Challenges and Solutions in Computer-Based Systems and E-commerce

This report discusses the challenges and solutions in computer-based systems and e-commerce, including transaction cycles, financial reporting system, management reporting system, e-commerce shortcomings, security measures, risks associated with ERP systems, and the role of ethics and internal control processes.

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Executive summary
In the current business industry, Information Technology has been implemented. This
has not only increased the ease and productivity if businesses but it has also made it
more competing to survive. This has forced a business institution to not only
implementing IT techniques but maximizing of the best IT resources available; these
techniques help in completing the daily business processes.
In order to form maximum utilization of these technologies and techniques, it is
necessary that the institutions first conduct a preliminary investigation. This investigation
will help the institution to understand the required environmental aspect and also the
challenges that come with its implementation. By understanding this, the business will
be able to maximize on the systems, be it an ERP system or E-commerce.
The report below offers the information concerning the computer-based systems and
the challenges associated with it, it also offers ay that will enable a company to mitigate
and prevent challenges associated with the system.

Contents
Executive summary...........................................................................................................1
Introduction........................................................................................................................3
Transaction cycles.............................................................................................................4
The financial reporting system...........................................................................................5
Management reporting system..........................................................................................5
E-commerce.......................................................................................................................6
E-commerce shortcomings................................................................................................6
E-commerce security measures........................................................................................7
Risks associated with computer based/ erp systems........................................................7
Role of ethics and other internal control processes..........................................................8
Bell studio unified modeling language diagrams...............................................................9
Internal control weaknesses and associated risks to the company................................13
Conclusion.......................................................................................................................14
References.......................................................................................................................15

Introduction
In this report, one will be able to understand the different transaction cycles that are
present in an accounting system. In addition, E-commerce as a business entity will be
explained with reference to its challenges and how to handle them. The major challenge
being cyber-attacks, the report will also offer security routines that need to be adopted.
Businesses have also shifted from using manual systems to more advanced computer-
based systems. These systems have improved the mode in which business processes
were being carried out. The report will offer a comprehensive analysis of the ERP
system (Madapusi, and D'Souza, 2012). This will also include the shortcomings that are
brought about by implementing such systems into an organization.
Bell studio is an Adelaide-based wholesaler of art supply, the business processes that
are performed in the purchase, cash disbursement and payroll system have been
stated. In this report, their UML diagrams will be created. From these diagrams, the
flaws of the system with their corresponding consequences will also be stated.

Transaction cycles
In order to perform business processes in an ordered manner, there is a need to group
them. In business accounting, there are groups of tasks that are aimed at archiving a
particular goal; these groups are referred to as transaction cycles (Belfo and Trigo,
2013). The business transaction cycles include:
Financing Cycle
In some instance it can be termed as the counterpart to both the business and
investment cycles, this is because it majorly involves the process of diagrammatically
representing the business processes in the form of charts and graphs. The information
obtained I later used to understand the various shifts in the economy.
The Payroll Cycle
The Payroll Cycle is responsible for ensuring that the necessary business entities are
remunerated through wages and salaries. Companies have opted running their own
payroll systems, this is because it is more effective and cost-effective compared to
outsourcing this service (Thite and Sandhu, 2014). The following are a collection of the
various business processes in The Payroll Cycle:
 Recording and gathering information about the time spent by staff in the
organization
 Carrying out the process of deductions and benefits according to the gathered
employee time
 Based on the benefits and deduction, distributing salaries or wages to the
concerned entities
Purchasing Cycle
This is one of the intensive transaction processes. The Purchasing Cycle is a collection
of business processes that facilitate the transaction of good, or services between
different individuals or organizations. This involves searching for vendors who will
supply the necessary commodities to an institution (Grenci, and Hull, 2014). The
process is lengthy and ends when the purchasing department has received the products
from the vendor and that they are satisfied.
 Monitoring the inventories
 Requesting for products that need to be refilled in the inventory through
quotation
 Preparation of the purchase order

 Receive the goods/service and judge their quality
 Prepare invoice for payment
Sales Cycle
This involves all the processes that a sales department or person undergoes in order to
get a new customer (Hajji, Pellerin, Léger, Gharbi and Babin, 2012).
 Have a good understanding of the goods or services intended to be sold
 Identification of the suitable candidate for your product
 Critically analyzing the requirements/ needs of the identified customer
 Confronting the customer to sell your products, usually in the form of a
presentation
 Convincing the customer in cases where you meet rejection from the customer
 After customer acceptance, you close the deal
 Lastly is performing follow-ups on the customer and also offering additional or
alternative products
The financial reporting system
It is necessary that an institution to be aware of the state of its finance, this is made
possible by the Financial Reporting System that is an integrated system that offers this
information. This may include information such as trial balances balance sheets among
other financial reports. The success of the financial reporting system helps in making
business decisions. The report is done based on a periodical interval based on the
institution's desire.
The system starts with the collection of all the transaction data within the institution, this
should be taken seriously since the success of the system depends on it. An effective
system will be able to gather this information, store it and analyze it to derive valuable
information. The information is later represented to the concerned entities of the
company. The information to the top management is used to define the success of the
business.
 Updating data to the financial ledger
 Updating the adjusting entities of the company
 Financial statement preparation
 Generating managerial reports
Management reporting system
In an organization there is a need for it to have policies, rules, objective and goals; a
management system is used to generate these. They help in the normal functioning of

the institutions by acting as guides in the daily business processes. An effective
management system will smoothen the functioning of an organization so as to meet the
business requirements. In addition, they ensure that the operations happening in the
institution are not violating the laws of the nation/ state.
Depending on the organization, the management system has different functionalities;
the most common one being:
Ensuring maximum utilization of resources
 Ensure responsible utilization of resources and power
 Ensuring that the business requirements are meet
 Ensuring efficiency by reducing cost and time of production
 Below are some of the functions performed by a Management Reporting System
E-commerce
E-commerce is an acronym where ‘E' stands for Electronic; E-commerce is the process
of performing transactions including buying and selling of product (goods or services)
through an electronic system (Colla and Lapoule, 2012).
Their relation between the buyer and the seller determine the type of e-commerce being
performed. E-commerce is dated to three centuries back but as per now, it is one of the
implemented methods in businesses. The advantageous brought by this technology
include:
 Some of the functions are performed at a reduced cost
 Reduces the time used in performing business processes
 It helps sellers and buyer meet thus boosting the business profits
E-commerce shortcomings
Despite the numerous advantages that are brought about by e-commerce, there are
also several challenges associated with it; they include;
 In order to perform transactions, one has to have a specific technical skill, without
that, one cannot use the service effectively
 It is easier to experience system threats on e-commerce as compared to
traditional methods of commerce
 E-commerce requires some IT resources to function. If these lacks, then e-
commerce processes cannot run .i.e. Specific software, internet, and servers.
 It is more difficult to convince a customer to buy good they cannot physically see.
This is due to the fact that one cannot access the quality of the product online

E-commerce security measures
Based on the current statistic, the toll at which businesses are being hacked is high, this
has been recorded to have a catastrophic impact on the company. Some of the
consequences that come with a successful breach of a system include
(Niranjanamurthy, and Chahar, 2013):
 Loss of fund/ money
 Companies lose customer trust
 The company and its customer loss valuable and secret information
 Loss in recovering from system breach
The impact of such attacks has highly motivated security companies in developing the
countermeasure. These measures, if implemented effectively, prevent intrusion of a
system by unauthorized malicious actors. Some of the measures include:
 Using authentication protocols
 Using a firewall to protect organization networks
 Regularly updating the systems and applications
 Educating the users and staff on how to protect themselves and how to evade
hackers’ traps
Risks associated with computer based/ erp systems
The ERP (Enterprise Resource Planning) System has revolutionized the means in
which processes are performed. This is one of the most popular computer bases
systems that is being implemented in majority of the firms, regardless of the scale of the
business. The reason that has contributed to its popularity is its functionalities. This is
because it integrates most systems of a system to form a super system.
Despite this, it also has some disadvantage if some factors are not taken into
consideration. They include:
Failure to solve the problem before implementing the system
It is necessary that the organization solve business challenges before implementing the
system. Most businesses implement the ERP system to solve the problem; this leads to
failure of the system. The system is meant to transform the mode of operation but not
the actual business processes.
Lack of acceptance from the users
Most of the institution fails to involve the user of the system during the implementation
phase. This will limit the acceptance of the system thus leading to the failure of the

system. in order for the system to be accepted, it is necessary that the users be
involved in the implementation phase so as to suit the user's demands.
Inadequate infrastructure
The ERP system requires a particular set of resources; these resources include both
the human resource and the IT resources. Human resource includes skilled personnel
who manage the system. The IT resources include software, hardware and other
equipment. Failure to have this will compromise the success of the system to the
institution.
Role of ethics and other internal control processes
In order for accountability and integrity to be maintained within an organization, it is
necessary that there be internal control processes and ethics. This system will ensure
that the requirements of a business are archived without infringing the right of business
entities (Goetsch and Davis, 2014) .
The internal control structure is usually customized in order to ensure to conducts within
an organization. They act as a business guide to how the various business processes
are supposed to be conducted. General control structures include:
 It controls the functions performed in the organization
 Ensure that information is handled professionally while ensuring the chain of
communication in the organization
 Ensuring the policies raised are followed an adhered to
 Performing risk recovery and assessment to ensure the effects are mitigated
The major contributions brought about by good ethics include:
 High production
 Proper use of company resources
 Reduced time and cost of production, thus ensuring efficiency
The ethics and control structure have worked together to ensure that business
processes are carried out effectively and efficiently.

Bell studio unified modeling language diagrams
Data flow diagram of purchases and cash disbursements systems (Li and Chen,
2009)
Data flow diagram of payroll system

BELL STUDIOS SYSTEM DIAGRAMS WITH THEIR CORRESPONDING
WEAKNESSES
System flowchart of purchases system

System flowchart of cash disbursements system

System flowchart of payroll system

Internal control weaknesses and associated risks to the company
Purchase system
The following are the faults in the Bell Studio purchases system with their corresponding
faults (Doyle and McVay, 2017):
1. The initiation of the processes of the purchase system over-rely on the purchasing
clerk, failure of the clerk to do so will cause the failure of the entire system since it
will not be initiated
2. The processes start when the levels are very low, in the cases where the system
fails to acquire new product for the inventory in time will lead to the failure of the
entire system
3. The selection of the vendor by the clerk is done manually, this may cause biases
since one vendor can be favoured above another
4. The workload of the clerk in updating the entire ledger. If the clerk fails to input
correct data, it will, in turn, generate wrong information that may mislead the
company.
5. The process ends by sending the document to the cash disbursement system, if the
clerk fails to do so, the processes at the department will not be initiated.
Cash disbursement system
The following are the faults identified from the cash disbursement system
1. The system initiation over-relies on the manual submission of the documents from
the purchasing department. This may cause lateness if the documents fail to arrive
on time.
2. The clerk has to manually update the ledger, if the clerk inputs an error, the cash
disbursement information will be corrupted thus misleading
Payroll system
The following are the faults in the payroll system with their corresponding
consequences to Bell Studio
1. The employees have to manually input their working hours. The employees may
fake the time in order to gain more pay
2. The time card is monitored by the supervisor. If the supervisor is biased, they may
change the time card to favour one employee over another
3. The payroll clerk has to manually input data and also the disbursement voucher. If
they input wrong data it will compromise data integrity

4. Majority of the processes performed by the payroll clerk are performed manually
while others involve doing duplicates copies. This is a workload to the clerk that
may contribute to increased errors, thus compromising the integrity of the data
within the payroll system.
Conclusion
Based on the stated report, it is now clear of some of the business concept; one of
them, being the accounting transaction. From the report, it is clear of the type of
transaction processes and the business processes that are comprised in each on them.
From the report, it is now the advantages and disadvantages of the computer-based
system with reference to the ERP system. In addition, the systems in an organization
have been discussed comprehensively, including the ethics that govern the functioning
of an institution.
In addition, the report has brought into light the concepts of e-commerce; with its
corresponding disadvantages if not attended to effectively. From the report, the UML
diagrams for the Bell Studio. From the system diagram, the flaws of the system have
been identified with reference with their respective consequences to the system.
The sated recommendation in the report will help counter the threats and shortcoming
that come with this system. Thus ensuring that the system performs its functions
efficiently and effectively.

References
Belfo, F. and Trigo, A., 2013. Accounting information systems: Tradition and future
directions. Procedia Technology, 9, pp.536-546.
Colla, E. and Lapoule, P., 2012. E-commerce: exploring the critical success
factors. International Journal of Retail & Distribution Management, 40(11), pp.842-864.
Doyle, J., Ge, W. and McVay, S., 2017. Determinants of weaknesses in internal control
over financial reporting. Journal of accounting and Economics, 44(1-2), pp.193-223.
Goetsch, D.L. and Davis, S.B., 2014. Quality management for organizational
excellence. Upper Saddle River, NJ: pearson.
Grenci, R.T. and Hull, B.Z., 2014. New dog, old tricks: ERP and the systems
development life cycle. Journal of Information Systems Education, 15(3), p.277.
Hajji, A., Pellerin, R., Léger, P.M., Gharbi, A. and Babin, G., 2012. Dynamic pricing
models for ERP systems under network externality. International journal of production
economics, 135(2), pp.708-715.
Li, Q. and Chen, Y.L., 2009. Data flow diagram. In Modeling and Analysis of Enterprise
and Information Systems (pp. 85-97). Springer, Berlin, Heidelberg.
Madapusi, A. and D'Souza, D., 2012. The influence of ERP system implementation on
the operational performance of an organization. International Journal of Information
Management, 32(1), pp.24-34.
Niranjanamurthy, M. and Chahar, D., 2013. The study of e-commerce security issues
and solutions. International Journal of Advanced Research in Computer and
Communication Engineering, 2(7).
Thite, M. and Sandhu, K., 2014. Where is My Pay? Critical Success Factors of a Payroll
System–A System Life Cycle Approach. Australasian Journal of Information
Systems, 18(2).