Analysis of Cash Distribution System and Payroll Process

The provided report focuses on analyzing the data flow diagram and system flowchart of three systems: cash distribution, purchases, and payroll. It identifies various weaknesses in the present system of Bell Studio, which are likely to pose significant challenges in the future.

STRATEGIC
INFORMATION SYSTEMS
FOR BUSINESS AND
ENTERPRISE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Data flow diagram of purchases and cash disbursements systems..............................................1
Data flow diagram of payroll system...........................................................................................2
System flowchart of purchases system........................................................................................3
System flowchart of cash disbursements system.........................................................................4
System flowchart of payroll system.............................................................................................5
Description of internal control weakness in each system and risks associated with the
identified weakness......................................................................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Strategic information system can be defined as the system that is developed with respect
to the business initiatives. These Strategic Information Systems gives a huge competitive
advantage to the business organisations (Al-Fedaghi and Alduwaisan, 2018). This assignment
will lay emphasis on a case study of Bell Studio. They are the Adelaide-based art supplies
wholesalers. This company has a centralised accounting system with networked terminals at
various locations. Bell studio has three main procedures which are purchase system, Cash
distribution system and payroll system. As a business analyst a report has been prepared for
Chief Operating Officer so that he can evaluate the processes, risks and internal controls for its
expenditure cycle (Hossain, 2018). This report will explain Data flow diagram of purchases and
cash disbursements systems, Data flow diagram of payroll system, System flowchart of
purchases system, System flowchart of cash disbursements system, System flowchart of payroll
system and description of all the internal control weakness in each of the three systems as well as
the risks associated with the identified weaknesses.
MAIN BODY
Data flow diagram of purchases and cash disbursements systems
Data flow diagram is a way of representing the way data is processed by a system or of a
process in terms of both input and output (Al-Fedaghi and Alduwaisan, 2018). In other words
flow of system information is is explained within the diagram. This diagram consist of no loops,
control flows or decision rules in-fact simple flow of information is explained in this diagram.
Here, data flow diagram of purchase and cash flow system has been explained in details
(Laguna and Marklund, 2018). In this diagram brief overview of the system has been given and
flow of information within these systems of Bell Studio has been explained. In the purchase
system inventory subsidiary ledger is checked each morning and if quantity of an item is too low
then vendor is selected and purchase order is placed. In this system after checking the item
quantity order is placed and on arrival and validating the order inventory is update and invoice is
send to the cash disbursement department. In cash distribution system as the receiving report
from accounts payable department is received. Clerk files all the documents of cash
disbursement. On due date cheque is prepared by the clerk and mailed to the vendor and account
ledger is updated. So in this data flow diagram all the input and output information flow of both
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payment and cash distribution system is explained. Not only this where this information is saved
in the database is also explained within this diagram.
Data flow diagram of payroll system
In this data flow diagram complete process flow and information flow of all the input and
output data of central payroll system has been explained in detail. Flow of information collected
from all the employees, clerk and supervisor is inserted and updated into the system (Centobelli,
Cerchione and Esposito, 2018). This system mainly focuses on payment of all the employees
based on their working hours. In this system the main input information or data is mainly
provided by the supervisor and payroll clerk. All the processed output information is saved into
payroll table of the database. For this system mainly working hours of employees are updated in
time cards as an input. These time cards are updated and saved within the system. Based on this
information saved in the time cards payroll register is updated. All of these information is
reviewed by the supervisor and system is updated and cheques are distributed to the employees.
This system plays an important role for the payroll department as in order to pay employees their
salaries they need to all the information of the time card which contain employees working hours
information. Based on this information employees records are updated and their pay cheques are
mailed to the supervisor and then those cheques are distributed to the respective employees.
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Illustration 1: Data flow diagram of purchases and cash disbursements systems

System flowchart of purchases system
System flow chart can be defined as a physical design tool that shows all kinds of in
general operations that are performed or will be performed in the system (Lu and et.al., 2018).
System flowchart is a sub type of flow charts in which complete detail of the process that is
carried out in the system is explained (Dennis and Wixom, 2018). System diagram focuses on
flow of information and the direction in which data or information flows in the similar order in
which operations will be carried out. In this flow chart not only complete process and flow chart
of the system is explained but storage, input and output of the system is also explained. In the
below diagram system flow chart of purchase system has been explained in details. In this
system first of all inventory subsidiary ledger is checked and if the quantity of the item is
deemed to be low then vendor from vendor file is selected and a purchase order is prepared and
send to the vendor. When the goods arrive in the receiving department items are inspected based
on purchasing slip and digital purchase order. Then the receiving report is send to the inventory
warehouse and inventory subsidiary ledger is updated. Then this receiving report is send to the
accounts payable department. When the invoice is received from the supplier, all the three digital
accounts payable subsidiary ledger, the accounts payable control account and the inventory
control account in the general ledger are updated and the copies of invoice, receiving report, and
the purchase order is send to the cash disbursement department.
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Illustra
tion 2: Data flow diagram of payroll system

System flowchart of cash disbursements system
In this system flow chart diagram of cash disbursements system has been made and
explained in details. In this system flowchart all the operations involved in the complete process
that is carried out are explained and the flow in which they are carried out are also explained.
This system basically explains the process in which payment is done to the vendor and the
documents that are filed for the same (Shanks and et.al., 2018). Complete process involved in
this cash distribution system and the flow of inflammation of complete process is explained with
all the required details and where the information is stored is also explained. This process starts
when all the document receipts from accounts payable department. Cash disbursements clerk
files all the documents till the due date of the payment. On the due date cheque is prepared by the
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Illustration 3: System
flowchart of purchases
system

clerk for the invoiced account which is send or mailed to the vendor. When the payment cheque
is send to the vendor, cash disbursements clerk updates the cheque register, accounts payable
subsidiary ledger, and the accounts payable control account from their system. Lastly after
receiving the clerk file copies of invoice, purchase order copy, receiving report, and cheque copy
are send to the department.
System flowchart of payroll system
In this diagram System flowchart of payroll system has been explained in detail. In this
flowchart all the operations involved within this payroll system process that is carried out are
explained with the flow in which this process is carried out is explained as well. This system
basically explains complete payment process of all the employees based on their working hours.
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Illustration 4: System
flowchart of cash
disbursements system

This process starts when Bell Studio’s employees record their hours worked on time cards every
day. Each week these time cards are checked and submitted by the supervisors to the payroll
department. Then payroll clerk inputs this data into the system to print pay cheques, payroll
registers and based on this digital employee records are updated. When this time card data is
send to the payroll department pay cheques of the employees are directly send to their respective
supervisors so that they can review and distribute those cheques to the departments of
employees. After this payroll clerk files one copy of payroll register to the accounts payable
department and another to time cards in the payroll department. After reviewing the payroll
register accounts payable clerk prepares prepares a disbursement voucher. These voucher and
payroll register is then send to the general ledger department. Then the payable clerk files the
cheque based on entire payroll and deposit it in the bank. Lastly, when the general ledger clerk
receives the voucher and payroll register, clerk files the voucher and payroll register in the
department.
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Description of internal control weakness in each system and risks associated with the identified
weakness
All the three systems explained above have various flows and weaknesses within them
which are not beneficial for the organisation (Foote and Halawi, 2018). Not only this it reduces
the efficiency of the company and increases the chances of errors within the processing of the
system. Such internal control weakness are highly risky for the organisation as well as can
disturb carious results associated with the system (Gelu, Sarno and Siahaan, 2018). Cash
distribution, purchase and payroll system are three main systems of an organisation and if there
are any kind of errors then it is highly risky for the organisation (Shao, 2019). Similarly all of
these main processes of the central exciting system of Bell Studio has some internal control
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Illustration 5: System
flowchart of payroll system

weaknesses and there are many risks that are associated with those weaknesses of the system. So
all the weaknesses and risk of the central system will be explained below.
Purchase System
Weakness: there are various weaknesses associated with this system which are:
 One of the main weakness of this purchase system is that most of the work that is done in
the system is manual. For example clerk needs to check the inventory subsidiary ledger
manually.
 Another manual work weakness is that selection of the vendor from the vendor file is also
done manually in order to make purchase order.
 Clerk also need to manually generate two hard copies and send then to respective
departments. Not only this inspection of the received item is also done manually and
there are good chances of errors.
 Other manual work that is done within the organisation are production of hard copies of
packaging slip, updation of purchase order which is done in three different documented.
packaging slip etc. Another weakness is that they continuously need to coordinate with the accounts
department. Due to this chances of errors increases.
Risk: Based on all the above weaknesses there are various kinds of risk that are associated with
them which can arise due to various kinds of human errors. So here all the risk associated with
the weaknesses of purchase system are:
 As the inventory system is checked manually be the clerk so there is high risk that wrong
number of items can be counted and as foe the purchase order manual selection of vendor
from vendor list is done which is highly risky as wrong vendor can get selected which
can affect the budget of the company. Also it is quite a time consuming process which
might affect the overall financial performance of the organisation.
 Manual updation of ledger account is also a risky process as one manual human mistake
is a huge risk associated with it. If the coordination with accounts department is not done correctly and timely then it
increases the error chances in updating accounts information.
Cash distribution system
Weakness: There are various weaknesses associated with cash distribution system such as:
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 One of the main time consuming weakness of this system is preparation of cheque on the
due date. It is a weakness because there are chances that clerk might miss the due date on
which the check is to be prepared.
 Another weakness is updation of cash distribution system is done manually within all the
documents and accounts such as account payable control account, cheque register,
subsidiary ledger etc. All the documents that are to be filed in their respective departments are prepared
manually.
Risk: Based on all the above weaknesses there are various kinds of risk that are associated with
this system which can arise due to any kinds of human errors (Wenner and et.al., 2018). So here
all the risk associated with the weaknesses of cash distribution system of Bill studio are:
 Missing due date to prepare cheque can affect organisations relation with the vendor and
the future order that will be given to the vendor.
 Due to this late submission of cheque vendor might degrade product quality and
compromise with the quantity in which the item is required. Due to this manual work there is a possibility that wrong cash distribution is done which
will affect the overall financial performance of the company due to wrong ledger
transaction.
Payroll System
Weakness: Here are various weaknesses associated with Payroll system such as:
 As employees need to manually update their working hours in the their time cards on
daily basis is one of weakness of this system because there is a possibility that workers
might forget to update their working hours on their time card which can affect their pay
cheques
 Reviewing time cards is quite time consuming for the supervisor and there are chances of
some human errors. Writing pay cheques and printing hard copies of pay cheques is also done manually
which might delay the payroll process.
Risk: Based on all the above weaknesses there are various kinds of risk that are associated with
this system which can arise due to any kinds of human errors. So here all the risk associated with
the weaknesses of Payroll system are:
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 manual updation of pay cheques can affect the correctness of working hours which can
affect the pay cheques. This might affect the accounts department calculation and affect
the financial performance of the company.
 Wrong interpretation of ledger account can affect the financial statement.
 There is a high risk of cheque bouncing if the cheque is not managed on time which can
create some legal issues for the bank.
CONCLUSION
From the above assignment it has been concluded that strategic information system
provides various kinds of benefits to the organization in which they are used. It also helps in
providing the huge advantage to the organization in terms of competitive market in which they
operate. If this strategic information system is implemented within an organization then it can
help the organization to operate efficiently at lower cost. In this report three different kinds of
systems of Bell studio have been explained with their complete process flow as well as with
information flow within that system. This process and data flow of the system has been
explained with the help of data flow diagram and system flow chart of all the three system. In the
above report data flow diagram of cash distribution system and purchase system as well as data
flow diagram of payroll system has been explained. Other than this It has been analysed that the
present system of Bell Studio has various kinds of weakness and these weaknesses have many
risks associated with them due to which the organization is facing many challenges and in future
also.
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REFERENCES
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knowledge management systems to improve efficiency and effectiveness performance: A
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Dennis, A. and Wixom, B.H., 2018. Systems analysis and design. Wiley.
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Gelu, P., Sarno, R. and Siahaan, D., 2018. Requirements Association Extraction based on Use
Cases Diagram. Lontar Komputer: Jurnal Ilmiah Teknologi Informasi. pp.11-19.
Hossain, M., 2018. Loan disbursement and recovery system of Janata Bank Limited.
Laguna, M. and Marklund, J., 2018. Business process modeling, simulation and design.
Chapman and Hall/CRC.
Lu, X. and et.al., 2018. The process flow optimisation of crankshaft machining considering
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Shanks, G. and et.al., 2018. Achieving benefits with enterprise architecture. The Journal of
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Shao, Z., 2019. Interaction effect of strategic leadership behaviors and organizational culture on
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Wenner, G. and et.al., 2018. Organizational models of mobile payment systems in low-resource
environments. Information Technology for Development. 24(4). pp.681-705.
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