Platinum Group: Analysis of Accounting Information System Weaknesses

This report analyzes the accounting information system of the Platinum manufacturing group, focusing on weaknesses in its purchase process, particularly those stemming from verbal ordering practices. The report identifies these internal control weaknesses, emphasizing the lack of proper documentation and its potential impact on financial audits and strategic planning. A level 0 data flow diagram is provided to illustrate the purchase process. The study recommends the adoption of IT communication tools and accounting software to automate the purchasing process, mitigate risks, and enhance efficiency. It argues that these measures are compatible with the firm's IT infrastructure and will improve documentation, auditing, and overall operational effectiveness. The report highlights the benefits of an automated system, including reduced costs and improved productivity, while also suggesting the implementation of digital workplace tools for enhanced communication and data security. The report concludes with a table summarizing the internal control weaknesses and proposed solutions, supporting the adoption of these recommendations for improved financial management.

Running head: ACCOUNTING INFORMATION SYSTEM OF PLATINUM GROUP
ACCOUNTING INFORMATION SYSTEM OF PLATINUM GROUP
Name of the Student
Name of the University
Author Note

1ACCOUNTING INFORMATION SYSTEM OF PLATINUM GROUP
Executive Summary:
The purchase process of the Platinum manufacturing group is suffering from internal control
weakness and hence, the devised report identified the weaknesses which are mostly relevant
to the verbal ordering. The paper has also offered a level 0 data flow diagram to increase the
understanding of the readers about the purchase process of the special orders. Finally, with
appropriate recommendations that are relevant to the adoption of IT communication tools for
communication and accounting software to automate the purchasing process to mitigate the
risk posed by the internal control weakness of the firm. The report has even justified that the
recommended measures will be compatible with the new IT tools and techniques that the firm
decides to equip.

2ACCOUNTING INFORMATION SYSTEM OF PLATINUM GROUP
Contents
Brief discussion of the purchase process:..................................................................................3
Level 0 data flow Diagram.........................................................................................................4
Table: ICW ASSESSMENT TABLE OF PLATINUM...........................................................11
References:...............................................................................................................................12

3ACCOUNTING INFORMATION SYSTEM OF PLATINUM GROUP
Brief discussion of the purchase process:
After receiving the purchase requisition from the head of the department the
purchasing department validates the requisition and receives bid from different vendors. On
selecting the most suitable vendor the team places a verbal order and demands price
quotation. In the next step, the team send a pre-numbered purchase order to the head,
accounts payable and the receiving department while filing a copy in open purchase order file
which is then transferred from open to filled file after receiving confirmation from the
receiving department that the item has been received. The accounts department matches the
purchase order and vendors invoice and on confirmation sends it to the treasure where the
cashier signs over the $10,000 checks while the machine signature are placed on both the
checks over and under $10,000.

4ACCOUNTING INFORMATION SYSTEM OF PLATINUM GROUP
Level 0 data flow Diagram
FIGURE 1: LEVEL 0 DATA FLOW DIAGRAM OF PURCHASE PROCESS
(Source: Author)

5ACCOUNTING INFORMATION SYSTEM OF PLATINUM GROUP
Identified ICW Impact Recommendation Compatibility
The internal control
weakness of the
special order
purchase process of
the Platinum is
identified in its
communication
mode (Feng et al.,
2014). The firm
prefers the verbal
communication over
the documented
mode.
The lack of proper
documentation will
create problems for
the auditors. The
lack of
documentation will
lead to improper
financial audit and
the results from the
audit will lead to
devise the financial
strategy which will
not be suitable for
the Platinum
(Gallenmore &
Labro, 2015). The
improper financial
strategy will affect
the firm’s future run
adversely.
Additionally, the
firm will also lag
behind its
competition in the
‘It is advisable that
the organisation
equips the services
of Accounting
Information
system.’.
Adopting the system
will offer crucial
benefits while
mitigating the risks.
The accounting
information system
will automate the
purchase process
where with human
interaction the
orders will be placed
online (Hassan,
Nasir & Khairudin,
2017). After the
order will be placed,
the system will
verify the most
suitable vendors for
The recommended
means can be easily
integrated with the
reengineered It
infrastructure of the
firm. It is stated
because EDI, EFT,
electronic forms and
barcode scanning
can easily be
integrated with the
accounting
information system
(Lourenco, 2013).
However, it should
be kept in mind that
the recommended
system is purchased
from quality vendor
whose product
supports upgradation
process.

6ACCOUNTING INFORMATION SYSTEM OF PLATINUM GROUP
market and lose the
competitive
advantage it might
have been enjoying
(Cheng, Dhaliwal &
Zhang, 2013).
the delivery of the
ordered item. The
selection of the
vendors will depend
upon the background
of the vendor which
will include their
goodwill, their
customer services,
the quality of their
offering and other
major factors that
may affect their
services or product.
After the verification
is done the system
will ask for the price
quotation from the
vendors and then
based on its
programming
determine the most
suitable vendor who
can offer quality
products at the most

7ACCOUNTING INFORMATION SYSTEM OF PLATINUM GROUP
efficient cost.
Another factor that
will be measured by
the system is the
past relation of the
vendor with the
Platinum. Based on
all the factors above,
the system will send
a pre-purchase order
to the vendor to
place the order for
purchasing of the
product (Ismail &
King, 2014). After
the order is placed
the system will
circulate the
documents to
different
departments and on
receiving the items
will verify the
delivery item with
assistance of human

8ACCOUNTING INFORMATION SYSTEM OF PLATINUM GROUP
support of the
receiving
department. The
benefit of adopting
the system will be
that the firm will be
upgraded to an
automated system of
purchasing and
reduce the
expenditure of the
firm’s internal
resources that can be
better utilised to
increase Platinum’s
productivity
(DeFond & Lennox,
2017). In addition to
that Platinum will
also have a proper
documentation
which will enhance
the auditing process
and the financial
strategy

9ACCOUNTING INFORMATION SYSTEM OF PLATINUM GROUP
development as well.
The manual
verification and
placing of the order
is also a time
consuming and
effort consuming
process which can
be better utilised in
making the firm’s
internal processes
more efficient and in
the process enhance
the firm’s
productivity (Skaife,
Veenman &
Wangerin, 2013).
The complicated
purchase process
that involves
repetitive process of
verification
consumes time and
effort which could
be better utilised in
enhancing the firm’s
operations. It drags
down the
organisation and will
ultimately lead to
low productivity and
decreased quality of
the firm’s product
and service which
will adversely affect
the goodwill of the
organisation.
It is also
recommended that
the firm enforces a
protocol for written
sharing of
information that will
enhance the
reliability of the
records and also
assist in securing &
sustaining the firm’s
data that will be
used for planning
future strategy of
Platinum.
It will omit the
reverification
process. The
organisation should
upgrade itself to
digital workplace to
attain the above-
discussed measures.
The digital
workplace can even
readily cope with the
reengineered IT
infrastructure
because it would
have already
replaced the paper
documents with the
electronic forms.
Hence. It can be
emphasised that the
recommended
strategies can be
readily melded with
the reengineered IT
infrastructure while
keeping the firm’s
process functional.