Reference no: EM133049832

HI5019 Strategic Information Systems for Business and Enterprise - Holmes Institute

Assessment - System Analysis and Selection

LO1: Critically evaluate the purpose and role of accounting information systems in today's business environment,

LO2: Evaluate systems development methodologies and the role of accountants in system development projects, and

LO3: Appraise the risks inherent in computer-based systems/ERP, including the role of ethics and the various internal control processes that need to be in place.

Part A. Purchases and Cash Disbursement System [Up to 1000 words] At the beginning of 2000, Mr Stephen established a bicycle manufacturing firm and named it XYZ Limited. This is a medium-sized company with a total number of 130 employees. The company produces custom bicycles in its factory near Southport, Gold Coast, Queensland, Australia. Each bike is tailored to a rider based on measurements, including height, weight, inseam, and arm length. These measurements are taken at 30 professional bicycle shops around the area, certified to size XYZ Limited cycles. By accepting orders only through licensed dealers, XYZ Limited ensures that each bike matches its rider precisely. The custom bikes of XYZ Limited are considered extremely high quality, and the company takes pride in using only the best components sourced from around the world. Accordingly, XYZ Limited purchases from hundreds of suppliers, chosen for their commitment to quality and reliability. Due to environmental and health concerns, the demand for XYZ Limited's cycles has grown exponentially in recent years. The surge in demand was somewhat unexpected, and the company's factory has been operating at capacity for over a year. As a result, current orders face approximately five to six weeks of production backlog. Its operations have been further hampered by severe inefficiencies and control weaknesses attributed to its legacy accounting system. Your firm has been hired as an outside consultant to suggest improvements in the company's accounting procedures. The following paragraphs describe the company's expenditure cycle.

Purchases System
All purchases of raw materials are initiated in the purchasing department. A clerk in the department monitors inventory levels from his office computer, which is linked to the inventory subsidiary ledger. Once a part needs to be replenished, he creates a hard-copy purchase order. One copy is mailed to the vendor, a blind copy of the purchase order is sent to the warehouse, and the third copy is filed in the purchasing department. Typically, within three to five business days, the warehouse receives the ordered parts and the packing slip from the vendor, which the warehouse clerk reconciles with the blind copy of the purchase order. Once the reconciliation is complete, the warehouse clerk prepares a three-part hard-copy receiving report stating the quantity and condition of the items received.

One copy of the receiving report is sent to the general ledger department to update the digital inventory control account. The second copy is sent to the accounts payable department, and the third is sent to the purchasing department to update the inventory subsidiary ledger. Within a week, the mailroom receives the supplier's invoice, which is immediately sent to the accounts payable department. The account payable clerk reconciles the invoice with the receiving report and then records a liability in the account payable subsidiary ledger from the office computer. Finally, the clerk prints an account payable summary from the terminal and sends it to the general ledger clerk.

Cash Disbursements System
The accounts payable clerk regularly checks the accounts payable subsidiary account at his terminal to ensure timely payment to vendors. For those items due for payment, he sends approval in the form of a payment voucher to the cash disbursements department. For control purposes, cash disbursements are processed manually. The check details are recorded in the hard-copy cash disbursements journal, and the check is mailed to the vendor. The clerk then prepares a journal voucher and sends it to the general ledger. Once the general ledger clerk receives the journal voucher, the account payable summary, and the receiving report, she updates the affected general ledger accounts from the office computer.

Required: Based on the above information, prepare a report for Mr Stephen by evaluating the purchase and cash disbursements systems of XYZ Limited. In your report, you need to include the following items:

1. Describe potential internal control weaknesses in the purchase and cash disbursements systems of XYZ Limited.
2. Discuss the potential risks associated with the internal control weaknesses identified in Section (2) above.
3. Based on Section (3) above, what types of frauds are possible.

Part B. System Analysis and Selection Report. [Up to 1500 words]
Note: Part B is an independent part. Please do not relate it with Part A.

Background
You are running an Accounting Information System consultancy firm. One of your clients is currently evaluating its information systems. The managing director of your client thinks that they need to invest in an Enterprise Resources Planning (ERP) system to support the growth of the business. During your first meeting, the managing director of your client requested you to evaluate their business and recommend ERP software.

Client/Company Selection
You must select a listed company of your choice (your firm's client). The company chosen should be a manufacturing firm listed on either The Australian Stock Exchange or the Stock Exchange of your home country. The selected company is your firm's client.

Note: While selecting your company, please try to choose the company that best suits the situation mentioned above.

The framework of Analysis [Requirements]
The report should include the following components:

1. Background of the Selected Business

Evaluate your client's business process to identify potential weak internal controls and the risk associated with these potential weak controls. And recommend the control techniques that will reduce or eliminate the potential risks. [Hint: your response should be based on our discussion in interactive tutorials 4 to 6.]

2. Systems Requirements

Briefly discuss the software features and functionalities that your client should consider supporting its business activities. [Hint: your response should be based on Section 1.1 above.]

3. Software Selection

Compare and contrast the features and functionalities of three ERP software packages offered by the ERP vendors. [Hint. Try to apply the general functionalities and key elements of ERP systems we discussed in the week ten interactive tutorial].

In the end, identify the most suitable vendor and ERP software package for your client and explain why it is the best option.

Attachment:- System Analysis and Selection.rar