Strategic Information Systems for Paradise Industries
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Added on 2023/01/11
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This report discusses the role of expenditure cycle and conversion cycle in Paradise Industries and identifies physical internal control weaknesses in the expenditure cycle. It also explores the risks in the conversion cycle and suggests changes to reduce them.
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Strategic Information Systems for – Paradise Industries 1
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Contents Contents...........................................................................................................................................2 INTRODUCTION...........................................................................................................................3 TASK 1............................................................................................................................................3 System flow chart of expenditure cycle.......................................................................................3 System flow chart of conversion cycle........................................................................................4 Description of physical internal control weaknesses in the expenditure cycle...........................5 Evolution of the risks exist in the conversion cycle and the changes needed to reduce the risks .....................................................................................................................................................8 CONCLUSION................................................................................................................................8 REFRENCES...................................................................................................................................9 2
INTRODUCTION Strategic information system is de by business organization for properly record and interpret their business activities in effective way. To understand the concept in better way paradise industries has been taken. In this report role of expenditure cycle and conversion cycle their important and issue faces by organization during recording and maintain of data has been defined this report also define hoe manger are resourcing to resolve these issue by using effective method of strategic management. TASK 1 System flow chart of expenditure cycle Expenditure cycle: It can be defined as procedure of activities which is related with purchasing, acquisition and payment of essential materials and services for manufacturing business products. Expenditure cycle is formulated to provides brief description of manager regarding the whole procedure of what items needs to purchase by managers the procedure of purchasing and recordingandpaymentgiventosuppliershasbeendefinedthroughexpenditurecycle. 3
Systematic flow chart represents overall procedure of expenditure cycle in diagram format. Manager of Paradise organization use this chart to fulfil their following steps: Purchasing decision: It is the first step in expenditure cycle. When the stock of materials falls then it will be shown in the software use to manage the inventory, the supervision provides information through purchase requisition, the clerk provides information regarding purchase order, they take decision regarding purchase on the basis of requirement and future expectations. Ordering material: The purchasing k provide purchasing order to suppler The clerk places the order of materials with suppler they fulfil all the essential documentation formalities an record every detail in software of inventory. Clerk of paradise, made hardcopy of purchasing bill one copy is filled with warehouse department and another copy is filled by receiving department. Ordering materialswhere the firm received the items and clerk inform to the warehouse department and put entry in inventory ledger(Dong and Wu, 2015.) Receiving material: When the organization received material, in warehouse their supervisor check each ad every material and fin error to remove the errors. All the materials are stored with proper security to prevent loss and uncertainly. Payment: It was the last stage of flow chart of expenditure cycle the expenditure cycle completed when organization pays for material.Account payable department is liable for this, they received the invoice of payment from receiving department when the supplier’s invoice arrives, the accounts payable clerk adds a record to the supplier invoice file, which in turn triggers the system to automatically set up a liability in the accounts payable subsidiary ledger based on the financial information contained in the invoice. The account payable department pay the amount to supple and check the ledger to find out if any payment is pending or print cheque for as proof , the cheque into suppliers and to cash disbursement department for filled , entry pass to remove the liability on account payable account from pending of suppler payment and the expenditure cycle again run continue by taking another entry of purchasing of material. It continue run till the liquidation of business. The flow chart of expenditure cycle s a combination of activities of purchasing, receiving, account payable and cash disbursement department(Tsang, 2014). System flow chart of conversion cycle Conversion cycle can be refer as cash conversion cycle , it is a process where the company purchase inventory, sells though inventory on credit as an account receivables and then collects 4
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the account receivables. It can be calculated by addition of three steps days of inventory outstanding, days of sales outstanding and it will be deducted from days of payable outstanding The conversion cycle changes raw materials, overheads, labour into finished goods or service of sale. System flow chart is useful for interpretation the overall procedure in diagram format. Procedure of system flow chart of conversion cycle: Productionandqualitycontroldepartment:Conversioncycleshowtheprocessofcash converting it is started from production process. The organization manufacturing products on the basis of their quarterly for easy or safe, production planning and control clerk updates the digital production schedule to include the batches of products to be produced during the next quarter. Bill of materials are prepared digital format and all the bills are send to supervisor of work centre .The supervision check all the document and sent it to warehouse . Inventory control: When the supervision give document to inventory department ad they provides them material for production process. Scheduling: All the work are done on the basis of scheduling production world will be starting and run in every batch of manufacturing. When the production work is competed the clerk communicates information to cost accounting department so that they can able to record all the essential information to identify cost of manufacturing units. The inventory department also note down the time period, back work their performance. The warehouse clerk files one copy of the material requisition and updates the materials inventory file from the terminal in the warehouse office. The clerk then sends a second copy of the material requisition to cost accounting. At the end of the day, the clerk prepares a digital journal voucher and posts it to the general ledger control accounts(Ogiela and Ogiela, 2014). Cost accountant check all the materials and s the digital work orders and set up a work-in- process account for the production batch. The clerk also receives move tickets, job tickets, and material requisitions throughout the production process and use the documents to post in work- in-process subsidiary ledger. At the end of each day, the cost accounting clerk prepares a digital journal voucher and posts to general ledger control accounts to reflect the status of work-in- process and to record transfers of work-in-process to finished goods inventory(Whittington, 2014). The conversion cycle is a combination of work of all the department it is started with the production department and end with customers, the cycle run contain easily. It includes, 5
marketing, capital budgeting, engerniring, scheduling inventory control department All these department help in formulating a system which included each and every details regarding business activities. The procedure of selling and acquisition of vendor is includes each and every detail in digital form as all theses details help and useful for auditing purpose. It will help in aching business objective and enhance the productivity level by controlling cost . Business organization achieve their goal and vision and it will also useful for attaining competitive advantage by improving skills and knowledge of emploers Description of physical internal control weaknesses in the expenditure cycle Expenditure cycle is recorded all the business activity in a systematic way, but due to some weakness the organization unable to maintain it in organized way: Inadequate documents:It is one of the biggest issue for paradise industry , their accountant not record each and every transaction related with the purchase of materialsthusdue to lack of popper documentationissue arises relatedtoo mismatch of balance of statements .It is essential for the organization to maintain the documents in a systematic format and record each and every transaction. Key industrycycle is not clear in a proper way: Flow chart may help in providing information but it also but for effectively run a business cycle efforts are require. Manager does not make policies in written format as they though flow chart is enough for them but it is ,cost unused tool and it will become valuable by adding little efforts . By using written policies manager use them as gridline and it will helpinalignmentsofbusinessgoalsandbusinessoperationstogether. Documentation of supervision of each cash, receivables, purchasing, yet is essential for better rebuilt. Lack of control with authorization of transaction:The authorization related with purchase of materials should be conform before the decision of taken of purchasing resources. For elimination of risk it is require proper authorise all the account and actives,. 6
No review:The manager of Paradise not review or supervise the performance of their supervisor , clerk whether they work it ethically or not, they did not check th monthly journal process, flow chart and not cross verify the journal entries. They not check the documentation or proof read all the transaction entered accountant record in journal thus it wills also a reason of misconduct or fraud(Seddon,2014). Unproductive information system: The Company not focus on improving of their information system thus they have communication issue. It is essential for them to use user friendly system though which they are able to deal and make effective and strong communication either their employer’s and supervision it will also help in reduce the chances of fraud. Lack of physical security: Due to lack of physical security, company suffers from manger, theft problems loss of inventory , assets, all the equipment related with physical inventory should be kept in a security base strong basement so the risk of manger or loss by fire is decreases as organization faces from problems and loss due to their lack of Security SYSTEM On the other side they also need to focus on anything their cyber system strong in order to control the risk of cyber crime or theft of their digital information as proper miss uses of these data. Lack of ethical procedure and policies: There will be no ethical code of conduct follow in the Paradise industry. All the workforce done their work according to their own way they came an go at any time. The it is the duty of manager to build rigid policies regarding ethical ad code of conduct it will help in contain big the risk of ethical misbehaviour. The roles and responsibilities not defined clearly: The chart shoe wrong data of transaction as due to many physical transaction problems it is necessary for the manger to distribute all the role and responsibilities in a systematic manner. Employers are the assets of organization an they all should be treated as assets. They were act as communicator for the customers thus it s essential o defined them theirrolesandrespectingregardingtheorganization.Thejobrolesand responsibilities must be written in writing and it will be provide help and manager all needs to those supervisions that did not proved their report at fixed time and not 7
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done work in effective manner. The written document also useful for understanding of newly joined employers to about their job responsibilities(Shiau, 2016). Not have of division of duties: It may be possibility threat fraud conducted due to organizationsownemployers.Everyemployersshouldhavespecificjob responsibilities. And it must be in writing to provide ensuring that there will be no confusing regarding assigning for job. It is really hard for assigns job roles different personals authorizing transactions maintain coast related with cashfor more effective internal control and have less opportunity for miss appropriation of assets Insufficient ruin improvement: It is essential for the organization to improve the performance of their workforce align their goal with organizing goal it will help. They need to improve backup system and for this check every moth the backup system in order save their business data for long time purpose. All these are the issue Paradise suffers from their weakness of internal control system. Evolution of the risks exist in the conversion cycle and the changes needed to reduce the risks Risk involve in conversion cycle is related possibility of theft, there will be chances that organization suffers a their workers not follow the code of conduct and they have facing problems regarding communication and lack of trust . Thus it, may be chances that organization have irk of theft by their own workforce. There will be chance that manager will not check the record transactions and reports made by clerk and supervisor, there will be lots of error the manager does not cross check it may be possibility that they recorded wrong data and organization can not recognised the real value of their assets and cost of manufacturing there real profits errors arise in which activates, and which business activity incurred high cost. From reducing all the problems it is essential for accountant and managers to follow their ethical rules and policies(Sedera and et.at. 2016). They need to formulate rigid policies for employers as well as workers. They check and supervise their performance in monthly basis. Manager should ask question either their employer regarding work perforce or details of all the cost chat and report it will help in reducing the risk of theft end misconduct. 8
Training and development program conduct to improve the relation and between team member and skills also increase. Manager need to developed skills in how to use software an form effect flow chat. Managers are prepared and work doe in system id mange in order to remove all the issue within the organization. CONCLUSION From the above analysis it has been identified that strategic accounting management system is a part of managerial function which used by manager for effectively record their business transactions.Formakingeffectiveinformationsystemmanageruseexpenditureand conversion flow chart theses help in providing information in diagrammatic format which will help in easily understand the overall procedure of purchasing material to sae and collect moneyfromcustomers.Butorganizationsmayfacesproblemsbecauseoflackof management policies and physics internal control issue to overcome all these problems managerneeds to formulate policy thorough which they reduce errors of recording transaction maintain environment in which works wok in ethical manner it will help in removing all the issue organization faces during preparation of flow chart. REFRENCES Peppard,J.,Galliers,R.D.andThorogood,A.,2014.Informationsystemsstrategyas practice.The Journal of Strategic Information Systems,23(1), pp.1-10. Kandjani, H., Mohtarami, A., Taghva, M.R. and Andargoli, A.E., 2014. Classification and comparison of strategicinformationsystemsplanning methodologies:a conceptual framework.International Journal of Enterprise Information Systems (IJEIS),10(1), pp.1- 10. Dong, J .Q. and Wu, W., 2015. Business value of social media technologies: Evidence from online user innovation communities.The Journal of Strategic Information Systems,24(2), pp.113-127. Ogiela, L. and Ogiela, M. R., 2014. Cognitive systems for intelligent business information managementincognitiveeconomy.InternationalJournalofInformation Management,34(6), pp.751-760. Tsang, E. W., 2014. Case studies and generalization in information systems research: A critical realist perspective.The Journal of Strategic Information Systems,23(2), pp.174-186. 9
Whittington, R., 2014. Information systems strategy and strategy-as-practice: a joint agenda.The Journal of Strategic Information Systems,23(1), pp.87-91. Seddon, P .B., 2014. Implications for strategic IS research of the resource-based theory of the firm: A reflection.The Journal of Strategic Information Systems,23(4), pp.257-269. Shiau, W.L., 2016. The intellectual core of enterprise information systems: a co-citation analysis.Enterprise Information Systems,10(8), pp.815-844. Sedera, D., Lokuge, S., Grover, V., Sarker, S. and Sarker, S., 2016. Innovating with enterprise systems and digital platforms: A contingent resource-based theory view.Information & Management,53(3), pp.366-379. 10