ACKNOWLEGDEMENTS

Assalamualaikum w.b.t, we are most grateful to Allah S.W.T for the completion of this
report as one of the requirement that need to be accomplish in the course work assessment
for subject Accounting Information System (AIS4014). In order to done one of the requirement,
we required to discuss and preparing the assignment of PBL flowchart for case of Lagenda
Coffee Bhd.

Special thanks to our parents in supporting us during the process of completing the
report. Without their support in financial support, this assignment could not be done because
in preparing the assignment, we have to using some amount of money to printing, binding and
filing the report. Besides, not to be forgotten to our lecturer, Ms. Wan Rosnah Binti Awang Isa
for her kindness in helping us during the process of completion of the assignment. She has
given us a good guide such as providing useful information and guide in the process of
presenting the case. Without her support and guide, we would not be able to complete this
assignment.

Lastly, we want to give a big thanks to those who had involved and contributed directly
or indirectly during the process of prepare the report of issue. We are very grateful to them for
the effort and initiative that they have been shown in assignment until we successfully
completed in preparing the report. Without their support and guide, this assignment could not
be completed successfully. We also hope this report that we have been managed reach the
requirement of the assignment.

PROBLEM BASED LEARNING: LAGENDA COFFEE BHD 1

 TABLE OF CONTENT

NO. INDEX PAGE

1 Acknowledgement...

2 Content..

3 1.0 Introduction....

2.0 Findings..
2.1 Input transaction and output document of the system.
4 2.2 Flowchart.
2.3 Weaknesses and implications of sales business process..
2.4 Benefits of cycle billing plan.

6 3.0 Summary and recommendations...

7 4.0 References

PROBLEM BASED LEARNING: LAGENDA COFFEE BHD 2

1.0 INTRODUCTION

Based on the case study given in this Problem Based Learning (PBL) which is about
Lagenda Coffee Bhd, we were asked to provide a report and a presentation due to carry and
solve out this case study. It started when the management of the company received dozens
of complaints from their clients for their wrong order received, wrong billing and being billed
with back orders and not for the coffee sent. In addition, the company was also facing the
rising problems of uncollectible sales or late payment.

The process begins when an order is made through phone or fax to sales department.
The sales clerk will using the customer sales history records to carry out a credit check and to
authorize the transaction. Next, by referring to the master price database, the clerk has to
prepare two copies of sales order. Hence, the sales order database will be updated with the
order particulars. Each copy of the sales order will need to send to the warehouse and billing
department.

The sales order that was received from sales department then was used to pick the
goods from the shelf in the warehouse department. The warehouse clerk then uses a PC
based inventory system to update the inventory subsidiary ledger. Next, the sales order with
the goods are then will be forward to the shipping department.

The shipping department packs the goods and prepare the packing slips and bill of
lading.

PROBLEM BASED LEARNING: LAGENDA COFFEE BHD 3

2.0 FINDINGS

2.1 INPUT TRANSACTION AND OUTPUT DOCUMENT OF THE SYSTEM

Entities Activities Input / Output

1. The sales clerk carry out a credit
check using the customer sales history
record.
2. The sales clerk use customer sales 1. Two copies of sales order.
Sales
Department history to authorize the transaction.
3. The clerk will prepares the copies of
the sales order referring to the master
price database.
1. The warehouse clerk will receive the
sales order from sales department.
2. Warehouse clerk will uses the sales
Warehouse order to pick the goods from the shelf.
Department
3. The warehouse clerk will uses a PC
based inventory system to update the
inventory subsidiary ledger.
1. The shipping department will be packs
the goods.
2. The shipping clerk will be prepare
packing slips and bill of lading.

Shipping 3. The shipping clerk will updates the

Department shipping log. 1. Two-part of packing slips.
4. The clerk placed the packages near 2. Bill of lading.
the loading dock door in alphabetical
order.
5. The clerk will files the sales order
together with the packing slip and bill
of lading.
1. The billing clerk receive the sales
order from sales department.
Billing 2. The clerk will prepare the invoice after 1. Three-part of invoices.
Department receive the sales order.
3. The clerk will sent the customer copy
invoice to shipping department.

PROBLEM BASED LEARNING: LAGENDA COFFEE BHD 4

2.2 FLOWCHART

PROBLEM BASED LEARNING: LAGENDA COFFEE BHD 5

2.3 WEAKNESSES AND IMPLICATIONS OF SALES BUSINESS PROCESS

1. All order made by customer is through fax and phone not online order.
Lagenda Coffee Bhd distributes coffee to caf, deli and restaurants around the nation.
So, it means, Lagenda Coffee Bhd will receives hundred or maybe thousand order per
day. The problem is that all the orders were made through phone and fax. When the
orders made by customers are through phone or fax, it is difficult to record all the orders
correctly without mistake especially when the orders made by phone. It will leads to
mistaken record order. When the order record is incorrect, the customers will received
wrong order and wrong billing.

2. There are no signature required to confirm the release of the goods.

In the warehouse department, the clerk will pick up the goods from shelf that customer
order. The problem is that there are no signature to confirm the release of goods. It will
be the problem in inventory movement because there is high chance for the staff to do
take the goods without permission because there are no signature required in releasing
the goods. The signature is important because if there is issue in the releasing goods,
they only have to refer to the authorizer or the person who sign the releasing the goods.

3. The package is placed alphabetical order not placed according date.

In the shipping department, the clerk will placed the packages in alphabetic order. The
packages should be placed in date order because it is easier to record of all carrier out.
When the record is in the date order, the clerk will easy to refer or do inspection when they
receive any complain from the customer.

4. There are no system of backorders records.

When there are backorder of the customer order, there is no record at all. Because of no
record, being billed with backorder will be a problem. When there is no record, the clerk
difficult to identify if there are backorder because the receive many of orders from the
customer. When hundred or thousand order, it is really difficult to identify the backorder
and the order that have been sent.

PROBLEM BASED LEARNING: LAGENDA COFFEE BHD 6

5. There is no system of order information that can be access to all department.
All order receive by sales clerk by phone and fax and all the order is process by the sales
department. Then the copy of sales order will send to warehouse and billing department.
With the sales order information from the sales department, the goods and billings have
made. The problem is that all information only sales department process and if the sales
clerk made mistake such as mistaken order or misinformation, other department using
the incorrect sales order and do the other process until order sent. Lagenda Coffee Bhd
should have system of order customer information. With the system, other department
can recheck the sales order.

2.4 BENEFITS OF CYCLE BILLING PLAN

Many companies that use the balance-forward method use a process called cycle
billing to prepare and mail monthly statements to their customers. Companies with large
numbers of customers who make many small purchases each month such as utility
companies, credit card issuers or national retail chains typically use this method, the balance-
forward method. For them, this method is more efficient and reduces costs by avoiding the
need to process cash collections for each individual sale. It is also more convenient for the
customer to make one monthly remittance.

Hence, we recommend Lagenda Coffee Bhd to use the cycle billing plan to prepare
and mail monthly statements to its customer in order to obtain a more uniform flow of cash
receipts. Under cycle billing plan, monthly statements are prepared for subsets of customers
at different times. For example, the customer master file might be divided into four parts and
each week monthly statements would be prepared for one-fourth of the customers. Cycle
billing produces a more uniform flow of cash collections throughout the month and reduces
the time that the computer systems is dedicated to printing monthly statements. Cycle billing
can significantly affect processing requirements. For instance, consider the case of a utility
company serving several million customers in a large metropolitan area. If it prepared monthly
statements for all its customers at the same time and it took 10 seconds to print out each one,
its printers would be tied up for several days.

PROBLEM BASED LEARNING: LAGENDA COFFEE BHD 7

3.0 SUMMARY AND RECOMMENDATIONS

Based on this case study, there are so many things, works and procedures need to be
upgrade by Lagenda Coffee Bhd in order to accomplish their target and goals. However, there
are a lot of weaknesses that we have found during carry out this case. The weaknesses
includes all order made by customer is through fax and phone not online order, no signature
required to confirm the release of the goods, the package is placed alphabetical order not
placed according date, no system of backorders records and order information that can be
access to all department.

Hence, they need to incorporate adequate internal control procedures in order to

ensure that the information provided for decision making is both accurate and complete to
mitigate such threats or complaints from the client that they have been received such as wrong
order received, wrong billing and being billed with back orders. Other than that, to facilitate
strategic decision making, the accounting system should be designed to accommodate the
integration of internally generated data with data from external sources. Here are some
recommendations for Lagenda Coffee Bhd should be adopted:

Improve warehouse and shipping department efficiency by replacing bar codes with
radio frequency identification (RFID) tags.
Improve billing process efficiency by increasing the number of customers who agree
to participate in invoice less sales relationships and when possible, by using
electronic data interchange (EDI) to transmit invoices to those customers who will
require them.
Improve the customer service periodically survey and monitor customer satisfaction
with their products and performance.
Improve efficiency of cash collections by encouraging customers to use electronic
funds transfer (EFT) and preferably, financial electronic data interchange (FEDI) to
remit payments. Obtain a UPIC from their bank to avoid having to share detailed
bank account information with customers. Monthly develop and monitor cash flow
budgets to anticipate short-term borrowing needs.

PROBLEM BASED LEARNING: LAGENDA COFFEE BHD 8

4.0 REFERENCES

4.1 Books & Journals

1. Romney, B. M. & Steinbart, J. P. (2015). Global Edition. Accounting Information

Systems, 13th Edition.
2. Romney, B. M. & Steinbart, J. P. (2013). Global Edition. Accounting Information
Systems, 12th Edition.
3. Hubbard, Larry. (2005). Limits to Process Documentation. Internal Auditor Vol. 62, No.
3, pp. 2627.
4. Klamm, Bonnie K., & Marcia L. Weidenmier. (2004). Linking Business Processes and
Transaction Cycles. Journal of Information Systems Vol. 18, No. 2, pp. 113
125.
5. Joseph W. Wilkinson (1989). Essential Concepts and Applications. Book of Accounting
Information Systems.

4.2 Web Addresses

1. Bajaj, G. (2013). Flowchart Symbols: What They Present? Retrieved from

http://www.indezine.com/products/powerpoint/learn/flowcharts/flowchart-
symbols-what-they-represent.html
2. Tsakas, A. (2011). Weekly Auditorium: Open Item or Balance Forward.
Retrieved from http://weeklyauditorium.blogspot.my/2011/03/open-item-or-
balance-forward.html
3. 21st Century Accounting: Billing Cycle. Retrieved from
http://www.c21accountingsoftware.com/daily-ops-customers.php
4. McGraw, H. Chapter 6 Flowcharting. Retrieved from
http://highered.mheducation.com/sites/dl/free/0078025338/933540/Chapter_6
_Flowcharting.pdf
5. Romney, B. M. & Steinbart, J. P. Accounting Information Systems. Retrieved from
http://wps.pearsoned.co.uk/ema_ge_romney_ais_12/194/49668/12715132.cw
/-/t/index.html

PROBLEM BASED LEARNING: LAGENDA COFFEE BHD 9

4.3 Others

1. Jackson, N. (2014). Revenue Cycle Overview.

Retrieved from http://www.youtube.com/watch?v=Tb0ZZUL_tHk
2. Pickard, M. (2014). System Documentation Part VI: Creating the Flowchart.
Retrieved from https://www.youtube.com/watch?v=YTcah66oYJU
3. Romney, B. M. & Steinbart, J. P. (2003). PowerPoint. Accounting Information Systems,
9th Edition.

PROBLEM BASED LEARNING: LAGENDA COFFEE BHD 10