Systems engineering/Workshop on Fundamentals of Systems Modeling/Irwin Consulting Bookkeeping Payroll & Invoice System

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Case Study/Example of small administrative system.

Irwin Consulting was a small computer consulting firm operating from 1992 to 2002 in the State of Oregon, USA.

It started with a sole proprietor, grew to approximately 12-14 professional employees and then shutdown with the loss of its major engineering customer and failure to reach market with its multimedia edutainment product.

Along the way, the proprietor established his books on a couple of book keeping systems before settling on Quickbooks and programmed his payroll processes according the IRS publications using the Microsoft Excel spreadsheet program. Standard templates for timesheets, expense reports, invoices, etc. were developed as needed to support the critical administrative tasks.

People/roles involved

  • Owner - Must withhold taxes and file payroll reports with IRS.
  • Bookkeeper - Must collect, classify, enter data and produce final reports for owner approval and filing with IRS.
  • Employee - Must turn in time sheets and expense reports for customer and inhouse projects.
  • Project Manager - Must use time and expense reports to create invoices monthly to large customers for ongoing work.
  • Consultant - Must create task invoice, collect payment, turn in all information to bookkeeper.
  • Customers - feedback, complaints, queries, request for proposals, remuneration for services rendered.

Physical Components Involved

  • Company and Consultant Automobiles
  • Desktop and portable computers and disk media
  • Phones, answering machines, modems,

Software, procedures and data

  • Bookkeeping software
  • Spreadsheets
  • Standard Report Forms
  • Handwritten or verbally provided data
  • Standard rates/tasks

Insert some data flow diagrams here

Interesting variations in processes

  • automated timesheets - prototyping initiated, unsuccessful in field due to software interface problems
  • Change in reporting requirements (IT mangr vs. customer Engr Mangr)
  • Notice from major customer accounting department - $15 dollar invoices to expensive to process ---consolidate into larger tasks or projects.
  • Customer process broken, large invoices will not be paid until subsequent billing cycles
  • FDIC banks not required to accept payments to IRS unless you have a customer account with them. Builtin process time makes timely deposits impossible without preplanning.
  • Employees leaving clear the books only when balance is favorable to them. Policy issue. Employees must travel and incurr expenses to create revenue but if they will not turn in receipts or clear travel advances company incurrs steady cash loss with employee turnover.

Interesting Questions

1. Cost effective to implement electronic time sheets?

How is this affected by operational training requirements and

services delivery and evaluation for customers?

2. Is it possible or desirable to operate without cash advances to employees or is this best solved by budgeting for inevitable loss?

3. Holdback period. Is it adequate, desirable, legal to allow efficient records processing and forwarding of accurate financial reports and cash to IRS or are multiple filings of corrected reports inevitable as information comes available to administrative office?