Accounting Information Systems: Evaluation of Adam and Co.'s Procedures

This report evaluates Adam and Co.'s procedures for accounting information systems, including payroll calculation, cash allotment, and purchases systems. It includes flowcharts and internal controls for each system, along with possible limitations and resolutions. The report concludes with recommendations for improving the overall effectiveness of the accounting information system.

Running Head: ACCOUNTING INFORMATION SYSTEMS
Accounting Information Systems
Name of the Student
Name of the University

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Executive Summary
The detailed evaluation of the report focuses on Adam and Co.’s three main
procedures for the accounting system the payroll calculation system, cash allotment system
and purchases system along with the flowcharts. There are flowcharts for all the three
systems in order to highlight the workflow and to show how all the data is being managed by
the different levels of the department. The flowchart will highlight all the key efforts for
output and input to every next team in the department.
The report also includes the various controls systems to recognize any possible
limitations or disadvantages that might exist in the abovementioned departments. The control
system is also provided with the resolution for all the weaknesses that the department faces.
Therefore, the control system helps to eliminate any kind of risks that are related to the
weaknesses.

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Table of Contents
Executive Summary...............................................................................................................................2
Introduction...........................................................................................................................................4
Purchases System..................................................................................................................................4
The flowchart.....................................................................................................................................4
Internal Control.................................................................................................................................8
Cash disbursements system..................................................................................................................9
The flowchart.....................................................................................................................................9
Internal control................................................................................................................................12
Payroll System.....................................................................................................................................12
The flowchart...................................................................................................................................12
Internal control................................................................................................................................15
Conclusion...........................................................................................................................................17
References...........................................................................................................................................18

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Introduction
In an organization, it is important to have a controlled accounting system for any kind
of data or information processing. Conversely, on any accounting system if the
comprehensive variety is connected than it is important to have cognitive presentation ability
for every system of the department. This system will facilitate the higher executives to put
together a decision based on precise field, which is obtained from the presentation that needs
instant attention (Prasad, Acklesh and Peter 2015).
The detailed assessment of the report is based on the organization named Adam and
Co. The company is a wholesale supplier that deals with its item from Perth and transports in
the mandatory purchase globally from Vietnam, Thailand, and China. The company’s
complete accounting cycle or flowchart is divided into different processes that include the
payroll calculation system, the cash allotment system and purchase system.
Purchases System
The flowchart
In Adam and Co. organization, the complete purchase system is programmed to a
definite amount relating to the resources for sales. The below flowchart is a highlight for
complete purchases system of the organization.

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In order to manage the complete purchase system of the organization, the flowchart is
important and helps us to understand the different processes that are necessary. The main or
the first part of the flowchart is the inventory that boot starts the process. The purchase
system department looks after the inventory receipt in order to discover any kind of inventory
shortage. If the department finds any then it is quickly reordered, after examination the

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inventory subsidiary ledger the company is accounted. As seen in the flowchart, this results in
the seepage of purchase system order that will eventually result in a merchandise inflow
along with a dealer invoice and packing slip.
The scrutiny of the received merchandise is the next step of the flowchart. The
receiving department of the system handles the process by understanding the dealer invoice
and packing slip thus making sure of the creation of a delivery report. The report is printed as
two copies and the inventory clerk sends one copy to the inventory department for later filing
and another copy is dispatched to the depart of accounts payable that are accountable for the
understanding of the delivery report. The dealers’ proof of purchase and the digital purchase
order eradicates any inconsistency that might occur. The primary function is to update the
system in its own general heads of both subsidiaries and manage the inventory ledger
management and the payable accounts ledgers. Lastly, after eliminating all the material errors
the rationalized service copy is sent to the cash expenditure team (Komala 2017).
Internal Control
There needs to be an efficient internal control system for the purchase system as a
huge part of this system is programmed. The internal control system will make sure about the
continuous workflow all over the system. The definite weakness and their possible resolution
that might happen in the future are:
 A wholesaler subsystem does not exist for the generation of the demand of an object.
For this kind of instance, there should be a system in place that would maintain the
entire supporting ledgers, which contains comprehensive information about all the
possible vendors in the area including the services and cost of products offered by
them (Cho and Lee 2016). This will help with the new demand, as it is easy to
crosscheck and the system will resolve any trouble of vendor inaccuracy that might
happen in the system.
 The information supply will be inaccurate in all the forthcoming days if false
information is supplied at the end of the day. An organized system needs to be in
place for the entire department even though the organized accounts are being
sustained for particular ledgers. The control system is there to check the effectiveness

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of the department. The various departments have their own confirmation system that
is indulged to check the details at least two times.
Cash disbursements system
The flowchart
This system plays a vital role in sufficient reimbursement delivery for both the vendor
and the subsequent system that incorporates employees. It also acts as a representative for
those who have worked in the direction of the efficient delivery of the merchandise. The cash
disbursements system’s nuances are highlights through the flowchart:

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The receipts as in the form of the purchase order, dealer’s invoice and the delivery
report is the main entry point for the flowchart of the cash disbursement system from the first
department of purchase system, the receiving report and the digital purchase order. In order to
uphold a good relationship with the vendors, the system is accountable for its satisfactory and
timely disbursement. The system’s clerk recognizes the due date of disbursement from the
entire abovementioned invoices and once the reconciliation is done then it will arrange a
cheque for a vendor. For the final disbursement from the cheque, it should be sent to the
organization’s treasurer in order to attest it (Herrera-Cáceres and Ibeas 2016).

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Once the vendor is paid, there will be more of accounting work, which is the last step
of this cash disbursement system. There will be a system update in the accounts payable,
subordinate ledger and cheque register for the department form the system’s clerk (Berlinger,
Bihary and Walter 2018). After this, the ultimate output is the production and consequent
filing of the last replica of the cheque, supplier’s invoice, copy of purchase order and delivery
report that was issued in the name of the vendor.
Internal control
The entire output of the organization can be compromised as the entire cash
disbursements system rotates around the inputs and outputs of the system clerk, so any small
inaccuracy on the system clerk’s part will compromise all. Therefore, the definite nuisance
that might happen and their resolution are:
 The system clerk’s aware or unaware manipulation of the account control ledger may
end up with an inaccurate outline for the vendor who is still highlighted as a creditor
to the organization even with the cash outflow. A detached control centre needs to be
set up to secure the system for the organization. In this detached system, the system
clerk will be authorized to perform an update into a copy of the control ledger. The
situation with the rationality of each entry will be beneath the capacity of due
diligence by the control area.
 There is no particular method for repeated adjustment towards the payment process in
all the systems. In the organization’s account cycle, it is very uncommon for a system
to use the same payment method for all vendors. The system should implement
various security-based updates in order to enhance the final payment method levels.
The organization should put a new government policy for any kind of possible
embezzlement of cash by employees or anyone (Mukherjee 2017). The department
can appoint an external party in order to process the audit of the system to legalize the
system flow without disturbing it, if any of the abovementioned circumstances occur.

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Payroll System
The flowchart
The final system of the company’s accounting information system is the payroll
system. The main objective of the system is rewarding the resources of the organization
efficiently which is considered for the maintenance of the organization. The below flowchart
will include many levels:

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The main entry point for this flowchart of the payroll system is the employees’ work
hours that are entered into their individual time cards. This will afterward structure the base
for the function of this entire payroll system. The payroll system clerk confirms the time card,
which will then put in input into the digital record of the employee and consequently generate
a paycheque in the name of the employee. The time card conversion will take place in the
next level where the administrators are involved and they will maintain the understanding of
the paycheck and its demand. They also maintain the time cards through which the
paycheques are generated.

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The last level of this payroll system flowchart involves the payroll system clerk to
produce the register for payroll. The clerk also sends the payroll register to the accounts
payable system in order to produce an expenditure receipt that will consequently include the
all the pay checks of the employees and submit the same detailed register in the organization
account. The final step of the payroll system flowchart concludes with the system clerk that
who places the update in the system for the payroll of an employee along with the receipts on
delivering their registers correspondingly (Mahajan, Shukla and Soni 2015).
Internal control
All the flowchart of this department rotates around the payments that are provided to
all the employees as paychecks. The payroll system is only the one that goes beyond three
sub-levels when compared with the other two systems. Nevertheless, there might be some
nuisances along with the resolutions as highlighted below:
 The organization might have various employees and independent freelancers
operating together at the same time, so associating the same payroll system will not be
a viable option, as it will fail all the accounts departments and the paycheck system’s
outcome will be an error. Therefore, a separate system needs to be in a place only to
account for those employees who are operational in different capacities.
 There might be a case if any employee mistakenly put in inaccurate hours this is
particularly accurate for salespeople of the organization as they have flexible working
hours. The organization needs to put a digital time card along with the biometric
systems for the attendance of an employee. This will maintain the interests of the
payroll system as well as employees as a whole in the organization. The digital or
biometric time card will precisely record the entry and exit time of an employee
(Sledgianowski et al. 2017).
 The payroll system of the accounting information is the last part of the system that
integrates a feeling of ordinary recurring or monotonous work. In an organization, the
management executive teams have a tendency to thrust this kind of responsibility to
inexpert or unqualified employees. This type of task will compromise the overall
payroll system. Therefore, to avoid the likelihood of such things occurring, the
organization needs to subcontract the complete payroll management system to the

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oversight. This will help the organization to supervise the payroll procedure
efficiently and to see the outcome of the payroll that helps the HR department of the
organization (Taha and AbdulRazzaq 2019).

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Conclusion
The accounting information system of the company Adams and Co. might appear as a
whole and satisfied concerning the various analyses. However, there are thorough details
where it highlights that there are weaknesses in some areas that can damage the general
operations of the organization. The above assessment also shows that the accounting
information system of the organization is formed for following the conventional and
monotonous processes that form the parcel and part on a daily basis of the organization’s
operation cycle.
There is internal control for all three accounting systems that been defined to include
various probable solutions for each possible emergency (Libby 2017). This helps the
organization with any kind of urgent situation in the future that may unfavourably influence
the operations. After examining the details report, we can conclude that if Adam and Co.
Company applies the same system then it will result in effectiveness of the overall
disbursement cycle determined in the accounting information system and moderate it
alongside any unnecessary procedures in the future.