Strategic Information System

This report explores the expenditure cycle in the Bell Studio organization. The significant weaknesses and system risks are also being identified in association with them. This report also enables Chief Operating Officer to conduct proper exploration of risks, procedures and internal controls in relation with expenditure cycles.

Running Head: BELL STUDIO 0
Strategic Information System

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Contents
Introduction................................................................................................................................2
Data Flow Diagram of Purchases and Cash Disbursements Systems........................................2
Data Flow Diagram of Payroll System......................................................................................6
System Flowchart of Purchases System.....................................................................................8
System Flowchart of Cash Disbursements System..................................................................10
System Flowchart of Payroll System.......................................................................................11
Internal Control Weaknesses and Risks in Each System.........................................................12
Conclusion................................................................................................................................13
References................................................................................................................................14

Purchasing
Department
Inventory
Warehous
e
Cash
Disbursement
Department
Monitor inventory
records
Updates inventory
records
Receives Goods
Prepares Digital
Purchase Order
Updates Inventory
Control Access
Updates AP Control
Access
Updates digital AP
subsidiary ledger
Valid Vendor File
AP Pending File
Vendor
Account
Payable
Department
Inventory
Subsidiary
Ledger
Receiving
File
Digital purchase
order records
Purchase order copy 1
Purchase order copy 2
Receiving reports copy
Receiving report copy 2
Sends invoice
Sends invoice
Inventory level
Inventory
Subsidiary
Ledger
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Introduction
In an organisation, the purpose of expenditure cycles is to allow the transformation of
business cash, physical and human resources that improves several functions in an enterprise.
This report explores the expenditure cycle in the Bell Studio organisation. The significant
weakness and system risks are also being identified in association with them. This report also
enables Chief Operating Officer to conduct proper exploration of risks, procedures and
internal controls in relation with expenditure cycles.
Data Flow Diagram of Purchases and Cash
Disbursements Systems

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Figure 1 - Purchase System Data flow diagram
In the purchasing system, it includes various significant tasks necessary for order placement,
getting inventories, improving the recognition of inventory requirements, and reassessing the
existing liabilities. In figure 1, these tasks and their interconnected responsibilities are
showed and all these processes are used in both manufacturing and retail segment in the
organisation. Though, the way purchase is authorised creates a significant difference while
defining the two segments (El-Sappagh, Hendawi and El Bastawissy, 2011). For instance, In
retail sector, the organisation purchases finished product for the purpose of reselling and the
approval of purchasing decision is done under inventories control function. On the other
hand, the manufacturing segment in the organisation buys raw materials necessary for the
production and here the approval of purchasing decision in done under production planning
and control functions.
The facilitation of monitoring records of inventory is reinforced when the organisation
reduces its inventories with the help of material transfer considering production stage. It
comes under conversion cycle and in revenue cycling, it facilitates the reselling of finished
products to the customers. The level of inventories and finished products are logged and
monitored under inventory controls. At last, the purchasing process will be initiated with the
drop in inventories level and it induces purchase clerk to formulate the purchase order
function.
Afterwards, in different corporations, purchase application will be varied and fundable.
Usually, as per the requirement, an organisation will prepare and facilitate a distinct purchase
application considering many inventories items (Sanchez et al, 2009). Subsequently, for an
accessible vendor, there can be several purchasing application and these applications must be
amalgamated into one purchasing order before it is directed to the vendor. Hence, this system
form enables every purchasing order to be connected to more than one purchase application.
As per the requirement, purchasing application will be organised by the vendor considering
the preparation of the purchase order function. Subsequently, for each respective vendor, the
Purchase Order (PO) copy will be designed as shown in figure 1 (data flow diagram). In
addition, for establishment of Account Payable (AP) function, another copy is relocated to
the purchasing division.

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It was identified that various organisations found a time lag amid receiving goods and order
placing. Considering this stage, several PO copies will be encompassed in the temporary files
and there is no execution of any sort of economic aspect. At present, not any single inventory
is received by Bell Studio or incurred any sort of financial requirements. Considering this, it
does not require the company to do formal entries in the records of accounting (Durugbo,
Tiwari and Alcock, 2013). However, the organisation may take upon memo entry in extent
with pending inventory associated responsibility and earnings.
In further stage of the cycle, it involves the inventories receipt in which there is a preparation
of receiving report with the arrival of goods. These goods are then resigned with the Digital
Purchase Order (DPO) and packing slip. The document replicas comprise of prices of the
items received as well as data on quantity. In addition, with the help of these documents, the
inspection is possible through receiving clerk so that before drafting the report of receiving.
Generally, the receiving division is busy and their workforces are doing work related to
signing lading bills and unloading the transport vehicles (Kemp and Low, 2008). Hence, it
enables receiving clerk to only get relevant information considering quantity of item and
accept product delivery in extent to the given information.
The next stage in the cycle includes the updation on provision in relation with the records of
inventory. Considering inventory valuation system, it will varied in case study – Bell Studio 7
different companies. An organisation that exploits a framework of standardised cost may
consider performing or implementing their inventory at a fixed standardised figure regardless
of the charges being compensated to an available vendor (Eslami and Talebi, 2011). In
addition, to ensure attained quantity, it is very important to have a standardized inventory
ledge in relation with significant and connected data. As the information of item quantity lies
in receiving reports, it is necessary to update the main cost inventory ledge from the
inventory warehouse. Throughout the procedure of this transaction, it is important to set up
accounts payable. The PO is filed and the AP function obtains this situation the temporary
files of the receiving report. The Bell Studio company has attained these inventories from
relevant vendors and comprehended their accountability to compensate for the received
goods.
With the end of this process, it is necessary for the payable clerk to reassess the precise
valuation of the obligation upon the time the invoice is acknowledged (Hooshyar et al, 2016).
At the time when there is something improper in estimation, several amendments and

AP Department
Updates
Documents
Document Receipts
Identification
of Liability
Due
Treasurer
Vendor
Preparation of
cheque for invoice
account Signature
Mailing
Receiving
Receiving Report File
Invoice FileCheque Copy
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adjustments are required to do in entries so as to rectify the mistakes. In addition, an
evaluation of all the liabilities needs to be done by clerk that have not recorded during the
time-end-closing as the received invoice trigger AP processes and techniques. The significant
financial data will be reconciled by AP clerks with the PO after inventories arrival. This can
be called as three-step verification that validates the quantity and its respective prices
(Cheung, Lee and Rabjohn, 2008). In this time, the Digital Account Payable subsidiary ledger
is also increasingly updated by the Clerk.
Figure 2: Cash Disbursements Systems Data Flow Diagram
It is important to assess the cash disbursement flow considering the expenditure cycle. When
the Account Payable Division makes available the receipt of significant documents to the

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clerk filling is made expecting the due dates. Hence, the clerk will need to formulate a cheque
referenced to the invoiced amount while the date arrives. Subsequently, the cheque will then
transferred to the organisation treasurer for the purpose of mailing and signing to the vendor.
Furthermore, with updation of cheque registers, AP control account and AP subsidiaries
ledger is done from the computer terminal. In last, the records are then delivered to the
receiving division for filing of the bills, cheque copies and receiving reports.
Data Flow Diagram of Payroll System
Figure 3 - Payroll System Data Flow Diagram

Prepares cash
disbursement
vouchers
Payroll DepartmentEmployees Time Cards
Supervisors
Central Payroll SystemTime Card data
Payroll register
Payroll register
Supervisor
AC Department
Write ChequesCheque file
Imprest bank
General ledger
department
Cheque file
Department Employees
Reviews and submits
Hour’s records
Digital Employee Record
Reviews and submits
Deposits
Reviews
Check
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In Bell Studio, the payroll structure is built to enable staffs to fill in the time cards that attain
the data in relation with number of working hours. Afterwards, supervisors review and
evaluate the information in the time cards and that data is then delivered to payroll division.
The system of payroll is standouts from the central payroll system located in the data
processes division from which the clerk pushes data prints copies of payroll registers,
paycheque and digital employee records. With the payroll division, the time cards were filed

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by clerks and then transported to the supervisors for review and distribution. Subsequently,
AP department also receives a copy of the payroll register and another composition of the
time cards.
Now, the register is reviewed by AP clerks and then vouchers of cash pay-out prepared
manually. Later on, the general ledge division gets the voucher, payroll register encoded by
the clerk and this makes AP clerk writers for the payroll, and hence the cheque is being
deposited in respective account at the Bank.

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System Flowchart of Purchases System
Source: (Hung et al, 2011)
This flowchart is concern with control of inventory and here also inventory is monitored
(Hung et al, 2011). During the drop of the pre-set reordering point, a purchasing application
is being drafted by the clerk and one of the copy is also delivered to the purchase division. It
is also important to know that there is a difference between purchase department and
inventory control department in relation with provision of authorization control while
implementing the transaction.
This procedure monitors the purchase application sorting by research of PO and vendors and
for each vendor in the purchasing division. Considering this stage, vendor also gets two

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copies of the purchase orders whereby the copy of PO is delivered to inventory control
segment in order to fill it with available application of purchasing. The reconciliation with
blind copies of PO also held when goods instigate from the vendors.
After the completion of inspection and physical counting process, different reports are
prepared by receiving clerk describing the quantity and condition of the inventories
(Vranken, 2017). Inventory division also gets the one copy of the receiving report and then
the remaining copies are delivered to the purchasing department. It also facilitates
reconciliation between available PO and clerk.
The arriving invoice received by the clerk in the accounts payable division whereby data is
resigned with the existing pending document file. Afterwards, a record of the significant
transactions comprising AP subsidiary ledge is formed in the journal points and purchases.
Clerk then direct the receiving report and sourced papers with following a record of the
liabilities. At this stage, an updation is also done on including AP ad inventories control
account from the terminal of computer in the DL division in relation with digital account
payable subsidiaries (Lay, Schroeter and Biege, 2009)
(Lay, Schroeter and Biege, 2009). In last, receiving documents, bills and PO copies are
transferred by clerk to the division of cash disbursement.

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System Flowchart of Cash Disbursements System
In the organisation, the accounts payable clerk review and assess the existing vouchers
payable documents to mark the item due and handover the related vouchers and files in the
cash disbursement division. In this division, vouchers packets then received by the clerk and
start evaluation on them for clerical efficacy and extensiveness (Kim, Ferrin and Rao, 2008).
In each disbursement, three records are presented by the clerk and then it facilitates counter-
checks on the records and records relevant data in the register. Afterwards, all significant
documents will move for signing in the division of cash disbursement.

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Later on, copies of cheques returned by the clerk and in the same way account payable
division also get voucher packets considering one of the cheque copies if filed. At last, the
preparation of related entries will initiate through the clerk and these will get transfer to the
GL division considering journal vouchers. In the AP division, the clerk eradicates the
liabilities with the cheque numbers recordings and archives the packets of voucher in the
secure files.
System Flowchart of Payroll System
The flowchart on payroll systems specifies the measures of payroll authorization that
comprises the number of hours worked by the significant staff in the organisation (Peterson,
2009). It is found that information is significant and also supervisors need to review before it

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is delivered to the payroll division from personnel and production sources. The clerk
reconciles the significant data, issue the payment cheques and recalculate the payrolls.
Afterwards, data concerning the amount of time the staff spend on a single job is measured
from production. The clerk working in account payable division gets a précised data from the
payroll departments and accepts the cheque deposits with the cash disbursement division.
This amount is then transferred to respective bank account.
Internal Control Weaknesses and Risks in Each System
Purchase Systems
In purchase system, the failure to conduct necessary research is one of the major weakness
(Doherty, Ashurst and Peppard, 2012). Purchase department in Bell Studio fails to do
research on the suppliers in relation to quantity and quality of materials to be created. The
enterprise count on just any supplier.
Cash Disbursement Systems
As of improper controls, this department risks underperformance and the management
defines the internal control and thus their decisions might be inappropriate (Holz, 2013). The
enterprise risks to be subjected in relation to security considerations by being strict in one
segment and lax in other segment.
Payroll Systems
The system handles less accounting risks and accuracy more check-writing errors. In
addition, the division does not basically improve its efficiency in operations. Many
arrangements of corporate faces the issues of incompetence when it comes to technology
(Defelice and Leon, 2010). Entry is another weakness of payroll time data whereby
employees enter information in relation to the worked hours. The organisation needs to adopt
individual codes or any other practice to identify personnel to their entry of worked hours.
These distinct codes will limit the chances of staff sharing the code. The system wants an
appropriate guidebook with unique procedures for checking out or in considering payroll
information.

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Conclusion
Considering above discussion, the expenditure process of Bell Studios is being clearly
defined that are significant in conducting business and aiding the acquirement of raw
materials and finished products. As many organisations conduct these activities, data systems
are required to be assessed and formed effectively to review and record necessary obligations
and release them as per the requirement of the situation or condition. All systems are clearly
elaborated with the help of flow of diagram intended towards improving the record
maintenance and supporting the management decisions considering various financial
requirements as well as mitigate potential risks.

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