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Accounting Information System

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Executive Summary
This study is imparted in context to an accounting information system. This particular study is
about Adam & Co which is a wholesaler in context to industrial supplies. The company sources
its inventories in regard to the manufactures Thailand, Vietnam, and China. This report will
entail to comprehend the System flowchart in context to purchases system, payroll system, and
cash disbursement system. Further, the study will find out the weakness that re-associated in
context to these attributes.

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Table of Contents
Introduction ................................................................................................................................ 4

System flowchart in context to purchases system ..................................................................... 4

System flowchart in context to cash disbursements system ...................................................... 5

System flowchart in context to payroll system .......................................................................... 6

Internal control weakness in each system and associated risks ................................................. 7

Conclusion ............................................................................................................................... 10

References ................................................................................................................................ 11

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Introduction
Accounting information system is generally termed as a system that is significant for
accounting of the financial data and storing and processing it. To entail a business in effective
terms it is of innate importance that the organization subjects to an efficient accounting
information system. There are various technological developments that are used in today’s time
to enhance the business and to ensure effective performance. Businesses today use advanced
software that covers important aspects of the business and automates the important tasks to
perform (Collier, 2015). These features include centralized accounting, transaction cycle
management, expense cycle, and user access. This study is imparted to evaluate the risks,
processes and internal controls in context to its expenditure cycle of the Adam & Co. Adam &
Co is a wholesaler of the industrial supplies which sources its inventories in regard to the
manufactures Thailand, Vietnam and China. The accounting system in context to the company
is a centralized one with network terminals which are situated at various locations. This report
will also subject the system flowchart in context to the purchase system, cash disbursement
system and payroll system (Libby, 2017).

System flowchart in context to purchases system


The purchase system in context to the Adam & Co begins with the clerk checking in context to
the subsidiary ledger at the computer terminal every morning. The clerk prepares the digital
order file when the quantity of the items is low. Adam & co prints two hard copies in this
context. The first copy is sent to the vendor whereas the other copy is kept and filed in context
to the purchasing department. The receiving clerk inspects the orders and check the information
in context to the digital order and the packing slip. In this regard, two hard copies are prepared
by the clerk. The hard copiers are initiated in context to the receiving orders. One of the receipts
is sent to the warehouse whereas the other is sent to the accounts department. The hardcopy is
initiated by the accounts payable department when they receive the invoice. Aftermath the
update is done in all regards by the clerks from his terminal. After which it is sent to the cash
disbursement department. In this context, it can be seen that the process followed at Adam &
Co is very much performance-oriented and the functions are deliberate and transparent. Each
process is done in effective terms to avoid any mishap (Buzyn et al. 2019).

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Figure 1: System flowchart in context to purchases system

System flowchart in context to cash disbursements system


As commented by Ellis (2018), cash disbursement system is entailed by every organization. It
is generated so that the organization can make secure cash payments to its clients or vendors.
The Cash disbursement system in context to Adam & Co imparts in context to the documents
that are received from the accounts department. The main function of this department is to
check the documents in context to the due date of the payment. When the due date nears the
clerk prepares the cheque in regard to the invoice account. The cheque is further mailed to the
vendor when the treasurer signs it. In this context, we find that Adam & Co initiates in context
to proper documentation and every transaction is recorded in the financial records of the
company. In this context, it is very much required to mention that good and effective internal
controls are much significant in order to cater to cash disbursements.

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Figure 2: System flowchart in context to cash disbursements system

System flowchart in context to payroll system


As commented by Haruna et al. (2015), the payroll system, in general, is initiated in every
organization to cater to the payments of its workers. This system in context to Adams & Co is
generated to track the hours of work, calculation of the wedges and other pertinent deductions.
The payroll system in context to the Adam & Co initiates their employees to record their work
hours every day in their time cards. The time cards are reviewed by the supervisors and it is
submitted to the payroll department for screening. A computer terminal is connected in context
to the central payroll system which is present at the department of data processing. The hard
copies in this context are printed by the payroll clerk. Two copies are printed in this regard.
The payroll clerk is subjected to the file the time cards in context to the payroll department.
Aftermath is sent to the accounts department. The payroll register is screened and reviews by
the accounts payable clerk. After checking everything he manually prepares and disburses a
voucher. Then the ledger department gets the voucher from the clerk. Aftermath, the general
ledger gets the payroll register and the voucher, the clerk then imparts the general ledger from
the department.

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Figure 3: System flowchart in context to the payroll system

Internal control weakness in each system and associated risks


As commented by Laudon and Laudon (2016), when a company uses a system of internal
operations to reduce operational problems, the processes involve the risk of running daily. Each
system has its weaknesses and risks associated with Adam & Co. the weakness and associated
risks are stated below:

Purchase system

Adam & Co has developed a procurement system to provide the necessary supplies based on
the drawing of the supplier's inventory order of the company. However, the purchase system is
delineated with two of the weaknesses which are non-presence of the ethical procedures and
policies and no oversight.

In the presence of ethical procedures and policies

As stated by DeVan et al. (2015), the ethical principles and procedures are simply absent from
the effectiveness of the Adam & Co purchase method. The system commands the crank and
then updates the logs. Update Here, no ethical system is applied to the collection system and it

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somehow or in any other way extends the illegal benefits and authority to the system clerks.
The clerk does not have to obey the expectations of an organization, which is possible due to
the absence of ethical principles and procedures. This can lead to misconduct by employees
and misuse of resources. This promotes a very rigid attitude among employees and aims to
disrupt employee engagement in the organization, which may ultimately affect the integrity of
the purchasing system.

No oversight

One of the key challenges involved with Adam & Co's logistics system is that it does not
involve automated forecasting activity and the company must rely on hand crank reports. In
other words, it is not a fully automated purchasing system because manual inputs are important.
There is one more aspect to this, which means that the clerk can order multiple times regardless
of attendance at the company, which gives additional orders.

Cash Disbursement System

One of the most important systems involved with a company like Adam & Co is a cash
distribution system that involves paying for different suppliers. As commented by Rozzani et
al. (2016), payments over time are important for distribution companies and suppliers as they
directly impact the organization's relationship with suppliers and suppliers and ultimately
disrupt the overall business operations. There are risks to some businesses in the cash
distribution system, and the personnel involved in these activities are ultimately responsible.
Adam & Co has fixed rates on cash distribution systems and these responsibilities are attributed
to employees employed in cash distribution services and their office dealers. One of the major
risks identified by Adam & Co in the cash distribution system is the need for a double signature.
If the seller is involved in exceeding this amount for shipping, the system can cause financial
loss to the company and is added without verification. Another weakness identified is the
delivery system that is routinely combined with bank accounts. Vendors do not reunite with
Adam & Co accounts. This can be very risky, as transaction documents are also tempered
when receiving reports prepared by the clerk, which may promote behavior contrary to ethics.
Another risk is the clerk's ability to sign his own checks, as there is no specification of
accountability.

Payroll system

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Adam and Co presented a payment structure for their employees based on salary. Not only is
the framework governing payment exchanges effective, it also helps the Association to register
workers' benefits. The Pay-Roll section updates the payment information with the Pay-Roll
office a week after the previous week. The framework allows the organization to track the
number of delegates employed each week and to plan payments according to their needs. The
major weakness in this context are the mutual creation in context to the records, inspection of
payroll records. The main weakness lies, in this case, is that there are no security measures.
Presented below are some of the payroll system risks:

Lack of security measures

As commented by Handoko et al. (2017), security measures are considered as one of the
foremost important elements in context to the payroll system. But in context to Adam & Co,
we find that the security measures are not adhered to by the management of the company. In
this regard, it is found that Adam & Co have not imparted any of the security checks or
measures in context to the untheatrical conducts or activities that are occurring in the
organization. One of the major challenges in this regard has been found out that the personnel
information can be accessed by everyone. This can lead to the misuse of information of the
company details or the employees.

Creating the records manually

As stated by Dominguez (2018), In this case, we find that the records are created manually by
the clerk. There has been found the payroll registers are created in manual terms. A broad
spectrum of neglect and importance that can affect a business's financial flow. Adam and Co
are highly dependent on manual entry even though the payroll role system is turned on. The
financial flow can be challenged and disturbed in context to the manually created payroll
registers. Tampering of the data can be done easily in this regard. Manual inputs are needed to
be stopped so that the system can be subjected to fair terms.

Inspection in context to the Payroll records

The pertinent challenge that remains visible in context to the payroll system is that the whole
system cannot be inspected in all regards. This instance can draw a flaw while creation of the
time cards. This is because the supervisor will not be able to screen the time cards in an
effective manner and no further investigation will be imparted in this matter. There is an
immense need for the payroll registers to be inspected and verified to avoid any of the unethical

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conduct. The organization needs to amply technologies that can screen the entire payroll
system.

Conclusion
Nowadays, associations around the world have begun using mechanical parts to promote the
transportation and execution of their activities. Innovation does an incredible job for
companies, and these associations gain an effective ability to execute unexpected executions.
Nowadays, companies use a national program that covers the first parts of the business and
robotizes this primary functionality for the organization's implementation. These features
include a unified accounting framework, business cycle monitoring, cycle utilization, and
customer availability. Associations currently value orders more than their purchasing power,
and care providers are easier than ever. Adam and Co. have used a solitary assistant in their
internal stock division who works with purchasing power, and acting as a union act can be
difficult, but nothing happens. Purchase requirements are carefully produced and the frame
creates a quality duplicate for both the printed version and the son's file. It tends to be carefully
documented by the Association and the Office, which can perform a great job of buying it.
When the company derives its sorted products from global goals, the listing department's
auxiliary manual can store the reports as acceptable reports. When an association sends out an
internal structure to reduce practical difficulty, it is risky to run processes daily.

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References
Buzyn, J., Irizarry, B., Milsom, D., Reynolds, D., Une, D. and Webb, M., Behr Process Corp,
2019. Color selection, coordination, and purchase system. U.S. Patent Application 10/180,774.

Collier, P.M., 2015. Accounting for managers: Interpreting accounting information for
decision making. John Wiley & Sons.

DeVan, S.M., Markwell, S. and Myers, D., JP Morgan Chase Bank, 2015. Integrated
Electronic Disbursement and Cash Flow Management System and Method. U.S. Patent
Application 14/106,999.

Dominguez, B., Visa International Service Association, 2018. Method and system for
processing internet purchase transactions. U.S. Patent 9,916,578.

Ellis, G.E., 2018. Credit wagering system and method of use. U.S. Patent Application
15/787,431.

Handoko, B.L., Sabrina, S. and Hendra, E., 2017, October. The influence of leadership styles
on accounting information systems quality and its impact on information quality survey on
state-owned enterprises. In 2017 IEEE 17th International Conference on Communication
Technology (ICCT) (pp. 1989-1993). IEEE.

Haruna, I., Joseph, A. and Samson, A.J., 2015. Integrated Personnel Payroll and Information
System (IPPIS): Panacea for Ghost Workers Syndrome in Nigerian Public
Service. International Journal of Public Administration and Management Research
(IJPAMR), 2(5), pp.55-64.

Laudon, K.C. and Laudon, J.P., 2016. Management information system. Pearson Education
India.

Libby, R., 2017. Accounting and human information processing. In The Routledge Companion
to Behavioural Accounting Research (pp. 42-54). Routledge.

Rozzani, N., Mohamed, I.S. and Syed Yusuf, S.N., 2016. Technology for Islamic
microfinance’s disbursement and repayment system. International Journal of Social
Economics, 43(12), pp.1271-1283.

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References

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