Case Study - Bell Studio Report

This report analyzes the Bell Studio case study on the purchases, cash disbursements, and payroll systems. It includes data flow diagrams, system flowcharts, and identifies internal control weaknesses and associated risks.

Case Study – Bell Studio report
Student’s name
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Table of Contents
Executive Summary.....................................................................................................................................2
Introduction.................................................................................................................................................3
Data flow diagram of purchases and cash disbursements systems...............................................................3
Data flow diagram of payroll system...........................................................................................................6
System flowchart of purchases system........................................................................................................7
System flowchart of cash disbursements system.........................................................................................9
System flowchart of payroll system...........................................................................................................10
Internal control weakness and the associated risks....................................................................................11
Conclusion.................................................................................................................................................12
References.................................................................................................................................................13
Table of Figures
Figure 1: Data flow diagram of purchases and cash disbursements systems...............................................4
Figure 2: Data flow diagram of payroll system...........................................................................................6
Figure 3: System flowchart of purchases system.........................................................................................7
Figure 4: System flowchart of cash disbursements system..........................................................................9
Figure 5: System flowchart of payroll system...........................................................................................10

Executive Summary
Bell Studio Company outsources its various inventories from manufacturers around the
world including New Zealand, Japan, China, and Australia. Bell Studio has a centralized
accounting system that has networked terminals at each of the company’s different locations.
The case study describes Bell Studio’s expenditure cycle procedures. The report analyses the
three main departments at Bell Studio organization which are the purchases system, cash
disbursement system and the payroll system. The report is prepared from a business analyst point
of view.

Introduction
The aim of this report is to analyses the Bell Studio case study describing the various
transaction cycles, financial reporting, e-commerce, and management reporting systems. The
case study has identified three main departments that need describing these departments are the
payroll system, cash disbursement system and the purchases system.
In addition to describing this three main system, the report will also come up with the
data flow diagram and system flowchart diagrams for the mentioned departments. Also, the
report will describe the internal control weakness in each of these three systems and the risk
associated with the identified weaknesses
The report will be structured by having a cover page, an executive summary, an
introduction, the conclusion and the main body where these three systems will be described.
Also, the table of contents will be given for easier navigation in the report.
Data flow diagram of purchases and cash disbursements systems
Bell Studio has a centralized accounting system that has networked terminals at each of
the company’s different locations. A data processing system is used to take input data, process it
and produce output. A starting point for system design work is to establish what data processing
is needed. The term data modeling is sometimes used to describe the technique of looking at the
system from data handling purposes (Dellisola at al., 2017). One useful way of recording in
which data is processed without bothering the equipment is a data flow diagram. In this report
data flow diagrams and system, flowcharts are designed to address certain issues and understand
the problems and develop transparency within the organization especially in the accounting
section of Bell Studio.

Figure 1: Data flow diagram of purchases and cash disbursements systems

Data Flow Diagram represents the network of the system with all the components which
might be operated automatically or manually. It gives the idea of the individual components
which interfaces with the core component (Trigo, Belfo, & Estébanez, 2014). The main focus of
designing Data Flow Diagram is to represent the flow of data between the external entities and
the core system and the process involved with the database in managing information and
effective flow of data. The data flow diagram for both the purchases and cash disbursements
systems shown in figure 1, details the processes involved in the accounting system for the two
departments. This will help the management to understand the internal processes involved with
the different departments of Bell Studio.
This will address the queries of the staffs in need from the purchases and cash
disbursements departments immediately due to direct communication of the different
departments. The communication between the purchases department, the cash disbursements,
and the payroll departments need to be very transparent for efficient transfer of the information
regarding various financial transactions, order transactions, invoicing, communications with the
suppliers and vendors and various reporting activities among other vital business transactions
(Chiu, Liu, Muehlmann, & Baldwin, 2019).
Knowing the details of the purchases department and the cash disbursements will be able
to send data to the government departments about accounting statistics and publish their various
accounts on different media. Also, a smooth flow of information will show how well Bell Studio
is observing the set accounting rules and accounting principles (Belfo & Trigo, 2013). The
database stores the data about the various accounting related transactions which can be accessed
by Bell Studio employee’s at any point of time irrespective of the presence of the organization

heads and the secured data can also show the payroll records and other information which can be
accessed in a centralized manner by the management (Olszak & Kisielnicki, 2018).
Data flow diagram of payroll system
Figure 2: Data flow diagram of payroll system
The data flow diagram for the payroll department is not different from the data flow
diagram that included the purchases and the cash disbursement system (Worrell, Gangi, & Bush,

2013). The data flow diagram for the payroll system shows the process involved and how the
data flows from the payroll clerk when they input the time card data for various employees into
the system to when the general ledger department post the payroll register and the disbursement
voucher to the general ledger after filing these documents. This data flow diagram shows some
disconnect when the payroll clerk sends the prepared cheque to supervisors for signing. The
information flow from the payroll clerk to the department supervisor is clearly shown. However,
the data flow from the various department supervisors to the other departments is not clear
(Trigo, Belfo, & Estébanez, 2016).
System flowchart of purchases system
Start
End
Purchasing clerk
checks the inventory
subsidiary ledger
Purchasing clerk selects
a vendor from the valid
vendor file
Purchasing clerk
prepares a digital
purchase order and
prints 2 copies
Receiving clerk sends
goods to the inventory
and shelves them
Purchasing clerk sends
to the vendor, and the
other is filed in the
purchasing department.
Receiving clerk inspect
goods and reconciles
them against the digital
purchase order and the
packing slip
Receiving clerk
updates the inventory
subsidiary
ledger
Receiving clerk
sends a copy of
the receiving
report to the
accounts payable
department
Receiving clerk
manually prepares two
hard copies of the
receiving reports
Receiving clerk
files the receiving
report in the
department
Accounts payable
clerk files the
receiving report
Accounts payable clerk
reconciles the receiving
report, the digital
purchase order and the
supplier’s invoice
Accounts payable
clerk receives
supplier’s invoice
Accounts payable clerk sends
the invoice, receiving report,
and the purchase order copy to
the cash disbursement
department
Accounts payable
clerk updates , the
accounts payable
control account
Accounts payable clerk
the inventory control
account in the general
ledger
Accounts payable clerk
updates the digital
accounts payable
subsidiary ledger
Figure 3: System flowchart of purchases system

The system flowchart of the purchases department of Bell Studio shows the process that
starts when the purchasing clerk checks the inventory subsidiary ledger (Brandas, Megan, &
Didraga, 2015). On determining that the inventory has lower than the required amount of goods,
the purchasing clerk selects the suitable vendor from the list of vendor file that is readily
available in the purchases department. The purchasing clerk then prepares a digital purchase
order after which he prints two hard copies for the same. The clerk sends this digital purchase
order to the vendor, and the other one is filed for use by the purchasing department. After the
preparation and distribution of the digital purchasing order are done, the receiving clerk takes
charge and inspect the goods on arrival (Edmonds, Miller, & Savage, 2019). The receiving clerk
inspects the goods and reconciles them against both the packing slip and the digital purchase
order. The receiving clerk then manually prepares two hard copies of the receiving reports after
which he directs the goods to the inventory for shelving. The receiving clerk then updates the
inventory subsidiary ledger. The clerk files the receiving report in the department and sends a
copy of the receiving report to the accounts payable department (Patasiene, Zaukas, & Patasius,
2015).
On arriving at the accounts payable department, the account payable clerk files the
receiving report and wait until they can receive the supplier invoice. When the supplier invoice
arrives at the accounts payable department the accounts payable clerk reconciles the three
document, that is, the receiving report, the digital purchase order, and a supplier invoice. The
account payable clerk then updates the digital accounts payable subsidiary ledger, updates the
accounts payable control account and inventory control account in the general ledger. The
account payable clerk sends an invoice, a receiving report and the digital purchase order copy to
the cash disbursement department (Holm, Kumar, & Plenborg, 2016).

The flow of information in the purchases system can expose various points in the system
where the various system users like the purchasing clerk and the account payable clerk can be
able to manipulate the system without them being noticed. In the case of an error occurring the
system would need to have kept the logs that show what time did an update to the system happen
and who initiated the update. In case there's no such log information then it is not easy or totally
impossible at all to establish who made a mistake in the purchasing department (Peña & Depeña,
2018).
System flowchart of cash disbursements system
Figure 4: System flowchart of cash disbursements system

In the centralized accounting system for Bell Studio, the cash disbursement department
seems to be the smallest department of the three sections that are involved in accounting
activities. In this department, the process starts when the cash disbursement clerk receives
documents from the account payable department (Lapinskas & Shubentseva, 2014). On receiving
these documents, the cash disbursement clerk files the received documents and then prepares a
cheque for invoiced accounts. The prepared cheque is sent to the supervisor for signing. The cash
disbursement clerk updates the cheque register, the accounts payable subsidiary ledger and the
accounts payable control account (Worrell, Wasko, & Johnston, 2013). After this, the data flows
back to the receiving clerk in the purchases department who in turn files the invoice, the
purchasing order copy, the receiving report and a copy of the cheque. In this system flowchart,
the information seems to flow well, and the connection between the different departments can be
established. For instance, the cash disbursement department receives inputs which are documents
from the account payable department and after working on these documents they are sent to the
receiving clerks who are at the purchasing department (Thomas, 2016).

System flowchart of payroll system
Figure 5: System flowchart of payroll system
As explained using the data flow diagrams for the payroll system the system flowchart
also depicts the various processes that information flow within the accounting system and in
particular the payroll department happens. In the payroll department, the process starts when the
payroll clerk inputs time cards and data as received from the various employees. The clerk then
prints hard copies of this time card data and posts to digital employee’s record. The payroll clerk

files these time cards in the payroll department after which he sends paycheques to the various
supervisors who are responsible for signing these cheques. The clerk sends copies of the payroll
register to the accounts payable department (Ghasemi, Shafeiepour, Aslani, & Barvayeh, 2011).
On receiving the payroll register, the accounts payable clerk is responsible for reviewing
them and then manually preparing a disbursement voucher. The accounts payable clerk sends the
payroll register, and disbursement voucher prepared to the general ledger department after which
the general ledger department receives the payroll register and post to the general ledger after it
is filed for using the department.
Internal control weakness and the associated risks
The accounting system as a whole contain various internal control weaknesses which are
present in all the three departments that make up the accounting section of Bell Studio. This
internal control weakness includes having one person who is responsible for a lot of activities
and no one to counter check or verify their work. For instance, the payroll clerk after receiving
data from the employee's, inputs this data to the system and no one else verifies whether this data
is correctly inputted into the system or not (Spånberg & Shahnazarian, 2019).
Also in this payroll system when the accounts payable clerk reviews the payroll register,
it is not clear what action(s) they take if they receive and reject a payroll register. After receiving
the payroll register, the accounts payable directly goes into preparing a manual disbursement
voucher. This means that the disbursement voucher could contain errors that are not known to
anybody else except the accounts payable clerk (Ponisciakova, Gogolova, & Ivankova, 2015).
The risk of having the same person doing a lot of work without verification from another
person is that we can end up having many inconsistent data in the same system or having and

completely different data from the system to the data in the hard copies (McLaren, Appleyard, &
Mitchell, 2016).
Conclusion
In conclusion, the report has analyzed the Bells Studio case study. This analysis has
included the use of data flow diagrams for the purchases and cash disbursement departments and
a data flow diagram for the payroll department. Also, the report has used a system flowchart for
all the three departments. These diagrams have been well explained to identify the various ways
in which data flows in and out of the different departments. A description of the internal control
weaknesses and the risk associated with these weakness has been given at the end of the report.
The use of data flow and system flowchart diagrams to analyses a case study is useful as it can
enable every stakeholder in the company to view the various data flows graphically. When this is
done, the various stakeholders can use the results of this report to make key decision for the
company.

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