Platinum Industries: Special Order System Analysis and Improvement

This report provides an analysis of Platinum Industries' special order system, focusing on its functionalities and associated issues. The company, which handles special orders ranging from $10,000 to $100,000, has invested significantly in information technology. The report examines the current system, including the purchasing, receiving, and payment processes, highlighting weaknesses in internal controls such as verbal order confirmations, inconsistent accounting procedures, and a lack of segregation of duties. The analysis explores the impact of these weaknesses on the company's operations and recommends improvements, including implementing electronic forms, electronic fund transfers, and IT experts to enhance the system's efficiency and accuracy. The report emphasizes the importance of IT controls and management information systems to optimize the special ordering system and ensure long-term growth.

2017

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By student name
Professor
University
Date: April 30 , 2018.
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Executive Summary
In this assignment the special-order system of Platinum Industries would be discussed with respect to
the how the system works and what are the associated issues in the system. In the recent days we have
seen that there has been large scale development in the total amount that the companies are spending
on information technology and this is because it has change the entire system on how the companies
use to function in previous times. There has been so much advancement which was not present
previously. All these and other different aspect with respect to the special ordering system would be
discussed.
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Contents
Question 1…………………………………………………………………........................................................4
Question 2…………………………………………………………………………………………………………………….….4
Question 3…………………………………………………………………………………………………………………….….8
Refrences.....……………………………………………………………...........................................................11
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1.The platinum industries deal with special ordering system under which they place orders for specific
products within the range of $10000 to $100,000 and the company has spent total $13billion on the
overall front. The payments are divided into two range less than $10,000 and more than $10,000 and
accordingly the same is made. There is different accounting system that the company is following for
each kind of payment made by them, the overall assignment is based on the analysis of the given system
of the company and making a recommendation on how the management can improve the same in the
long run.
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Special Purpose
Ordering
system
Purchasing Department
Takes the order through form
Places the order to the supplier
The Receiving
department.
It will accept the order
Send it to the delivery
centre psot stamping
The accounts payable team
tie the order received with
the open orders, and debits
the equipment account.

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3.
Internal Control Analysis Analysis of the Internal control of the company is
very important as it provides an insight on how
the management is functioning and whether they
are doing their duties effectively or not. It is very
important that companies should have strong
internal controls in place if they want to succeed
(Maynard, 2017). In the given case of Platinum
Industry with regards to the special ordering
system there are certain elements of internal
control weakness that cannot be ignored like –
Most of the orders that are received by the
company are through telephones and they are
verbal orders. So, there is no basis on which the
company can cross check the same in the future.
So, to make sure that the internal controls of the
company are strong enough, the management
can go for such methods that provides better
documentation for all the process in the system.
This will help in providing for the audit trail in the
future. Thus, instead of verbal order confirmation
the company should have a more dignified and
processed way to filter the orders, process them
and deliver them to the clients. It will help in
ascertaining that there is no falsification of the
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The treasurer and the cashier will
make the payment.

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accounts (Dichev, 2017).
One of the other major weakness in the accounts
of the company is that the books of the company
are not properly maintained. There is no
consistency in the procedures followed by the
company to edit its accounts and present its
financials. One thing that can be seen is that the
books of the company are debited before the
payment is done, so what if there is a default in
the future, it will destroy the overall flow of
financials of the company and render it false. So,
to change it the company needs to maintain its
accounts in a clear-cut way there are no advance
entries.
Another important change that the company
needs to do is with its payment system where
half of the payments are authorized by cashier
and the same are done through cheques, the
company needs to incorporate a more secured
mode of payment so that in future there are very
less chances that the employees would be able to
falsify the accounts and it would also lead to
more transparency and clarity in the overall
system for the company and its managements.
Thus, more secured payment modes are needed.
Another weakness is that there is no proper
segregation of duties between the employees of
the company. So, one employee is getting a lot of
power with which they can misuse the funds of
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the company and cause a lot of issues, hence the
aim should be that proper segregation of duties
and power between the employees are there and
also effective supervision should be there so that
in future the company does not have to suffer. In
any case if it is seen that the employees are
falsifying the accounts they should be penalized.
So proper allocation of power is very important
between the various departments of the
company (Alsagoff, 2010).
1. Effect of Internal Control Weakness on
the functioning of the company.
Weakness in the internal controls of the company
can lead to a lot of issues like –
 There would be a lot of loss for the
company if it is not able to manage its
accounts in a proper way.
 There would be issues with regards to
the flow of information from one
department to another and that would
cause disruption to the business.
 The company might suffer in the long run
because there will not be a proper
stability for the company given the fact
that its sources of income are less.
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 The company needs to ensure that
effective internal controls are in place so
that they can manage the company in the
long run (Chron, 2017).
2. Conclusion and Recommendations
 Proper controls to be incorporated
It is important that the management should think
about incorporating proper internal control
system in the company. It is very important that
timely audit of the system must be done by the
company, also it is important that help from
experts must be taken as and when required so
that in future the company does not have to
struggle owing to poor internal controls. The
most important thing would be that the
management of the company should keep the
system upgraded and keep a check on it in all
ways possible (Alexander, 2016).
3. IT Controls Having efficient IT controls are very important for
the long-term growth and development of the
company. Development in information
technology has led to wide scale development in
this field and many companies are incorporating
them in the system to ensure that the system is
free from all kind of errors possible. IT helps in
making the system fast and saves a lot of time. It
would help in increasing the overall efficiency of
the system and that would help in increasing the
productivity of the system. If we see closely then
we can see that there are many manual works
that have now been automated and that has
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helped the companies in scaling their revenues a
lot. There are ways in which the Platinum
industries can incorporate their IT practices in
their system-
Electronic Forms – In place of verbal forms the
companies can go for electronic forms, this would
help in keeping a trail on the total amount of
order received by the company and thus would
help the auditors too. These purchase forms
should be matched with the supplies made by the
company and then that can be tied to the
payment made. So, we would have proper proof
with us that we can follow for ascertaining that
there is no loophole in the system and this would
also help in saving money.
Electronic Fund Transfer – Another most
appropriate method that the company can follow
is that they can use other method payment apart
from cash and cheques. This would help in
keeping the company secured in money terms.
Like here we see that all payments that are made
less than $10,000 are authorized by the cashier
and the payment is made through cheques,
hence the aim should be to change this and
follow electronic fund transfer in which proper
trail would be available for the company and will
help in auditing the accounts of the company
(Ghofiqi, 2018).
Another important change that the company can
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make in its present system is that they can
introduce IT experts that can help in designing
the overall domain for the company and that
would be beneficial for the company in a way
that they make sure of software application for
these special-order systems. All this would help
the management of the company and would also
help the customers in striking a relationship with
the company and make it easy for them that they
can order their products through applications and
thus there will be low errors (Abdullah & Said,
2017).
The management can also make use of MIS that
is known as the management Information
System, which would help the management of
the company to supervise all the activities of the
company and give better results in the end. All
these would help in making the entire system of
special ordering system fast and error free.
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References
Abdullah, W., & Said, R. (2017). Religious, Educational Background and Corporate Crime Tolerance by
Accounting Professionals. State-of-the-Art Theories and Empirical Evidence, 129-149.
Alexander, F. (2016). The Changing Face of Accountability. The Journal of Higher Education, 71(4), 411-
431.
Alsagoff, N. (2010). Microsoft Excel as a tool for digital forensic accounting.
Dichev, I. (2017). On the conceptual foundations of financial reporting. Accounting and Business
Research, 47(6), 617-632.
Maynard, J. (2017). Financial accounting reporting and analysis (second ed.). United Kingdom: Oxford
University Press.
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