Bell Studio Expenditure Cycle: Risks, Controls, and Processes Analysis

This case study analyzes the expenditure cycle at Bell Studio, focusing on the strategic information system. The report examines the payroll, cash disbursements, and purchases systems through system flowcharts and data flow diagrams. It identifies internal control weaknesses, associated ri...Read More

Expenditure Cycle
Strategic Information System
Expenditure Cycle at Bell Studio
Student Name
Instructor
Institutional Affiliation
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Expenditure Cycle
Executive Summary
Strategic Information System is essentially used in the organization to help in making
decisions with regards to the firm activities when compared to the real world. When SIS is used
in a firm, they are known for giving an organization a higher preferred position when compared
with the immediate competitors. It can be used to deliver material or services at cost which are
low and thus separating most of the part as it is focusing on ordering market which in deed is
much creative.
SIS is a basic element in corporate and technology development globally. In additional,
this has been used by many firms as it enhances the organizations to be able to acquire, store, be
able to process information and thus using such received information to create and receive
others. It has also been used in empowering and giving different materials and services that can
be used to help the organization to be able to measure the materials thus enabling them to
perceive the ingenious open doors. This is usually used for development and thus the basic ways
will upgrade the tasks and supply proficiency.
This report has majored on doing an analysis on the procedures, the hazards and the
internal controls that exists in Bell Studio expenditure cycle. The report has been classified in
several parts as stated below. There is the diagram representing the flowcharts and data flow
diagrams of payroll system and disbursement system. The diagrams are used to show how the
processes from one point to another within the given internal controls. The report has also been
used to show how decisions are made with relation to the information movement. It has also
been used to show the associated risks, threats are in the business processes in the Bell Studio
Expenditure cycle scenario. This will help one in understanding the required internal controls in
addressing all the threats.
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Expenditure Cycle
Table of Contents
Executive Summary.......................................................................................................................2
List of Figures................................................................................................................................3
Introduction....................................................................................................................................4
Structural and Modelling Diagrams............................................................................................5
System flowchart of payroll system..........................................................................................6
Data flow diagram of payroll system........................................................................................6
System flowchart of cash disbursements system.....................................................................7
Data flow diagram of purchases and cash disbursements systems.......................................7
System flowchart of purchases system.....................................................................................8
Description of internal control weakness in each system and risks associated with the
identified weakness........................................................................................................................8
Expenditure Cycle......................................................................................................................8
Business Processes......................................................................................................................9
Risks, Threats and Internal Controls.....................................................................................10
Conclusion....................................................................................................................................13
List of references..........................................................................................................................14
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Expenditure Cycle
List of Figures
Figure 1 System flowchart of the payroll system............................................................................7
Figure 2 DFD for Payroll System of Bell Studio............................................................................7
Figure 3 Flowchart for Cash Disbursements system.......................................................................8
Figure 4 Data flow diagram of purchases and cash disbursements systems...................................9
Figure 5 System Flowchart of Bell Studio Purchases System.........................................................9
Introduction
Strategic Information System is essentially used in the organization to help in making
decisions with regards to the firm activities when compared to the real world. When SIS is used
in a firm, they are known for giving an organization a higher preferred position when compared
with the immediate competitors. It can be used to deliver material or services at cost which are
low and thus separating most of the part as it is focusing on ordering market which in deed is
much creative. SIS is a basic element in corporate and technology development globally. In
additional, this has been used by many firms as it enhances the organizations to be able to
acquire, store, be able to process information and thus using such received information to create
and receive others. It has also been used in empowering and giving different materials and
services that can be used to help the organization to be able to measure the materials thus
enabling them to perceive the ingenious open doors. This is usually used for development and
thus the basic ways will upgrade the tasks and supply proficiency.
In the Strategic information system in this case of Bell Studio, will be explained in terms
of the expenditure cycle. EC can be explained to be the detailed collection of the activities
related to the purchases and payment made to various products and services in a given
organization (Kazak, 2015). In the expenditure cycle, the cycle will start when the firm is in need
of any service or a product for the firm operational functions or for trading. In the concept of
expenditure cycle, the internal controls are defined as the systems which have a relationship with
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Expenditure Cycle
rent practices and processes and it is usually developed by the aimed entities at securing all the
assets, also enhance efficiency, accuracy assurance of the accounting information and measure
the procedure of compliance and management policies.
This report has majored on doing an analysis on the procedures, the hazards and the
internal controls that exists in Bell Studio expenditure cycle. The report has been classified in
several parts as stated below. There is the diagram representing the flowcharts and data flow
diagrams of payroll system and disbursement system. The diagrams are used to show how the
processes from one point to another within the given internal controls. It will also be used to
show the decision making process on how information move, the main risks associated and all
the threats with regards to the expenditure cycle. This will help one in understanding the required
internal controls in addressing all the threats.
Structural and Modelling Diagrams
The figures below shows the drawings for the Data flow diagrams and flowchart
diagrams on the cash disbursements systems, purchases systems, and the payroll system. In this
concept, diagrams have been used in showing how information flow in the expenditure cycle of
the given systems of Bell Studio. This figures are drawn using the Microsoft Vision and are own
drawing.
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Expenditure Cycle
System flowchart of payroll system
Figure 1 System flowchart of the payroll system
Data flow diagram of payroll system
Figure 2 DFD for Payroll System of Bell Studio
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Expenditure Cycle
System flowchart of cash disbursements system
Figure 3 Flowchart for Cash Disbursements system
Data flow diagram of purchases and cash disbursements systems
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Expenditure Cycle
Figure 4 Data flow diagram of purchases and cash disbursements systems
System flowchart of purchases system
Figure 5 System Flowchart of Bell Studio Purchases System.
Description of internal control weakness in each system and risks associated with the
identified weakness
Expenditure Cycle.
In a perfect world, when Bell Studio needs to source its inventories from the undeniable
manufacturer, the affiliation needs to have at first trade data with the provider or dealers
inquisitive about whether the things required are accessible. This data is uncommonly key for
outside and inside budgetary revealing and to the general record (Aguiar, 2013). The objective of
expenditure cycle is to reduce the outright cost of ordering and making decisions of the
organizations, the supplies and the stock (Ayagre, 2014). A touch of the rule choices that Bell
Studio must make concerning the utilization cycle wires where the item will be secured. The
organization management likewise needs to evaluate the adequacy and effectiveness of the
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Expenditure Cycle
procedures associated with the expenditure cycle (Burt, Petcavage and Pinkerton, 2011). The
information utilized in the use cycle should be precise and it ought to contain data about the
operators who are included, the assets influenced, and the occasions that happen (Guillamón,
2013). The information that is used in the expenditure cycle should be accurate and detailed in
giving information of the specialists involved, affected assets and the date it happened.
Business Processes
The first process is when the firm order for goods or the services. This procedure joins on
perceiving what, how much, and when to buy and from which producer. The organization should
put more emphasis on their stock control on the grounds, thus in this case, any shortcoming may
achieve basic issues with this technique. The decision of this strategy for stock control is the
essential believed that affected the referencing technique. There are three unique approaches to
oversee stock control from which Bell Studio can examine: Material Requirements Planning,
Economic Order Quantity, and Just in Time Inventory.
Regardless of the kind of stock control framework, the requesting procedure
fundamentally begins with a buy demand, in this way age of procurement request. There must be
a worker inside Bell Studio who understands the deficiency of a specific material and thus
triggers the buy demand. The buying operator gets the buy order in the buying division. The
obtaining specialist at that point plays out a fundamental choice in choosing a producer
dependent on unwavering quality, and cost. Note: it is essential to always follow the
manufacturer. IT frameworks can be utilized to improve adequacy and productivity of the
obtaining capacity.
Secondly is the receiving and storage of ordered goods and services. This philosophy
fuses the suffering development of materials from the producer. The materials received must be
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Expenditure Cycle
passed on to the stock control so that they can be recorded. The receiving division has two basic
occupations: to check on the received materials and decide if to perceive or dismiss them subject
to the status and nature of the materials. The check technique is basic since it guarantees that the
aggregate and nature of materials to be received is what was referenced.
The third business process is the payment of the received materials and services. This
procedure includes making the installment subsequent to accepting and confirming the materials
requested. Two sub-forms are associated with this procedure: affirming the solicitations of the
producers and making the genuine installment of the solicitations. The records payable office is
in charge of affirming the producer solicitations. The law obliges that installment ought to be
endless supply of the materials, however most organizations make the installment after receipt
and confirmation of both the materials and receipt. The Finance division is in charge of starting
payment for products that the organization requested and were delivered. There are two basic
strategies to handling maker solicitations (Länsiluoto, Jokipii and Eklund, 2016): Bell Studio can
improve the practicality and capability of the installment method by having the producers or
manufacturers present their solicitations through EDI in light of the fact that the system will
facilitate their POs thusly with the getting reports.
Risks, Threats and Internal Controls
Preferably, abundance stock or materials out of stock: the verifying representative may make a
buying interest for the things that are right now in stock. This will incite abundance stock.
Besides, he/she may comparatively surrender in referencing for new supplies required by Bell
Studio, and this may understand conclusion of the operational approach given the nonappearance
of creation materials. This danger can be obliged by utilizing fitting and solid choosing
techniques, and exact stock controls likewise ought to be utilized.
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Expenditure Cycle
Another hazard that may influence the requesting procedure is the referencing of
senseless materials or supplies: the workers at Bell Studio may make a buy enthusiasm for a
thing that isn't essential. Along these lines, the obtaining operator may proceed in referencing the
materials, and this will instigate the affiliation procuring useless things that have little a spurring
power to the relationship of the referencing pro. The internal control of such a risk is through the
use of a database bargain for the various divisions and produce reports that interface portrayal of
the things to part numbers to help request affiliation (Wood, 2014).
Requesting materials at swelled costs: this is a typical hazard confronting numerous
organizations. Bell Studioz is note excellent. In view of the dynamic idea of the economy may
prompt expansion. Therefore, the organization may wind up requesting materials when the costs
are swelled. This hazard can be controlled keeping a rundown of costs for the materials that are
acquired consistently; survey buy orders; use lists for shabby things; execution audit; obligation
bookkeeping; and spending controls (El Mahdy and Thiruvadi, 2014).
Receipt of material that were not requested: this is a conceivable hazard that Bell
Company may be involved. A producer may convey things to the organization that Bell Studio
had not requested. This generally happens when the obtaining representatives makes and request
and later drops it. The provider might not have gotten dropping and proceeds to convey the
items. Such a hazard can be constrained by getting just materials with an endorsed buy request
(Länsiluoto, Jokipii and Eklund, 2016).
Another risk is botches in checking the materials and products received. This hazard
generally happens in the Bell's receiving division where material are tallied physically. The
tallying representatives may miss the numbers and end up giving erroneous qualities (Frank,
2014). The control of this hazard includes utilizing the utilization of standardized identifications
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Expenditure Cycle
for the material arranged, re-checking the materials for stock control, motivating forces for
distinguishing errors, mark of accepting agent, and amounts blanked out on receiving shapes
(Länsiluoto, Jokipii and Eklund, 2016).
The other risk is failing to give the correct receipts. The finance department
representative may mess around by missing to know the mistake made when receiveing the
materials. Two or three figures may have been adjusted and may look so evident. In that limit,
they may wrap up supporting invalid or off center sales for segment. In any case, this risk can be
tended to by supporting acquisition cards, utilizing an average transporter beyond what many
would consider possible, preparing workers on burden terms, utilizing assessed receipt
settlement, and avow coherent exactness (Pevzner, 2015).
Paying for materials not delivered. This risk may occur when there is some records which
are sent to finance departments even before the materials have been received. Bell Studio may
wrap up paying for the materials that were referenced yet have not been conveyed. This hazard
can be obliged by utilizing limited spending controls and checking the entireties gotten by
looking totals low down against aggregates conveyed (Gaynor, 2015).
Conclusion
Notably, this report has endeavored to isolate the approach, dangers and inside controls
for Expenditure cycle at Bell Studio. The main ideas covered in this paper have been
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Expenditure Cycle
summarized below: examining the different exercises and methodologies that are done in the use,
the choices that must be made and the data that is required to settle on these choices, the standard
hazard and dangers in the expenditure cycle, and within controls required to address the dangers.
The essential choices that Bell Studio must make concerning utilization cycle intertwine
where the item will be secured, the part of courses of action and stock to be received, and the
producers who offer the quality materials at reasonable expenses. The decision of the framework
for stock control is the basic imagined that influenced the referencing strategy.
List of references
Aguiar, M. and Hurst, E. (2013). Deconstructing Life Cycle Expenditure. Journal of Political
Economy, 121(3), pp.437-492.
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Expenditure Cycle
Ayagre, P., Appiah-Gyamerah, I. and Nartey, J. (2014). The Effectiveness of Internal Control
Systems of Banks. International Journal of Accounting and Financial Reporting, 4(2), p.377.
Ayam, J. (2015). An Analysis of Revenue Cycle Internal Controls. Case Studies in Business and
Management, 2(2), p.1.
Burt, D., Petcavage, S. and Pinkerton, R. (2011). Proactive Purchasing in the Supply Chain.
New York: McGraw-Hill Publishing.
Chow, V., Long, D., Wang, R. and Zhang, R. (2018). Joint Inventory, Pricing, and Expenditure
Control. SSRN Electronic Journal.
El Mahdy, D. and Thiruvadi, S. (2014). Antecedents, Characteristics and Consequences of
Internal Control Weaknesses and the COSO (2013) Framework. SSRN Electronic Journal.
Frank, R., Levine, A. and Dijk, O., 2014. Expenditure cascades.
Guillamón, M.D., Bastida, F. and Benito, B., 2013. The electoral budget cycle on municipal
police expenditure. European Journal of Law and Economics, 36(3), pp.447-469.
Hsueh, C. (2011). An inventory control model with consideration of remanufacturing and
product life cycle. International Journal of Production Economics, 133(2), pp.645-652.
Kazak, L., Chouchani, E.T., Jedrychowski, M.P., Erickson, B.K., Shinoda, K., Cohen, P.,
Vetrivelan, R., Lu, G.Z., Laznik-Bogoslavski, D., Hasenfuss, S.C. and Kajimura, S., 2015. A
creatine-driven substrate cycle enhances energy expenditure and thermogenesis in beige
fat. Cell, 163(3), pp.643-655.
Länsiluoto, A., Jokipii, A. and Eklund, T. (2016). Internal control effectiveness – a clustering
approach. Managerial Auditing Journal, 31(1), pp.5-34.
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Expenditure Cycle
Pevzner, M. and Gaynor, G. (2015). The Impact of Internal Control Weaknesses on Firms's Cash
Policies. SSRN Electronic Journal.
Wood, J. (2014). IT Auditing and Application Controls for Small and Mid-Sized Enterprises.
Wiley
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