CONTROL

IMPLICATIONS
Automated System vs.
Reengineered System

The Automated System

1.IMPROVED INVENTORY CONTROL
o Improved ability to manage inventory needs
o A well-controlled system should provide
management with adequate summary reports
about inventory purchases, inventory turnover,
spoilage, and slow-moving items.

2.BETTER CASH MANAGEMENT

o scanning the voucher file daily for items due
o the firm reduces labor cost, saves processing time,
and promotes accuracy

3.TIME LAG
o exists between the arrival of goods in the receiving
department and recording the inventory receipts in
the inventory file

4. PURCHASING BOTTLENECK
o Directly involved in all purchase decisions
o Freeing purchasing agents from routine work

5. EXCESSIVE PAPER DOCUMENTS

o

Adds costs because they must be purchased,

stored, prepared, handled by internal mail carriers,
and converted by data processing personnel.

The Reengineered System

o Improvements:
uses real-time procedures and direct access
files to shorten the time lag in record keeping
eliminated routine clerical procedures
achieves a significant reduction in paper
documents by using digital communications
between departments and by digitally storing
records

1.SEGREGATION OF DUTIES
o Computer programs authorizes and process POs
as well as authorize and issue checks to vendors.
o The system provides management with detailed
transaction listings and summary reports.

2.ACCOUNTING RECORDS AND ACCESS

CONTROLS
o Advanced systems maintain accounting records
on digital storage media, with little or no hardcopy backup.
o Adequate control security measures to protect
accounting records from unauthorized access and
destruction