Strategic Information Systems

This report discusses the case of Bell Studio, a wholesaler of art supplies, and explores the control weaknesses and associated risks in their strategic information systems. Recommendations for mitigating these risks are also provided.

Running Head: STRATEGIC INFORMATION SYSTEMS
Strategic Information Systems
Name of the Student
Name of the University

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Executive Summary
The organisation under focus in this report is Bell Studio, a wholesaler of art supplies that is
based in Adelaide, Australia. Bell Studio utilizes a centralized accounting system that is
connected to various network terminals at different locations. In this system, there are some
control weaknesses that include use of hard copies and paper documents, manual recording and
data processing, manual payment processing through paper cheques, lack of information security
in the company computers and others. Due to these control weaknesses, many risks arise that
include cyber security threat, incorrect data processing, errors in payments, tampering of
important and critical documents, incorrect payroll records and others. For mitigating these risks,
it has been recommended for Bell Studio to deploy an information system with technically
updated hardware and software.

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Table of Contents
1. Introduction and Overview of the Report....................................................................................3
2. Discussion of the Case of Bell Studio.........................................................................................4
2.1 Data Flow Diagrams..............................................................................................................4
2.1.1 Purchase and Cash Disbursement Systems.....................................................................4
2.1.2 Payroll System................................................................................................................6
2.2 System Flowcharts.................................................................................................................7
2.2.1 Purchases System............................................................................................................7
2.2.2 Cash Disbursements System...........................................................................................8
2.2.3 Payroll System................................................................................................................9
2.3 Internal Control Weaknesses with the Systems and Associated Risks................................10
2.3.1 Internal Control Weaknesses........................................................................................10
2.3.2 Associated Risks...........................................................................................................11
2.4 Recommendations................................................................................................................13
3. Conclusion.................................................................................................................................14
References......................................................................................................................................15

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1. Introduction and Overview of the Report
Bell Studio is a wholesaler of art supplies that is based in Adelaide, Australia. Bell Studio
utilizes a centralized accounting system that is connected to various network terminals at
different locations. The company’s expenditure cycle procedures include a purchases system,
cash disbursements system and a payroll system. These procedures determine the cash flow
within the organisation through a specific and structured approach.
This report discusses about the various processes within the expenditure cycle along with
detailed elaboration using data flow diagrams and flowcharts. Furthermore, the internal control
weaknesses of the company have been discussed and the risks associated with these weaknesses
have been explored.

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2. Discussion of the Case of Bell Studio
2.1 Data Flow Diagrams
2.1.1 Purchase and Cash Disbursement Systems
Figure 1: Purchasing System DFD
(Source: Created by Author)

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Figure 2: Cash Disbursement Process DFD
(Source: Created by Author)

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2.1.2 Payroll System
Figure 3: Payroll System DFD
(Source: Created by Author)

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2.2 System Flowcharts
2.2.1 Purchases System
Figure 4: Purchasing System Flowchart
(Source: Created by Author)

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2.2.2 Cash Disbursements System
Figure 5: Cash Disbursement System Flowchart

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(Source: Created by Author)
2.2.3 Payroll System
Figure 6: Payroll System Flowchart
(Source: Created by Author)

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2.3 Internal Control Weaknesses with the Systems and Associated Risks
2.3.1 Internal Control Weaknesses
In the current expenditure cycle processes of Bell Studio, there are a number of internal
control weaknesses that can serious risks and threats to the system. These control weaknesses
arise from a number of systems and processes that are completely backdated and pose security
and other threats to the system. Some of the control weaknesses of Bell Studio are as follows.
Paper Oriented Documentation System – The first main control weakness of the
expenditure cycle of Bell Studio is that the entire process is paper oriented. All the transaction
processes, invoice generations, processing of the cheques, sending reports and others are done
through paper documents (hard copies) (Galliers & Leidner, 2014). This is a significant
weakness in the system as the entire process is very slow and error prone that is mainly due to
manual processing throughout the life cycle. Moreover, the hard copies are needed to be passed
through a large number of stakeholders that consume a lot of time. Again, the hardcopies can be
easily stolen or destroyed that is not desired for the organisation of the scale of Bell Studio.
Manual Payment System – All payments are done through manually operated systems in
which based on the records, cheques are processed by the payroll staff and are sent to the
employees of the organisation. Once the cheques are issued, they can be tampered or stolen by
some unauthorized personnel (Pearlson, Saunders & Galletta, 2016). Again, these cheques can be
lost or easily destroyed as a result of which, the payments of some of the employees may not be
processed at all.
Backdated Computer System – The computers of Bell Studio are completely backdated
and have very limited features as opposed to the features that are desired for Bell Studio.

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Moreover, the use of backdated computers makes the system vulnerable to the external cyber
security attacks (Arvidsson, Holmström & Lyytinen, 2014). The backdated systems are least
resistant to the security threats as they have limited system protection functionalities.
Payroll System – The control weakness associated with the payroll system of the
employees is that the wages are processed based on the attendance records from the time card
data recorded (Cassidy, 2016). The weakness factor in this regard is that the time cards can be
easily tampered or altered that will result in misinformation about the attendance of the employee
that will in turn lead to the wrong amount of salary processed for that particular employee.
Again, this is not desired for the company of the scale of Bell Studio.
2.3.2 Associated Risks
Following the analysis of the control weaknesses analysed above, there risks associated
with the system based on the control weaknesses are explored and discussed as follows.
Errors in Calculations and Statistical Data Records – One major risk that arises from the
control weakness of the system is the increase in the chances of errors in the calculations and
statistical data processed within the company. The entire process is manually handled on paper
documents and hence, there are numerous errors in the records. These errors often go through the
attention of the control staff and hence, remain unchanged (Whittington, 2014). These errors
result in significant problems within the internal processes of the company. In addition to the
manual errors, the entire process is extremely slow as the operations are time consuming and the
hard copies need to be transferred through a large number of staff and employees that consume a
lot of time (Ismail & King, 2014). Hence, the overall processing and response time for a

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particular process is extended much beyond the actual expected time. This process delays the
normal operations of the company.
Manual Payment Process Risks – Another risk that arises from the control weakness
includes the manual payment process risks. In the current system, the payment processes are
conducted manually – the records are kept manually in paper documents and the cheques are
generated manually using these manual records. Again, these cheques are manually processed
and handed over to the employees or the vendors for payments against purchases or salaries
(Peppard, Galliers & Thorogood, 2014). With current high level expertise and technological
development, anyone can tamper such document or alter the information on the cheques so they
are processed for a different person and an increased amount of payment. As a result, the some
employees may not receive payment and get cheated by fraud problems. Hence, the current
system does not ensure fair processing and payments due to lack of sufficient infrastructure
setup.
Cyber Security Threat and Unauthorized Access – One of the major risks that the
company faces from the control weaknesses within the system is cyber security threat. Since
most of the internal processes and operations are manually done in the company, the company
continues to use backdated computer systems with limited functionalities that fulfill the current
technical needs of the company in the system (Mignerat & Rivard, 2015). The backdated
computers are major security threats to the system as hackers and other unauthorized personnel
will be easily able to break into the system through advanced data breach techniques and steal
confidential information of the company. Furthermore, these security threats have the ability to
destroy the entire infrastructure of the system of the company. On the other hand, in addition to
the external cyber security threats, the computers are also vulnerable to the internal security

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threats like breach of security and unauthorized access to confidential data (Tsang, 2014). These
attacks do not come from external threats, rather they are done internally by some internal
employee or some other unauthorized person by physically accessing the systems and break into
the database by cracking easy passwords and security measures. The company faces the risk of
losing valuable information and data due to these external and internal attacks.
Incorrect Payroll System – As analysed earlier, the payroll system is manual and the
salaries are determined using the time cards submitted by the employees regarding their
attendance and based on these, the salaries are processed through cheques (Altameem, Aldrees &
Alsaeed, 2014). However, similar to the hard copy problem, these time cards can also be altered
or tampered to show wrong values. As a result, there will be discrepancies in the salaries
processed for the employees. This is a major security issue that needs to be mitigated.
2.4 Recommendations
Based on the analysis results presented above, some recommendations can be suggested
for the system that might be able to mitigate the issues highlighted. The main recommendation
for Bell Studio is to deploy a technically updated information system that will be able to solve all
the problems of the company. First, the information system will automate the internal operations
and minimize the manual errors that are causing problems for Bell Studio. Second, the
information system will digitalise all the documents in order to replace paper based hard copies.
Moreover, single digital copy can be forwarded to multiple people instead of sending one paper
document through a chain of different people and staff. Third, the information system will
provided additional functionalities for developing strong system resistance to external and
internal data breach threats. Fourth, connecting a biometric attendance system with the
information system will allow the company to record attendances of the employees digitally that

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will completely prevent alteration of attendance data. Lastly, the information system will allow
electronic payments through online payment gateways that will minimize the need to use
cheques for payment purposes.
3. Conclusion
It can be concluded that Bell Studio faces a number of risks due to the various control
weaknesses within the system. Some of these control weaknesses within the system include use
of hard copies and paper documents, manual recording and data processing, manual payment
processing through paper cheques, lack of information security in the company computers and
others. Due to these control weaknesses, many risks arise that include cyber security threat,
incorrect data processing, errors in payments, tampering of important and critical documents,
incorrect payroll records and others. The suggested solution for these risks is the deployment of
an information system with multiple functionalities that will be able to solve risks that are
highlighted. Bell Studio should immediately invest in the development of an information system
with computerized operations, accounting systems, system security firewalls and automated
payroll systems including biometric recording of employee attendances.

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References
Altameem, A. A., Aldrees, A. I., & Alsaeed, N. A. (2014, October). Strategic information
systems planning (SISP). In Proceedings of the World Congress on Engineering and
Computer Science (Vol. 1, pp. 22-24).
Arvidsson, V., Holmström, J., & Lyytinen, K. (2014). Information systems use as strategy
practice: A multi-dimensional view of strategic information system implementation and
use. The Journal of Strategic Information Systems, 23(1), 45-61.’
Cassidy, A. (2016). A practical guide to information systems strategic planning. Auerbach
Publications.
Galliers, R. D., & Leidner, D. E. (2014). Strategic information management: challenges and
strategies in managing information systems. Routledge.
Ismail, N. A., & King, M. (2014). Factors influencing the alignment of accounting information
systems in small and medium sized Malaysian manufacturing firms. Journal of
Information Systems and Small Business, 1(1-2), 1-20.
Mignerat, M., & Rivard, S. (2015). Positioning the institutional perspective in information
systems research. In Formulating Research Methods for Information Systems (pp. 79-
126). Palgrave Macmillan, London.
Pearlson, K. E., Saunders, C. S., & Galletta, D. F. (2016). Managing and using information
systems, binder ready version: a strategic approach. John Wiley & Sons.

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Peppard, J., Galliers, R. D., & Thorogood, A. (2014). Information systems strategy as practice:
Micro strategy and strategizing for IS. J. Strategic Inf. Sys., 23(1), 1-10.
Tsang, E. W. (2014). Case studies and generalization in information systems research: A critical
realist perspective. The Journal of Strategic Information Systems, 23(2), 174-186.
Whittington, R. (2014). Information systems strategy and strategy-as-practice: a joint
agenda. The Journal of Strategic Information Systems, 23(1), 87-91.