(pdf) Introduction to Accounting Information Systems

Running head: ACCOUNTING INFORMATION SYSTEM
ACCOUNTING INFORMATION SYSTEM
Name of the Student:
Name of the University:
Author Note:

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Table of Contents
Introduction......................................................................................................................................2
Summarized version of the expenditure process of the company:..................................................2
0 level Data Flow Diagram of the current system:..........................................................................2
Identification of different factors within the organization:..............................................................3
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

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Introduction
The Platinum Manufacturing Company conducts its purchase process in a certain way.
Some steps and inter departmental processes are involved in the expenditure process of the
company. The whole process is partially manual process as it requires the annual interface to do
certain important jobs. The main objective of the paper is to identify the weakness in the process
of the company and recommend a modification plan of the process.
Summarized version of the expenditure process of the company:
The expenditure process of the company has four phases- purchasing, receiving, making
payment by the accounts and process regarding treasury. The purchase form is generated by the
department head at the initial stage of making purchase. The verification of the form is done by
one of the five purchasing agents. The selection of suppliers is conducted followed by the
contacting with the suppliers and placing the order. The purchase number is generated and
forwarded to the supplier and the department. After the receiving of the order, the receiving
department stamped the purchased order and verbally informs the department about the receiving
of the order. The review of the order is done once in a month. In order to make the payment to
the suppliers the filling of open purchase order is made on the basis of receipt. The vendor
invoice is received and unpaid invoices are filed for due date. A treasure signs the cheque for the
due date. The cheque signature machine key is maintained by the cashier .The signature of both
cashier and the treasurers are needed for the cheque above $10,000. Cheques under $10,000 are
signed by machine.

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0 level Data Flow Diagram of the current system:
Figure 1: 0-Level DFD of the System
(Source: Created by author)
Identification of different factors within the organization:
Discussion Points Discussion
Identification of weakness in Platinum
There are several weakness in the expenditure
process of Platinum Manufacturing System. The
weakness has been identified for the individual
process:
Purchasing: The verification process of the

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Manufacturing Group: purchasing g form is acceptable for the security
purpose. However, it has been found that the
process is manual (Kane et al.,2015). This takes
much time in the verification process. The choosing
of the suppliers is done on basis of different factors.
However, the placement of order is done verbally
which is not acceptable. The verbal communication
between the company and the suppliers can
generate human error in the order placing;
moreover, there will be no proof of the number
items and the types of items ordered by the
company (Armada & Martin, 2016). The
documents including purchase number are sent to
the department and purchase order file is opened.
The whole process is done manually which can be
replaced by the automatic machine process (Mack
& Veil, 2017). Again, the acknowledgement of the
receiving of the order is informed to the department
verbally, which is not a professional way of
communication. This acknowledgement can be
done by a certain process which can be used as
valid proof.
Receiving: The receiving of the order includes
the stamping of the purchase order along with
checking the order details. Any difference between
the requested order details and the received order is

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taken into concern (De Haes et al., 2017). The
receiving clerk sends the purchased order along
with the equipment to the requisitioning department
followed by a verbal acknowledgement to the
department. This verbal communication can be
replaced by the communication through official
way.
Accounts payable: After receiving the order the
clerk in the accounts department fills the open
purchase order. This is an manual process and
chances of human error is present in the process
(Utesheva, Simpson & Cecez-Kecmanovic,2016).
Moreover it takes time in filling each of the file.
The filling of the invoice purchase order along with
the purchase number is filled with paid invoice,
which is also a manual process that is time
consuming.
Treasurer: The cheques are sorted into two
types- cheques for under $10,000 which are
machine signed. The cheques which are above
$10,000 are signed by both cashier and treasure.
This approach is useful for the security purpose and
there is no weakness noted in this section.
Certain impacts of the flaws or the weakness

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Impact of weaknesses on the organization:
in the system can be observed in the organization:
At certain level in the organization, the
communication is verbal. The verbal
communication can create miscommunication
during the understanding of the requirement and
acknowledging the information. This can lead to
serious problems in the process. In case, if the
placing of the order is not done properly , there will
be a difference between the placed order and
required order.
The filling of the purchased order is done
manually. In this case, the human error such as
filling up with wrong order number can happen.
This can lead to the mismanagement of the process
flow in the organization.
The storing of the important files and data are
stored in the office. In this case, misplacement of
file can happen.
The payment is made in offline mode, which is
cash on delivery system. The cash may not be
available all time. In that case online money
transaction can solve the problem.
There are certain steps; those can be taken in order
to mitigate the identified internal risks of the
Platinum Manufacturing company. The three

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Practical implementation to mitigate the internal
risks:
identified weakness, which can cause the risk in the
organization are- the verbal communication in the
business process, the manual filling of the forms
and bills and the storage of files at the office.
Storing the important files containing the important
data can be misplaced (Norta, Grefen &
Narendra,2014). This can create problem in future
for the company (Gureva et al.,2016). In order to
eliminate this, concept of cloud storage can be
adopted in storing process of the data. This will
help to retrieve data from anywhere and anytime
(Horlacher, Klarner & Hess,2016). The security
will be provided by the cloud provider. There is no
need for the company to maintain the record
manually which will be cost effective. Moreover,
the cloud storage will provider larger space to store
data.
In order to replace the verbal communication,
certain initiatives can be taken. One of these
initiatives is to develop an electronic interface,
through where the communication can be created
through internet or LAN. The communication
through this electronic interface will help to keep
the track of the summery of the communication,
which may be needed in the future along with that
it will allow the faster communication. In order to

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do this a software interface is needed to be made
through which the staffs of different department in
the organization can communicate (Hyvönen,
2018). In order to communicate with the suppliers
the transcript of the requirement needed to be
generated and the transcript can be sent to the
supplier for the confirmation or the electronic
forms can be used (Majchrzak, Markus &
Wareham, 2016).
In order to fill up the order details, instead of
manual effort the barcode system can be
implemented. All the information regarding quality
and quantity of the placed order can be encrypted
into the barcode (Zimon, 2016). The retrieval of the
information can be done scanning the barcode. This
will eliminate the chances of human errors and will
save time and money of the processing.
Recommendations for the reengineering of the
expenditure process:
Certain recommendations can be made to
implement the whole process in such a way that
maximum use of IT technology can be made in the
system.
Certain IT technologies can be implemented such
as barcode scanning, electronic fund transfer and
interchange of data electronically. In order to
implement these systems in the organization certain

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requirements should be followed:
The overall infrastructure of the organization is
needed to be improvised.
The new electronic interface is needed to be
implemented so that the communication can be
done through electronic data exchange and
electronic forms. In order to develop this system a
group of software experts can be recruited.
The infrastructure for the bar code scanning is
needed to be done.
The cloud architecture is needed to be
implemented. In order to do this the selection of
clod provider is important.
The transfer of the money can be done
electronically (Conforti et al.,2015). To do this
certain arrangements with the financial institutions
can be followed.
The security in the system should be maintained
properly. The password of the systems should be
protected and the authorization for accessing the
system should be restricted to certain officials of
the organization.
The security at the transaction gateway is needed to
be checked by then officials.
The workers of the organizations are needed to be
trained, so that they can be familiar enough to

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handle the new IT dependent system.
The backup and recovery strategy should be taken
by the company in case if te system crashes.
Conclusion
It can be concluded form the above discussion that there are certain weaknesses present
in the expenditure system of the organization. However, these weaknesses can be eliminated by
the implementation of the certain strategic plan such as developing latest IT infrastructure and
security system in the process. The modification of the whole process can deliver a robust system
of expenditure process.