the transaction in the file of purchase order. It
includes a software that consist of purchase system where the clerk of the company records the
transaction for the company (Chae, Koh and Prybutok 2014). The inadequate backup of files

10ACCOUNTING INFORMATION SYSTEM
mainly consist of empirical data that is associated in the system of purchase and data that are
invalid might also hamper the overall process.
Cash disbursement system
The system of cash disbursement mainly highlights different areas of organisation which
assist in the process of developing and controlling the internal factors along with the rules and
regulation that are associated with it. The inherent weakness of the company is associated with
the process of cash disbursement system might cause the concerns for the security which is too
strict for the effective communication in the system (Dewi et al. 2018). The internal control are
required to be properly regulated along with the normal project of the business. It also includes
the accountability and adaptation of the issues that might hamper the overall course of business
along with highlighting the functions of the accountability process. Moreover, loss of fund might
hamper the overall profitability of the project and the risk that is associated with the system is
mismatching the recorded entries in the books of accounts. Paid vouchers in the system of cash
disbursement is to be provided by the managers which are to be performed with the process of
maintaining the profitability (Mirzaey, Jamshidi and Hojatpour 2017). In addition to this, the
department of purchase and sales activity by the transactions that are associated with the
company.
Payroll system
Payroll system consist of internal control weakness which might hamper the safeguarding
all of the information that is directly involved within business course of the company. The
disputes that might arise in the process of recording the entry in their books of accounts also
points out the effective transactions of the business (Andon, Baxter and Chua 2015). The process
of data entry might applied with certain amount of financial loss that would also affect the

11ACCOUNTING INFORMATION SYSTEM
profitability of Adam and Co in their normal course of business. Separation of duties in the
system of payroll includes the internal control weakness that points out fictitious employees of
the company. Moreover, the risk that are involved with the company affect the timekeeping
analysis of the employees along with discrepancies in the overall system of payroll (Uyar,
Gungormus and Kuzey 2017). Certain faults in the installed computer system along with manual
entry of the accounting records also gets affected by the faults that is present in the payroll
system.
Conclusion
From the above study, it can be concluded that the system that is involved in the process
of accounting information consist of different system that would be effective in recording their
transactions. The purchase system is to be initiated by the process of effective measurement on
the activities of the business. The system of cash disbursement helps in approving the transaction
which mainly depends on the type of transaction that includes different kind of paperwork and
might differs with the actual transaction of the business organisation. The file of purchase order
mainly records the transaction that are associated with arrival of goods to the receiving
department along with performing inspection and reconciliation of the goods. The system of
payroll mainly starts with hiring of employees that are associated with the business along with
maintaining the records that would help the company in mitigating the overall procedure.
Therefore, it is to be included in the system of the above mentioned system which would affect
the overall profitability of the business.

12ACCOUNTING INFORMATION SYSTEM
References
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useful. Journal of Management Studies, 52(7), pp.986-1002.
Asare, S.K. and Wright, A.M., (2016). Inferring remediation and operational risk from material
weakness disclosures. Behavioral Research in Accounting, 29(1), pp.1-17.
Chae, H.C., Koh, C.E. and Prybutok, V.R., 2014. Information technology capability and firm
performance: contradictory findings and their possible causes. Mis Quarterly, 38(1), pp.305-326.
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