Internal Control Weaknesses in Accounting Systems

This case study discusses the internal control weaknesses in the accounting systems of The Bell Studio, including the purchases system, cash disbursements system, and payroll system. It also highlights the risks associated with these weaknesses and suggests the automation of accounting systems to eliminate them.

Executive summary.
The Bell Studio provides whole sale supplies of art.The commodities are got from different producers in
Australia, china, Japan and new Zealand. Bell’s runs a central accounts system embedded on its branches in
different parts of Australia. It is process where the Bell studio, staff and suppliers are able to interact with
the Accounting system. Accounting system has three subsystems Purchases System , Cash Disbursements
System and payroll system. Purchases System is used for buying of commodities the worker does stock
taking to identify if there is need of buying. If there is need the worker contacts supplier for supply Cash
Disbursements System
.
Introduction
The case study shows how workers are payed and show different step taken during payment process. Most
modern companies have left manual mode of paying its workers and now they have digitalized everything
and payment is done online no need to physically move to account department.
Body of the report

Figure 1 below shows dataflow diagram of purchases system.

Figure 2 below shows dataflow diagram of cash disbursement system.

Figure 3 below shows dataflow diagram of payroll system.

Figure 4 below shows system flowchart of purchase system.
Figure 5 below shows System flowchart of cash disbursements system.

Figure 6 below shows System flowchart of payroll system.
Description of internal control weakness in system and risks associated with the identified weakness.
In 2015, Tregear suggested that business system have weakness and some of weaknesses can be eliminated
by automating business process. When records and reports of system are not correct will lead to high
risks of failure in system transactions.
Description of internal control weakness in purchases and risks associated with the identified
weakness.
In 2017,Hardy explained internal controls and weakness of purchase system as follows Stock is not
evaluated independent during purchase requesting. Lot of orders are not accountable for example when
cancelling order may lead to misplacement and no purchasing will take place. Selection of Suppliers is done
basing on the image create or relationship between supplier and company. Prices and other factors are vital
to consider. Clearance of good supplied is not done by receiving department. Manager is only who proves
purchasing of goods.
Description of internal control weakness in cash disbursements systems and risks associated with the
identified weakness
Cash disbursements demonstrates the way a company uses its resources .It shows how money is
distributed to different departments of a company for the better operation of company.It has also
weakness. This weaknes include.
Improper Controls.
Funds allocated can be transferred to manage things which are not allocated in budget.

Missing Controls and Specific Circumstances.
Misappropriate of funds in the company
Accountability
No accountability of company resources.
Continual Adaptation Issues.
Funds for changes or coming up issues must be allocated in budget .
Description of internal control weakness in payroll system and risks associated with the identified
weaknes. .
Information of employees is kept by payroll system..
Data Collection.
Payment data should be safeguarded
Separation of Duties
Every employee should be allocated their tasks.
Data Security
Unsuring employess data is safe.
Internal Audit
Doing internal audit to eliminate ghost workers.
CONCLUSION.
Accounting system is very vital to business operations and they have to be validated before using them to
remove accounting weakness in different departments. There a lot of weakness identified in manual
accounting so it is better to automate all accounting system and put them in one database system.
Bibliography.
Books.
Hardy, C., 2017. Managing Strategy in Academic Institutions: Learning from Brazils (Vol.
25). Walter de Gruyter GmbH & Co KG.
Tregear, R., 2015. Business process standardization. In Handbook on Business Process Management 2 (pp.
421-441). Springer, Berlin, Heidelberg.