Accounting Information System Manufacturing Company

Rattan Handicraft – Asmidar Furniture

The final Task of Accounting Information System Course

Lecturer : Asniati, SE, MBA, Ak, Ph,D

By :

Fidya Kasih Maulidya 1610531025

Karina Fitri 1610533009
Ratu Shavira 1610532025

Economic Faculty of Andalas University

Accounting Major
Padang 2018
 FOREWORD

All praise belongs to Allah SWT. Shalawat and Salam are always poured out to Rasulullah
SAW. Thanks to the abundance and mercy of his constituents are able to complete the task of this
group to fulfill the tasks of Accounting Information System courses on the cycles and accounting
systems within the company.

This task is arranged to fulfill the final tasks. This task we present based on the learning we
have done from various sources of information, reference and practice directly to the company
concerned. The company we choose to watch is Asmidar furniture which is engaged in handicraft,
because according to us Asmidar Furniture has a system that fulfill our duty. This task is composed
by the authors with various obstacles. Whether it comes from both ourselves and those who come
from outside. But with patience and especially help from God this task can finally be resolved.

Hopefully this task can provide a wider insight and become a contribution of thought to the
readers, especially the students majoring in accounting andalas university. We are aware that this
paper is still much deficient and far from perfect. To that end, our supervisor asks for input for the
improvement of our task making in the future and expects the criticism and suggestions from the
readers.

Padang, West Sumatera, April 2018

Authors
 Chapter 1 Introduction
I. Company Background
Asmidar Furniture is a small and medium sized Business engaged in rattan handicrafts
in Padang West Sumatera. Asmidar Furniture offers a wide range of products such as
furniture for home and household appliances made from rattan. Asmidar Furniture craft has
started business in industry in this field since 200., Currently Asmidar Furniture is controlled
by Mrs. Asmidar who is also the founder and owner of Asmidar Furniture. All operational
activities of Asmidar furniture are done at Jl. Raya Pitameh, Lubuk begalung, Padang, West
Sumatera.

In its own business process, initially started with consumers ordering products in
accordance with finished goods photo given, then Asmidar furniture will make the process of
making the product in accordance with the order of the buyer but if the product requested
by the buyer is still in the supply of Asmidar furniture, the product is immediately sold to the
buyer who has ordered. In the purchase of raw materials, Asmidar furniture purchases raw
materials in accordance with the needs of products in accordance with orders from buyers
through cooperatives, in order raw materials Asmidar furniture does not apply the system of
debt therefore purchases of raw materials purchased in cash. In the process of making,
Asmidar employees are divided into several sectors, namely the sector of product framing,
wicker rattan sector, and finishing sector. in the salary of employees, employees in salary
based on the amount of goods they have produced in a day per individual and salary given
every day. after the ordering product is complete, Asmidar furniture will contact the buyer
that the goods of the attestation are ready. The buyer can take orders directly to Asmidar
Furniture store and pay the product according to the price.

Asmidar furniture products are not only sold in Padang, products from asmidar
furniture are also sold to foreign countries such as malaysia.
II. Accounting Information System Implementation
In the application of accounting information system in Asmidar Furniture based on the
process manual. this is in the show with the recording of all business activities without using
applications or computers. in the process of production activities, Asmidar Furniture does
not have accounting bookkeeping but Asmidar furniture has a record of all cash inflows,
cash outflows as well as recording of materials in accordance with the needs of the
company. in financial reporting, Asmidar records all monthly production records to
determine the income, expenses, and profit or loss incurred in a month.
 Chapter 2 Discussion
I. Revenue Cycle
a. Sales Order Processing System
The sales order process begins when a customer calls in his or her order to an
experienced sales representative, who then manually transcribes the necessary
customer information, quantity, type, and model of things that requested onto
customer order document. Once prepared, one copy of sales order is sent over to the
warehouse to be used as the stock release. Another copy of the sales order, invoice, is
sent to the billing department.
When the warehouse clerk receives the one copy of sales order as a stock
release copy, he reviews the document for clerical accuracy. He then manually
updated the Inventory ready in the warehouse and then he picks the goods and sends
them and also filed the stock release document. The billing department clerk receives
the customer invoice of the sales order from the sales department. The billing clerk
then adds prices and other charges to the invoice, which she sends to the customer.
The clerk then sends the invoice to account receivable department. The clerk in
account receivables department receives the invoice and manually uses to prepare the
account receivable. One copy of invoice bill will filed and one copy of invoice will billed
to the customer.

Sales Order Data Flow Diagram

 Sales Order Processing Flowchart

b. Cash Receipts System

The cash receipts process begins when the customer want to pick up the
goods, the customer will shows the invoice that already billed and cash to paid. The
cash will directly paid to the cashier, and the invoice will reconcile and receipt by the
clerk and the clerk will signed the invoice. The signed in voice will send to account
receivable department and manually uses to update the account receivable. The
signed invoice will filed.

Cash Receipts Data flow Diagram

 Cash receipts flowchart

c. Internal Control Weaknesses

a) Supervision
1. There is only one supervision of this business for all of department which is
only the owner
2. There is no strict rule for the employee of this business
3. There is no guarantee that the employee will work as should as well

b) Segregation of Duties
1. There is double triple task for one person
2. Lack of employee
3. The owner as an owned, employee, accountant, and also manager

c) Access Control
1. There is no computer uses of this business
2. There is no tidy book keeping of this business

d) Inventory Record
1. There is no journal records
2. There is no computer uses
3. All the activity manually access by only one person
 d. Suggestions to Improve the Weaknesses
a) Supervision
1. Asmidar Furniture must have an authorize person in focus job
2. There must have a strict rule to guarantee the employee will come to work
not only when they need money
3. There must be one person to control the order and do marketing

b) Segregation of duties
1. In order to maximize time and maximize the order sales, Asmidar furniture
must be able to see that different department are assigned with their
specific task
2. The owner of the business should not be multitasker, but focus in one thing
to control
3. The employee should much more to do the task

c) Access Control
1. Asmidar Furniture should have a tidy bookkeeping
2. It should have record by journal and general ledger to accuracy data

d) Inventory Record
1. Must always maintain the file back up since they don’t have any journal
records
2. Make a journal records and prepare the general ledger

II. Expenditure Cycle

a. Purchase Processing System
Inventory Control
The purchase system begins when inventory control clerk makes 2 purchase
requisitions. One copy of the purchase requisition is sent to the purchasing
department, and one copy will be filed with purchase order from purchasing
department and receiving report from receiving department.

Purchasing Department
The purchasing department receives the purchases requisition from inventory
control. Then the purchasing department clerk prepares the purchase order. There are
4 documents: 3 copies of purchase order and 1 copy of purchase requisition. 2 copies
of purchase order will be sent to Vendor and Inventory Control, and the other one of
purchase order will be filed together with one copy of purchase requisition.
Receiving Department
The receiving department clerk will receive the packing slip from the vendor.
Then, the clerk will prepare the receiving report. There are 3 documents: 2 copies of
receiving report and one packing slip. One copy of receiving report will be sent to
inventory control and the other copy will be filed together with packing slip.

Purchasing Process system DFD

Purchasing Process System Flowchart

 Internal control weaknesses and Suggestion for improvement
Purchase System

Control Activities Weakness Suggestion

Asmidar Furniture doesn't have

authorized purchasing when they Asmidar Furniture should have
purchase new raw materials. authorized purchasing that can result
They don't have inventory ledger in excessive inventory levels for some
Transaction Authorities
to manage their inventories. In items, while others go out of stock.
result, sometimes they lack of Unauthorized purchasing can
materials or some materials is potentially damage the firm.
wasted.

Asmidar Furniture should have an

Asmidar Furniture doesn't have
auditor to reconcile records to the
Segregation of Duties an auditor to reconcile records to
physical inventory in order to
the physical inventory
maintain their inventory

When goods arrive, receiving clerk

Asmidar Furniture doesn't do must inspect items for proper
inspection for proper quantities quantities and conditIon. For this
Supervision
and condition. The clerk doesn't reason, the clerk should receive a
receive blind PO. blind copy of the original PO from
purchasing.

Asmidar Furniture should have

Asmidar Furniture doesn't do
accounting record to maintain an
Accounting Records accounting activity because of
audit trail adequete from tracing a
lack in accounting knowledge.
transaction.

Asmidar Furniture doesn't have a

Asmidar Furniture must limit access
proper access control like
Access Control to documents that control its physical
documents to physical assets
assets.
such as cash and inventory.

Asmidar Furniture doesn't have

Independent Asmidar Furniture doesn't have
proper independent verification by AP
Verification proper independent verification.
and by general ledger department.
 b. Cash Disbursement
The cash disbursement department clerk receives the receiving report, and
packing slip from Receiving Department. Then, the clerk will submit the payment in
cash to vendor. After submit the payment, the receiving report, and packing slip will be
filed.

Cash Disbursement DFD

Cash Disbursement flowchart

Internal control weaknesses and Suggestion for improvement

Cash Disbursement

Control Activities Weakness Suggestion

Asmidar Furniture doesn't have AP

Asmidar Furniture should have AP
function to authorize cash
Transaction Authorities function to authorize cash
disbursement. They also don't
disbursement via AP packet.
have checks.

Asmidar Furniture should have an

Asmidar Furniture doesn't have an
auditor to reconcile records to the
Segregation of Duties auditor to reconcile records to the
physical inventory in order to
physical inventory
maintain their inventory
 Asmidar Furniture should have
Asmidar Furniture doesn't do
accounting record to maintain an
Accounting Records accounting activity because of
audit trail adequete from tracing a
lack in accounting knowledge.
transactions.

Asmidar Furniture doesn't have a Asmidar Furniture must have proper

proper security over cash and security over cash and limit access to
Access Control
access control like documents to documents that control its physical
cash. assets.

Asmidar Furniture doesn't do Asmidar Furniture shoul do overail

overail reconciliation by general reconciliation by general ledger, in
Independent
ledger, they don't borrow money order to develop the company,
Verification
from the back so they don't have Asmidar is recommended to borrow
bank reconciliation. asset from the bank.

III. Payroll Processing Cycle

The payroll processing system begin with the employees report to the supervisor their
job ticket because in Asmidar Furniture the employees get paid based on the total product
that they already finish for each sectors. After that, supervisor approves the job ticket and
send the approved job ticket to the payroll department to prepare the salary slip for an
evidence of a payment and then the payroll department will make an employee record. The
salary slip will be distributed to the employee as well the employee will get paid at the end
of the day and the job ticket of the employee is filed by payroll department.

Payroll processing DFD

 Payroll processing flowchart

Internal Control Weaknesses and Suggestion to Improvement

NO Element Weakness Suggestion
1 Segregation of duties - There is no time- - Need time-keeping to avoid
keeping function the dishonesty of time in
the time card

2 Supervision - There is no a - Need time-keeping to

supervision who control control the employee’s job
employee ticket, so the information of
job ticket is similar with the
output process of each
employee
3. Accounting record - There’s no an - Each cash out flow need to
outflow recorded by be record to know the
cash disbursement amount of cash that are
department paid for payroll
4. Access control - There is no access - Need an access control
control in payroll over from paymaster to avoid
all document in payroll the errors by payroll
department
5. Independent - There is no paymaster - Need paymaster to make
verification to checking the slip distribution and
distribution of the verification become well to
salary slip by the avoid issued the check for
payroll. the employee who is not
work according to the time
of job ticket.
IV. Fixed Asset Processing Cycle
Employee verbally report the fixed assets requirement to the manager, if the manager
approve then employee manually prepare the purchase request form and then submit it to
the purchasing department. By purchasing department, the purchase order is being
prepared and make two copies of purchase order to send to vendor and to be filed. The
purchase requirement is being filed in the purchasing department. Purchasing department
prepare the Fixed Assets report.
In the receiving department, the department receive the packing slip and then
manually prepare the receiving report. The receiving report and the packing slip is being
filed by receiving department.

Fixed Assets DFD

Fixed Assets Flowchart

 Internal Control Weaknesses and Suggestion to Improvement
NO Element Weaknesses Suggestion
1 Supervision control - There is no supervision - Need supervision
control over the assets control to control the
that being used. using of assets
accordance to the
business needed and
practices.

V. Conversion Cycle
Asmidar Furniture start their business by order of customer. The conversion process of this
kind of furniture based on customer order. The documents needed in conversion cycle for Asmidar
Furniture are started from the billing of materials, and the route sheet. These documents uses for
planning and controlling the production. And the sales forecast is conduct by the marketing system.
The sales order based on sales order system in revenue cycle, and the purchase requisition based on
purchase system in expenditure cycle. The planning and controlling production will presents the
production schedule, work order, move ticket, and materials requisition to perform the production
operations and also to maintaining the inventory control. After perform the production operations,
the payroll time card will present to expenditure cycle for HR &payroll system.
There are 4 batch for conversion cycle of Asmidar Furniture, which is production planning and
control, work centers, store keeping, and inventory control. The purchase requisition in 1 st batch will
transferred to the last batch which is inventory control and for final step is filed the purchase
requisition. And the one copy of purchase requisition will use as purchasing. The one copy of work
order, move tickets, and material requisition, after prepare production control documents will uses
for cost accounting, one other copy will filed, and last copy will transferred to 2nd batch which is
work centers.
In 2nd batch, work centers, the documents transferred will receipts control and prepared. And
the one coy of work order will use in PG warehouse. One other copy of work order will transferred
to 4th batch, inventory control and will filed. The material requisition and material excess will
transferred to the 3rd batch, store keeping, as a document for issuing the raw materials in exchange
for material requisition. And the exchanged of excess material and material requisition will filed. And
2 other copies of them will transferred to the last batch, inventory control.
In 4th batch, the inventory status already transferred first to the 1st batch, to planning
controlling production for assessing inventory requirements.. in this last batch, the excess materials
and material requisition from store keeping batch will uses for cost accounting.
Conversion cycle DFD

Conversion Cycle Flowchart

 Internal Control Weaknesses and Suggestion to Improvement

Conversion Cycle

Control Activities Weakness Suggestion

- Need to make formal work

- There is no formal work order to reconcile the
Transaction Authorities order to reflect the productions requirement
production requirement different between expected
demand for product

- Supervision need to control

- There is no control of over the RM usage to control
supervisor in oversee the the what are used and to
Supervision usage of raw material minimized the waste
- There is no observation of - Supervision need to observe
supervision to time the time keeping for the valid
keeping of employee job ticket

Lack of the access control - Need to add several guard for

Access Control -
limiting the sensitive areas the sensitive areas

- Need to make a journal

Lack of record the journal record to make clear about
Accounting record -
for each activities the transaction that already
occurred
 Chapter 3 Conclusion

Asmidar furniture that has been established from 2003-now in the implementation of
accounting information system in Asmidar business is relative good for the level of small and
medium enterprises. all activities related to the production of goods are good enough. for
any shortcomings contained in the implementation of Accounting Information System in
Asmidar Furniture can be developed with some suggestions that have been listed in the
previous discussion.
Chapter 4 Documentation