ACC539 Report: Laurel Pty Ltd - Expenditure, Inventory and BI Analysis

This business report, prepared for Laurel Pty Ltd's CEO, addresses concerns regarding inventory management and expenditure processes. The report identifies internal control weaknesses within the company's inventory and expenditure cycles, detailing their potential impacts, such as unreliable financial records, fraud, and increased costs. It suggests specific, practical internal controls to mitigate these weaknesses, including segregation of duties, pre-numbered invoices, independent payment authorization, staff rotation, and inventory record-keeping. Furthermore, the report explores the benefits of implementing Business Intelligence (BI) and digital dashboards. It explains how BI can aid in decision-making, improve manufacturing processes, and provide real-time insights into the supply chain, ultimately supporting strategic planning and cost optimization. The report emphasizes the importance of data-driven decision-making for Laurel Pty Ltd's future growth and competitiveness.

Running Head: Business Report
BUSINESS REPORT
Student Name
Institution Affiliation
Instructor’s Name
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Question 1
Internal Control Weakness Impact of the Weakness Control to mitigate the
Weakness
Potential errors and
irregularities in the purchase
circle. It has clearly been
noted that sometimes
purchase orders (PO) remain
outstanding for more than 2
weeks due to errors
committed by the staff in the
purchasing department.
This weakness can create
unreliable records since they
do not indicate the true state
of liabilities owing to the
firm. This can make the firm
incur huge losses as payments
may be done for goods and
services never received.
The firm should employ
adequate staff and segregate
their duties such that each
clerk has specified duties
which they exercise only up
to a specified limit. This will
reduce the outstanding
purchase orders (PO)
significantly as errors
committed at a particular
stage can easily be identified
by the next clerk in the next
stage.
Invoicing errors. Sales
invoice may not be recorded
completely or recorded
incorrectly by the accounts
payable clerk.
Creditors and debtors
misstatements either
overstatement or
understatement can result in
the organization incurring
huge losses. This is because
The firm should adopt the use
of pre-numbered sales
invoices and they should be
issued sequentially. There
should proper maintenance of
journals. All invoices should

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debtors may pay less or
creditors may be overpaid.
Increased disputes with either
suppliers or debtors due to
errors waste resources in their
follow-up.
be scrutinized independently
before being authorized.
Making payments without
proper documentation and
authorization.
This results in payment of
goods not received or
overstatement of payments to
be made and expenses. In the
case of Laurel Pty Ltd, the
accounts payable clerk, who
on daily routine would
prepare invoices, would also
authorize payments in the
event the accounts payable
manager is on leave. It is
possible to commit fraud and
errors during this period
because the same person
preparing invoices, is the
same who authorizes
payments. Thus chances to
The firm must make it a
compulsory requirement that
before any payment is
effected, all invoices must be
originals and must be
supported with proper and
complete documentation. And
upon effecting payments, all
documents associated with
the payments must clearly be
marked to prevent them being
represented for payments
again.
The firm should also ensure
that payments authorizing
duties are done a separate
independent person other than

Business Report
unearthing an error
committed in preparation of
invoice are very minimal.
the one preparing payment
invoices. This would not only
minimize errors and fraud but
also promote accountability
within the firm.
There is the risk of collusion
between staff and suppliers
especially those in the
purchasing department.
In the case of Laurel Pty Ltd,
the staff in the purchasing
department would contract a
supplier who has been
contracted before regardless
of the prices they charge.
This can plunge the company
into huge losses in that they
may be supplied at high costs
than their peers in the
industry.
The company should make
policies governing the
rotation of staff. Staff should
not stay at one point in a
department for so long. This
will prevent any risks of
intentional collusion between
the staff and suppliers to
defraud the company.
There should also be an
independent committee
tasked with reviewing the
suppliers to be engaged so
that the company can engage
those that are cost-effective.
By this way, the company
will mitigate losses arising

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from direct tendering.
There is no proper accounting
record-keeping of inventories
leaving or entering the
warehouse. Moreover, there
are no security measures to
safeguard goods from theft
and pilferage.
With the absence of proper
bookkeeping of all
inventories entering or
leaving the warehouse, it is
difficult to ascertain if all
goods are accounted for. This
way, the company may suffer
huge losses due to loopholes
existing for theft and
pilferage of inventory.
The company should put in
place a record-keeping
mechanism of all goods
entering and leaving the
warehouse so that all the
goods are well accounted for.
The company should also
exercise physical controls on
who is authorized to enter the
warehouse. This way will
prevent authorized access that
may tamper or steal goods.
This can be done by hiring
security guards.
Question 2
2. a) Business Intelligence (BI) is a technology that employs data analysis techniques to present
actionable and relevant information to be used by business executives, end-users and other
corporate stakeholders in making informed business decisions. This technique makes use of
various tools and methodologies to collect data in an organization, from both internal and
external sources, carry out rigorous analysis and prepare reports of findings as well as

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recommend for viable actionable decisions to be taken by the interested stakeholders (Layoff and
Berry, 2011). This technique is often employed by firms to make business decisions regarding
productivity, revenue maximization, cost reduction as well as strategic planning. Therefore BI is
essential especially in a dynamic business environment we have today which calls for quick
actions over a short period of time.
BI makes use of digital dashboards which is a tool or electronic interface that aggregates and
displays real-time information from multiple sources. It keeps track of all business processes
being undertaken at a particular time. It allows all users to understand the analytics that is of
much interest to them by providing an objective view performance metrics. This helps them
monitor how their business is faring.
2b) I) In the case of Laurel Pty Ltd, BI will be of great benefit in terms of decision making at the
management level. BI employs data mining techniques to collect information both internally and
externally and critically analyze them and give various recommended actions to be taken in form
of decisions (Munoz, 2017). This technique takes into consideration all aspects and even all
consequences associated with siding a particular decision. It is therefore ideal for a company like
Laurel Pty Ltd to employ this technique so as to monitor trends in the car manufacturing
industry. This will help them in formulating their marketing strategies as well as resource
allocation in terms of what parts to manufacture as well as their respective quantities.
Therefore in employing this technique, the CEO of Laurel Pty Ltd would have an easier time
taking a particular decision owing that in a dynamic business environment, there are multiple
alternatives to take. Traditionally, this often takes time to evaluate which alternative to side with
since it relies on the executives’ intuitive understanding of the matter at hand (Julian, 2010).
Decisions made also may not be ideal as little information may have been taken into

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consideration. However with the emergence of Business Intelligence, decisions are taken after
concrete analysis has been undertaken. It, therefore, reduces bias and misinterpretation of
information. The CEO will also observe how business is faring on day to day basis. Abnormal
behavior such as abrupt increment in costs that will be flagged in the digital dashboard and the
possible drivers of such behavior will be indicated.
2B II) According to Munoz, (2017), business intelligence is of great benefit in the manufacturing
process in that it provides insights on information pertaining manufacturing. Over the years,
manufacturing has become complex in terms of changing technology. Therefore with BI, the
business executives can be able to monitor manufacturing process from their offices. BI will
indicate if the manufacturing capacity of the firm is being utilized and if not, it will indicate the
deficit quantities. BI, therefore, will aid in synchronizing the manufacturing processes with the
ever-changing customer needs. BI can also provide real-time observations and analysis of supply
chain (Koch, Baars, Lasi, and Kemper, 2010). The firm will be in a position to observe the ever-
changing market trends and employ the necessary resources into the manufacturing process. The
business executives will also be in a position to monitor buffer stock available to them and the
projected market needs in the coming days. This will in a great extent help in strategizing for
future supply.
In conclusion, Business Intelligence has revolutionized the entire corporate world in terms of
data collection, data analysis, and decision making. Decision-making process has been greatly
reduced and for every decision taken, it is backed with an elaborate data analysis and thus the
probability of making uninformed decision is very minimal. Therefore this technique is ideal for
a company like Laurel Pty Ltd which manages and monitor most of her manufacturing processes

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from another location in ensuring that they make right decisions at any given time and optimize
their manufacturing capacity to reduce unnecessary costs.

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Reference List
Gordon S. Linoff and Michael J. A. Berry, (2011). Data Mining Techniques: for Marketing,
Sales and Customer Relationship Management. Third Edition, Wiley Publishing.
Julian, Taylor (2010). Business Intelligence implementation according to customer needs. APRO
Software. Retrieved 16 May 2016.
M.T Koch, H . Baars, H. Lasi and H.G Kemper,(2010). Manufacturing Execution Systems and
Business Intelligence for Production Environment.
Munoz, JM. ( 2017). Global Business Intelligence. Routledge, UK
Peter Rusch, Alaa Sheta, Aladdin Ayesh, (2013). Business Intelligence and Performance
Management. Springer Verlag, UK.