FAKULTI PERAKAUNAN

UNIVERSITI TEKNOLOGI MARA

ACCOUNTING INFORMATION SYSTEM

AIS 510
LEARNING PACKAGE: CASES
PBL Session 1
PBL Session 2
PBL Session 3

SEMESTER SEP 2015 JAN 2016

Amri Mohamad
Anita Che Hassan
UiTM Kelantan

PBL AIS 510 : SEP 2015 JAN 2016

PBL SESSION 1: REVENUE CYCLE (70 marks)

Ranhy Sdn Bhd is a middle-sized company situated in Penang and it produces solar panels for
export market. The company is 17 years old and it is using centralized Accounting Information Systems
(AIS). The headquarter office and the production, shipping, and receiving departments are all located
in one single building so as to facilitate easier networking among the employees.
The sales order entry department has three sales order clerks. Upon obtaining an order over
the telephone, a sales order clerk manually prepares two copies of non-sequentially numbered sales
order. First copy of the order is filed by date and the second copy is sent to the shipping department.
All sales are on credit terms where the first collection is due in three months time. Because of the
downward trend in sales, the sales order entry clerk did not do a proper and thorough credit histories.
They are more interested in getting customers to increase sales rather than screening customers first
for their credit checking. As a result, 33% of credit sales are either late collections or uncollectible.
The shipping department upon receiving the sales orders from the sales order entry
department, they began to package the goods from the warehouse and at the same time making
observation on stocks that has fallen below the reorder point. The PC in the terminal within the
shipping department is used to update the perpetual inventory records of each item as it is removed
from the shelf. Once packaged, the packages are then placed near the loading dock door so as to
expedite the shipping process. A shipping clerk then signs the sales order form, indicating that the
order is filled and ready to be shipped to customer.
The sales order form is then forwarded to the billing department, where two copies of sales
invoices are prepared. The first sales invoice together with sales order entry form are filed according
to date. The second sales invoice is sent back to shipping department and shipping then inserts it into
an envelope on the package and send it together with the package to customers.
The carrier company is then contacted to pick up the goods and send the goods to the
customer. In the past, goods are usually shipped within three working days of receipt of the customers
order; however lately, shipping dates now has come up to a week. One reason for this longer shipping
days is that the companys shipping docks have been undergoing renovation to expand it further, thus
it causes major difficulties for the carrier company to pick up the packages especially the large
consignments The renovation process is expected to finish in the next three months.

PBL AIS 510 : SEP 2015 JAN 2016

Required
a.

Identify five (5) weaknesses in Ranhy Sdn Bhds sales order entry, shipping and billing
department. Recommend relevant internal control procedures that should be added to the
system to correct the weaknesses. Format your answer as follows:
Weaknesses

Internal control procedures

(30 Marks)
b.

Discuss four (4) ways of how Information Technology (IT) can be used to improve both internal
control and efficiency during sales order processing.
(10 Marks)

c.

Draw a business process flowchart of the Ranhy Sdn Bhd.

(30 Marks)
(Total: 70 marks)

PBL AIS 510 : SEP 2015 JAN 2016

PBL SESSION 2: EXPENDITURE CYCLE AND CASH DISBURSEMENT SYSTEMS (70 marks)
Part I: Expenditure Cycle
As an internal auditor of Apex Manufacturing Company, you are assigned to perform an audit to a few
selected departments of the company. The current task is to do an operational audit of the purchasing
department. The department composed of 10 buyers and several clerical staffs and headed by a
purchasing manager. Below are some commentary done by the purchasing manager.
We run a fairly efficient operation here.
We have established purchasing policies and procedures. The buyers have an average of 10
years of purchasing experience, and all have long tenure with the company.
The buyers also have received on-the-job training and a few have been sent to outside
seminars for management training.
Our main task is to get the right product in the right quantity to the right department.
If you refer to the statistics on the number of purchase orders we handle each year, you will
see that in recent years we have processed more purchase orders than ever with no increase
in staff. I am pleased with my staff performance.
During your review of operations you note the following:
i.

The firm is spending huge sums on personal computers and related products which require
variety of suppliers. The intention is to meet the capability requirements with the lowest
possible prices. However some of the suppliers are found being declared bankruptcy or have
stopped producing the product lines the firm purchased.

ii.

The purchasing department insists on ordering a certain chemical product from a supplier for
the production department because the supplier is stable and reliable and because the firm
has always purchased from this supplier in the past. Yet some competing firms have
successfully used a substitute product that has a much lower price.

iii.

The firm normally purchases from local suppliers. Through inquires you determine that these
local suppliers acquire their materials from two major producers in the country. Any firm such
as yours can order directly from these producers.

iv.

One reason the number of purchase orders has increased is the increased frequency in gasoline
purchases. It is possible to negotiate bulk purchases of gasoline.

v.

Only one quote is received from a supplier in the case of each product required, even though
for most products ordered several suppliers are available.

vi.

Branch managers can order supplies in amounts less than RM500 without following the
purchasing department procedures. You note a few instances in which a purchase of an item

PBL AIS 510 : SEP 2015 JAN 2016

costing more than RM500 was made without the purchasing managers approval by means of
issuing several purchase orders for the item.

Required:
a.

Identify each deficiency in the operations of the purchasing department.

(6 marks)

b.

Discuss the risk(s) related to each deficiency.

(12 marks)

c.

Suggest appropriate internal control procedures to compensate the risk(s).

(12 marks)
(Total: 30 marks)

Part II: Cash Disbursement System

SleeqSport Corporation is a regional wholesaler of sporting goods. The management of SleeqSport is
advised by the internal auditor that there are some weaknesses occur in their Cash Distribution
System. The management of SleeqSport attempt to rectify the weaknesses but need some
clarifications about it. The following descriptions present SleeqSports Cash Distribution System.
1.

The account payable clerk approves payment of all Invoices for the purchase of inventory.
Invoices are matched with the Purchase Requisitions, Purchase Orders and Receiving Reports.
The account payable clerks focus on vendor name and skim the documents when they are
combined.

2.

When all the documents for an invoice are assembled, two copies of Disbursement Voucher are
prepared. The transaction is recorded in the Voucher Register. All the documents including
Disbursement Voucher are then filed alphabetically by vendor.

3.

Two copies of Journal Voucher that summarizes each days entries in the Voucher Register are
prepared daily. Copy 1 is sent to the General Ledger Department and Copy 2 is filed in the
Account Payable Department by date.

4.

The vendor file is searched daily for the Disbursement Vouchers of invoices that are due to be
paid. Both copies of Disbursement Vouchers are sent to the Treasury Department along with the
supporting documents.

5.

The cashier in Treasury Department prepares a cheque for each vendor, signs the cheque and
records it in the Cheque Register. Copy 1 of the Disbursement Voucher is attached to the cheque
copy and filed in cheque-number order in Treasury Department. Copy 2 of Disbursement Voucher
and all supporting documents are returned to the Accounts Payable Department and being filed
alphabetically by vendor.

PBL AIS 510 : SEP 2015 JAN 2016

6.

Two copies of Journal Vouchers that summarizes each days cheques is prepared. Copy 1 is sent
to the General Ledger Department and Copy 2 is filed in the Treasury Department by date.

Required:
a.

Prepare a document flowchart of the SleeqSport Corporations Cash Disbursement System.

marks)

b.

Discuss the weaknesses exist in the system and provide corrective recommendation for each
weaknesses.
marks)

(16

(24
(Total: 40 marks)

PBL AIS 510 : SEP 2015 JAN 2016

PBL SESSION 3: HUMAN RESOURCE MANAGEMENT AND PAYROLL SYSTEMS (60 Marks)
Syarikat MBS Bhd. is a major electrical factory in town. Their production floor is divided into eight
production centers that hires 200 hourly workers. Although the production workers may be involved
in preparing, running, or testing several different processing works, they are paid for the total hours
worked every fortnightly. Every day the production workers insert their time cards into a punch card
machine as they arrive for work and leave work at the end of their shift. The Human Resource
Management (HRM) department checks the time cards on weekly basis and manually key in each
employees time into the payroll computer. At the end of each week, the HRM department sends a
summary report to the production supervisors to review and verify on the data about the employees
hours worked. Normally there are changes and adjustments highlighted by the supervisors. The HRM
department then updates the payroll data with the new adjustments. Once the changes have been
updated, the HRM department sends the new updated report to the cost accounting department and
a second copy to the account officer who maintains the general ledger, prints paychecks, and prepares
financial statement monthly. The cost accounting department will use the report to prepare a monthly
labor cost report.
Due to the competitiveness in the market, Syarikat MBS Bhd. intends to cut cost so as to be
better able to offer electrical products at competitive price to the consumers. Labor costs and
processes are thought to be the major cost per product, but management just could not find the
alternatives solution for the higher labor costs and inefficiencies in the process. Thus, Syarikat MBS
Bhd. hires you to analyze their HRM and Payroll systems within its company and to suggest
recommendations to decrease costs and to enhance efficiencies in the process.

Required
a.

Explain five (5) internal control weaknesses and suggest five (5) recommendations to the
problems described. Please prepare your answer by following the suggested table below:
Weaknesses

Recommendations

(30 Marks)
b.

Explain three (3) examples of how IT can be used to record time and attendance data.
(15 Marks)

PBL AIS 510 : SEP 2015 JAN 2016

c.

Explain the following terms as used in the HRM/Payroll departments.

i.

Payroll Register

ii.

Earning Statement

iii.

Deduction register

iv.

Payroll service bureau

v.

Professional employer organization

(15 Marks)
(Total: 60 marks)