Internal Control Weaknesses in Bell Studio Information System

This report discusses the internal control weaknesses in the information system of Bell Studio, a wholesaler of art supplies. It focuses on the weaknesses in the purchase system, payroll system, and cash disbursements system, and the associated risks. The report also includes data flow diagrams and system flowcharts for each system.

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

1BELL STUDIO INFORMATION SYSTEM
Executive summary
The report focuses on describing the activities that is taking place within the system of Bell
studio organization. The assessment will focus in describing the different transaction cycles that
takes place within the system of Bell studio. As a business analyst it is important to determine
the major concerns related to each system. The main sources for the Bell studio organization
are Australia, China, New Zealand and Japan. The report will describe the risks and internal
control weakness associated with each system. This organization follows a typical procedure
and ensures effective functioning for the purpose of managing the system and ensures that
system is able to meet the needs of present business. The report will outline the data flow
diagram for purchase and cash disbursement system. In addition to this the data flow diagram
for the payroll system and the system flow chart for all this systems.

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Table of Contents
Introduction.....................................................................................................................................3
Internal control weakness associated with the systems.................................................................3
Purchase system internal control weakness...................................................................................3
Risks related to purchase system....................................................................................................4
Internal control weakness of Payroll system...................................................................................4
Risks associated with payroll system...............................................................................................5
Cash disbursements system internal control weakness..................................................................5
Risks associated with the system....................................................................................................6
Data flow diagram for cash disbursement and purchase system...................................................7
Data flow diagram for payroll system.............................................................................................7
System flowchart for purchase system...........................................................................................9
System flowchart for cash disbursement systems........................................................................10
System flow chart for payroll system............................................................................................11
Conclusion......................................................................................................................................11
Bibliography...................................................................................................................................13

3BELL STUDIO INFORMATION SYSTEM
Introduction
Bell studio is an organization that focuses on manufacturing artifacts. This is an Adelaide
based wholesaler of art supplies that focuses on achieving the products from main
manufacturing industries that are mainly Australia, china, Japan and New Zealand based
company. The organization performs several activities such as manufacturing the product and
delivering it to the customers. The main reason behind reviewing the system functions is that
there are several internal weaknesses that impact the processing. The main activity that is
being performed by purchase system is that it checks the inventory stock and request for
products from the vendor. Thus the system needs to have a proper control over the processing
so that exact process can be performed by the system. The report aims at focusing on the
different activities performed by the system. With the help of data flow diagram it will become
easy to explain the functions performed by each system. The main function associated with the
purchase system is to receive the invoice statement regarding the purchase order. The payroll
system mainly focuses on describing the payments procedures so that it becomes easy to
understand the performance. The system needs to focus on the working and to process a fixed
amount of payment towards every employee. Apart from all this the report will discuss the
main internal weakness associated with each system so that it becomes easy to manage the
activities for better future.
Internal control weakness associated with the systems
Purchase system internal control weakness
The system aims at processing the purchase system so that it can ensure better working
of the system. The internal control weaknesses related to purchase system are going to be
discussed in this part of the report so that it becomes easy to determine the working of the
system. The internal weaknesses that are identified within the system that needs to be
mitigated are described below:
 Inspection process: the main reason behind stating that purchase system involves a
lengthy inspection process because once the products are being delivered than it is
being frequently reconciled by receiving clerk. This takes a long time to calculate the
time taken by checking process and hence the process becomes lengthy that has the
ability to impact the processes performed by the system.
 Manual process impacts the system: the organisation tends to keep data manually
within the system and prints the hard copies for sharing with main stakeholders. This
eventually have ends up sharing the hard copies and leading to consuming extra time.
Thus the process becomes slow and it becomes difficult to conduct different activities
within the purchase department of the Bell studio. Moreover the organisation fails to
manage the data manually as it becomes hard to maintain data within the system.
 Reports shared with different members: the reports prepared within the purchase
departments are further shared with the other member of and this process leads to

4BELL STUDIO INFORMATION SYSTEM
taking time. Thus the slower process leads to impacting the performance of the system.
With the increase in time, the chances of customer dissatisfaction also increase.
Risks related to purchase system
After analysing the internal weakness within the purchase system it can be stated that
there are several risks that comes along with this weaknesses. The major risks that are
associated with the system include:
 The response time for system increases as there is a high increase in length of the
process. Thus this will impact the performance of the system. The procedure gets on
increasing and hence the business performance gets impacted.
 The risk that arises with manual maintenance of hard copies is that it leads consumption
of huge space area that eventually leads to harming the performance and storage of the
system.
 While reviewing the same process by different supervisors and staffs it takes huge time
to get completed. This results into increase in product development time. With
continuous reconciling process the development time increases as a result this leads to
increase in cost of the product.
Internal control weakness of Payroll system
The system will involve proper processing of the payment towards the employees after
reviewing their time cards. The time cards are used by the employees for storing the number of
hours worked by them. The working hours are calculated and the payments are being
processed accordingly. However there are several internal weakness faced by the system that
are listed below:
 Control over the accounting system: in order to access the accounting system it
becomes essential to have proper access from the supervisors. The access is being
provided to only authorised person and this will ensure that no data theft and
modification is done. However it is observed that the payroll system is being reviewed
by several people as a result everyone can access data and this has the ability to hamper
the data present within the system.
 Reconcile data: before processing the payment it is being observed that the system
reconciles the data by different departments. This leads to increase in time and
eventually end up impacting the performance of the system. In addition to this the time
consumed by payroll system for processing the employee payment also increases.

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Risks associated with payroll system
The major risks that are associated with the payroll system are going to be described within
this part. With the rise in internal weakness, the chances of risks also increases and this leads to
impacting the performance of the system. The risks are as follows:
 With improper working of payroll system and late in processing the payment chances of
increase in employee dissatisfaction rate increases. This impacts the performance of the
system and hence the relation between employee and organisation gets hampered.
 Reviewing time cards by different employees different time leads to increase in errors.
This will eventually hamper the performance of the system. The employee
dissatisfaction rate will increase and will harm the system.
 The separation of data increases within the data redundancies. Moreover the data
redundancies will hamper the performance of the system and will eventually lead to
consumption of extra storage.
Cash disbursements system internal control weakness
The system functions for ensuring that proper amount of cash is being distributed and
proper vendors are being checked. This ensures that all data and records regarding to purchase
are being processed effectively without any error. However there are several errors that arise
with the performance of the cash disbursement systems that are needed to be discussed. The
main internal weaknesses that are being identified within the system are discussed below:
 Control issues: it is observed that the payroll system lacks in having proper and effective
control over the system and hence it leads to hampering the performance of the
system. Before processing any payment it is observed that the data is being reconciled
by different supervisors that lead to hampering the process. Moreover the system lacks
individual supervisor who will control all the decision made. This harms the performance
and has the ability to impact the output.
 Controls missing: it is observed that there is no external authority and control over
organization and this leads to hampering the procedures that is taking place within the
system. This also leads to hampering the internal operations. Thus sometimes the
procedure tends to disturb the output generated by system.
 Loss of control: with improper control and lack of knowledge regarding the outputs it is
observed that the system loses control over the system that eventually leads to harming
the performance.
 Security issues: while processing the details and managing the cash it is observed that
there is no specific control and security maintained within the system. This leads to
hampering the system and affects the performance. Security plays a major role in
maintaining the system. These internal weaknesses are needed to be mitigated.

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Risks associated with the system
With the performance and internal weakness within the system it is observed that there
is a high chance of increase in risks within the system. The risks that are likely to come along
with internal control weakness are as follows:
 The main risk that is faced by the system is with unorganised procedures. The
procedures within the cash disbursement system have become too difficult to manage
and hence lead to improper control over the system.
 The continual process of adaption leads to irregular procedures and hence affects the
performance of the system.

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Data flow diagram for cash disbursement and purchase system
The above diagram is developed for the purpose of understanding the activities that
takes place within the cash disbursement and purchase system. The major activity that takes
place within this system is processing the cash to vendors and towards the employees. The
main focus of the system is to analyze the treasure so that the cash dispatched can be
understood properly without any errors. This function ensures a better performance of the
system and ensures that the cheque is being processed effectively towards the vendors and
employees.
Data flow diagram for payroll system

8BELL STUDIO INFORMATION SYSTEM
The data flow diagram of payroll system is being developed for the purpose of
understanding the payments that is processed towards employees. The payment is being
processed once the time cards are reviewed by the supervisors. The payments are being
processed based on the time cards data.

9BELL STUDIO INFORMATION SYSTEM
System flowchart for purchase system
Purchase system of bell studio aims at performing the tasks effectively so that it can generate
reports effectively towards the cash disbursement department for the purpose of evaluating
the cash. The main functions that take place within the system are described in the system
flowchart. This will help in understanding the activities and will ensure a proper flow of
activities throughout the purchase system.

10BELL STUDIO INFORMATION SYSTEM
System flowchart for cash disbursement systems
The system flowchart that is described above is used for the purpose of defining the
performance of cash disbursement systems that is taking place within the Bell studio. The
flowchart is used for the purpose of describing every activities associated with the system.

11BELL STUDIO INFORMATION SYSTEM
System flow chart for payroll system
The above flowchart is being developed for the purpose of understanding the activities
that is taking place within the payroll system. This will help in understanding the performance
that takes place within the system. Each and every activity within the system needs to be
analyzed effectively so that the benefits that are offered with payroll system can be
understood.
Conclusion
Thus from the above assessment it can be stated that there are several issues faced by
the systems of bell studio that are needed to be analyzed and mitigated so that it can work

12BELL STUDIO INFORMATION SYSTEM
effectively without any error. The report has described the process that takes place within the
system so that it becomes easy to understand the activities. In addition to this the assessment
has also included the internal control weaknesses that are associated with each system. Hence
a business analyst it is highly recommended to have a proper analysis of each system and the
activities that is taking place within the system so that it becomes easy to manage the
functionality. Business performance needs to be improved so that it can provide better benefit
towards the organization.

13BELL STUDIO INFORMATION SYSTEM
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