Case Study Analysis: Adam & Co. Accounting Information System - HA2042

This case study analyzes the accounting information system of Adam & Co., focusing on its inventory management and cost management systems. The assignment provides flowcharts for the purchase, cash disbursement, and payroll systems, illustrating the processes within the company. It also identifies and discusses potential internal control weaknesses within these systems, such as inefficiencies in the management system and security risks within the payroll system. The analysis emphasizes the importance of strategic approaches and the need for constant monitoring and improvement in the expenditure cycle, including the implementation of machine learning tools for detecting potential threats. The study also highlights the role of supervisors in the payroll system and the need for automation to enhance business efficiency.

Running head: ACCOUNTING INFORMATION SYSTEM
ACCOUNTING INFORMATION SYSTEM
Name of the student:
Name of the university:
Author Note:

ACCOUNTING INFORMATION SYSTEM 1
Table of Contents
Introduction................................................................................................................................3
Discussions.................................................................................................................................3
Flowchart of the purchase system..........................................................................................3
Flowchart of Cash disbursement system................................................................................5
Flowchart of payroll system...................................................................................................6
Estimation of the Internal Control Weakness........................................................................7
Conclusion..................................................................................................................................9
References................................................................................................................................10

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Executive Summary
The current topic is concentrating on the flow chart of the entity along with the purchase
department, cash disbursement system and the payroll system of the entity. It is actually
important for the entity to identify the internal control weakness in the flow chart system and
also the various aspects which are associated with it are further taken into consideration in the
conducted study. Along with that the detailed analysis of the entity is performed and further
the loopholes or rather the weakness in the system has also been highlighted in this conducted
assignment.

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Introduction
The assignment actually deals with the chosen company, which is the Adam & Co.
and the inventory management system of the company, where the goods on the other hand are
manufactured in the locations of China, Vietnam and Thailand. The cost management system
of the company actually includes the four discussed parameters which are the purchase
system, cash disbursement system and payroll system are the most significant parameters
which must be taken into consideration along with the flow chart of the company which is
depicted accordingly.
Discussions
Flowchart of the purchase system
The flowchart of the purchase department of the company have been shown bellow:
(Inventory control management receives the
Invoices from the purchase department)
Inventory ledger
Check
Inspects Purchase
Order
Checks and update
inventory
Accounts Payable Clerk
Updates transaction related to
the inventory control
Purchase Department Receiving Department
Unchecked
Vendor prepares digital
purchase order

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The flowchart of the purchasing department have been prepared based on the some of
the business parameters along with the other aspects which are actually associated with it.
The entire process of the purchase department regarding managing the inventory system of
the company is shown in the above flow chart diagram. The inventory system is managed
based on the inventory level of the company along and certain business movements along
with it impacted at the same time in the business of the company. The purchase department of
the company takes care of the entire process in the flow of the company.
Then the important role is actually played by the receiving department where the
receiving department of the vendor actually inspects the digital purchase orders (Gelinas et
al. 2017). Then it becomes the responsibility of the clerk to understand the inventory
management and to update it at the same time. At the time of payment it is quite the
responsibility of the department to manage the invoices in the system of the entity. The
accounts payable clerk actually manages the main facets of the business along with the other
factors associated with it. The accounting related transactions of the business are taken into
consideration by the top level management of the company and related step[s are further
taken in order to rectify the same. The overall upgrade in that case is actually needed in order
to enhance the financial condition of the entity. Then the invoices related to the inventory
management control is send to the purchase department (Kieso, Weygandt and Warfield
2019). The strategic approach in that case are taken by the bopard of directors of the
company along with the steps to rectify the same. Each transaction in the business is
effectively managed by the inventory control management of the entity along with the
various aspects which are associated with it.

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Flowchart of Cash disbursement system
(Invoice file is sent to the receiving
Department)
The above flowchart diagram is shown regarding the cash disbursement system of the
company where the invoices in that case are filed by the company and updated accordingly.
The cash disbursement system of the entity is completely depended on the financial records
where the main operation in that case is played by the internal control system of the
company. The resultant effect of the cash disbursement is related to the outflow of cash from
the business where the management system of the company needs to adopt the significant
business strategies. At the time of settlement of the money is made accordingly when the
vendor sends the invoice files in the business as the disbursement if cash takes place (Hoque
2018). The details of the receipts in that case must be upgraded along with the transaction
which are actually involved with it. Then the receiving clerk files the invoices which includes
the other documents related to such invoices of the entity. The disbursement of the cash is
Checks and send it to
the vendor
Cheque receipts is upgraded
Receiving clerk then files the invoices
Cash Disbursement System
Check Uncheck

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then prepared and further the purchase order copy along with the receiving report is send to
the purchase department from whim the material is obtained (Smith 2017). After the
disbursement of the cash, it is quite important for the entity to keep the relevant records and
verify the relevant transaction which took place in the business along with the impact of it in
the organization.
Flowchart of payroll system
(Accounts payable department)
(effect of time card adjusted to
the department)
The above flowchart of the payroll system is shown which actually takes place within
the organization of the company along with the other transaction associated with it (Gordon
2018). The payable department of the company actually manages the entire business
transaction along with the payment which is made to the employees of the companies. The
payroll system actually includes the significant elements which are the inputs, time card data,
print of the hard copies, payroll register, and the digital employee records which are actually
needed to be considered by the board of directors of the company. The company on the other
hand must review the time card and upgrade regarding the same are needed to be made
Payroll Clerk inputs the
time card data
Time card is checked and
updated
Employee pay cheques are
send to the supervisors
Payroll System
Check Uncheck

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accordingly (Maskell, Baggaley and Grasso 2017). At the end the pay checks on the other
hand are sent to the supervisors of the company along with the potential information which
are associated with it. The payroll system of the company is then sent the files to the upper
level management of the company for further update of the same.
Estimation of the Internal Control Weakness
The weakness in the internal control system of the company is actually related to the
inefficiency in the management system of the company. The fluctuation in the management
system of the company also needed to be taken into consideration by the management system
along with the other parameters which are involved in that case (Hoyle, Schaefer and
Doupnik 2015). The potential glitches and threat in the system must be taken care of by
internal management of the entity and accordingly the significant steps are needed to be
taken. There are threats regarding the security related risk in the business and tit is the
responsibility of the management heads to mitigate the risk in the business.
The clusters of the payroll system of the company is not effective enough to mitigate
the potential risks and threats involved in that case. Security plays a significant role in the
business of the entity as it also ensures the effectiveness in the business operation, which is
actually conducted within the entity. If the head of the management manages the system or
rather it is needed to upgrade the entire system of the payroll department then certain steps in
that case are needed to be taken. Based on the presentation of the flowcharts in case of every
system which are the purchase department, cash disbursement and payroll system of the
entity (Kranacher and Riley 2019). The functions of each and every departments are different
along with that it is the duty of the upper level management of the entity to decentralize the
entire system. The record of each and every system must be taken care of by the management
and further responsibilities in that case are embedded on the departmental head of the
business.

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In case of internal weakness within the system it is needed by the entity to understand
the facts, which are associated with the potential business loopholes, and to solve it with the
help of the critical analytical approach which must be adopted by the entity. The internal
control in the expenditure cycle must be optimized in an interval basis and accordingly the
top-level management of the entity must take the decisions (Laudon and Laudon 2016). The
facts and figures must be considered by the company at time of evaluating the potential
business facets The relevant tools and techniques in that case are needed by the entity in order
to understand or rather calibrate the facts and figures associated with the potential facets of
the business. The various kinds of the internal weakness of risk, which are associated with the
entity, are the technical, operational, administrative and architectural control regarding the
weakness of the entity (Libby 2017).
The parameters of the risk management must be taken into consideration along with
that the changes in the system of the company must be made accordingly. On the other hand
actually supports the relevant facts associated with the entity along with the various business
impact of the entity based on the objectives of the firm. The current flow regarding the
expenditure cycle, which is adopted by the entity, are taken care of by the management
system which is quite perfect (Schaltegger and Burritt 2017). The reason behind that is the
entity maintains the flow in the system of the entity as it is producing a positive impact in the
business of the entity based on the long run objectives. The another significant facets is that
the organization needs to constantly monitor the expenditure control and implementation of
the machine learning tools will further help the management to detect the malware and the
ransom ware in the system (Kaplan and Atkinson 2015). In case of any potential changes,
which must further be taken care of by the management, system of the company and the
potential weakness in the system must be altered. The policies and strategies regarding the

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expenditure cycle of the company must be made adopted by the company with the systematic
approach associated with it.
In case of the expenditure cycle of the entity it is actually needed by the entity to
secure the transaction related data so that the security realted facts of the company can be
taken into consideration. The payroll system of the entity includes the payment structure
which must be revised by the company and the supervisors in that case plays the significant
business role (Lara, Osma and Penalva 2016). In case of any manipulation within the system
of the entity it is quite important for the supervisors of the entity to report it to the top level
management of the entity along with the other business parameters which are associated in
that case. The internal control system of the entity must be automated so that the entity will
be able to enhance the efficiency of the business based on the long-term approach of the
entity. At the time of audit of the entity it is quite needed by the entity to adopt the strategies
in the system so that the business of the entity is free from the material misstatement or
frauds which actually takes place in the business (Prasad and Green 2015).
Conclusion
From the above discussion it can be concluded that the flowchart of the Adam and Co.
has been prepared and the potential risk along with threats in the business of the company
must be identified by the company. The data of the company must be updated at the time
along with the other factors which are associated in the business of the company. Based on
the criticality of the analysis it is quite noticeable that the preparation of the flowchart will
help the management system of the entity to get into the right track in the business. The
implementation in the operations of the entity will further help the business to accomplish the
main objectives. On the other hand the internal control weakness of the entity have been

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highlighted which is less and further changes regarding the same have highlighted in the
conducted study.
References
Duska, R.F., Duska, B.S. and Kury, K.W., 2018. Accounting ethics. Wiley-Blackwell.
Gelinas, U.J., Dull, R.B., Wheeler, P. and Hill, M.C., 2017. Accounting Information Systems.
Cengage Learning.
Gordon, S., 2018. Technology Advancement Influence in Accounting and Information
System Fields.
Hoque, Z., 2018. Methodological issues in accounting research. Spiramus Press Ltd.
Hoyle, J.B., Schaefer, T. and Doupnik, T., 2015. Advanced accounting. McGraw Hill.
Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.
Kieso, D.E., Weygandt, J.J. and Warfield, T.D., 2019. Intermediate accounting. John Wiley
& Sons.
Kieso, D.E., Weygandt, J.J. and Warfield, T.D., 2019. Intermediate accounting. John Wiley
& Sons.
Kranacher, M.J. and Riley, R., 2019. Forensic accounting and fraud examination. John Wiley
& Sons.

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Lara, J.M.G., Osma, B.G. and Penalva, F., 2016. Accounting conservatism and firm
investment efficiency. Journal of Accounting and Economics, 61(1), pp.221-238.
Laudon, K.C. and Laudon, J.P., 2016. Management information system. Pearson Education
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Libby, R., 2017. Accounting and human information processing. In The Routledge
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for measuring and managing the lean enterprise. Productivity Press.
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Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting: issues,
concepts and practice. Routledge.
Smith, M., 2017. Research methods in accounting. Sage.