Title: Report on Walton’s Accounting Information
Systems
MIS441: Accounting Information Systems
Section: 2
Summer 2023
Submitted To:
Mr. Naveed Adnan
Senior Lecturer
School of Business and Entrepreneurship
Submitted By:
Name: Sarhan Sayeed
ID: 1910453
Date of Submission: 22nd August 2023
Letter of transmittal
To,
Mr. Naveed Adnan
Senior Lecturer,
School of Business and Entrepreneurship
Independent University, Bangladesh
Subject: Submission of report on Walton’s AIS
Dear Sir,
I am writing to submit my report on Walton’s AIS with a special focus on their expenditure and
revenue cycles. I have given my full effort to give all the necessary information for the questions
that were asked and have done all the work with genuine dedication and earnestness.
The report outlines how integrating AIS into Walton’s expenditure and revenue cycles aid them
to streamline both operational and accounting activities. The Expenditure Cycle analysis
includes the procurement of materials, preparation of purchase orders, receiving and
inventory management, accounts payable processing, and cash disbursement. Likewise, the
Revenue Cycle assessment covers order processing, inventory management, sales
processing, accounts receivable, and general ledger updates.
I hope this report will demonstrate my grasp of the subject and meet your expectations. Lastly,
I would like to thank you for your invaluable guidance and support throughout the course,
without it, the completion of this report would not have been possible.
Yours Sincerely,
Sarhan Sayeed
1910453
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Table of Contents
Executive Summary.......................................................................................................................................................... 4
Introduction............................................................................................................................................................................ 5
Walton’s Expenditure Cycle ........................................................................................................................................ 5
Purchases and Cash Disbursements Procedures............................................................................ 5
Walton’s Revenue Cycle ............................................................................................................................................... 6
Real-Time Technology Processing .............................................................................................................. 6
Point-of-Sale Systems...........................................................................................................................................7
2a) Authorization................................................................................................................................................................ 8
2b) Access Control ........................................................................................................................................................... 8
2c) Supervision .................................................................................................................................................................... 8
2d) Segregation .................................................................................................................................................................. 9
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Executive Summary
Source: Walton, [Link]
The main objective of this report is to evaluate Walton’s accounting information system (AIS),
focusing mainly on its expenditure and revenue cycles. Within the Bangladeshi industry, Walton
holds a prominent position, primarily in the electronics sector; specializing in home electronics
and appliances such as televisions, refrigerators, air conditioners, microwave ovens, etc. They
have further diversified their portfolio by entering the smartphone and motorcycle industry.
Walton has extensive market coverage, as they serve households across all income levels
through more than 1000 retail stores spread across the country. They have also positioned
themselves as one of the largest employers in Bangladesh, with over 30,000 employees
(Walton, 2022). Their presence went beyond the borders of Bangladesh as their operations are
spread over 20 countries, with full-swing operations in the markets of Saudi Arabia, Qatar, India,
Nepal, UAE, etc.
To calibrate such large-scale operations, it is important that functional departments such as
manufacturing, purchasing, and retailing within the business unit are in complete
synchronization and data processing. This requires management that goes beyond traditional
management ideologies and practices, often requiring the aid of technology and information
systems. Traditional accounting department and bookkeeping has especially benefitted due
to tech integration, as it makes sure that every aspect of the operation is properly recorded as
efficiently and effectively as possible, while also ensuring adherence to legal requirements.
Therefore, the following section of this report aims to analyze and understand how Walton
gained a competitive advantage by adapting AIS to record expenditures and revenue.
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Introduction
An accounting information system (AIS) is a technology-driven tool that collects, stores, and
processes financial data used by internal stakeholders for reporting. It combines accounting
practices with modern technology, aligning with Generally Accepted Accounting Principles
(GAAP) (Tuovila, 2020). AIS benefits include efficient automation of data processing, reducing
errors, and streamlining workflows (Kim, 2022). Given Walton's substantial business operations,
AIS is crucial for error-free data handling. This report examines how AIS aids Walton in
managing its vast accounting data, particularly in the expenditure and revenue cycles.
Walton’s Expenditure Cycle
The core purpose of the expenditure cycle is to convert the organization's financial resources
into physical assets and human capital essential for the execution of business operations. (Hall,
2011). The expenditure cycle encompasses various activities and processes involved in
purchasing goods, services, and resources necessary for business. It begins with the
recognition of a need for materials and ends with the payment to vendors being recorded in
the records. The following are the steps for how the receipt of materials and payment to
vendors is processed by Walton:
Purchases and Cash Disbursements Procedures
Monitor Inventory Records
The production of electronic appliances requires huge amounts of inventory which usually
consists of circuit boards, cables, connectors, etc. These are raw materials for
Walton. When the inventory is depleted and reaches its reorder point a purchase requisition is
prepared by the inventory control to start the purchase process.
Prepare Purchase Order
After receiving the purchase order from the inventory control, the prepare purchase order
function generates a purchase order (PO) for each individual supplier as different components
come from different sources. Vendors, accounts payable, and the receiving department (blind
copy) each receive copies, while another copy is kept in the open/closed purchase order file.
This ensures streamlined communication and documentation for the audit trail.
Receive Goods & Inventory
After materials arrive at Walton's warehouses, the receiving team matches them with the blind
copy PO to ensure counts and inspections. Post-inspection, a report details the received
quantity and condition called the receiving report. Copies of the report are used: for storage,
closing PO, accounts payable, updating inventory records, and filing in the receiving report
repository.
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Set Up Accounts Payable (AP)
Once the supplier’s invoice is received, the AP department does a three-way reconciliation with
the information in the invoice, receiving report, and PO in order to recognize the obligations and
to prepare a journal voucher for the general ledger function.
Liabilities Due & Cash Disbursement
After regular reviews of the AP open file, the AP department sends approval for payment
through a voucher packer to the cash disbursements department. The payment clerk inspects
the documents for any errors and then records the details of the payment in the check register.
When checks are sent to the suppliers, a copy is attached to the voucher packet which is
returned to the AP department. A journal voucher is sent to the general ledger function, which
contains the summarized entries.
Update AP Record & Post To General Ledger
Upon voucher packet receipt, the AP clerk updates records by removing liabilities, then files the
packet in the closed voucher file. The general ledger function reconciles and updates AP
control and cash accounts based on journal voucher and summary.
Walton’s Revenue Cycle
The revenue cycle manages the processes involved in recording revenue that is generated
from the company’s finished goods. It involves the tracking and recording of transactions from
initiation, often beginning with customer orders and ending with payment from customers
(Srivastav, 2022). In the context of Walton and its revenue generation, it begins when customers
place an order for electronic appliances. These orders are placed either online or placed
directly in Walton’s one of many retail stores or authorized distributors therefore, the processing
is done using real-time technology for online transactions and the point-of-sale systems for
retail stores.
Real-Time Technology Processing
Sales Procedures
When customers place an order through Walton’s online store, known as “E-Plaza”, a sales clerk
processes each transaction separately as they arrive. The clerk performs various tasks through
a computer terminal connected to a sales order system. First, the availability of the inventory
is checked by accessing the inventory subsidiary file. If the product is available, the product is
placed in the customer’s shopping cart awaiting payment (There is no credit check since
Walton does not allow goods to be bought on credit). After payment is done, the system
updates and reduces the inventory. Automatically, the system also sends a digital stock
release document to the warehouse, and a digital shipping notice to the shipping department,
and logs the sale in the open sales order file.
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Warehouse Procedures
After the electronic transmission, the warehouse terminal immediately produces a printed
copy of the stock release document. Subsequently, the warehouse clerk picks the items and
sends them, along with a duplicate of the stock release document, to the shipping department.
Shipping Procedures
In the shipping department, first, a three-way reconciliation of the goods, stock release
document, and terminal-generated packing slip is done. Through the terminal, a shipping
notice is sent, including shipping date and freight charges. During this process, real-time
updates occur to the open sales order record.
General Ledger Procedures
A program updates financial records, adjusting completed orders in inventory, sales, Accounts
receivables, and cost of goods sold.
Point-of-Sale Systems
Walton has strategically placed various retail stores all around Bangladesh. In these stores,
since credit is not allowed electronic appliances are bought directly for cash. For payment only
cash and debit/credit cards are valid. The process is initiated after consumers choose their
preferred items and carry them to the checkout counter.
Daily Procedures
In POS, the checkout process involves scanning items’ universal product code (UPC) labels also
known as the barcode, with a laser scanner. If the product is large or weighs a lot, the counters
usually have the UPC of the selected product at their disposal for scanning. POS system fetches
product prices and adjusts inventory in real-time. After scanning all items, taxes, discounts,
and the total are computed. For cash sales, money is secured in the cash drawer. Transactions
are entered via the keypad, recorded in the sales journal, and printed as receipts. At the shift's
end, supervisors reconcile the cash drawer contents against internal tape records.
Discrepancies are handled based on organizational policy. The cash receipts clerk prepares a
reconciliation form, records details, and secures cash for bank deposit.
End-of-day Procedures
The cash receipts clerk readies a three-part deposit slip for the cash received. Since there is a
safety issue with the transportation of cash to the bank, guards might be required to
accompany it. A batch program summarizes sales and cash receipts, creates a journal
voucher, and updates the general ledger accounts.
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2a) Authorization
Authorization or transaction authorization refers to the crucial role of validating the legitimacy
of all significant transactions processed with the AIS. This validation to conduct a process
requires a sign from entrusted personnel of a particular department, this ensures that only few
people can initiate processes that have a financial impact on the business.
By doing this the amount of fraud, unauthorized activities, and errors are substantially
minimized, while promoting transparency and accountability.
For example, Lego, the giant Danish toy company requires raw materials like plastic and color
pigments for their production. When the inventory reaches the reorder point the inventory
control function authorizes the re-stock. If purchasing agents had the right to authorize this
transaction, they could purchase the stock for their own benefit which is a misuse of company
resources.
2b) Access Control
Access controls make sure that only authorized personnel are given access to company assets
which also include classified information and records. In other words, it means that only
authorized individuals can enter a specific area, use certain resources, or access databases or
programs.
Access control is crucial for safeguarding company resources such as inventory, cash, and
accounting records from theft. Mechanisms such as security cameras, locks, safes, ID cards,
and alarm systems can be implemented to protect resources from unauthorized direct or
indirect access.
For example, the cashier in Meena Bazaar has access to the cash register and can potentially
steal money. However, cash registers have an internal tape that records all the transactions
after products have been scanned, and at the end of the day, the manager reconciles the tape
with the money in the register, thus reducing theft. There are also security cameras in place to
monitor such activities.
2c) Supervision
It is necessary to guarantee that employees are working in line with the plan and the schedule
while maintaining company standards, this requires direction, guidance, control, and
continuous feedback. It is the department supervisor’s responsibility to keep track of the work
being done and to look out for any breach of operation. Supervision can also be automated
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which changes the nature of the job as the focus shifts to supervising technical aspects of a
system such as programming and electronic monitoring.
For example, the giant retail corporation, Walmart requires a huge amount of daily inventory,
which arrives in their receiving department. The receiving department often gets hectic as
goods are offloaded, which creates an opportunity for employees or outside perpetrators to
steal some of the inventory. It is the supervisor's responsibility to look out for such instances.
The supervisor also makes sure that the work is done safely and efficiently.
2d) Segregation
The separation of tasks and responsibilities among different departments or individuals is a
crucial aspect of internal controls, this is known as the segregation of duties. In other words, it
is necessary to ensure that no individual or department does a transaction in its entirety,
responsibilities are divided and allocated to different individuals. These separations of tasks
reduce collusion for fraud as more people must be involved, which increases the chances of
being detected.
For example, many T-shirts are bought on credit from Beximco Apparel. When the payments
are cleared by customers, it is the cash receipts department's duty to take custody of the cash,
and the record-keeping responsibility is on the accounts receivable department. If the tasks
were not separated the chances of record manipulation in order to conceal theft of company
money increases.
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Bibliography
• Hall, J. (2011). Accounting Information Systems 7th Edition. In J. Hall. Chicago: Cengage Learning.
• Kim, B. (2022, December 2). The Importance of an Accounting Information System: Advantages
and Disadvantages. Retrieved from Walsh Medical Media:
[Link]
information-system-advantages-and-disadvantages-
[Link]#:~:text=AISs%20can%20help%20with%20the,into%20different%20levels%20in%20
AIS.
• Srivastav, A. K. (2022, January 1). Revenue Cycle. Retrieved from [Link]:
[Link]
• Tuovila, A. (2020, November 19). Accounting Information System (AIS): Definition and Benefits.
Retrieved from [Link]: [Link]
[Link]
• Walton. (2022, August 2). About Walton. Retrieved from [Link]:
[Link]
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