Analysis of Weaknesses in Expenditure and Conversion Cycle

CASE STUDY-
PARADISE
INDUSTRIES

Table of Contents
INTRODUCTION...........................................................................................................................3
1. System flow chart of expenditure cycle...................................................................................4
1.1 Analysis of physical internal control weaknesses in the expenditure cycle......................4
2. System flow chart of conversion cycle....................................................................................8
2.2 Analysis of the risks exist in the conversion cycle and the changes needed to reduce the
risks..........................................................................................................................................8
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
This project report is based on two operating concept; expenditure cycle and cash conversion
cycle. Expenditure cycle flow chart will show how and when purchase order is placed and how
many copies required to be distributed to initiate purchase order and it also discuss about
treatment of work in progress status. Discussion of weakness in current model of procurement
process has been discussed and proper recommendation is also suggested for the same. The other
concept which is cash conversion cycle; discusses about period and risk associated with
conversion of finished goods into cash and also explained the process of whole cycle.

1. System flow chart of expenditure cycle
1.1 Analysis of physical internal control weaknesses in the expenditure cycle
1. Possible weaknesses Structural weaknesses
• The income cycle system: the accountant (AC) performs most of the RC exercises and gets
overloaded for business, especially RC, exchanges or procedures. She is the recipient and
approver of the customer’s request, prepares the RC origin archives, for example slips orders /