Accounting Information Systems Case Study: Adam & Co (HA2042, T2 2019)

This case study analyzes the accounting information systems of Adam & Co, a wholesale company. It examines three key procedures: the purchases system, the cash disbursement system, and the payroll system. The report includes flowcharts illustrating the workflow and information handling within each system, detailing inputs and outputs. It also identifies and assesses the internal controls implemented to mitigate potential risks and errors within these procedures. The analysis covers the computerized nature of the systems and proposes solutions to address potential issues such as incorrect data feeds, vendor management, payment processes, timecard diligence, and employee classification. The study aims to provide a comprehensive understanding of the company's accounting processes and internal controls, ultimately contributing to the efficiency and accuracy of its financial operations.

Running head: REPORT 0
ACCOUNTING INFORMATION SYSTEMS
SEPTEMBER 19, 2019
STUDENT DETAILS:

REPORT 1
Executive summary
The following parts states the three important procedures of accounting system of Adam and Co.
these three important procedures are cash disbursement, payroll system and purchases system.
This report states the flowcharts of these systems to describe work flow and the manner
information is handled as well as used by each stage in the said departmental procedure. These
flowcharts state the input and the output of all the procedures that is important to functioning of
the subsequent sections in demonstration. The internal controls of this departmental process are
depended on setting up to classifying the possible faults can present in the above mentioned
sections. The solutions aim to eliminate the risks that relate to these issues as well as faults or the
risks that can take place in upcoming period due to certain unexpected events.

REPORT 2
Contents
Introduction......................................................................................................................................3
Company background......................................................................................................................3
Purchases System of Adam and Co.................................................................................................4
Cash disbursements system-............................................................................................................7
Payroll System...............................................................................................................................10
Conclusion.....................................................................................................................................13
References......................................................................................................................................14

REPORT 3
Introduction
The centralizing accounting system is important because it ensures the constancy of data as well
as process flow in all the connotations. However, on the account of comprehensive variety
regarding this accounting system, this is very significant to have reasoning presentation for all
the systems (Zou, et. al, 2015). It will be helpful to increase the high-tiered administration for
attaining the outcomes based on clear areas resulting by the presentation, which requires prompt
notice. In the following report, the expenditure cycle procedures of Adam and Co, are discussed
and critically examined. The whole expenditure cycle has been categorised in different
departmental level procedures. These different departmental level procedures are depended on
payroll system, cash disbursement system as well as purchase system.
Company background
Adam and Co is known to be the industry wholesaler based out of Perth that takes in essential
requirements of purchase at international level from Thailand, China along with Vietnam. Adam
and Company has been built on basic belief of rendering the greater services along with
continuously increasing expectation of the clients (Ellies, 2017). The main purpose is to expect
as well as fulfil the requirements of the clients, whatever the plan for an upcoming period. The
client comes to Adam & Co for the reason that their requirements are extra ordinary. The bank
responds with service as well as solution that may be exactly tailored to match the clients from
private bank for making investment in the management as well as financial planning. Adam &

REPORT 4
Company puts focus on the clients, the wealth of clients, and the ambitions for upcoming period
(Albreht, et. al, 2016).
Purchases System-
The whole purchase systems of Adam and Co. have planned to the certain quantities with value
to sourcing in materials for sale to its customers. The system flowchart of purchases system is
mentioned below-

REPORT 5

REPORT 6
The above discussed flowchart of the company states that there are numerous procedures, which
are dynamic towards application of whole purchases system of company. The entry’s flow is the
inventory, which begins the whole procedure. The purchase department looks after the inventory
receipt for searching the deficiencies in inventory. It is promptly ordered as well as accounted by
making cross check of the accounts subsidiary ledger. Additionally, it consequently matches with
the prospective seller to be produced. Further, it may led as better inflow (as mentioned in above
discussed flowchart), which goes along with the packing slip as well as the statement of supplier.
Further, at an upcoming stage the flowchart made the examination of products, which are taken
by the department from developing the knowledge of packing slips along with statement of
supplier that furthermore results in a creation of receipt. The similar has been made in two copies
wherever the inventory clerks send one copy to an inventory department to file this later.
Furthermore, the next copy is provided to the account payable section, which is in a charge to

REPORT 7
make settlements of the receiving report, the dealers statement, the digital purchase orders are to
end the disagreement that can take place, and afterwards, the double procedures are managed.
Firstly, there is the update related to the system in the specific heads of both the secondary
control account payable ledger as well as inventory maintenance ledgers. In last, this is updated
copies of service. Moreover, subsequent to forgetting the material errors, this is provided to the
cash disbursement group (Soewito, et. al, 2015).
Internal control-
Mostly in this, all the sections are computerized. So the proper internal control is required be in
a place to assure constant flow through a work. In this way, various solutions may take place.
Following can be the solutions:
1. In closing time, an incorrect feed can flow over the incorrect information feeds in the
upcoming days. The controlling mechanism for all the departments are assumed to be
came in a place however the control accounts are being made for some particular ledgers.
Moreover, it is required that the control system should have proper check to decide
whether effectiveness of department has conceded as there is verification of all the
information humored by numerous sections no less than twice (Huang and Huang, 2019).
2. To make the requirement of materials for that vendor’s subsystems do not present, the
supporting ledger contains the wide-ranging data of complete possible vendor in a field
that has services as well as the cost of the production provided by them. They are
required to be maintaining the system in a manner that the cross-references are likely in a
matter of the additional requirement. In addition, the issue related to the vendor would be
resolved in a case when the errors take place in a system (Haitz, et. al, 2019).

REPORT 8
Cash disbursements system-
Cash disbursement system has a role of mediator. This system performs the significant part
between proper compensation deliveries to the next system incorporating employees and sellers
who are doing work properly and supplying goods that are provided by the vendors. The cash
disbursement system is illustrated in the flowchart as below-

REPORT 9
The flowchart states the receipts through the cash disbursement system from the purchases
system in the structure of the supplier invoice, the receiving report and the digital purchase order.
The cash disbursement system is in a charge of adequate as well as proper payment to vendors
for creating the best image of relationship. The cash disbursement system clerk would identify
the pending date of the payments from the above discussed statements, and after merging they
would manage the cheque in the vendor’s name. The check would be furthermore sent to entity’s
treasure that makes confirm this, the cheque would be provided to all vendors to make final
payment agreements. The last step of this system carries more of the accounting works wherever
there take payments to the sellers. The cash disbursement system clerk would put in the on-
system updates in cheque register, control ledger as well as account payable additional (Likofata
Esanga, et. al, 2017).
Internal control

REPORT 10
Since complete scheme, rotates around the output along with input of the cash disbursement
system clerk, the matters having faults on the clerks part would involve the output of system as
the whole. Henceforth, certain issues take place that may be resulting as below-
1. Whole system has no mechanisms for continual version to payment process- this is
not common that similar payment mechanism for all the vendors as this would adopt for
the whole life of company. There may be the changes based on safety that can be the high
level. The last approvals of making payment run the new government system for ensuring
that possible cash embezzlements are indulged in the workers of company. For
controlling the flow of system without snooping, then the outer party can be appointed
towards conducting process of audit of system on the specific period for the precise time
frequently.
2. Unconscious or conscious guidance of the account payable control ledger by system
clerks- the outcomes may be the imprecise figures booking for venders who can make
focus on the creditors of entity despite cash outflow. For securing these various controls,
the field needs being developed (Gupta and Gupta, 2017).
Payroll System
The payroll system is an end of connotation. It can say that it aims at efficiently rewarding of the
organizational means, which divert the sustainability of the entity as a sum. The system
flowchart of the payroll system at different level is discussed below-

REPORT 11
Firstly, the flowchart states the entry where it discusses in relation to the hours worked by the
workers taking entry in their time card, which would make a base of performance of entire
system (Appelbaum, et. al, 2017). The payroll clerk who would further put the inputs in the