Internal Control Weakness of Platinum
Added on 2021-06-15
11 Pages2307 Words100 Views
Running head: INTERNAL CONTROL WEAKNESS OF PLATINUM PURCHASEPROCESSINTERNAL CONTROL WEAKNESS OF PLATINUM PURCHASE PROCESS Name of the StudentName of the UniversityAuthor note
INTERNAL CONTROL WEAKNESS OF PLATINUM PURCHASE PROCESS1EXECUTIVE SUMMARYThe report had discussed the internal control weakness of Platinum and identified that theweaknesses are associated with its communication process, inequivalent distribution of dutiesand extra effort by the organisation. To avoid the weaknesses, the accounting informationsystem had been recommended or they can do it by traditional means. In traditional meansadopting of electronic form or enforcing written communication are recommended tomitigate communicational weakness while restructuring of duties and department for theother two identified weaknesses. A level 0 data flow diagram has also been attached for betterunderstanding of the organisations’ purchase process. The impact of the weaknesses has alsobeen discussed in the report and even measured the compatibility between the recommendedmeasures and the reengineering of Platinum’s IT structure if they decide to adopt disruptivetechnology.
INTERNAL CONTROL WEAKNESS OF PLATINUM PURCHASE PROCESS2ContentsPurchase Process of Special Orders in Platinum........................................................................3Level 0 Data Flow Diagram.......................................................................................................4Table of Identification and Assessment.....................................................................................4Identification of Internal Control Weakness in Platinum.....................................................5Impact of Internal Control Weakness....................................................................................5Recommendation to mitigate the Internal Control Weaknesses............................................5Measuring the compatibility of recommended measures with reengineering of Platinum’sIT structure.............................................................................................................................5Bibliography:..............................................................................................................................9
INTERNAL CONTROL WEAKNESS OF PLATINUM PURCHASE PROCESS3Purchase Process of Special Orders in PlatinumPlatinum manufacturing group has a department based purchase process wheredifferent department plays the prominent role to complete a process. The first role is of thepurchase department which have five buyers who on receiving purchase requisition from thehead justifies the requisition validity within the department. Then, one of the five buyerstakes the initiative and proceeds with the buying process where he/she selects a suitablevendor for the purchase and demands a price quotation from them while placing a verbalorder. Then the selected buyer forms a pre-numbered purchase order and forward it todifferent department along with the head to proceed with the task in hand. The receivingdepartment on receiving the pre-numbered purchase order and the ordered item from thevendor starts their role in which they compare the received item and the ordered item. If thereceived item is suitable as per the ordered item, then they stamp the purchase order andforward it to the accounts payable while in the other scenario they mark the purchase orderwith red ink. After receiving the stamped purchase order from the receiving department, theaccounts department comes to pay their role where they justify the similarity of the vendor’sinvoice and the purchase order. On verification of the similarity between the purchase orderand the vendor’s invoice, the accounts department formulates a check and sends it to thetreasurer completing its role in the purchase procedure. The next part is played by thetreasures department where the cashier on receiving the checks the amount to be paid which;if under $10,000 then the machine signs the check and over $10,000 is signed by the machineas well as the cashier completing the purchase procedure.
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