Accounting Information System

This report focuses on the system of accounting information associated with the business and controls the overall cycle of expenditure. It includes system flowcharts of the purchase system, cash disbursement system, and payroll system. Internal control weaknesses and associated risks are also discussed.

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 system of accounting information which would be
associated with the business and controls the overall cycle of expenditure. This study mainly
points out the system flowchart of purchase system which helps the business in recoding their
transactions. System flowchart of cash disbursement system points out the effective management
of cash disbursement system in the business. It also includes payroll system that mainly deals
with payment of salaries and wages of the employees. The study also includes the internal
control weakness along with the risk that are directly associated with the business.

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...........................................................................................................9
Payroll system............................................................................................................................10
Conclusion.....................................................................................................................................10
References......................................................................................................................................12

3ACCOUNTING INFORMATION SYSTEM
Introduction
Accounting information system is vital for an organisation as it includes the set of
guidelines which mainly assist the companies to implement the strategies along with planning in
an effective way. System of purchase is associated with the business that also includes other
forms of system like cash disbursement system, payroll system and others. In this study, Adam
and Co has been taken into consideration which is a wholesaler and based in Perth and mainly
supplies industrial products to other business. The centralised accounting system of the business
is connected with networked terminals which are located in different locations. The system
flowchart of different system has been discussed along with proper diagram and the internal
control weakness of every system has been described along with the risk that are directly
associated with the business.
System flowchart of purchase system
The system of purchase is required to be good for satisfying the customers and fulfilling
the needs and goals of the company. This particular system is directly associated with the
inventory of the business firm along with preparation of digital purchase order (Abdul‐Halim et
al. 2016). The company required to put the right quantity of the products and services for
maintaining the right parameters for maintaining the overall function of purchase. A certain
procedure that is formal in nature is required to be followed for introducing the process of
purchase along with placing order to the supplier that are selected by the company in their
normal course of business. The procedure that is formal in nature is required to be selected for
the supplier to initiate the overall process of purchase that would help the company to deal with
the customers. The system of purchase is mainly required to be associated with certain input that
consist of the details of the product which would be visible to the customers (Asare and Wright

4ACCOUNTING INFORMATION SYSTEM
2016). Different suppliers are required to be selected that would help in fulfilling the purchase
order along with completing the overall system of purchase that is associated with the business.
The following figure mainly points out the system flow chart of purchase system of the company
that is Adam and Co.
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 that are associated with the business. It can
be seen that the company mainly uses the system of digital electronics which helps the business
to prepare the purchase order along with recording the purchase in the books of accounts (Buck

5ACCOUNTING INFORMATION SYSTEM
2016). The system of purchase mainly starts with the allocation of material that are directly
associated with the business and the company that includes the business instructions. The
quantity of the inventories is also low that would point out purchasing of new stock that are
mainly required under purchase order. The clerk purchases new order or stock at the time of
quantities that includes the overall process of checking the inventory. The mentioned company
uses digital system of purchasing the order that are associated with the business along with
recording the file for purchase order. The arrival of good are associated with filing of purchase
order and the receiving department are to be inspected and recon ciliated for the each item. Each
of the department is to be adjusted with new products and adjustment are to be made with ole
products that are available within the company (Chen et al. 2016). At the end, the receipt and
invoices includes the cash disbursement department for initiating the payment process.
Moreover, the purchase system of Adam and Co would be effective in the overall process of
recording the invoices and has the ability pay the suppliers in an effective way.
System flowchart of cash disbursement system
The system of cash disbursement is associated with an organisation as it consist of
different types of documents that would have effective function on the process. The books of
accounts of the company are to be recorded their financial records that would affect the cash for
legitimate transactions (David, David and David 2017). The functions of accounts payable is
mainly supported by certain documentation which is totally depended on the transactions. The
requirement of paperwork does not affect the actual transaction that is to be taken into
consideration for the business. The total amount of inventory that has been purchased by the
company is to be recorded in the books of accounts that provides invoices which mainly act as
proof of receipt of the merchant. The documentation that is associated with the business points

6ACCOUNTING INFORMATION SYSTEM
out the transactions receipt of the merchandise which is to be received on the time of occurrence
of transactions (Donelson, Ege and McInnis 2016). The following table mainly shows the system
flowchart of cash disburse system which points out the effective system of cash disbursement.
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 associated with the business and voucher packet. The records
of accounts payable are to be updated as per the general ledger and voucher file is to be checked
at the time of recording the transactions (Hu et al. 2016). The records of accounts payable is to
be transferred in the general ledger for effective measurement in their books of accounts. The

7ACCOUNTING INFORMATION SYSTEM
process of cash disbursement is to be checked with the goods and services that are provided to
the suppliers of the company. It also includes the functions of accounts payable that approves the
transactions which supports the documentation of the transactions and other uses. In addition to
this, the functions of accounts payable is to be measured with the creditors along with association
of different paper work for different kind of transactions. If any kind of documents are missing
then the transaction is missing from the business or it has been missed by the appointed
accountant of the firm. The clerk that has been appointed by the company has the responsibility
to prepare the cheque along with the payment that are to be recorded in the account of invoices.
The department of accounts payable include certain documents which is to be checked by the
appointed clerk within the due date and has be recorded in the account of invoices (Hübner,
Kuhn and Wollenburg 2016). Every document includes in the process of maintaining the invoice,
copy of cheque and copy of purchase order in their overall course of business.
System flowchart of payroll system
System of payroll is the procedure that includes the payment of salaries of the employees
that are employed by the company. Filing of employment taxes is associated with the
organisation in their normal course of business that highlights the nature of working for the
company (Jurnali and Siti-Nabiha 2015). Payroll system points out the process of assisting in
recording the working hours along with evaluation of wages that includes the taxes for the
process of withholdings. The customers would like to receive the taxes from the company which
has already been deducted from them. This particular system mainly starts with the process of
hiring of employees that would help the company in meeting their objective and goals in their
overall course of business (Van den Heever, Plotko and Jones 2019). Income tax is to be
included in the overall process that would help in keeping the exact record of the employees that

8ACCOUNTING INFORMATION SYSTEM
has been hired by the company. the employees of Adam and Co mainly records their total hours
of working which is required to be multiplied with the rate of their wages to determine their total
outcome of the overall process (Khamis and Salleh 2018). The following figure shows the
system flowchart of payroll system that highlights the involvement of management.
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. Gathering of funds is to be distributed among the employees that
would be distributed among the wages and salaries of the employees (Khan 2019). The mode of

9ACCOUNTING INFORMATION SYSTEM
payment is mainly categorised into weekly payment and monthly payment which points out
payment of transaction and payslip of the employees. The statement that records the payment
summary of an employee over their period of time along with the amount that would be incurred
by the company for payment to the government. Income tax is the amount that would be paid to
the government after a certain period of time along with enjoying the benefits. The backups of
pays are to be allocated to the employees which runs on the demand by the employees.
Description of internal control weakness in each system and risk associated with the
identified weakness
Purchase system
Purchase system consist of internal control weakness that mainly depends on the stock
along with recording of transaction which might lead to over allocation. The cancelled order or
misplaced order is to be paid in advance for better delivery services with actual prices and the
sequences to be maintained (Mwangi, Kiarie and Kiai 2018). It also includes the risk that are
associated with the business that highlights the errors in the system and unauthorised access
would be affected by different individual of the system. This particular system includes the
software that helps the process of purchasing and backing up the files which includes the
empirical data. The data that are invalid in nature would be entered by the vendors and they
might provide inadequate or incomplete trails of audit in the overall system of purchases.
Cash disbursement system
Adam and Co includes different areas that assist in gaining control over the development
and regulation of the rules within the organisation. Weakness that is inherent in nature points out
the improper control for security concern that are strictly affecting the nature of the business.

10ACCOUNTING INFORMATION SYSTEM
Disbursement of cash system might not be properly regulated in case of normal business projects
that would affect the adaptation of accountability efforts (Sarvaiya, Eweje and Arrowsmith
2018). The risk that are included in cash disburse system that point out the checking of registers
and recording of transactions. The paid vouchers for accounts payable has been provided by the
managers which increases the performances in the overall system. Moreover, the involvement of
department that includes the activities of sales which go through the journals of the company.
Payroll system
Safeguarding the information is one of internal control weakness of payroll system along
with protecting the employees from the financial resources. Moreover, collection of proper data
might also falsifies for recording the transaction in the timecard of the company. In addition to
this, separation of duties changes the payroll system that points out the internal control of the
company (Sun 2016). It also includes certain risk that are associated with the business which puts
impact on the time keeping of the employees that are appointed in the organisation. The
association of discrepancies of the payroll system might consist of evaluation which impacts on
the faults in the computer system along with manual records for the entry.
Conclusion
From the above study, it can be concluded that accounting information system is vital for
the organisation as it includes different system that would beneficial for the company in their
normal course of business. The company that is Adam and Co is required to put the right
quantity of the products and services for maintaining the right parameters for maintaining the
overall function of purchase. The system of purchase is mainly required to be associated with
certain input that consist of the details of the product which would be visible to the customers. .
The system of purchase mainly starts with the allocation of material that are directly associated

11ACCOUNTING INFORMATION SYSTEM
with the business and the company that includes the business instructions. Different control
weakness and risk are directly associated with the business which would be effective in the
business transactions.

12ACCOUNTING INFORMATION SYSTEM
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