Management at Kudler Fine Foods has reviewed the flowcharts prepared in Week Two and is requesting information on controls that will be required.
1,100 words in which you address the following:
- Analyze the risks in the systems that your team analyzed.
- Identify all risks and internal control points by incorporating the controls and risks into the flowcharts.
- Design internal controls to mitigate risks to the systems.
- Evaluate the application of internal controls to the systems.
- Discuss other controls, outside the system, that Kudler Fine Foods may need.
I will be more than happy to discuss each area with you and provide additional resources but I can't complete your paper for you. I can thoroughly discuss each area with you so that you have a great understanding of the concepts involved in each section. Let's get started.
The four areas of concern are payroll, accounts payable, accounts receivable, and inventory. We can identify risks in the system, how they would be incorporated into the flowcharts, the internal controls that should be used, an evaluation of the internal control system, and outside controls that can also be used.
In the area of payroll, the main risk will always be a person overriding payroll internal controls. The exact point at which this is an issue and identifiable from the flowchart would be where we check input accuracy. This is the most susceptible point at which data can be changed by the user and is the highest risk area in the entire payroll AIS process. The internal controls that need to be in place include a virtually error-free AIS component. This component needs to be tested on a regular basis to ensure that it is functioning properly. If error-checking is built into the AIS for payroll as it should be, the changes made by users should draw flags when there is an inconsistency.
An additional internal control that can be implemented by use of flowchart design is for only authorized persons to have access to the actual payroll processing function that leads to the printing of the payroll checks and/or authorizations for direct deposit. It is a well known auditing standard that the auditor always, always checks points of access for the printing of checks in the AIS. The minimum number of people should have access - namely only those who actually need such access. The more people that are granted access, the higher risk it becomes. We effectively evaluate the internal controls that we put into place in this area by random evaluation. At various intervals, management conducts an overview of the payroll processing system as it is integrated into the AIS to determine if overrides have taken place. If they have, they need to be dealt with immediately so as to prevent further unauthorized access.
There is always an outside control for large companies and their payroll processes. Most big companies have employees (senior executives, actually) that verify addresses by going to certain addresses that draw flags, based on the information from the AIS. The main reason is ...
This solution discusses the following:
Analyze the risks in the systems that your team analyzed.
Identify all risks and internal control points by incorporating the controls and risks into the flowcharts.
Design internal controls to mitigate risks to the systems.
Evaluate the application of internal controls to the systems.
Discuss other controls, outside the system, that Kudler Fine Foods may need.
Risk in System Analysis and Evaluation
Management at Kudler Fine Foods has reviewed the flowchart(s) prepared in Week Two and is requesting information on controls that will be required.
o Prepare at least a 750 word brief (i'll need to add more)in which you:
- Analyze the risks in the systems which your team analyzed (BELOW)
- Identify all risks and internal control points by incorporating the controls and risks into the flowchart(s)
- Design internal controls to mitigate risks to the systems
- Evaluate the application of internal controls to the systems
- Discuss other controls which may be needed by Kudler Fine Foods outside the system.
- Use at least 2 non-textbook sources
Accounting Information System Improvements for Kudler Fine Foods
The team has made the decision to purchase industry specific software from Counter Point. The benefits of industry specific software are lower cost, quicker implementation, and knowledgeable training. Included in the software are Point of Sale, Inventory Control, Customer Management, Purchasing, Reporting, Accounting, and an option for E-Commerce that the company may consider. In addition to the industry specific software, the team suggests an Acuprint time clock for accurate payroll.
The areas of improvement for payroll are with the time clocks and reporting of the records to human resources and accounting. An employee must clock in to an electric time clock that will send the data to server that creates a time card report on each employee. At the end of the pay period, management signs off on each employee's time and prints data into paychecks signed by the treasurer. The accounts payable system runs quite smoothly with the exception of cash on delivery (COD) transactions. By implementing a petty cash bag kept by management, it would reduce the hassle that employees, management, and vendors have to go through on COD transactions.
Similar to accounts payable, accounts receivable is straightforward. Most transactions occur by point of sale (POS), meaning when a customer takes merchandise from the store, it is paid for by cash or credit card immediately. On occasion, with approval from management, a customer can charge the merchandise to an in store account. When this happens, the company sends invoice to the customer. Later, the company deposits the money in the bank. The inventory system poses the biggest expense to the company. In addition, when inventory is too low and out of stock, it causes the company sales. To combat this problem, the company should implement a low and too high inventory alert system. This will help the company to meet heir 95% stock level goal.
Flow Charts of the Four Accounting Systems Analyzed
The Value the Recommended Changes Add to the Four Accounting Systems
The recommended changes, such as implementing industry specific software, and using electronic system that tracks inventory, account payables and receivables would provide a secure, reliable, and effective way to track raw materials from the point of replenishment, to the dispatch of the finished goods, and finally through invoicing management. The changes would put the company resources, expenses, and revenue in one electronic platform accessed by the management of Kudler Company.
The new system enable the management to have real-time tracking of resources, and the ability of management to monitor cash flow from different geographical locations via an easy to navigate and secure web based portal without the need for the intermediate steps of reporting and communication. The new system would eliminate some of the procedures, in the current system that add no value to the tracking system, create time lag and cause inefficiency. The goal of the recommended changes is to ingrate payroll, account payables, account receivables, logistics, and purchasing functions. Moreover, the proposal states that as many of the paper transactions as possible will be replaced by electronic data interchange transactions (EDI) in the entire system. The replacement of the paper transactions is efficient, because the new change would not lose track transactions.
Apollo Group. (2004). Kudler Fine Food, Virtual Businesses Portal. Retrieved August 2, 2009, from University of Phoenix, ACC542 - Accounting Information System Website, r-Materials.
Accuprint. (2009). Retrieved August 8, 2009, from Time Clock Eshop.com Web Site: http://www.timeclockeshop.com/index.asp?PageAction=VIEWPROD&ProdID=288
Couter Point POS. (2009). Retrieved August 8, 2009, from Counter Point SQL Enterprises Web Site: http://www.retailposcounterpoint.com/counterpoint/pos.shtmlView Full Posting Details