Qn. Strengths and weaknesses in the internal control procedures of Melcher Enterprises.
Strengths
One of the strengths is that the purchasing department has a greater connection with the warehouse employees. Additionally, the manager at the receiving end of the requisition process makes an approval that is handed to the vendor. The internal control cooperates appropriately with all its internal departments, that is, from the purchases, the receiving to the accounts payable departments. Nonetheless, the receiving clerk has an obligation to check on the PO and communicate the dealings to the vendor. The internal control processes of Melcher Enterprises are made bureaucratic in such a way that no one individual is allowed to interfere with what the other expert in a different department does. No one employee controls all the activities within the enterprise. Additionally, the accounts payable department ensures that the right invoices are supported. Also, the internal procedures of the enterprise have ensured that there are proper guidelines on what each department is capable of doing at their levels. A clear line has been drafted for every department and that is a strength on its own. The flow of the way the process flows from the purchases department to the final treasurer then to the final vendor is a great achievement for Melcher Enterprises.
Weaknesses
The warehouse employees apply for the purchase requisition forms at any time they feel like so that they can obtain any products they want. The process in some way is very discretionary and therefore, the warehouse employees can undertake product requisitions that are not required. Secondly, within the purchase department in the process of placing orders, what the buyer or the purchaser does is do a search on the last purchases made on the items. Afterwards, the buyer then makes a completion of the purchase order so as to make a purchase from the vendor themselves.
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Thirdly, the purchase department has the capacity to monitor all the regular reports on the stocks. Nonetheless, the reorder levels have to be reset. The reordering level requires reset because the purchase department of the warehouse would want the requisition forms. The purchases are thus based on the process of requisition (Noerlina, Johan & Yoswara, 2011). Therefore, a second check would be made for the determination of the stock levels to know if the product is basically required or not wanted by the purchasing department.
Moreover, during the purchasing process of the products, the number of the different vendors who call the quotations are three or more. The scenario then follows proper quality and price vendor analysis completed through invitations of quotations.
Qn. Benefits that Melcher may receive by installing a newer IT system to process purchases, goods received, accounts payable, and checks.
Firstly, the company will have the capacity to purchase products when they require them and the needed quantity they want. The purchases will help in the avoidance of the overbought situation. The benefit provided will help in avoiding unrequired blockage of funds.
Secondly, the company will have the capacity to purchase products that are of the best quality at a very affordable and reduced price. The purchases will be obtained from different vendors rather than getting the quotations from a single vendor. The case is dependent on the individual vendor. The products face a high price purchase. Also, favorism to a provided single vendor cannot be banished.
Also, their work becomes less difficult compared to the previous system.
Moreover, the improved IT networks would ensure that the work’s computer systems are protected by a strong firewall that would avoid illegal intrusion into the daily activities of the enterprise.
A newer IT system ensures that there is efficiency regarding data provided to the enterprise. The system incorporates the rightful internal controls that help in the delivery of the information required by the management. The case helps in the proper decision-making process for all the activities carried out in the enterprise. Additionally, the IT networks help in the provision of information about the purchases that is significant, up-to-date and relevant (Panetto & Cecil, 2013). Thus, the information is instantly available and therefore, the management can access it online.
Also, the newer IT systems would ensure that every customer’s information and those of the enterprise are kept personal. Nonetheless, the same personal information can be easily accessed anytime whenever they are required by the relevant departments within the enterprise. The new IT system would ensure that no disclosure of the customer’s information is done without permission from the relevant IT authority (Turner, Weickgenannt & Copeland, 2017). Also, the retrieval of the information of every customer and all the processes are well done without much effort. In general, the IT system ensure that workload is reduced and much output is achieved.
Document flowchart of the expenditure processes is as follows:
Reference
Noerlina, N., Johan, J., & Yoswara, Y. (2011). Analysis and Design: Accounting Information System in Purchasing and Supplying. CommIT (Communication and Information Technology) Journal, 5(1), 18-20.
Panetto, H., & Cecil, J. (2013). Information systems for enterprise integration, interoperability and networking: theory and applications.
Turner, L., Weickgenannt, A. B., & Copeland, M. K. (2017). Accounting information systems: the processes and controls. John Wiley & Sons.
