INPUT CONTROLS ANDNETWORKINGA global manufacturing company has over 100subsidiaries worldwide reporting to it each month. Thereporting units prepare the basic financial statementsand other key financial data on prescribed forms,which are e-mailed or faxed to the corporate headquarters.The financial data are then entered into the corporatedatabase from which consolidated statements areprepared for internal planning and decision making.Current reporting policy requires that the subsidiariesprovide the previous month’s reports by the tenthworking day of each new month. Accounting departmentstaff log and enter the reports into the database.Approximately 15 percent of the reporting units aredelinquent in submitting their reports and three to fourdays are required to enter all the data into the database.After the data are loaded into the system, data verificationprograms are run to check footings, cross-statementconsistency, and dollar range limits. Any errors in thedata are traced and corrected, and reporting units arenotified of all errors via e-mail.The company has decided to upgrade its computercommunications network with a new system that willsupport more timely receipt of data at corporateheadquarters. The IT department at corporate headquartersis responsible for the overall design andimplementation of the new system. It will use current computer communications technology and installLANs, PCs, and servers at all reporting units.The newsystemwill allowclerks at the remote sites tosend financial data to the corporate office via the Internet.The required formtemplates will be downloaded tothe remote sites, along with the data verification programs.The clerkswill enter data into the forms to createa temporary file, which data verification programs willcheck for errors.All corrections can thus bemade before transmitting the data to headquarters. Either the datawould be transmitted to corporate headquarters immediately,or the corporate headquarters computer wouldretrieve it fromdisk storage at the remote site as needed.Data used at corporate headquarterswould therefore befree from errors and ready for consolidation.The company’s controller is pleased with the prospectsof the new system, which should shorten thereporting period by three days. He is, however, concernedabout security and data integrity during the transmission.He has scheduled a meeting with key personnelfrom the systems department to discuss these concerns.RequiredThe company could experience data security andintegrity problems when transmitting data betweenthe reporting units and corporate headquarters.a. Identify and explain the data security and integrity problems that could occur.b. For each problem identified, describe a controlprocedure that could be employed to minimizeor eliminate the problem. Use the following format to present the answer.Problem Identification and Explanation Control Procedure and Explanation
INPUT CONTROLS AND
NETWORKING
A global manufacturing company has over 100
subsidiaries worldwide reporting to it each month. The
reporting units prepare the basic financial statements
and other key financial data on prescribed forms,
which are e-mailed or faxed to the corporate headquarters.
The financial data are then entered into the corporate
database from which consolidated statements are
prepared for internal planning and decision making.
Current reporting policy requires that the subsidiaries
provide the previous month’s reports by the tenth
working day of each new month. Accounting department
staff log and enter the reports into the database.
Approximately 15 percent of the reporting units are
delinquent in submitting their reports and three to four
days are required to enter all the data into the database.
After the data are loaded into the system, data verification
programs are run to check footings, cross-statement
consistency, and dollar range limits. Any errors in the
data are traced and corrected, and reporting units are
notified of all errors via e-mail.
The company has decided to upgrade its computer
communications network with a new system that will
support more timely receipt of data at corporate
headquarters. The IT department at corporate headquarters
is responsible for the overall design and
implementation of the new system. It will use current computer communications technology and install
LANs, PCs, and servers at all reporting units.
The newsystemwill allowclerks at the remote sites to
send financial data to the corporate office via the Internet.
The required formtemplates will be downloaded to
the remote sites, along with the data verification programs.
The clerkswill enter data into the forms to create
a temporary file, which data verification programs will
check for errors.All corrections can thus bemade before transmitting the data to headquarters. Either the data
would be transmitted to corporate headquarters immediately,
or the corporate headquarters computer would
retrieve it fromdisk storage at the remote site as needed.
Data used at corporate headquarterswould therefore be
free from errors and ready for consolidation.
The company’s controller is pleased with the prospects
of the new system, which should shorten the
reporting period by three days. He is, however, concerned
about security and data integrity during the transmission.
He has scheduled a meeting with key personnel
from the systems department to discuss these concerns.
Required
The company could experience data security and
integrity problems when transmitting data between
the reporting units and corporate headquarters.
a. Identify and explain the data security and integrity problems that could occur.
b. For each problem identified, describe a control
procedure that could be employed to minimize
or eliminate the problem. Use the following format to present the answer.
Problem Identification and Explanation Control Procedure and Explanation
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