Accounting Info System: Review of Expenditure Cycle & Internal Control

This report presents an analysis of an accounting information system, specifically focusing on internal controls within the expenditure cycle of a company named Chipps. It includes a flowchart documenting the acquisitions process of the purchase system. The report identifies internal control weaknesses related to purchasing clerk responsibilities, verbal approvals, and a lack of regular purchase order reviews. It discusses the potential impacts of these weaknesses, such as increased fraud risk and financial misstatements. The report also suggests control improvements, including formalizing approval processes, segregating account responsibilities, and implementing regular reconciliations. The analysis concludes with recommendations for strengthening internal controls to mitigate risks and improve the overall efficiency and accuracy of financial reporting.

Running head: Accounting Information System
Accounting Information System
Name of the Student
Name of the University
Author Note

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Accounting Information System

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Accounting Information System
Table of Contents
PART A......................................................................................................................................3
PART B......................................................................................................................................3
Introduction............................................................................................................................3
Discussions.............................................................................................................................4
Conclusion..............................................................................................................................6
Reference....................................................................................................................................7

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PART A
Flow chart of the Acquisitions of the purchase system
PART B
Introduction
Internal control is a process which help the auditor to check whether all the activity
inside the management is been working properly or not. This process help the auditor to get
the details about the management flow and help it to assess the risk and fraud related to the
company financial statements (Chang et al., 2014). These processes help the auditor to
monitor and measured the company activities in regards with the production and selling of its

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product. This process help the auditor to take necessary actions in related to the fraud and
other error in the management of the company. It is been seen the more good internal control,
management has the more better workflow it can have in the company as internal control help
the management to get a better performance of the company in the business.
Discussions
Internal Control weakness and its impact
Internal Control
Weakness
Impact of the weakness Control to mitigate the
weakness
As there 5 purchasing clerk
so it can be a internal
control weakness as it may
happen due no
coordination among the
suppliers can create a
problem in the firm as it
will not able to
communicate with them
properly and as a result it
will affect the overall
perform of the company
(De Simone, Ege &
Stomberg 2014)
The weakness is affect is that
it will may increase or
decrease the total amount of
the raw material needed as a
result the company may have
to suffer losses for the same
and may over raw material
usage can be there in the
company. So this will affect
the company financial
position as if the company is
unable to sale the product
than it will be a loss to the
company and it may affect
the business of the company.
To eliminate this weakness
the company should
authorize on person for
taking the responsibility as it
will help them to make the
communication more better
and also help them for a
smooth flow of the business
As the approval is been given
in verbally so it can be
consider as a internal control
The impact of the weakness
is that it will be affected as if
any material is been lost and
This can remove as the
company should do the
approval by the writing so

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weakness as if they are is any
problem in the
communication there will be
no proper way to disclose the
real matter in the company
there is no proper record of
approval so it will create a
mis-communication in the
business.
that it will help them to keep
a proper record as well as it
will help them to get a better
flow of the work (Lin et al.,
2014).
The internal control is that
the purchasing clerk is not
the review of the purchase
order on a regular basis so
this is a big internal control
weakness as if no proper
verification is been done than
it will not able to get proper
record of the transaction.
This will also be
manipulation of the transition
can be done by the company
so this will affect the
financial position of the
company
The impact of this is that it
will directly affect the
purchase order of the
company and may happen
that the company is not able
to get a proper details of the
company and it will also
affect the company overall
performance . There can be
manipulation in the account
as it will be that no proper
verification of the accounts
and it will also be affecting
the company financial
position of the company.
The changes which is been
required in the same internal
control is that the company
should authorize the
purchasing clear to do a
continuous checking of the
open up order so that it can
able to reconcile them
properly (Newton et al.,
2015).
As per the case study it can
be the seen the cheque of
amount more than $5000 is
been signed by both the
cashier and the treasure so it
can be consider as an internal
control weakness as not all
the person should be able to
The impact of these will be
easily manipulation can be
done in the cheque account
and also it will be affect the
company overall financial
position of the company. As
if many person are been
authorize for the payment and
The changes which are
required in the company
internal control is that it
should segregate the account
in to different head so that it
can help them to give the
responsibility to other and
also only one person should

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sign the required transaction
as there will no proper secret
of the company
issue of the cheque than it
will be problem for the
company and even
manipulation of the account
can easily take place.
be authorize about the cash
so that it will be affect the
company financial position
also.
Conclusion
The reports conclude about the internal control of the company, it shows how the
company is able to manage the whole system and how they deal with their internal
management problem. Auditor get help by checking the internal control of the company it
able to know how the company is working and what are their internal management problem.
This process help the auditor to know about the risk which is been associated with the
company and also the fraud related matter in the company.
Lastly the report concludes about the internal control of the company and show what
are the weakness which are there in the internal control of the company and also it give them
the changes which are been required to changes which are require by the company to change
their internal control weakness as it will able to give them the ways in which they will able to
get rid of the internal control weakness in the company and able to run the business smoothly
and effectively.

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Reference
Chang, S. I., Yen, D. C., Chang, I. C., & Jan, D. (2014). Internal control framework for a
compliant ERP system. Information & Management, 51(2), 187-205.
De Simone, L., Ege, M. S., & Stomberg, B. (2014). Internal control quality: The role of
auditor-provided tax services. The Accounting Review, 90(4), 1469-1496.
Lin, Y. C., Wang, Y. C., Chiou, J. R., & Huang, H. W. (2014). CEO characteristics and
internal control quality. Corporate Governance: An International Review, 22(1), 24-
42.
Newton, N. J., Persellin, J. S., Wang, D., & Wilkins, M. S. (2015). Internal control opinion
shopping and audit market competition. The Accounting Review, 91(2), 603-623.