Strategic Information System Report: Revenue and Expenditure Cycles

This report provides a comprehensive analysis of the strategic information system (SIS) for the Giant Eggplant company, a fruit and vegetable business. It begins with an introduction to the company, its current challenges, and the objectives of the report. The core of the report includes data flow diagrams (DFDs) for both the revenue and expenditure cycles, visually representing the flow of data and processes within the company. Following the DFDs, the report delves into an analysis of the physical internal control weaknesses within Giant Eggplant’s systems, categorizing the weaknesses into organizational, process, documentation, asset, management, and authorization controls. Specific examples of weaknesses are provided for both the revenue and expenditure cycles. The report then proposes descriptions of IT controls that should be in place to address the identified weaknesses, offering recommendations for improved management policies, automated systems, and enhanced security measures. The report concludes by summarizing the key findings and recommendations, emphasizing the importance of implementing the suggested controls to mitigate risks and improve overall business performance. References to the cited sources are included.

Running head: STRATEGIC INFORMATION SYSTEM
STRATEGIC INFORMATION SYSTEM
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction.................................................................................................................................2
Body............................................................................................................................................2
Data flow diagram of revenue cycle.......................................................................................2
Data flow diagram of expenditure cycle..................................................................................4
Analysis of physical internal control weaknesses in Giant Eggplant’s systems.....................4
Description of IT controls that should be in place in Giant Eggplant’s systems.....................6
Conclusion..................................................................................................................................6
References.................................................................................................................................7

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Introduction
The Giant eggplant company is established in the field of fruit and vegetables and
other dairy products in Rowvile, Victoria. Currently there are 25 employees are working there.
The employees are general manager, store manager, sales staff, store supervisor, clerk,
financial clerk, accounting clerk etc. having being the sales decline in the recent time, they
want to analysis the business process of their current functions along with the identification of
the problem domains and weakness to remove permanently. In this report the Data flow
diagram for the provided cycles in the case study has been developed. Both the cycles have
different set of functionalities for the company (Mourre, Astarita and Princen 2014). Along
with DFD, internal control problems in the company has been found and suggested with
recommendation of removing the weaknesses using some IT devices. It mainly indents to
research and examine the current scenarios of the company in order to revive the potential of
the company.
Body
Data flow diagram of revenue cycle
A data flow diagram represents the external entities, processes, and data store by
showing the flow of the data. The flow of the data is represented by the arrows and
messages for the arrows (Yuwen and Wang 2014). The below diagram of the Giant eggplant
system explains the processes of the Revenue cycle of the company. It represents the
checkout process of the customer along with the processing of staff in great detail. The
revenue cycle is consisting of five external entities along with the eight processes and
multiple data flows. Whereas the figure 2 represents the interaction and flow of data between
clerk, finance clerk, accounting clerk and supplier (Loock and Hacklin 2015). There are eight
processes and multiple data flows in the expenditure cycle of the company to represent the
back-store inventory management of the company.

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Figure 1: Revenue Cycle Data Flow Diagram of Giant Eggplant
Source: created by author

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Data flow diagram of expenditure cycle
Figure 2: Expenditure Cycle Data Flow Diagram of Giant Eggplant
Source: created by author
Analysis of physical internal control weaknesses in Giant Eggplant’s
systems
The analysis of the weaknesses in the internal control of the giant eggplant company
has been done on the basis of the details of their expenditure and revenue cycles. Both the
cycle represents the different motive, aim and aspects of the company and can be compared
as the front end and the back end of the whole business process (Chang et al. 2014). The
weaknesses identified in their current system can be categorized in different categories which

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are mentioned and described below. However, the internal control weaknesses are discussed
according each cycle.
Organizational control Weakness
In this cycle the Sales staff have been given too much responsibility and authority over
their heads. They perform almost all of the work in the revenue cycle and process the
customers’ purchase. Specifically, they are also responsible for managing the stock shelves,
billing, generating receipts etc. on other hand, the finance clerk is responsible for the
maintaining general ledger and customer receipts. In the case, of the sales staff, it can be
possible that they may cheat customers by having charging greater than the original amount
or having any conflict of interest with the customer (Ji, Lu and Qu 2017).
The custody of the stock management and refilling is handled by a single department.
The clerk is responsible for authorizing new purchases, billings, fax, phone, email, generating
check payments for the shippers etc. In controlling the company’s inventory, clerk person is
given too much of responsibility. He or she can purchase and not record something or may
purchase extra or may not inform any frozen food inside the stock due to any conflict.
Process control Weakness
The sales record and bills are maintained under drawers, which are not well organized
and sequentially. In analyzing the sales record and reviewing must be difficult in this process.
There is possibility that in the approval of the payments can go uncheck. The process of the
payment using credit card is also not secure (Su, Zhao and Zhou 2014). The purchases for
the giant eggplant have been made on the basis of the checking stock status which is a late
activity the fruit and vegetable market. The products need to be delivered fresh and stored in
an organized manner.
Documentation control
In the revenue cycle (RC), the customer cart and purchases should be ordered in a
numbering system and documented well for the computerized or better review. The cash
records are also already made in the registers and drawers which can lead to the missing or
incorrect information. On other hand in the Expenditure cycle (EC), the order details are
discussed over phone and fax which is not documented and the check payment is also
shared with the mail. This might be possible that the supplier avails the check but claims that
he has not got the mail. The purchases also do not represent the each and every transaction
between the supplier and company (Gleason, Pincus and Rego 2017).
Asset control
The clerk orders goods for the company in the EC, by ordering verbally over phone
and the asset in the form of goods have no physical accountability verbally. No proof of
purchase or any documentation is signed between the clerk representing the company or the
suppliers. Whereas, the clerk acknowledges the arrival of the shipment sent by the supplier
inappropriately (Sun 2016). The proper documentation is missing to trace the details of the
goods.
Management control
There are no written policies about management practices. On a future purpose, if
company grows in terms of sales and increased employees, then it will become difficult for

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them to learn the work management. On other hand, if the clerk resigns on some point, it will
become difficult for the company to run the expenditure cycles and that will affect the revenue
cycle also. Here, the process of the expenditure cycle has been done under ambiguity and
discrepancy (Feng et al. 2014).
Authorization control
There should be a perfect organizational chart for the company to assign designed
managers and posts for their specific type of work only (Zhou, Chen and Cheng 2016). In this
case normally the clerk and store supervisor have the authority to run the major operations of
the company.
Description of IT controls that should be in place in Giant Eggplant’s
systems
In Revenue cycle
There should be management policies for the staff members, accounts, sales
management, credit card verifications along with the receipt process. An audit should be
performed on a regular basis for the sales record and the receipts (Alles et al. 2018). The
sales record should be organized as transaction which shows the pricing for the products for
each payment. There is only one standalone PC, that can be increased for some limited
staffs along with an automated business tool. There should be identification system for the
staff that will store which staff generated the receipt for which sale. A CCTV camera should
be present in the door.
In Expenditure cycle
There should be system generated purchase bills and order lists for the stock refill
which should be possessed by both clerk and supplier. They should sign or leave a digital
signature along with the real details and specifications of the orders. The payment to the
supplier should also be done in a more secure way rather than emailing the checks
(Corcoran and Gillanders 2015). Inventory counts and status should not manage by humans
totally. A computer can manage the inventory details by maintain the outcome and the
income of the goods in the system. The shipping container or box should have any type of
bar code or QR code for verification of what is inside the box and its quantity. This type of
both way authorization will assure the guarantee of the products if they damage or go
missing.
Conclusion
The weaknesses identified in the RC and EC system are the major flaws in the duties
of the employees or the leaders in the giant eggplant company. There is no presence of any
signed document regarding the products. Purchases, shipment or payment to the suppliers. It
should focus on the documentation part or the process overall by enhancing the use of
modern-day technologies to work. Duty’s segregation in appropriate manner should be
implanted along with the policies in the company. It will help in minimizing the possibility of
the fraud, employee theft, purchases accountability along with other positive changes.

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References
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Feng, M., Li, C., McVay, S.E. and Skaife, H., 2014. Does ineffective internal control over
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controls and last chance earnings management. The Journal of the American Taxation
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