ACC539: Internal Controls and Systems Documentation at Platinum

This report assesses the internal controls and systems documentation of Platinum Manufacturing Group, a growing electronics manufacturer. It identifies weaknesses in their raw material purchasing, receipt, storage, and issuance processes. The assessment reveals risks such as low storeroom staffing, lack of a proper inventory system, outdated authorization processes, inadequate supervision of raw material counts, and outdated filing methods. The report provides a risk matrix, detailing the impact and probability of each risk. It recommends solutions including hiring more skilled staff, implementing a modern IT-equipped inventory system, improving authorization and supervision processes, and installing CCTV for monitoring. These improvements aim to enhance security, prevent theft, and ensure efficient internal operations. Desklib offers similar solved assignments and study resources for students.

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Executive summary
The present study is about an electronics equipment manufacturing company Platinum
Manufacturing Group which is a new company in Australia. Despite being a new-comer the
company is already experiencing steady growth. To enhance this growth further the company
decided to assess the internal risks of the organization and implement specific steps to
overcome them. Following this idea, a risk assessment was done to understand the risks
which is prevalent in the internal operations of the organizations and which may cause
problems in the future. The assessment provided a lot of important information about the
prevalent risk in the company. It was found that due to the rapid growth of the company, it
has not been able to improve its internal operations. The most risky gap which was found was
the absence of a proper inventory. Along with this, the company still used the basic means to
file their invoices and sales report in the files. The proper suggestions to the above findings
are to employ new supervisors and develop a well IT equipped inventory. The total method of
receiving an authentication must also be changed and CCTV may be installed in the
inventory for continuous monitoring. Following these steps, the company must implement
them for the proper functioning of the internal operations and make the internal operation
more secure than it was before. In this way, the company will be able to make the internal
operations more secure and will be able to get a lot of security from the problems like
inventory theft and data leakage.

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Table of Contents
Executive summary....................................................................................................................2
Introduction................................................................................................................................4
Raw material purchasing process...............................................................................................4
Risk identification......................................................................................................................5
Risk identification of Platinum Manufacturing Group..............................................................6
Risk matrix of Platinum Manufacturing Group.........................................................................7
Internal weaknesses, impacts and solutions...............................................................................7
Conclusion and recommendation...............................................................................................9
References................................................................................................................................10

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Introduction
Platinum Manufacturing Group is a rising electronics manufacturing company. Most of its
customer base are small and medium sized businesses. Due to its excellent performance the
organization is growing at a steady rate and making a lot of profit. In this current situation
there is a need to assess the risks and implement improvements in the organizational process
to make the overall system flawless and better (Hopkin, 2018). This study is mainly
conducted to assess all the areas of risk the company has. It could be conducted to provide the
CEO with a proper report to mitigate the risks which may otherwise cause problem for the
organizational work process of the organization (Ruan et al., 2015, pp. 1440).
Raw material purchasing process
Payment
Invoice received
Raw materials
supplied
Order copy retained
E-mail
Supplier
Preparing
purchase
order.
Purchase area
E-mail
Item inventory number
entered on purchase
requisition list.
Raw material count
below reorder level.
Check order
level.
Storeroom

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The above level 0 Data Flow Diagram provides all the details of the raw material purchasing
procedure. The diagram was constructed with the help of Microsoft Word. It has all the
necessary information regarding that particular matter. The storeroom staffs initiate the
process of raw material acquisition whenever there is a low count. For that, they enter the
item inventory number in the purchase requisition list and mail it to the purchasing
department. According to Sadgrove (2016), the purchasing department prepares the purchase
order based on the received feedback and initiates the process of buying raw materials by
emailing the requirements to the supplier. In this process, the purchasing department retains
the copy of the order. After receiving the order the supplier sends the supply to the company
and after receiving, the purchasing department initiates the payment to the company based on
the invoice.
Risk identification
At the present situation, the company is performing quite well but for better functioning,
there is a requirement of assessing the risks of the operational processes properly. Risk
assessment is a very important procedure in an organization (Bergamaschi et al., 2015, pp.
192). Almost all the business organizations employ specific analysts who perform thorough
check-up of all the organizational processes to determine the areas of weakness which may
give serious trouble to the organization in the future (Ratnayake&Antosz, 2017, pp. 42). The
risk is anything which may have a high or low chance to harm by some hazard or provide
some sort of damage to an individual or an organization (Hopkin, 2018). There are various
tools, techniques and frameworks to assess and evaluate the risks in an organization. Among
all the existing processes, Risk Assessment Matrix is the most effective technique (Ni et al.,
2010, pp. 1273). The technique provides a detailed description of all the underlying risks and
also provides proper knowledge about how much probability of that risk has to occur
(Knutson &Huettel, 2015, pp. 144). Most of the businesses organizations use these particular
tool asses the risks in their organizations and based on the result they undertake various
important decisions to develop various strategies (Albery et al., 2016, pp. 183). The strategies
are developed regarding the severity and the probability of the risk to occur (Sadgrove, 2016).
The risk assessment matrix is developed after properly analyzing the work operations and
detecting various risks. The risk assessment and mitigation process consists of five main steps
(Stergiopoulos et al., 2015, pp. 44). These steps are as follows:
1.Identification of the risks.

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2.Quantification of the risks.
3. Developing strategies to contain the risks.
4. Implementing the developed strategies.
5. Monitoring the tasks which are associated with the risks.
The likelihood of risk to occur has some specific scales based on which the result is provided
(Pritchard & PMP, 2014). The scale is described below:
1 = Rare
2 = Unlikely
3 = Possible
4 = Likely
5 = Frequent/almost certain
On the other hand, the tool also provides a scale of impact (Ruan et al., 2015, pp. 1445). The
scale of impact is as follows:
1 = Insignificant
2 = Minor
3 = Moderate
4 = Major
5 = Catastrophic
The best way to utilize the risk assessment matrix is to properly assess the impact by utilizing
a combination of thought and properly provide a rating in the areas where there is a
possibility to have the largest impact of the risk (Nishatet al., 2006, pp. 550).
Risk identification of Platinum Manufacturing Group
The organization has a lot of functions which are undergoing to deliver their products to the
customers. The manufacturing process involves the storage of various raw materials. The
overall functions of the organization were found to be satisfactory and functioning well,
however the analysis, showed some important gaps in the purchase and storage of raw
materials. The areas of risks are as follows:

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 Risk 1: The numbers of staffs in the storeroom are low.
 Risk 2: Being a large company with a huge turnover the company has not
implemented any proper inventory system. The company still relies on the storeroom
facility and the counting of the raw materials is done by hand counting method (Ni et
al., 2010).
 Risk 3: The authorization process of the company is outdated. The authorization for
acquiring the raw materials is still done verbal and written method. There is not any
further monitoring of the process after getting the initial authorization.
 Risk 4: The items received after purchasing are counted by the storeroom staff
without any proper supervision. There are no personnel to verify the count of the raw
materials by tallying it with the provided permission.
 Risk 5: Filing of the received orders is outdated. The filing is still done by using the
old age method of paperwork and there is no softcopy of the orders received or sent.
Risk matrix of Platinum Manufacturing Group
The above discussion provided a lot of information about the current work operation and the
various risks associated with the operations. The assessed risks and their degree of impact are
provided below:
Probability
(Likelihood)
Impact (Seriousness)
Very Low Low Medium High Very High
Very High Risk 2
High Risk 1 Risk 5 Risk 3
Medium Risk 4
Low
Very Low
The risk matrix analysis provided one key information that the company has some critical
risks in the department of purchase and storing. The present situation means a lot of

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reformation needs to be done so that the future incidents of organizational failures may be
avoided (Reason,2016). Most of the risks are in the level of medium to high impact level and
their probability of occurrence is very much high.
Internal weaknesses, impacts and solutions
From the above discussion, it was clear that the present situation needs to be changed
promptly as the company is already functioning with a lot of underlying risks. For better
understanding of the risks, a proper discussion of the risks, their impacts and solutions are
provided below:
Internal control
weakness Impact Control for mitigating
the risks Latest IT development
Low storeroom
staffs
The company is
developing fast and
there is possibility
that the staffs may
become overwhelmed
and commit some
mistakes.
Employing more staffs
with proper skills in the
storeroom section.
Online sources may be implemented
for seeking competent candidates for
the job.
Installing computer systems.
Lack of inventory
system.
May result in
misplacement or
miscalculation of the
objects received in
the inventory.
Changing the policy
and rules and use the
latest ideas so that a
proper inventory system
may be implemented.
Utilizing computers and internet for
developing a powerful and efficient
inventory system.
Outdated
authorization
system of
purchase and
sales
May result in serious
security issues and
cause thefts.
Implementing proper
supervision and
changing the
preexisting
authorization process
and employing trained
supervisors.
Installing modern technologies like
fingerprint scanners for proper
authorization.
Installing communication media like
intercoms or video cameras for
confirmation of authorizations.
Lack of storeroom
supervision
Security risks,
lethargy among the
staffs and theft.
Developing new posts
and employing new
skilled supervisors.
Installing CCTV cameras.
Outdated filing
system
Misplacement of
critical reports of
funds, sales and
purchases.
Employing IT trained
staffs.
Changing the preexisting system by
installing computers and advanced
IT for proper storage of the various
important files of the company.

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Conclusion and recommendation
The present report was solely conducted to assess the present condition of Platinum
Manufacturing Group. As the company is constantly growing and gaining more revenues it is
important to assess the operations of the company. Generally the risk assessment procedures
are conducted to make some reforms in the existing strategies and policies. This was also
same in case of the present company. The risk assessment pointed out that in spite of the
growth of the company; the various internal operations are still done in the traditional
methods. It may be due to the fact that the company management has not yet considered this
portion for up gradation.
The above report provided a lot of important facts about the company’s sales and raw
material purchasing section. The risk analysis provided a lot of important gaps in the relevant
sector. The company utilizes the old methods of pen and paper technique to manage the
product sales and purchases. The most risky factor was the absence of a proper inventory. In
light of this present finding it can be said that the company could suffer from critical data
leak or resource theft any time. It is highly recommended to implement an efficient inventory
with modern IT systems so that the internal critical operations can be made secure.
The above study provides a lot of information regarding the implementation of risk matrix
and also helps to understand the various methods to assess the internal risks on an
organization. It should be always remembered that the successful companies run on effective
risk analysis and risk mitigating methods and it is the sole reason why they always stay at an
advantageous position than other companies.

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References
Albery, S., Borys, D., &Tepe, S. (2016). Advantages for risk assessment: Evaluating
learnings from question sets inspired by the FRAM and the risk matrix in a
manufacturing environment. Safety science, 89, (180-189).
Bergamaschi, E., Murphy, F., Poland, C. A., Mullins, M., Costa, A. L., McAlea,
E., ...&Tofail, S. A. (2015). Impact and effectiveness of risk mitigation strategies on
the insurability of nanomaterial production: evidences from industrial case
studies. Wiley Interdisciplinary Reviews: Nanomedicine and
Nanobiotechnology, 7(6), (839-855).
Hopkin, P. (2018). Fundamentals of risk management: understanding, evaluating and
implementing effective risk management. Kogan Page Publishers.
Knutson, B., &Huettel, S. A. (2015).The risk matrix. Current Opinion in Behavioral
Sciences, 5, (141-146).
Ni, H., Chen, A., & Chen, N. (2010). Some extensions on risk matrix approach. Safety
Science, 48(10), (1269-1278).
Nishat Faisal, M., Banwet, D. K., & Shankar, R. (2006). Supply chain risk mitigation:
modeling the enablers. Business Process Management Journal, 12(4), (535-552).
Pritchard, C. L., & PMP, P. R. (2014). Risk management: concepts and guidance. Auerbach
Publications.
Ratnayake, R. C., &Antosz, K. (2017). Risk-based maintenance assessment in the
manufacturing industry: minimisation of suboptimal prioritisation. Management and
Production Engineering Review, 8(1), (38-45).
Reason, J. (2016). Managing the risks of organizational accidents.Routledge.
Ruan, X., Yin, Z., &Frangopol, D. M. (2015). Risk matrix integrating risk attitudes based on
utility theory. Risk Analysis, 35(8), (1437-1447).
Sadgrove, K. (2016). The complete guide to business risk management.Routledge.

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Stergiopoulos, G., Kotzanikolaou, P., Theocharidou, M., &Gritzalis, D. (2015). Risk
mitigation strategies for critical infrastructures based on graph centrality
analysis. International Journal of Critical Infrastructure Protection, 10, (34-44).