HI5019 Strategic Information Systems for Business and Enterprise

Assessment 1: Individual Case Study Analysis – Bell Studio

Assessment Details

Unit Code: HI5019
Unit Title: Strategic Information Systems for Business and Enterprise
Assessment Type: Individual Assignment (Case Study)
Weighting: 20% of the total unit assessment
Word Limit: 2,500 words (excluding references, appendices, and diagrams)
Due Date: Week 6, Friday by 5:00 pm (AEST)
Submission Method: Blackboard (Turnitin integration)

Purpose and Learning Outcomes

This assessment is designed to evaluate your ability to analyse complex business processes and design information system controls. By completing this assignment, you will demonstrate the following Unit Learning Outcomes (ULOs):

ULO 2: Describe the various transaction cycles, financial reporting, management reporting systems, and e-commerce.
ULO 4: Understand the risks inherent in computer-based systems/ERP, including e-commerce, the role of ethics, and the various internal control processes that need to be in place.
ULO 5: Appreciate the opportunities for computer fraud and the security measures in electronic commerce that need to be taken to overcome this.

Case Study: Bell Studio Background

You have been employed as a Business Analyst at Bell Studio, an Adelaide-based wholesaler of art supplies. The company sources inventory from manufacturers in Australia, China, Japan, and New Zealand. Bell Studio utilizes a centralised accounting system with networked terminals across various locations. Your task is to analyse the current procedures for the Expenditure, Cash Disbursements, and Payroll cycles described below.

Purchases System

The process initiates when the purchasing clerk reviews the inventory subsidiary ledger via a terminal. Upon identifying low stock, the clerk selects a vendor from the valid vendor file and generates a digital purchase order. Two hard copies are printed: one is mailed to the vendor, and the other is filed in the purchasing department. A digital record is simultaneously added to the purchase order file.

When goods arrive, the receiving clerk inspects the items and reconciles them against the digital purchase order and packing slip. The clerk manually prepares two hard copies of the receiving report. One copy accompanies the goods to the warehouse, where the inventory clerk updates the inventory subsidiary ledger via a terminal and shelves the goods. The second copy is sent to the accounts payable department. The accounts payable clerk holds this copy until the supplier’s invoice arrives. Upon receipt of the invoice, the clerk retrieves the receiving report, prints a hard copy of the digital purchase order, and reconciles all three documents. The clerk then updates the digital accounts payable subsidiary ledger, accounts payable control account, and inventory control account. Finally, the invoice, receiving report, and purchase order copy are forwarded to the cash disbursements department.

Cash Disbursements System

Upon receiving the document packet (invoice, receiving report, purchase order), the cash disbursements clerk files them until the payment due date. On the due date, the clerk prepares a cheque, which is sent to the treasurer for signature and mailing to the vendor. The clerk then updates the cheque register, accounts payable subsidiary ledger, and accounts payable control account via the terminal. The documents are subsequently filed in the department.

Payroll System

Employees record hours on time cards daily. Supervisors review these for accuracy and submit them to the payroll department weekly. The payroll clerk inputs time card data into the central payroll system, prints pay cheques, prints two copies of the payroll register, and updates digital employee records. Pay cheques are sent to supervisors for distribution. One copy of the payroll register is sent to accounts payable; the other is filed with time cards. The accounts payable clerk reviews the register, manually prepares a disbursement voucher, and sends it with the register to the general ledger department. The clerk then writes a single cheque for the total payroll, deposits it into the imprest bank account, and files a copy. The general ledger clerk posts the transaction to the general ledger and files the voucher and register.

Task Requirements

You are required to prepare a professional business report addressed to the Chief Operating Officer (COO) of Bell Studio. Your report must evaluate the processes, risks, and internal controls of the documented cycles. Specifically, you must include:

Data Flow Diagrams (DFDs):
- A comprehensive DFD for the Purchases and Cash Disbursements systems.
- A comprehensive DFD for the Payroll system.
System Flowcharts:
- A System Flowchart for the Purchases system.
- A System Flowchart for the Cash Disbursements system.
- A System Flowchart for the Payroll system.
Internal Control Analysis:
- Identify specific internal control weaknesses within each system.
- Discuss the potential risks associated with each identified weakness (e.g., fraud, error, inefficiency).
- Recommend appropriate control measures to mitigate these risks.

Assignment Structure and Formatting

Your submission should follow a formal report structure:

Assignment Cover Page: Student name and ID clearly stated.
Executive Summary: A concise overview of findings and recommendations.
Table of Contents: accurate and hyperlinked.
Introduction: Brief overview of the report’s scope.
Body Paragraphs: Use appropriate headings for DFDs, Flowcharts, and Control Analysis. Diagrams must be clear and legible.
Conclusion: Summary of key risks and the importance of implementing proposed controls.
Reference List: Harvard referencing style.

Formatting: MS Word format, 12-pt Arial font, 2 cm margins, 1.5 line spacing. All diagrams must be created using professional drawing tools (e.g., Visio, Lucidchart, or MS Word shapes) and pasted into the document.

Marking Rubric

Criteria	Weight	Standard of Excellence (High Distinction)
Data Flow Diagrams (Purchases, Cash Disbursements, Payroll)	4%	Diagrams correctly depict the entire systems with standard notation, accurate entities, data stores, and processes. No logical errors or omissions.
System Flowcharts (Purchases, Cash Disbursements, Payroll)	6%	Flowcharts comprehensively map the logic and flow of documents and data. Correct symbols used for manual/computer processes and files.
Internal Control & Risk Analysis	6%	Insightful identification of critical weaknesses. Risks are analysed with depth, linking process flaws to potential financial or operational impacts.
Presentation & Communication	2%	Professional business report format. Writing is clear, concise, and error-free. Structure aids readability.
Research Quality	2%	Extensive use of high-quality, peer-reviewed evidence (2018–2026) to support arguments regarding control frameworks and risk management.

Complete the Bell Studio case study (approx. 8–10 pages) by designing Data Flow Diagrams and System Flowcharts, and conducting a critical analysis of internal control weaknesses and fraud risks

An analysis of Bell Studio’s expenditure cycle reveals a significant internal control weakness in the reconciliation process within the accounts payable function. Currently, the accounts payable clerk is responsible for reconciling the purchase order, receiving report, and invoice, while also updating the subsidiary ledger and the general ledger control accounts. This concentration of duties violates the principle of segregation of duties, as the same individual has custody of the record-keeping assets and authorization authority. According to Romney et al. (2021), effective internal control requires that the recording of transactions be separated from the authorization of those transactions to prevent the concealment of fraud or errors. In Bell Studio’s case, the clerk could potentially authorize a payment for a fictitious invoice and conceal the discrepancy by manipulating the general ledger. To mitigate this risk, the responsibility for updating the general ledger should be assigned to a different employee, ensuring an independent check on performance.

Resources

Romney, M.B., Steinbart, P.J., Summers, S.L. and Wood, D.A. (2021) Accounting Information Systems. 15th edn. Harlow: Pearson.
Gelinas, U.J., Dull, R.B., Wheeler, P.R. and Hill, M.C. (2018) Accounting Information Systems. 11th edn. Boston: Cengage Learning.
Kuraesin, A.D. (2022) ‘The Effect of Accounting Information Systems on The Quality of Financial Reports’, Journal of Mantik, 6(1), pp. 883-888. Available at: https://doi.org/10.35335/mantik.v6i1.2173.
Trigo, A., Silva, P. and Belfo, F. (2019) ‘Accounting Information Systems: The internal control in the context of digital transformation’, Procedia Computer Science, 164, pp. 155-161. Available at: https://doi.org/10.1016/j.procs.2019.12.167.