Question

Gary is the purchasing officer for a medium-sized company. The current system for approving the purchase of goods and supplies requires the signatures of the relevant manager on hard copy internal forms. Sometimes this approval can take over a week from the initial request from an employee for certain items before arriving in his office and his staff taking action and placing the order.

After consulting with the IT team and financial systems experts, it was arranged that administrative staff for each department can place an order electronically on the finance system and log it. The system considers the request, matches the staff number of the person requesting the purchase and sends a summary to the designated authorizing officer, who can authorize the purchase electronically; if the purchase is in excess of the authorizing officer’s limit, the details are sent to the manager for approval.

Approvals now take one working day and approximately 90 per cent of orders are placed with the supplier within one working day.

Consider the above case scenario and answer the following questions:

            

1. Identify the system that was previously implemented by Gary, along with the IT team and financial system experts, to ensure purchasing approvals were conducted in a timely and efficient manner.
2. Write a brief report, on the above case scenario, emphasizing ‘Time’ as a valuable resource for efficient management of a financial system.
3. Identify and explain the issues that need to be considered before designing and implementing a financial management system.
4. Identify the organization’s resources used in establishing financials systems and how are these resources allocated?
5. Compare and contrast the manual vs computerized accounting system.

Answer 1

Gary has implemented an automated financial management system by replacing a manual financial management system.

People usually consider money as their most valuable resource, however they are unwise to think that money is their most valuable resource as the most valuable resource available to us is "Time".

Money lost can be earned back but once the time has gone it has gone forever. In the above case a lot of time was being wasted in getting the approval from procurement department which eventually leads to revenue loss. The best way to manage financial system is to start with time management. Efficient utilization of time leads to a successful financial management system. In the above case by implementing an automated system for approvals, the procedures which took 1 week were being completed within a day which represents effective utilization of time as a resource.

Before designing and implementing a financial management system several issues need to be considered like

1) Maintaining Data Integrity and Security

2) Keeping all records up to date

3) Minimizing overall Paperwork

4) Eliminating Errors in the current system

5) Ensuring Compliance with relevant laws and regulations

6) Offering flexibility to accommodate change and growth.

Organisations resources used in establishing financial system are : People, Time, Money, Material, Information.