Analysis of Weaknesses in Expenditure and Conversion Cycles

Case Study – Paradise
Industries

Table of Contents
INTRODUCTION...........................................................................................................................3
SYSTEM FLOW CHART FOR EXPENDITURE CYCLE...........................................................3
Analysis of physical internal control weaknesses in the expenditure cycle................................4
SYSTEM FLOW CHART FOR CONVERSION CYCLE.............................................................8
Analysis of the risks exist in the conversion cycle and the changes needed to reduce the risks. 8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
The strategic information system is developed regarding the response to the corporate
business initiatives. It is used for providing advantage of competition to the specific organisation
as it delivers many services at lower prices and differentiated way that are used in order to
concentrate on demanding market session which is an innovation. Moreover it is an important
feature within the corporate and information technology world which is useful for the company
to store a locate move and process their data information in order to develop and receive it
(Rezvani, Dong and Khosravi, 2017). Along with this it is also useful in enabling various tools
and techniques that are helpful for the company to apply specific metrics and analytical tools
regarding the information function and also allows them to analyse the resourceful opportunities
for the growth and operations of supply efficiency.
Despite from this the project is based on two prominent operating concepts that is
expenditure cycle and cash conversion cycle. In this the cash conversion cycle describes
regarding the time period and risk factor which is concerned with the conversion of final goods
into cash and also describe the procedure of whole cycle. Furthermore, the expenditure cycle
flowchart describe when and how the buying order is placed and how many copies are need to be
distributed in order to start the purchasing order as it discuss regarding the treatment of work in
progress status. Along with this it also includes the discussion of weakness of the current model
of procurement procedure which is discussed with proper recommendation.
SYSTEM FLOW CHART FOR EXPENDITURE CYCLE
It is the centralised system with various terminals located in different departments. In this
the terminals are networked to various digital accounting records and computer applications that
are hosted on the server of data processing department. Along with this the data processing
Centre scans the inventory records in order to look the prominent items that should be
replenished (Shanks and et. al., 2018). Moreover the computer application is considered as the
data processing department that automatically scans the accounts that are payable to the
subsidiary files that are due for the payment. In this context it required a flow diagram in order to
understand it more briefly.

Analysis of physical internal control weaknesses in the expenditure cycle
Possible weaknesses and structural weaknesses
Expenditure cycle system: It states that organisation combine registration licensing and
also care operations within the one unit that control of reception, purchasing and inventory (R, P
and IC). It describes the infringement of the isolation of duties. As reception purchasing and
inventory staff performs most of the expenditure cycle exercise and also have various business
responsibility for the exchange and procedure of expenditure cycle. It makes the request for