Strategic Information Systems for Business and Enterprise

Strategic Information
Systems for Business and
Enterprise

Table of Contents
INTRODUCTION...............................................................................................................3
MAIN BODY.......................................................................................................................3
System Flow of Expenditure Cycle................................................................................3
System Flow of Conversion Cycle.................................................................................5
Analysis of physical internal control weaknesses in the expenditure cycle...................6
Analysis of the risks which are exist in the conversion cycle along with changes
needed to reduce risks...................................................................................................7
CONCLUSION.................................................................................................................10
REFERENCES................................................................................................................11

INTRODUCTION
Strategic information system in business is developed to gain competitive
advantage by the business. Strategic information system in organisations also
contributes in effective coordination and communication within organisation. This report
will discuss about strategic information system at Paradise Industries. Business
activities of the company are manufacturing of high precision machine tools and it is
based in Adelaide. This report will discuss about expenditure cycle which is concerned
with acquisition of inventory and information system in expenditure cycle at the
industries. Limitations of expenditure cycle have also been discussed in this report.
Conversion cycle and its information system will also be discussed in the report. In
relation with system of information at Paradise Industries they have centralised
computer system and its terminals are distributed in all departments of the Paradise
Industries.
MAIN BODY
System Flow of Expenditure Cycle
Expenditure Cycle is concerned with acquisition of material and inventory in the
organisation. This cycle mainly involves three stages which are ordering inventory and
material, receiving inventory and payment for the inventory. This is based on material
requirement which is calculated on the basis of production forecast of the Paradise
Industries (Moser and et.al., 2019). This is one of the most important phase and
involves important function of Paradise because Paradise Industries is a manufacturing
industry hence effectiveness of the material requisition can affect the effectiveness of
the complete manufacturing process.
Expenditure cycle in Paradise Industries starts from time when inventory falls
recorder point. This is an automated process and when inventory falls on reorder point
automatically generates purchase requisition and one copy gets printed on the terminal
of purchase department. This is followed by selection of supplier by purchasing clerk

and preparation of purchase order. One copy of the purchase order is sent to suppliers
and another copy of the purchase order is sent to receiving department. Receiving
department is sent the copy so when they receive the material they can monitor
inventory being supplied and inventory being ordered. Then purchasing clerk adds
record to purchase order file and update program in data processing.
Receiving clerk reconciles purchasing order and packing slip when receives
inventory from supplier. Receiving clerk then prepares a hard copy of the items which
has been received along with their quality and quantity. This copy is given to receiving
department and warehouse. The records are also added to digital receiving report
through terminal. This automatically closes purchasing order and warehouse clerk
updates inventory on receiving the order through terminal. Accounts payable clerk on
arrival of suppliers’ invoice adds record to suppliers invoice file. This automatically adds
liability on the accounts payable ledger on the basis of financial information from the
invoice and this updates all affected ledger (Kong, Dong and Zhang, 2019).
All the accounts payable which are automatically scanned by system for items
which are due to be paid and cheques are automatically printed for them (Fiebiger,
2018). Cheque is sent to supplier and one of its copies is sent to cash disbursement
department and records of this are added to cash register file and this removes the
liability from accounts payable ledger.
Figure 1System Flow of Expenditure Cycle