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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
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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
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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
recording and payment given to suppliers has been defined through expenditure cycle.
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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 materials where 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
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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:
Production and quality control department: Conversion cycle show the process of cash
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,
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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
materials thus due to lack of popper documentation issue arises related too
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 industry cycle 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
help in alignments of business goals and business operations together.
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,.
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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
their roles and respecting regarding the organization. The job roles and
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
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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
organizations own employers. Every employers should have specific job
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 cash for 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.
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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. For making effective information system manager use expenditure and
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
money from customers. But organizations may faces problems because of lack of
management policies and physics internal control issue to overcome all these problems
manager needs 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. and Thorogood, A., 2014. Information systems strategy as
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 strategic information systems planning 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
management in cognitive economy. International Journal of Information
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.
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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.
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