Role of Accounting Information System in Operating Policies and Structure of Organization

Running head: CASE STUDY- ADAM & CO
CASE STUDY- ADAM & CO
Name of the Student
Name of the University
Author Note

CASE STUDY- ADAM & CO
Executive Summary:
In this paper, the role of accounting information system in the context of operating
policies and structure of organization has been presented. For such analysis, the
case on Adam and Co explaining its different system of the procedure of expenditure
cycle has been evaluated. The assignment states the evaluation of the method of
risk and internal control based on strength and the weakness of the organization.
This process of analyzing the risk and internal control is explained with the help of a
case study of a renowned company named Adam and Co. There are three different
departments in Adam and Co, which have been engaged in determining the total
amount of purchase, payroll, and the amount of cash disbursed. The remaining part
of the assessment represents the flaws of internal control system arises in each
department.

CASE STUDY- ADAM & CO
Table of Contents
Introduction:..................................................................................................................3
Discussion:...................................................................................................................3
System flowchart of purchase system:.........................................................................3
System flowchart of cash disbursement system:.........................................................5
System flowchart of payroll system:.............................................................................5
Identification of the internal control weakness and the risk associated with the
system:..........................................................................................................................6
Conclusion:...................................................................................................................7
Reference list:...............................................................................................................9

CASE STUDY- ADAM & CO
Introduction:
The aim of this assignment is to establish a concrete a framework on
evaluation of risk, process and method of internal control on expenditure cycle of the
company. Therefore, it can be said that the framework will assist the managing
directors of Adam & Co for growth and development. Adam & Co is engaged in
wholesale business and the company collects its resources from Thailand, China
and Vietnam. The process of expenditure cycle of Adam & Co consists of purchase
system, payroll and cash disbursement system. The process of expenditure cycle
can be defined with a flow chart, which provides an overview of evaluating the state
of transactions concerning present situation for further development and growth
(Farkas and Hirsch, 2015).
Discussion:
System flowchart of purchase system:
The overall purchase system of an organization is engaged in formation of
purchases order, approval of purchase order, and delivery of the purchased items
and preparation of invoice. Thereafter the purchase order becomes a legally
enforceable by law, if the vendor accepts it. There are several checkpoints and
approval of tasks in the process of purchase order where it helps to ensure that the
process of purchase order is accomplished within the time. Thus, the purchase
system introduces the importance and need of inventory, placement of order on time,
receipt of inventory and identification of liability. The reduction of inventory is done by
sale of finished goods. When inventory start decreasing below the predetermined
level the purchasing clerk will prepare a digital purchase order. After getting the
appropriate files from the vendor then only the digital purchase order can be sent to
the vender. The process of purchase order begins when the copy of purchase order
is delivered to the vendor along with the purchasing department (Aubert and
Bernard, 2017). According to the study the company should keep an evidence of
purchase order in a digital form.