Strategic Information Systems

HI5019 T3 2020 Assessment 1: Individual Assignment 1

HI5019 T3 2020 Assessment 1: Individual Assignment 2

ASSIGNMENT DETAILS
The Revenue Cycle of XYZ Limited.
After finishing your Master of Professional Accounting, you started your accounting
consultancy in Brisbane, Queensland, Australia. You got a high distinction in HI5019 Strategic
Information System and preferred to analyse the business processes, risks and internal
controls. XYZ is one of your clients, and the CEO of XYZ is delighted with your services.1 The
head of the accounting department is concerned about their revenue cycle. Therefore, he has
recently contacted you to evaluate their revenue cycle. During the initial meeting, you
elaborate him that conceptually, the revenue cycle is a recurring set of business activities and
related data processing operations associated with providing goods and services to customers
and collecting their cash payments. This definition reveals that the revenue cycle can be
categorised into (1) sales order processing procedures (SOPP), and (2) cash receipts
procedures (CRP). The SOPP and CRP of XYZ are elaborated below. Therefore, you requested
the head of the accounting department to describe the SOPP and the CRP of XYZ Limited
separately. This description is given below.
SOPP of XYZ Limited
The sales department receives the unstandardised sales order since customer orders are
mailed, e-mailed or faxed to the sales department. The sales clerk first converts the
unstandardised sales order into the standardised sales order. For this purpose, the sales
representative requests the missing information, if any. When the order is received, the sales
clerk checks the customer’s creditworthiness of the customer from his computer terminal.
Three years ago, the sales clerk requested the accounting department to provide him with a
list of customers whose account receivables are written off. The sales clerk is still using this
information to check the creditworthiness of the customers. The sales clerk is using the same
procedure to check the creditworthiness of the new customers.
The customer’s order is rejected if the customer’s credit is not verified. The sales order
processing is started after the credit verification. In particular, the sales clerk records the
approved standardised sales order in the sales order system through his computer terminal.
A digital copy of the order is distributed to the warehouse and the shipping department
terminals for further processing. The computer system automatically records the sale in the
sales journal. The clerk reviews this entry and files the hard copy of the customer order in the
sales department.
1 XYZ is a wholesaler of rafting and camping equipment that serves outdoor sports camping retailers throughout the
Queensland.
HI5019 T3 2020 Assessment 1: Individual Assignment 3
As indicated above, the receipt of the digital sales order prompts on the computer terminal of
the warehouse manager. Further, the stock release and the shipping notice are also accessible
at the warehouse terminal. For further processing, the warehouse manager prints out the sales
order, the stock release, and the shipping notice. Using the stock release copy, a warehouse
clerk picks the selected items from the shelves and sends them to the shipping department
along with the stock release and the shipping notice. The warehouse manager then updates
the inventory subsidiary ledger and the general ledger control account from his computer
terminal.
The shipping clerk receives the physical stock, the stock release, and the shipping notice from
the warehouse manager. The shipping clerk matches them to the corresponding digital sales
order displayed on his terminal. If everything matches, he prints out three hard copies of the
bill of lading and a packing slip. The shipping clerk sends two copies of the bill of lading and
the packing slip, along with the goods, to the carrier. The stock release copy and the shipping
notice are sent to the accounts receivable department. The third bill of lading copy is filed in
the shipping department.
Account receivable clerk receives the stock release and shipping notice from the shipping
clerk. Then, the accounts receivable clerk manually creates a hard-copy invoice, which is
immediately mailed to the customer. After mailing the invoice, the clerk uses information on
the stock release to update the accounts receivable subsidiary ledger and general ledger from
his computer terminal. After the records are updated, the clerk files the stock release and
shipping notice in the accounts receivable department. Sometimes, the account receivable
clerk reconciles the quantities from the sales order and adjusts the account receivables.
CRP of XYZ Limited
The payments of customers come directly to the general mailroom along with other mail
items. The mail clerk performs the following tasks:
• Sorts the mail,
• Opens the customer payment envelope,
• Removes the customer’s check and remittance advice, and
• Reconciles the two documents.
To control the checks and remittance advices, the clerk manually prepares two hard copies of
a remittance list. He sends one copy to the accounts receivable department, along with the
corresponding remittance advices. The other copy of the remittance list accompanies the
checks to the cash receipts department. Once the checks and remittance list arrive in the cash
receipts department, the treasurer performs the following tasks:
• Reconciles the documents,
• Endorses the checks,
• Manually prepares three hard copies of a deposit slip,
• Updates the cash receipts journal and the general ledger from his computer terminal,
• Sends the checks and two copies of the deposit slip to the bank, and
• Files the third copy of the deposit slip and the remittance in the department.
HI5019 T3 2020 Assessment 1: Individual Assignment 4
The accounts receivable clerk receives the remittance list and remittance advice from the
mailroom and reconciles these two documents. He then updates the accounts receivable
subsidiary ledger and the general ledger. Then, account receivable files the two documents in
the department.
Required
Based on the above information, prepare a report for the CEO of XYZ Limited to evaluate their
revenue cycle. In your report, you need to include the following items:
1. The CEO asks you to start the report from five general risks involved in the revenue
cycle of any business. Further, indicate the physical and IT control against each risk.
2. Describe potential internal control weaknesses in the sales order processing
procedures and cash receipts procedures of XYZ Limited.
3. Discuss the potential risks associated with the internal control weaknesses identified
in Section (2) above.
4. Based on Section (3) above, what types are frauds are possible. Hint: we have discussed
different types of frauds in the interactive tutorial and lectures. Your discussion should be based
on these contents.
ASSIGNMENT STRUCTURE
The report should include the following components.
1. Holmes Institute Assignment Cover Sheet
The Holmes Institute Assignment Cover Sheet is available at the end of menu item
Assessments on the Blackboard.
2. Executive Summary
The executive summary should be concise and not involve too much detail. It should make
commentary on the main points only and follow the sequence of the report. Write the
executive summary after the report is completed, and once you have an overview of the whole
text.
3. Table of Contents
This needs to show a logical listing of all the sub-headings of the report’s contents. Note this
is excluded from the total word count.
4. Introduction
Typically, the introduction is a short paragraph which includes background, scope and the
main points raised in the order of importance. There should be a brief conclusion statement
at the end of the introduction.
5. Main Body Paragraphs with Numbered Sub-headings
This section contains the detailed information which elaborates on the main points raised in
the introduction. Each paragraph should begin with an exact topic sentence, then supporting
HI5019 T3 2020 Assessment 1: Individual Assignment 5
sentences with facts and evidence obtained from research and finish with a concluding
sentence at the end.
6. Conclusion
This section contains a logical and coherent evaluation based on a thorough and objective
assessment of the research performed.
7. Appendices
This section includes any additional explanatory information which is supplementary and/or
graphical to help communicate the main ideas made in the report. Refer to the appendices in
the main body paragraphs, as and where appropriate. (Note this is excluded from the total
word count.)
Note: The report should be grounded on relevant literature, and all references must be cited
appropriately and included in the reference list.

HI5019 T3 2020 Assessment 1: Individual Assignment 6

HI5019 T3 2020 Assessment 1: Individual Assignment 7

HI5019 T3 2020 Assessment 1: Individual Assignment 8
Academic Integrity
Holmes Institute is committed to ensuring and upholding Academic Integrity, as Academic
Integrity is integral to maintaining academic quality and the reputation of Holmes’ graduates.
Accordingly, all assessment tasks need to comply with academic integrity guidelines. Table
1 identifies the six categories of Academic Integrity breaches. If you have any questions about
Academic Integrity issues related to your assessment tasks, please consult your lecturer or
tutor for relevant referencing guidelines and support resources. Many of these resources can
also be found through the Study Sills link on Blackboard.
Academic Integrity breaches are a serious offence punishable by penalties that may range
from deduction of marks, failure of the assessment task or unit involved, suspension of
course enrolment, or cancellation of course enrolment.
Table 1: Six categories of Academic Integrity breaches

Source: INQAAHE, 2020
HI5019 T3 2020 Assessment 1: Individual Assignment 9