Accounting Information System Organizational Process

Question: Discuss about theAccounting Information Systemfor Organizational Process. Answer: The organization are adopting the operation process of procurement of products from the vendors and sell them to public as well as business entities in the forms of hotels and restaurants. The vendors are mainly from local and overseas origin. The procurement process of the organization is guided by standard practice of procuring the products from the vendors with quality assurance and price feasibility. The sales process is through own retail outlet for the people of the community as well as to the institutions like hotels and restaurants through supply agreement of annual duration. The obvious threat for this business is the nature of products which are highly perishable in nature. To minimize the probable loss related to the products, I have to find out the necessary risks generated in this business with suggestions to avert from these risks. This report will be forwarded to CFO for his decision making about these issues of risk detection and probable solutions to mitigate them(Fa o, 2016). Risks Product Demand To ensure proper sales of procured products, basic requirement is to find out the demand of the products in the market. As the concerned products are of perishable in nature, proper assertion of probable sales for the products with SKU wise analysis is needed(Busch, 2013). Product Quality Product quality is one of the major risks if this business. As the products are not grown in own establishment, product quality is not ascertained through own Total Quality Management(Educba, 2016). Vendor Selection As the organization is procuring the products from local as well as overseas market, proper assurance of vendor is required so far quality assurance and price competitiveness is concerned(Shacklett, 2013). Product Selection The company has to find out the products of vegetable and fruits which are fast moving in the market. Otherwise unnecessary stacking of slow moving products blocks working capital and ultimately incurs loss due to obsolete and rotten condition of the products. Product Receiving The ordered products from vendors are received during the time of delivery. This area is elementary towards risk of receiving of product of unordered items which may be supplied through dispatch resulting warehouse place constraint. Product maintenance The product received from the vendor and stored in the warehouse need to be maintained by the guideline of product maintenance. This area is elementary towards maintenance risk as improper maintenance of inventories may cause several problems if proper segregation and stacking of products are not maintained. Spoilage This area causes major risk due to the perishable nature of the products. Spoilage affects working capital of the company as well as non supply of required order by the buyers. Internal Controls to Mitigate Risks Product Demand To ensure detection of product demand, Fruito has two options- market research and finding of food habit of the community. This can be done through analysis of data retrieved from the AIS as well as to make physical market survey to understand the food habit of the community(Hall, 2015). Product Quality To ensure internal control on product quality, main emphasis is to be given on freshness of the procured goods and proper system of preservation of the procured goods though latest technological solutions(Infotech, 2011). Vendor Selection Vendor selection risk should be monitored through internal control considering two criteria- proper market feedback about the vendor and selection of overseas vendors through judging credential. IT can help for the second criterion while first issue can be taken care from real feedback of vendor credential from the market(Frc, 2014). Product Selection Risk on this area can be mitigated through internal control of quantum of vegetables and fruits with high pull which can be got from AIS with sales analysis of historic data. Other option is to analyze community habit of buying products with high to low as per movement of the products. Product Receiving Fruito has to stick to the inventory system of FIFO while ordering for the products along with the practical practice of procuring products with long life duration(Johnston, 2011). Product Maintenance As these products cannot be left in normal temperature, proper maintenance of temperature is a crucial factor to ensure standard life of the products. The maintenance of inventory in proper way can ensure the life of the products with long life duration. Spoilage This risk is to be mitigated through the effort of selling the products with high perishable in nature in fast speed. This can be ensured with proper display of products in shelves to attract the customers for those products fast disposal. Summary to CFO Through the process of internal audit seven risks are found. Probable internal controls are suggested as per the observations. IAS can play major role in this context by contributing with historical data of sales with trend of products sold most. Detection of fast moving products through AIS data analysis enable Fruito to perform better with proper detection of risks related to inventories of products and strategic implementation of internal controls through IT enable system enhances to possibility of lesser damage of inventories and maximize the probability of greater revenue with more margin. Seven risks discussed above are mainly contributing to the negative growth of Fruito. Subsequent internal controls specified above will mitigate these risks and enhance the possibility of the good business. References: Busch, J., 2013. Supply Risk Management: Exploring Demand Risk. [Online] Available at: https://spendmatters.com/2013/12/03/supply-risk-management-exploring-demand-risk/ [Accessed 14 December 2016]. Educba, 2016. The 8 Crucial TQM Elements for TQM's Success. [Online] Available at: https://www.educba.com/the-8-crucial-tqm-elements/ [Accessed 12 November 2016]. Fao, 2016. Selling Fruits and Vegetables. [Online] Available at: https://www.fao.org/docrep/008/y4893e/y4893e09.htm [Accessed 14 December 2016]. Frc, 2014. Guidance on Risk Management, Internal Control and Related Financial and Business Reporting. [Online] Available at: https://www.frc.org.uk/Our-Work/Publications/Corporate-Governance/Guidance-on-Risk-Management,-Internal-Control-and.pdf [Accessed 14 December 2016]. Hall, B., 2015. How to Use Internal Controls to Mitigate Risk Prevent Profit Loss. [Online] Available at: https://www.biggerpockets.com/renewsblog/2015/06/21/internal-controls-mitigate-risk/ [Accessed 14 December 2016]. Infotech, 2011. Mitigate Internal Risks Achieve Compliance with Internal Controls. [Online] Available at: https://www.infotech.com/research/ss/it-adopt-a-framework-for-internal-it-controls [Accessed 14 December 2016]. Johnston, R., 2011. Mitigating the Risk of Fraud and Theft. [Online] Available at: https://www.aicpastore.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2011/CPA/Aug/FraudTheft.jsp [Accessed 14 December 2016]. Shacklett, M., 2013. 10 ways to reduce your risks in buying decisions and vendor selection. [Online] Available at: https://www.techrepublic.com/blog/10-things/ten-ways-to-reduce-your-risks-in-buying-decisions-and-vendor-selection/ [Accessed 14 December 2016].