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HI5019 Strategic Information Systems for Business and Enterprise - Holmes Institute

Assessment - Analysing an Accounting Information System

LO 1: Critically evaluate the purpose and role of accounting information systems in today's business environment.

LO 2: Articulate the various transaction cycles, financial reporting, management reporting systems and ecommerce systems to technical and non-technical stakeholders

LO 3: 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.

ASSIGNMENT DETAILS

The Revenue Cycle of MarksPush Limited.

As an Accounting Information System expert, you provide consultancy services to a wide range of clients in Australia. MarksPush Limited is one of your clients, and Miss Nancy, the head of its accounting department, is concerned about the revenue cycle's business processes and data related operations. Therefore, she has recently contacted you to evaluate their revenue cycle. You asked Miss Nancy to provide you with the details of sales order processing procedures (SOPP) and (2) cash receipts procedures (CRP). Miss Nancy has compiled the following information for you.

Sales Order Processing Procedures of MarksPush Limited

MarksPush Limited has a wide range of diversified customers. Therefore, these customers forward sales orders to the sales department via mail, e-mail or fax. Mr Paul is an experienced sales clerk who has been working in the sales department of MarksPush Limited for the last ten years. Mr Paul first converts the unstandardised sales order into the standardised sales order. For this purpose, Mr Paul requests the missing information, if any. When the order is received, the sales clerk checks the customer's creditworthiness from his computer terminal. Five years ago, Mr Paul requested the accounting department provide him with a list of customers whose account receivables are written off. Mr Paul is not a qualified accountant. However, he is using this accounting information to check the creditworthiness of the customers.

Interestingly, Mr Paul is using the same procedure to check the creditworthiness of the new customers. Miss Nancy discussed this issue with Mr Paul last week, and she was concerned about this procedure. However, Mr Paul explained to her that we have been doing this for the previous ten years and there is no issue with it. Mr Paul rejects the customer order if the customer's credit is not verified. The sales order processing is started after the credit verification. In particular, Mr Paul records the approved standardised sales order in the sales order system through his computer terminal.

A digital copy of the order is distributed to the warehouse and the shipping department terminals for further processing. The computer system automatically records the sale in the sales journal. The clerk reviews this entry and files the hard copy of the customer order in the sales department. As indicated above, the receipt of the digital sales order prompts on the computer terminal of the warehouse manager. Further, the stock release and the shipping notice are also accessible at the warehouse terminal. For further processing, the warehouse manager prints out the sales order, the stock release, and the shipping notice. Using the stock release copy, a warehouse clerk picks the selected items from the shelves and sends them to the shipping department along with the stock release and the shipping notice. The warehouse manager then updates the inventory subsidiary ledger and the general ledger control account from his computer terminal.

The warehouse manager forwards the physical stock, the stock release, and the shipping notice to the shipping clerk. After receiving these documents, the shipping clerk matches them to his terminal's corresponding digital sales order. If everything matches, he prints out three hard copies of the bill of lading and a packing slip. The shipping clerk sends two copies of the bill of lading and the packing slip, along with the goods, to the carrier. The stock release copy and the shipping notice are sent to the accounts receivable department. The third bill of lading copy is filed in the shipping department.

The shipping clerk forwards the stock release and shipping notice to the account receivable clerk. Then, the accounts receivable clerk manually creates a hard-copy invoice, which is immediately mailed to the customer. After mailing the invoice, the clerk uses information on the stock release to update the accounts receivable subsidiary ledger and general ledger from his computer terminal. After the records are updated, the clerk files the stock release and shipping notice in the accounts receivable department. Sometimes, the account receivable clerk reconciles the quantities from the sales order and adjusts the account receivables.

Cash Receipts Procedures of MarksPush Limited

The payments of customers come directly to the general mailroom along with other mail items. The mail clerk performs the following tasks: (1) sorts the mail, (2) opens the customer payment envelope, (3) removes the customer's check and remittance advice, and (4) reconciles the two documents. To control the checks and remittance advices, the clerk manually prepares two hard copies of a remittance list. He sends one copy to the accounts receivable department, along with the corresponding remittance advices. The other copy of the remittance list accompanies the checks to the cash receipts department. Once the checks and remittance list arrive in the cash receipts department, the treasurer performs the following tasks: (1) reconciles the documents, (2) endorses the checks, (3) manually prepares three hard copies of a deposit slip, (4) updates the cash receipts journal and the general ledger from his computer terminal, (5) sends the checks and two copies of the deposit slip to the bank, and (6) files the third copy of the deposit slip and the remittance in the department. The accounts receivable clerk receives the remittance list and remittance advice from the mailroom and reconciles these two documents. He then updates the accounts receivable subsidiary ledger and the general ledger. Then, the account receivable files the two documents in the department.

Required

Based on the above information, prepare a report for Miss Nancy by evaluating the revenue cycle of MarksPush Limited. In your report, you need to include the following items:

1. Miss Nancy is thinking about the reengineering of the sales order processing subsystem. How can this reengineering be accomplished using the technology?

2. Describe potential internal control weaknesses in the sales order processing procedures and cash receipts procedures of MarksPush Limited.

3. Discuss the potential risks associated with the internal control weaknesses identified in Section (2) above.

4. Based on Section (3) above, what types of frauds are possible. Hint: we have discussed different types of frauds in the interactive tutorial and lectures. Your discussion should be based on these contents.

ASSIGNMENT STRUCTURE

1. Introduction
Typically, the introduction is a short paragraph which includes background, scope and the main points raised in the order of importance. There should be a brief conclusion statement at the end of the introduction.

2. Main Body Paragraphs with Numbered Sub-headings
This section contains the detailed information which elaborates on the main points raised in the introduction. Each paragraph should begin with an exact topic sentence, then supporting sentences with facts and evidence obtained from research and finish with a concluding sentence at the end.

3. Conclusion
This section contains a logical and coherent evaluation based on a thorough and objective assessment of the research performed.

4. References
For the guidelines of references, please see the section "Assessment Design - Adapted Harvard Referencing".

Attachment:- Accounting Information System.rar