Accounting and Information Systems
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AI Summary
This report analyzes the situation of Platinum Manufacturing Group and provides recommendations for the implementation of an automated inventory management system to address the weaknesses and issues of the existing operational framework. The report identifies the main control issues associated with the operational processes of the company and recommends IT implementation to solve the problems and issues of the system.
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Accounting and Information Systems
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1ACCOUNTING AND INFORMATION SYSTEMS
Executive Summary
Accounting information systems are efficient tools of managing accounting processes of an
organization. Organizations that still run on manual operations are recommended to deploy
accounting information systems for speeding up the operations as well as increasing the
efficiency of the operations. In this report, the situation of Platinum Manufacturing Group has
been analyzed and suitable recommendations have been provided.
Executive Summary
Accounting information systems are efficient tools of managing accounting processes of an
organization. Organizations that still run on manual operations are recommended to deploy
accounting information systems for speeding up the operations as well as increasing the
efficiency of the operations. In this report, the situation of Platinum Manufacturing Group has
been analyzed and suitable recommendations have been provided.
2ACCOUNTING AND INFORMATION SYSTEMS
Table of Contents
Introduction......................................................................................................................................3
Overview of Expenditure Process of the Company.........................................................................3
Data Flow Diagram..........................................................................................................................5
Identification of the Aspects of the System.....................................................................................5
Conclusion.......................................................................................................................................8
References......................................................................................................................................10
Table of Contents
Introduction......................................................................................................................................3
Overview of Expenditure Process of the Company.........................................................................3
Data Flow Diagram..........................................................................................................................5
Identification of the Aspects of the System.....................................................................................5
Conclusion.......................................................................................................................................8
References......................................................................................................................................10
3ACCOUNTING AND INFORMATION SYSTEMS
Introduction
Platinum Manufacturing Group is a medium scale manufacturing company that deals
with the production of various electrical goods. The company procures the raw materials from
some regular vendors through a specific sequence of processes. For the purpose of ordering,
delivery and payment for the raw materials, the company uses a specific framework that includes
the sequence of events like publishing the list for requirements, placing the order based on the
list, delivering the goods to the storeroom staff, providing the invoice, making payments based
on the invoice and others. However, in addition to the operational benefits provided by this
particular framework, there are some loopholes and issues as well (Benaroch & Chernobai,
2015). These issues may result in several risk events for the company in the near future if not
identified, analyzed and addressed within a short time. The changes required to solve these
problems include the development of a new automated inventory management system and
others. The objective of the implementation of the new system is to ensure the errors occurring
due to manual errors and the gaps within the operational framework are addressed with the help
of more efficient and automated processes.
In this report, the main weaknesses and issues with the existing operational framework of
the company have been identified and suitable recommendations have been provided.
Overview of Expenditure Process of the Company
The current expenditure process of the company mainly follows a particular chain of
actions based on the availability of the stock of the raw materials in the storeroom. The company
has a particular long term supplier from whom, the materials are purchased every month. Based
Introduction
Platinum Manufacturing Group is a medium scale manufacturing company that deals
with the production of various electrical goods. The company procures the raw materials from
some regular vendors through a specific sequence of processes. For the purpose of ordering,
delivery and payment for the raw materials, the company uses a specific framework that includes
the sequence of events like publishing the list for requirements, placing the order based on the
list, delivering the goods to the storeroom staff, providing the invoice, making payments based
on the invoice and others. However, in addition to the operational benefits provided by this
particular framework, there are some loopholes and issues as well (Benaroch & Chernobai,
2015). These issues may result in several risk events for the company in the near future if not
identified, analyzed and addressed within a short time. The changes required to solve these
problems include the development of a new automated inventory management system and
others. The objective of the implementation of the new system is to ensure the errors occurring
due to manual errors and the gaps within the operational framework are addressed with the help
of more efficient and automated processes.
In this report, the main weaknesses and issues with the existing operational framework of
the company have been identified and suitable recommendations have been provided.
Overview of Expenditure Process of the Company
The current expenditure process of the company mainly follows a particular chain of
actions based on the availability of the stock of the raw materials in the storeroom. The company
has a particular long term supplier from whom, the materials are purchased every month. Based
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4ACCOUNTING AND INFORMATION SYSTEMS
on the purchase record of every month, a list of required raw materials is sent to the purchasing
team at the start of each month (Komala, 2017). The team compares this list to the existing
balance in the inventory. If the balance is negative, the purchasing team places the order to the
supplier. The supplier delivers the materials directly to the storeroom staffs who then checks the
invoice with the number of items received and signs off. Another copy of the invoice is also sent
by the seller to the purchasing team for filing. At the end of each month within the due date, the
purchasing team completes the payments for the purchase of the raw materials. However, there is
no additional stage for the purchasing team to ensure the ordered amount of the materials have
been delivered to the storeroom (Huang et al., 2015). Since there is not any direct mode or scope
of communication between the purchasing team and the storeroom staff, there is no way to verify
whether the seller delivered the right amount of materials and sent the right invoices to the
storeroom staff and the purchasing team. As a result, the company comes across financial losses
if the seller is not honest and cheats the company by taking advantage of the flaw of the system.
on the purchase record of every month, a list of required raw materials is sent to the purchasing
team at the start of each month (Komala, 2017). The team compares this list to the existing
balance in the inventory. If the balance is negative, the purchasing team places the order to the
supplier. The supplier delivers the materials directly to the storeroom staffs who then checks the
invoice with the number of items received and signs off. Another copy of the invoice is also sent
by the seller to the purchasing team for filing. At the end of each month within the due date, the
purchasing team completes the payments for the purchase of the raw materials. However, there is
no additional stage for the purchasing team to ensure the ordered amount of the materials have
been delivered to the storeroom (Huang et al., 2015). Since there is not any direct mode or scope
of communication between the purchasing team and the storeroom staff, there is no way to verify
whether the seller delivered the right amount of materials and sent the right invoices to the
storeroom staff and the purchasing team. As a result, the company comes across financial losses
if the seller is not honest and cheats the company by taking advantage of the flaw of the system.
5ACCOUNTING AND INFORMATION SYSTEMS
Data Flow Diagram
Figure 1: Data Flow Diagram
(Source: Created by Author)
Data Flow Diagram
Figure 1: Data Flow Diagram
(Source: Created by Author)
6ACCOUNTING AND INFORMATION SYSTEMS
Identification of the Aspects of the System
Internal Control
Weakness
Impact of the
weakness
Control to mitigate the
weakness
Latest IT
developments
The first control
weakness identified is
the communication gap
between the storeroom
staff and the purchasing
team. While the
storeroom staffs are
responsible for handling
the raw materials like
receiving the deliveries
from the supplier,
placing and taking out
the raw materials to and
from the inventory,
managing the inventory
and other
responsibilities, it is also
required to some
important information
from the storeroom to
the purchasing team like
the exact amount of the
This particular control
weakness can have a
major negative impact
on the company. Due to
the communication gap,
the purchasing team
cannot verify the actual
amounts of products
delivered. The supplier
can take advantage of
this situation and
delivers lesser amount
of the materials than the
actual amount ordered
but in the purchasing
team’s copy of the
invoice, the supplier
shows that the actual
amount has been
delivered. The main
flaw here is that after
receiving the invoice,
The main control
measure that needs to
taken in this regard is to
establish a
communication medium
between the storeroom
staffs and the
purchasing team. This is
to ensure the
development of
coordination between
the two teams such that
each and every delivery
report is sent to the
purchasing team at the
moment the materials
are delivered by the
supplier (Evans et al.,
2015). This process will
also be faster if the
delivery verification
system is automated
There are several IT
developments that can
help Platinum
Manufacturing Group.
The technology that is
to be implemented must
be focused on
automating most of the
operational processes
like inventory update,
delivery receipt and
others. One major
technology that can be
suggested is the bar
code reading system.
The supplier will be
asked to provide bar
codes with each
quantity of material that
can be scanned using a
bar code scanning
device (Simkin, Norman
Identification of the Aspects of the System
Internal Control
Weakness
Impact of the
weakness
Control to mitigate the
weakness
Latest IT
developments
The first control
weakness identified is
the communication gap
between the storeroom
staff and the purchasing
team. While the
storeroom staffs are
responsible for handling
the raw materials like
receiving the deliveries
from the supplier,
placing and taking out
the raw materials to and
from the inventory,
managing the inventory
and other
responsibilities, it is also
required to some
important information
from the storeroom to
the purchasing team like
the exact amount of the
This particular control
weakness can have a
major negative impact
on the company. Due to
the communication gap,
the purchasing team
cannot verify the actual
amounts of products
delivered. The supplier
can take advantage of
this situation and
delivers lesser amount
of the materials than the
actual amount ordered
but in the purchasing
team’s copy of the
invoice, the supplier
shows that the actual
amount has been
delivered. The main
flaw here is that after
receiving the invoice,
The main control
measure that needs to
taken in this regard is to
establish a
communication medium
between the storeroom
staffs and the
purchasing team. This is
to ensure the
development of
coordination between
the two teams such that
each and every delivery
report is sent to the
purchasing team at the
moment the materials
are delivered by the
supplier (Evans et al.,
2015). This process will
also be faster if the
delivery verification
system is automated
There are several IT
developments that can
help Platinum
Manufacturing Group.
The technology that is
to be implemented must
be focused on
automating most of the
operational processes
like inventory update,
delivery receipt and
others. One major
technology that can be
suggested is the bar
code reading system.
The supplier will be
asked to provide bar
codes with each
quantity of material that
can be scanned using a
bar code scanning
device (Simkin, Norman
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7ACCOUNTING AND INFORMATION SYSTEMS
materials delivered,
invoice provided by the
supplier to the
storeroom staff and
others. Without this
communication, there
will always be errors in
the purchasing system
as it is easier for the
supplier to cheat the
company.
the purchasing team do
not further communicate
with the store room staff
to determine whether
the right amount of
materials have been
delivered or not.
using suitable
technology. With the
use of technology, the
verification process will
be much easier and
faster. Some relevant
technologies that can be
included are bar / QR
code scanning,
automated inventory
record system and
others.
& Rose, 2014). After
scanning, the device
will automatically
update the purchase in a
specific portal that will
be accessible by both
the storeroom staff and
the purchasing team. As
a result, there will be no
further verification
required while receiving
the delivery.
Another major flaw in
the system is the use of
paper documents.
Moreover, all the
processes are handled
manually that result in
increasing the overall
processing time as well
as handling errors. The
paper document include
list of requirements,
invoices, purchase bills
and others. If not stored
correctly, these
The main impact of this
weakness is that the
entire process is very
much time consuming
and hectic. Keeping
follow up of
information using all
paper documents is a
difficult task to maintain
and naturally, numerous
errors occur during the
same. The paper
documents can also be
altered, tampered or
The use of the virtual
media is a suggested
method to take care of
this weakness i.e. the
information can be
stored online using
virtual documents
instead of the paper
documents (Prasad &
Green, 2015). This
system will not only
reduce the effort of the
data managers in the
company, but will also
Implementation of a
cloud based data
management
infrastructure is
recommended for
Platinum Manufacturing
Group (Komala, 2017).
This new system will
help to store and
manage any type of data
anytime that can also be
accessed for analysis
anytime. This system
will be entirely based on
materials delivered,
invoice provided by the
supplier to the
storeroom staff and
others. Without this
communication, there
will always be errors in
the purchasing system
as it is easier for the
supplier to cheat the
company.
the purchasing team do
not further communicate
with the store room staff
to determine whether
the right amount of
materials have been
delivered or not.
using suitable
technology. With the
use of technology, the
verification process will
be much easier and
faster. Some relevant
technologies that can be
included are bar / QR
code scanning,
automated inventory
record system and
others.
& Rose, 2014). After
scanning, the device
will automatically
update the purchase in a
specific portal that will
be accessible by both
the storeroom staff and
the purchasing team. As
a result, there will be no
further verification
required while receiving
the delivery.
Another major flaw in
the system is the use of
paper documents.
Moreover, all the
processes are handled
manually that result in
increasing the overall
processing time as well
as handling errors. The
paper document include
list of requirements,
invoices, purchase bills
and others. If not stored
correctly, these
The main impact of this
weakness is that the
entire process is very
much time consuming
and hectic. Keeping
follow up of
information using all
paper documents is a
difficult task to maintain
and naturally, numerous
errors occur during the
same. The paper
documents can also be
altered, tampered or
The use of the virtual
media is a suggested
method to take care of
this weakness i.e. the
information can be
stored online using
virtual documents
instead of the paper
documents (Prasad &
Green, 2015). This
system will not only
reduce the effort of the
data managers in the
company, but will also
Implementation of a
cloud based data
management
infrastructure is
recommended for
Platinum Manufacturing
Group (Komala, 2017).
This new system will
help to store and
manage any type of data
anytime that can also be
accessed for analysis
anytime. This system
will be entirely based on
8ACCOUNTING AND INFORMATION SYSTEMS
documents can easily be
lost, destroyed or even
stolen. Paper document
tampering is also an
issue that can be done
by some unethical
personnel for personal
gains. In addition, it is
also extremely hard,
hectic and time
consuming for the team
members to keep track
of information using
these paper documents.
stolen and hence, these
are not reliable sources
of storing valuable
business related data
and information. Hence,
it is important to replace
this system with an
efficient and faster
system that will not also
require hectic effort to
manage or maintain.
additionally help in data
analysis and analytics as
each and every piece of
data will be stored
online. It will also not
require any additional
storage space / physical
space as all the
documents will be
stored online in the
cloud. However, this
will only require some
technical expertise to
manage and maintain
and this can be achieved
by some training
sessions on the
employees.
virtual storage interface
and hence, it will not
require any additional
physical storage space.
Conclusion
This report is mainly based on the identification of the main control issues associated
with the operational processes of Platinum Manufacturing Group as well as identification of the
main aspects of the existing system along with the recommendations IT implementation that will
solve the problems and issues of the system. As per the overall analysis of the system, there are
some issues and gaps in the system. The first main gap identified is the lack of suitable
documents can easily be
lost, destroyed or even
stolen. Paper document
tampering is also an
issue that can be done
by some unethical
personnel for personal
gains. In addition, it is
also extremely hard,
hectic and time
consuming for the team
members to keep track
of information using
these paper documents.
stolen and hence, these
are not reliable sources
of storing valuable
business related data
and information. Hence,
it is important to replace
this system with an
efficient and faster
system that will not also
require hectic effort to
manage or maintain.
additionally help in data
analysis and analytics as
each and every piece of
data will be stored
online. It will also not
require any additional
storage space / physical
space as all the
documents will be
stored online in the
cloud. However, this
will only require some
technical expertise to
manage and maintain
and this can be achieved
by some training
sessions on the
employees.
virtual storage interface
and hence, it will not
require any additional
physical storage space.
Conclusion
This report is mainly based on the identification of the main control issues associated
with the operational processes of Platinum Manufacturing Group as well as identification of the
main aspects of the existing system along with the recommendations IT implementation that will
solve the problems and issues of the system. As per the overall analysis of the system, there are
some issues and gaps in the system. The first main gap identified is the lack of suitable
9ACCOUNTING AND INFORMATION SYSTEMS
communication between storeroom staff and the purchasing team that has also resulted in
inability to build continuity within the entire system framework. This issue causes financial
losses for the company on a regular basis. Again, most of the operational processes like handling
of paper invoices, sending requests in paper documents and others have been controlled
manually. This has resulted in the slow processing and operational time as well as several
manual errors that are not desired if the company is to grow from medium to large scale. Hence,
it is recommended for the company to develop a new automated system that will be much more
efficient as well as faster than the manually operated process.
communication between storeroom staff and the purchasing team that has also resulted in
inability to build continuity within the entire system framework. This issue causes financial
losses for the company on a regular basis. Again, most of the operational processes like handling
of paper invoices, sending requests in paper documents and others have been controlled
manually. This has resulted in the slow processing and operational time as well as several
manual errors that are not desired if the company is to grow from medium to large scale. Hence,
it is recommended for the company to develop a new automated system that will be much more
efficient as well as faster than the manually operated process.
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10ACCOUNTING AND INFORMATION SYSTEMS
References
Benaroch, M., & Chernobai, A. (2015). Linking Operational IT Failures to IT Control
Weaknesses. In AMCIS.
Collier, P. M. (2015). Accounting for managers: Interpreting accounting information for
decision making. John Wiley & Sons.
Evans, I., Long, F., Otgonbaatar, U., Shrobe, H., Rinard, M., Okhravi, H., & Sidiroglou-
Douskos, S. (2015, October). Control jujutsu: On the weaknesses of fine-grained control
flow integrity. In Proceedings of the 22nd ACM SIGSAC Conference on Computer and
Communications Security (pp. 901-913). ACM.
Hassan, H., Nasir, M. H. M., & Khairudin, N. (2017). Accounting Information Systems. In SHS
Web of Conferences(Vol. 34). EDP Sciences.
Huang, P., Guo, J., Ma, T., & Zhang, Y. (2015). Does the value of cash holdings deteriorate or
improve with material weaknesses in internal control over financial reporting?. Journal of
Banking & Finance, 54, 30-45.
Ismail, N. A., & King, M. (2014). Factors influencing the alignment of accounting information
systems in small and medium sized Malaysian manufacturing firms. Journal of
Information Systems and Small Business, 1(1-2), 1-20.
Komala, A. R. (2017). Cause and effect of accounting information system: A study in national
Zakat management organization. JABS, 3(2), 69-76.
References
Benaroch, M., & Chernobai, A. (2015). Linking Operational IT Failures to IT Control
Weaknesses. In AMCIS.
Collier, P. M. (2015). Accounting for managers: Interpreting accounting information for
decision making. John Wiley & Sons.
Evans, I., Long, F., Otgonbaatar, U., Shrobe, H., Rinard, M., Okhravi, H., & Sidiroglou-
Douskos, S. (2015, October). Control jujutsu: On the weaknesses of fine-grained control
flow integrity. In Proceedings of the 22nd ACM SIGSAC Conference on Computer and
Communications Security (pp. 901-913). ACM.
Hassan, H., Nasir, M. H. M., & Khairudin, N. (2017). Accounting Information Systems. In SHS
Web of Conferences(Vol. 34). EDP Sciences.
Huang, P., Guo, J., Ma, T., & Zhang, Y. (2015). Does the value of cash holdings deteriorate or
improve with material weaknesses in internal control over financial reporting?. Journal of
Banking & Finance, 54, 30-45.
Ismail, N. A., & King, M. (2014). Factors influencing the alignment of accounting information
systems in small and medium sized Malaysian manufacturing firms. Journal of
Information Systems and Small Business, 1(1-2), 1-20.
Komala, A. R. (2017). Cause and effect of accounting information system: A study in national
Zakat management organization. JABS, 3(2), 69-76.
11ACCOUNTING AND INFORMATION SYSTEMS
Laudon, K. C., & Laudon, J. P. (2016). Management information system. Pearson Education
India.
Marshall, B. R., & Steinbart, P. J. (2017). ACCOUNTING INFORMATION SYSTEMS.
PEARSON EDUCATION LIMITED.
Prasad, A., & Green, P. (2015). Organizational competencies and dynamic accounting
information system capability: impact on AIS processes and firm performance. Journal of
Information Systems, 29(3), 123-149.
Simkin, M. G., Norman, C. S., & Rose, J. M. (2014). Core concepts of accounting information
systems. John Wiley & Sons.
Uyar, A., Gungormus, A. H., & Kuzey, C. (2017). Impact of the Accounting Information System
on Corporate Governance: Evidence from Turkish Non-Listed Companies. Australasian
Accounting, Business and Finance Journal, 11(1), 9-27.
Laudon, K. C., & Laudon, J. P. (2016). Management information system. Pearson Education
India.
Marshall, B. R., & Steinbart, P. J. (2017). ACCOUNTING INFORMATION SYSTEMS.
PEARSON EDUCATION LIMITED.
Prasad, A., & Green, P. (2015). Organizational competencies and dynamic accounting
information system capability: impact on AIS processes and firm performance. Journal of
Information Systems, 29(3), 123-149.
Simkin, M. G., Norman, C. S., & Rose, J. M. (2014). Core concepts of accounting information
systems. John Wiley & Sons.
Uyar, A., Gungormus, A. H., & Kuzey, C. (2017). Impact of the Accounting Information System
on Corporate Governance: Evidence from Turkish Non-Listed Companies. Australasian
Accounting, Business and Finance Journal, 11(1), 9-27.
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