ACC539201860 - Platinum manufacturing group

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Platinum manufacturing group is a medium sized company which is a manufacturing company and manufacture electrical equipment. The Platinum manufacturing Group is a company incorporated in Australia. The major customers of Platinum manufacturing Group are small firms and medium companies in and around Australia. Platinum manufacturing Group had a turnover of $ 3.5 million in last year. The Platinum manufacturing Group has seen a growth of around $ 1 million in last 2 years and due to this growth the C E O of the Platinum manufacturing Group Ms. Lisa James wants to review the purchase, receipt, storage and issuance of raw material.

Overview -  

The expenditure process relating to purchase, receipt, storage and issuance of raw material is summarized below. Storage of the raw material is done in store room which is high cost electrical components small in size. Password is required to access the room so it is secure as entry is restricted. Purchasing team reviews the stamped slips to match them with valid purchase order, if the packing slip is not matched with a purchase order it is considered as outstanding item and followed up at end of the month, and quantities of packing slip and approved purchase orders are tallied if any discrepancy occurs it is filed in outstanding items and followed up in end of the month. Moreover purchasing team gets invoices from suppliers too and these invoices are paid on due dates and reconciled with at the end of each month. Purchasing team send emails to the suppliers demanding the required purchase orders. The raw material is directly received by the store room staff, staff counts items received and reconcile it with the packing slip of received goods, store room staff initials, dates and stamps the packing slip. The raw materials are issues without any accounting as the Platinum manufacturing Group does not follows any perpetual inventory system (W. Stevens, G. Myers, L. Constantine, 1974). The inventory at the end of the month is reconciled by physical count of raw material in stock.

Level 0 data flow diagram (raw material purchasing process) -       

Data flow diagram is a graphical representation system of the flow of information or data from one department to another including the process which is being conducted by them (John Azzolini, 2000). Data flow diagram is also called D F D, and D F D is an initial step which helps in creating an overview of the process without going in to much detail of each and every related step of the process and so on (Scott W. Ambler, 2001).  
Steps -

1. Store room supervisor physically counts quantities of raw material on hand against pre - determined re - order level of the Platinum manufacturing group.
2. If the count is below re - order level, supervisor enters items inventory number on material purchase requisition list
3. Material purchase requisition list is emailed to purchasing team.
4. Upon receipt of material requisition form purchasing team prepares purchase order for each item on the list
5. Emails the purchase order to respective suppliers from whom last purchase of relevant item was made
6. Copy of purchase order is retained in open purchase Order file.

S.No.	Internal control weakness