Accounting Information System Case Study: Adam & Co. Analysis Report

This case study examines the accounting information system of Adam & Co., a company based in Perth that sources goods and services from various international locations. The report delves into the purchase system, presenting a flowchart to illustrate the flow of goods, invoices, and payments. It emphasizes internal controls within the purchase system to mitigate risks and ensure accuracy. The cash disbursement system is then analyzed, with a flowchart depicting the process of payments to vendors, highlighting the importance of internal controls to prevent errors and fraud. Finally, the payroll system is explored, including a flowchart that visualizes the process from time tracking to employee payment, with a focus on internal controls to safeguard against inaccuracies and fraudulent activities. The report concludes by summarizing the key findings and recommendations for improving the overall accounting information system of Adam & Co. and provides references to the sources used.

Running Head: ACCOUNTING INFORMATION SYSTEM
Accounting Information System
Name of the Student:
Name of the University:

ACCOUNTING INFORMATION SYSTEM
Table of contents
Introduction......................................................................................................................................3
Purchase System..............................................................................................................................3
The flow chart..............................................................................................................................3
Internal control.............................................................................................................................6
Cash disbursements system.............................................................................................................7
The flowchart...............................................................................................................................7
Internal control.............................................................................................................................9
Payroll System.................................................................................................................................9
The flowchart...............................................................................................................................9
Internal control...........................................................................................................................12
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

ACCOUNTING INFORMATION SYSTEM
Introduction
In the modern technology, every industry or a firm should adopt the accounting
information system for a secured data and valid information processing. The accounting and
monetary information data on any organization should have complete and relevant information.
The system helps to generate the financial data and provide the information to different lenders,
potential investors and creditors. The accounting information system will help many
subordinates and executives in making an agreement for a better results and instant performance.
The report highlights the organization named Adam and Co. the industry deals with the
supply of goods and services form Perth. They purchase the related material and resources from
places like China, Thailand, and Vietnam and choose a reliable mode of transportation. The
report covers the accounting theories and cycle illustrated with the help of a flow chart. The
cycle includes cash allotment, payroll system and different purchases.
Purchase System
The flow chart
The purchase system is organized and highlighted for Adam and Co. The system deals
with the organization total amount form the selling and other resources. The flow chart of the
purchase system is illustrated below for the organization.

ACCOUNTING INFORMATION SYSTEM

ACCOUNTING INFORMATION SYSTEM
The above-illustrated flow chart is vital to identify the different purchases and even manage the
purchase system of an organization. The flow chart also indicates in determining the different
processes and assumptions from the system. The most important and the first factor of the
purchase system is an inventory, which helps to boost the system and refine it. The purchase
system department manages the inventory receipts and identifies if there are any shortfall of

ACCOUNTING INFORMATION SYSTEM
inventory. The department if examines and detect that the inventory is mismatched they quickly
find an option to locate and reorder it (Berlinger et al., 2018). The flowchart indicates the
infiltration of different purchase system that includes the invoices and packaging tags and billing
slips.
The second step of the flow chart indicates the merchandise that needs an investigation; hence,
the good receivable and delivery department identifies and manages the invoices from the
dealers, packaging, and delivery of the product. The process of the report is classified into two
copies; the first copy of the report is dispatched to the department of inventory and handlings for
later filings. The other copy is sent to the accounting department for a better examination and
analyzing the delivery report. The purchase of goods from the dealer “proof of purchase and
order sometimes might lead to some errors. The definite approach can be done with the up-
gradation of the system and manage the ledger management of inventory and accounting ledger
system. Finally, after all the omitting procedures are done, a copy of the report is sent to the team
dealing with the cash and expenditures (Choo and Lee 2016).
Internal control
The internal control and its internal system is an important component of the purchase system
for an organization. The system is well programmed and requires and efficient management, the
system will determine the workflow and measures of the overall system. In the future, the system
might face many threats and weakness and possible resolutions are included below:
1. The subsystem and its functionaries of wholesale cannot be at regular intervals in the
future generations for different demands and supplies. The definite system is required for
proper maintenance of ledger and its support system that includes all the information
related to vendors. The information includes the total cost and well offered by the
wholesaler to the company. However, if there is any mismatching and unreliable
information about the vendor the system helps to resolve the issue (Herrera et al., 2016).
2. There might be inaccurate information and defective billings in future shortcomings. The
department shall function properly and should be organized to maintain the ledgers for
different vendors. The internal control system inquires about the department's functioning

ACCOUNTING INFORMATION SYSTEM
and its operations. This will help to further manage and control the system efficiently,
and provide useful information for possible supplies (Mahajan et al., 2015).
Cash disbursements system
The flowchart
The cash disbursement system in an organization helps in disbursement for both the vendors and
the system that consolidate the working employees. The system also provides good reporting
information for cash disbursements and acts as a representative for the employees working on the
merchandise delivery. The following Cash disbursements are illustrated with the help of a chart
below:

ACCOUNTING INFORMATION SYSTEM
The different receipts and format are considered on the purchase order, the invoice of the dealers
and the final delivery of the report is the main agenda of the cash disbursement system. The
purchase system, different receiving reports, and purchase orders in the form of a digital report.
The good relationship among the vendors, are managed by the system and intensifies the timely
disbursements. The internal system identifies the due date of cash disbursements from different
invoices and billing procedures after it is done the cheque is prepared for the vendor (Mahajan et
al., 2015).
The complete disbursement of the cheque is sent and should be attested by the
organization treasurer. The payment procedures for the vendor are completed, then the overall
accounting workforce will increase more and that would be the final and last step for the cash
disbursement system. The accounting system, therefore, updates the accounts payable, different
subordinates ledger and other registering methods of cheque in the system. After, this process the
production continues and filings should be considered with the last invoices, cheques, the copy
of goods purchased and the delivery report from the vendor that was issued in his/her name
(Komala 2017).
Internal control
The overall output of the organization comprises the cash disbursement, which deals with the
input and output of the controlled system clerk. In the future, much defective information and

ACCOUNTING INFORMATION SYSTEM
inaccuracy might be faced by the organization. The possible threats and its resolution are as
follows:
1. The internal system of an organization sometimes might publish inaccurate information
and the mismatch of accounting ledgers for the vendor. This will result in the vendor to
be still in the books of the creditor in an organization even if there is cash outflow.
However, internal control must facilitate and perform the functions of a proper
accounting ledger for the vendors. The functions include the up-gradation of the system
and authorized controls, as well as to update the copy in the system (Libby 2017).
2. There are no different adjustments and payment system enabled for all the possible
vendors. The accounting process and cycle in the system enables the similar payment
process for all the vendors. This might result in inaccurate filings and amount on the
vendor books, to rectify the possible issues a proper up to date system and security are
the most important structure in the cash disbursement system. The company should enact
the legal term and regulations, policies and procedures of government. The management
can hire accounting professionals for a better system flow in the company. This will
enable the proper auditing and filings in the company for business purposes (Pendergrass
et al., 2013).
Payroll System
The flowchart
The payroll system is the final accounting information for an organization. The main goals and
objectives set by the organization in the payroll system are to reward the resources of an
organization and consider in the proper maintenance of an organization. The flow chart is
illustrated below to understand the system better.

ACCOUNTING INFORMATION SYSTEM

ACCOUNTING INFORMATION SYSTEM
The flowchart includes all the important system, the foremost important structure in the system
is the employees' work time and dedicated hours. This includes the time of the employees in the
workplace and the login hours denoted by them. The system indicates and records the databases
of the employee information and time card in the individual databases of an employee in the
system. The system helps to confirm and input the information digitally in their system, at the
time of the payment for employees the system creates a payroll cheque for each individual
employee. The different administrators and departments are however responsible for the proper
functioning of the system. The major responsibility also includes the maintenance of a timecard
where the payroll cheque is generated (Mukherjee 2017).
The final and the last level of payroll system include the proper maintenance and
checklist for the registered employees in the organization to maintain the records of attendance.
The system clerk also transmits the data to the amounts payable system. This will enable the
system to provide expenditure receipts and processes in the organization. The system also
provides detailed registration for every individual in the organization. The system clerk also
plays an important role in updating the system, payroll benefits and preparing the receipts for
each employee in the organization (Prasad et al., 2015).
Internal control
The overall flowchart of the particular department depends on the payment system of
employees in the organization. The payroll system is the only sub-system that exceeds the
internal control as compared to other subsystems. However, still there may be many threats and
responsibilities to be maintained in the payroll system for the future and are as follows:
1. The employees in the organization might be from different backgrounds and category
working on the same project at a particular time. If the payroll system for both the party
is organized in the same way, it leads to major misstatements of individuals on the
payroll system. The overall department of accounting might be affected, so the system
should make different payroll for every individual in the organization (Ismail et al.,
2014).
2. In most of the cases, the individual of an organization might punch in the inaccurate login
hours, therefore the system records an indefinite working hour and might affect the
payroll system. The organization needs to adopt biometric installments and proper login

ACCOUNTING INFORMATION SYSTEM
hours to maintain the attendance and log in hours of the employees. The system,
therefore, records the individual’s login time in the working hours and provides the
accounts payable data the correct information (AL et al., 2013).
3. The organization’s payroll system is the final part of the accounting information system
and hence it needs to be managed properly. The maintenance and in time up-gradation of
the system provides an efficient workflow in the organization. The higher level of
management and relevant department needs to check the proper functioning of the system
and recording the proper data. If there is any change required in the system the collective
department of the payroll system managing, the accounts, and monetary measures shall
do it. The more definite approach and responsibility enable a proper payroll system in an
organization to work efficiently (Caldwell 2013).