Strategic Information System

This report describes the development of an information system for Bell Studio, including the purchase system, cash disbursement system, and payroll system. It also identifies internal control weaknesses and associated risks.

Running head: STRATEGIC INFORMATION SYSTEM
Strategic Information System
Name of the Student:
Name of the University:
Author Note

1
STRATEGIC INFROMATION SYSTEM
Table of Contents
Introduction...................................................................................................................2
Data flow diagram of purchased system and cash disbursement system...................2
Data flow of the payroll system.....................................................................................3
System flowchart of purchase system..........................................................................4
System flowchart of cash disbursements systems.......................................................5
System flowchart of the payroll system........................................................................6
Internal control weaknesses.........................................................................................7
Purchase system.......................................................................................................7
Risks associated with the Purchase system.............................................................7
Payroll system...........................................................................................................8
Risks associated with the Payroll system.................................................................9
Cash disbursement system.......................................................................................9
Risks associated with the Cash disbursement system...........................................10
Conclusion..................................................................................................................11
Bibliography................................................................................................................12

2
STRATEGIC INFROMATION SYSTEM
Introduction
Information system is very useful for all the organizations and the information
system is to be integrated with the organization. The Bell Studio requires an information
system and hence the development of information system is described in this report. The
major procedures in the system are the purchase system, cash disbursement system and
payroll system. The systems are described separately in this report.
Data flow diagram of purchased system and cash disbursement system
The above diagram has been used for the description of the purchase and the
disbursement system in the organization. The main identified entities in the system are the
receiving clerk, the purchase clerk, the cash disbursement department, accounts payable
clerk, treasurers and the vendors.

3
STRATEGIC INFROMATION SYSTEM
Data flow of the payroll system
The data flow diagram illustrated above in this report provides the description of the
payroll system. The main process is the payroll system and the entities identified in the
system are the payroll clerk, employees, supervisor, ledger clerk and the employees.

4
STRATEGIC INFROMATION SYSTEM
System flowchart of purchase system
The flowchart designed above has been used for the description of the purchase
system in the organization. The purchase system is usually associated with the purchase
of the products from the vendors in the system and the providing the vendors with the
payment and invoices as per their purchase.

5
STRATEGIC INFROMATION SYSTEM
System flowchart of cash disbursements systems
The flowchart designed above has been used for the description of the cash
disbursement process that would be performed within the organization. For the
disbursement process the approval have to be taken from all the personnel within the
department and this has been described in the flowchart.

6
STRATEGIC INFROMATION SYSTEM
System flowchart of the payroll system
This flowchart has been used in the report for describing the payroll processes of
the organization. The process deals with the payment of the employees.
Internal control weaknesses
Purchase system
The purchase system of the organization works independently and the hence, the
organization faces many internal control weaknesses. The major weaknesses identified in
the payment system for the organization are:
 The receiving clerk does the reconciliation of the items after delivery. The inspection
and the reconciliation process of the payment system takes up a lot of time before
the items can be in use for the production of the organization. Hence, this a major
weakness for the business of the organization and the departments involved in this
process face a lot of delay for the business processes.

7
STRATEGIC INFROMATION SYSTEM
 The departments in the organization are separated and work individually hence, for
the maintenance of the data consistency throughout the organization the data are to
be recorded in each and every department of the organization associated with the
tasks. Hence this uses up additional time and effort for the departments to perform
the tasks. This is a weakness for the organization as this reduces the business
efficiency.
 In addition to this, the current process involves use of a lot of paperwork and this
involves using up a lot of time and energy to the complete the paper works. In
addition to this using manual processes mean that there would be a lot of space
crunch for the organization and this is a major weakness for the organization.
Risks associated with the Purchase system
Due to the weaknesses in the purchase system, the organization faces a number of
risk as described below:
 The repetitive reconciliation process in the system increases the response time in
the system largely. The purchase department performs the review procedures
repetitively and the different personnel involved in the procedures of the
department. This would increase the overall time consumption for the purchase
process of the organization.
 The time for the development would be increased due to the increase in the
response time involving the procurement of the materials for the system. The late
delivery and review process would be resulting in the reduction of efficiency in the
organizational production process, which would indirectly affect the sales of the
organization.
 The manual record keeping technique used by the purchase department would be
using up a lot of space within the organization and organization would be required
to reserve some spaces to store the manual paperwork. This would result into a
space crunch within the warehouse of the organization.
Payroll system
The payroll system generally processes the payments of the employees of the
organization, however the system involves the employees recording their own work hours
and supervisors and the other higher authorities reviewing the process. However, the
repetitive review processes bring about many internal control weaknesses within the
system. The internal control weaknesses for the payroll system of the organization are
described below:
 The access to any type of data is restricted and hence, the departments of the
organization would be required to have a certain authentication from the
department, which is supplying them with the data before they can proceed with the
task. This proves the inefficiency in the business process of the organization hence
this is an internal control weakness for the system.
 The data provided by the employee is reconciled and reviewed several times and
hence this increase the time required for the processing the payments of the
employees in the system. This brings about the weakness due to the separation of
duties in the system.
 The personnel in the departments are required to make reconciliations and the
review in the system from time to time. The reconciliation of the employee payment
processing creates an error in the system. The system thus faces the a lot of
problem and internal control weaknesses.

8
STRATEGIC INFROMATION SYSTEM
Risks associated with the Payroll system
The risk associated with the payroll procedures of the system are:
 The repetitive review process would mean that the employees would have to wait a
little longer for the receiving their payments. Hence, this would result into
dissatisfaction for the employees in the organization. As a result, the overall
business efficiency and the production of the organization would be hampered
largely.
 The payroll system would be include manual recording of the data flowing through
the business process in the organization and hence there are a lot of data storage
options which are to be used in the system and this would increase the
redundancies in the data stored in the system. As a result, it would be difficult for
the organization to maintain the data across all the whole of the organization.
Cash disbursement system
The cash disbursement process is used for the distribution of the payment
throughout the system the and the review of the processes of the system are done in this
system. The cash disbursement also goes through a process of review and the payment is
then processed in the system:
 The controls and the verification of the payment to be made across the systems and
the departments in the organization would be performing the internal authentication
is the organization. However, the organization might miss the authentication
process in some areas due to the absence of any external authenticator to the
system. The absence of any central administrator in the system would reveal the
internal con troll weaknesses in the system. This would affect the control over the
business process of the system.
 The authorization for any type of payment to be issues from the system would
depend on various type of personnel on the organization in the system and there
might be an agreements in between the different personnel providing their view on
the review. Hence, there might be a conflict of interest in between the different
personnel within the organizations. This might give rise to the continual adaption
weakness in the system. The affect would be on the security within the cash
disbursement systems in the organization.
Risks associated with the Cash disbursement system
The risks associated with the cash disbursement system are described below:
 The procedures in the system are unorganized in the system for the improper
controls available in the system. This would mean that there might be situations
where there is a case of the higher authorities ready to make an approval for the
disbursement however; an authenticator in the lower level would not be ready to
make the approval for the disbursement. The would give rise to the risks in the
system that would be decreasing the efficiency of the system to a great extent.
 There are various irregular procedures in the system that would occur due to the
continual adaption issues weakness in the organization. The production quality of
the organization would be hampered largely. In cases there are error in the previous
sequence of task the predecessors would be continuing the tasks with the errors in
the system would continue in the further phases.

9
STRATEGIC INFROMATION SYSTEM
Conclusion
For conclusion, it can be said that the report has been able to successfully describe
the issues in the current system. The weaknesses in the system has been identified in this
report and along with risks associated with the weaknesses in the system. The description
has been included in this report along with the illustrations in the report.

10
STRATEGIC INFROMATION SYSTEM
Bibliography
Brown, L.D., Call, A.C., Clement, M.B. and Sharp, N.Y., 2016. The activities of buy-side
analysts and the determinants of their stock recommendations. Journal of Accounting and
Economics, 62(1), pp.139-156.
Ji, X.D., Lu, W. and Qu, W., 2017. Voluntary disclosure of internal control weakness and
earnings quality: Evidence from China. The International Journal of Accounting, 52(1),
pp.27-44.
Li, Y., Yu, J., Zhang, Z. and Zheng, S.X., 2016. The effect of internal control weakness on
firm valuation: Evidence from SOX Section 404 disclosures. Finance Research Letters, 17,
pp.17-24.
Matthews, M.J., Green, D., Matthews, H. and Swanwick, E., 2017. The effects of
swimming fatigue on shoulder strength, range of motion, joint control, and performance in
swimmers. Physical Therapy in Sport, 23, pp.118-122.
Navarro, P., Roberts, R. and Wallace, D., 2018. Development, Validation, and Application
of a Material Internal Control Weakness Prediction Score. Working Paper, University of
Central Florida.
Soh, D.S. and Martinov-Bennie, N., 2015. Internal auditors’ perceptions of their role in
environmental, social and governance assurance and consulting. Managerial Auditing
Journal, 30(1), pp.80-111.
Thiruvadi, S., Huang, H.W., Wheatley, C.M. and Thiruvadi, S., 2016. Free Cash Flow and
Debt Monitoring Hypotheses: Evidence from Material Internal Control Weakness
Disclosure. Journal of Forensic and Investigative Accounting, 8(1).