Accounting Information Systems
10th Edition
ISBN: 9781337619202
Author: Hall, James A.
Publisher: Cengage Learning,
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 11P
a.
i.
To determine
Describe the role of management in the establishment, maintenance, and evaluation of internal control.
ii.
To determine
Describe the role of external auditor in the establishment, maintenance, and evaluation of internal control.
iii.
To determine
Describe the role of internal audit in the establishment, maintenance, and evaluation of internal control.
b.
To determine
Determine the authority to whom, the Director of internal audits should report.
c.
To determine
Provide opinion on the contention of the audit committee members as to the committee’s current composition.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Steve Ankenbrandt, president of Beeb Corporation, has been discussing the company’s internal operations with the presidents of several other multidivision companies. Ankenbrandt discovered that most of them have an internal audit staff. The activities of the staffs at other companies include financial audits, operational audits, and sometimes compliance audits.
Required:
Describe the meaning of the following terms as they relate to the internal auditing function:
a. Financial auditing.
b. Operational auditing.
c. Compliance auditing.
Wise Limited has an online platform for purchase and sale of goods and services which connects customers all around the world. It provides additional services of invoicing and data collation for sellers on the platform. Sellers process sales orders and transport the orders to the customers. Payment is made through the platform directly to the seller for which Wise limited collects a fee for invoicing services
Further to the requirement of the Code of Corporate Governance Wise limited has decided to change its auditors after a period of 10 years. Your firm was approached and due process followed in the appointment of new Auditors including appropriate professional clearance. The audit is now set to commence.
You are the Audit Manager responsible for this engagement but some of your Team members are not conversant with controls in on-line businesses.
b. A computer-based information system is expected to have general IT controls in place. Discuss the main categories of general IT…
The Directors of Aspen PLC have recently appointed your audit firm to act as their external auditor. Aspen PLC is a FTSE-250 fast growth company specialising in cloud computing solutions. As part of the audit services, you have been requested by the Directors of Aspen PLC to undertake the following services:▪ the external audit of the company’s annual financial statement▪ taxation services; and ▪ consultancy services relating to the trialling and implementation of a new, stateof-the-art information technology systemYour audit firm has not worked for Aspen PLC before but does act as auditor for its biggest rival, another FTSE-250 company Priory Mason PLC. Required: (a) Identify and explain the professional and ethical issues that your firm should consider with regards to the services requested by Aspen PLC, stated above. What safeguards should be implemented to address these issues? (b) Critically discuss the five key principles of ethics. (c) An auditor must never disclose a…
Chapter 1 Solutions
Accounting Information Systems
Ch. 1 - Prob. 1RQCh. 1 - Prob. 2RQCh. 1 - Prob. 3RQCh. 1 - Prob. 4RQCh. 1 - What is discretionary reporting?Ch. 1 - Prob. 6RQCh. 1 - Prob. 7RQCh. 1 - Prob. 8RQCh. 1 - Prob. 9RQCh. 1 - Prob. 10RQ
Ch. 1 - Prob. 11RQCh. 1 - Prob. 12RQCh. 1 - Prob. 13RQCh. 1 - Prob. 14RQCh. 1 - Prob. 15RQCh. 1 - What is the role of the accounting function in an...Ch. 1 - Prob. 17RQCh. 1 - Prob. 18RQCh. 1 - Prob. 19RQCh. 1 - What two roles are played by accountants with...Ch. 1 - Define the term attest function.Ch. 1 - Define the term financial services.Ch. 1 - Prob. 23RQCh. 1 - Distinguish between conceptual and physical...Ch. 1 - Prob. 25RQCh. 1 - Prob. 26RQCh. 1 - Prob. 27RQCh. 1 - Prob. 28RQCh. 1 - Prob. 29RQCh. 1 - Prob. 30RQCh. 1 - Prob. 31RQCh. 1 - Prob. 32RQCh. 1 - Why are custom systems more expensive than...Ch. 1 - Prob. 34RQCh. 1 - Briefly explain accounting independence.Ch. 1 - Prob. 36RQCh. 1 - Prob. 1DQCh. 1 - Prob. 2DQCh. 1 - Distinguish between financial and nonfinancial...Ch. 1 - Prob. 4DQCh. 1 - Do you think transaction processing Systems differ...Ch. 1 - Discuss the difference between the financial...Ch. 1 - Prob. 7DQCh. 1 - Discuss how the dements of efficiency,...Ch. 1 - Discuss what is meant by the statement, The...Ch. 1 - Discuss the importance of accounting independence...Ch. 1 - Prob. 11DQCh. 1 - Prob. 12DQCh. 1 - Discuss how conceptual and physical systems differ...Ch. 1 - Prob. 14DQCh. 1 - Prob. 15DQCh. 1 - Prob. 16DQCh. 1 - Prob. 17DQCh. 1 - Prob. 18DQCh. 1 - Prob. 19DQCh. 1 - Prob. 1MCQCh. 1 - Prob. 2MCQCh. 1 - Prob. 3MCQCh. 1 - Prob. 4MCQCh. 1 - Prob. 5MCQCh. 1 - Prob. 6MCQCh. 1 - Prob. 7MCQCh. 1 - Prob. 8MCQCh. 1 - Which of the following is NOT an objective of all...Ch. 1 - Prob. 10MCQCh. 1 - Which of the following best describes the...Ch. 1 - Prob. 12MCQCh. 1 - Prob. 13MCQCh. 1 - Which of the following statements is most...Ch. 1 - Prob. 1PCh. 1 - Prob. 2PCh. 1 - ACCOUNTING INFORMATION SYSTEM ACQUISITION What is...Ch. 1 - Prob. 4PCh. 1 - Prob. 5PCh. 1 - Prob. 6PCh. 1 - FUNCTIONAL SEGMENTATION The current organizational...Ch. 1 - COMMUNICATIONS Before the mid-1970s, systems...Ch. 1 - CHARACTERISTICS OF USEFUL INFORMATION All records...Ch. 1 - Prob. 10PCh. 1 - Prob. 11PCh. 1 - Prob. 12P
Knowledge Booster
Similar questions
- You are an audit supervisor assigned to a new client which is listed on a Stock Exchange. You visited the corporate headquarters to become acquainted with key personnel and to conduct a preliminary review of the company’s accounting policies, controls, and systems. During this visit, (g) Your preliminary assessment is that the accounting systems are well designed and that they employ effective internal control procedures. Identify the problems and explain them in relation to the internal environment.arrow_forwardMicro Systems, a developer of database software packages, is a publicly held company and listed with the SEC. The company has no internal audit function. In complying with SOX, Micro Systems has agreed to establish an internal audit function and strengthen its audit committee to include all outside directors. Micro Systems has held its initial planning meeting to discuss the roles of the various participants in the internal control and financial reporting process. Participants at the meeting included the company president, the chief financial officer, a member of the audit committee, a partner from Micro Dynamics’ external audit firm, and the newly appointed manager of the internal audit department. Comments from the various meeting participants are presented below.President: We want to ensure that Micro Systems complies with SOX. The internal audit department should help to strengthen our internal control system by correcting problems. I would like your thoughts on the proper…arrow_forwardInternal Controls Homer Simpson’s first assignment as an internal auditor for Springfield Services Company involved an audit of the data processing centre controls. The Data Processing Manager, Mr. Burns, gave him a tour of the facilities. Mr. Burns explained that the facilities were located between the accounting and the personnel departments because of the high volume of transactions generated by these two areas. "Our doors are always open as a matter of policy. This way, users feel involved and committed to the system," he told Homer as they entered the glass doors of the facility. Homer was introduced to a programmer and a systems analyst who were reviewing and approving results of a program they had written together. The computer tape files were stored in the centre of the room on open shelves for ease of access to both operators and programmers. The lower part of the shelving was a locked storage cabinet. Mr. Burns showed Homer the back-up copies of tapes stored there…arrow_forward
- You are an audit supervisor assigned to a new client which is listed on a Stock Exchange. You visited the corporate headquarters to become acquainted with key personnel and to conduct a preliminary review of the company’s accounting policies, controls, and systems. During this visit, (h) Some employees complained that some managers occasionally contradict the instructions of other managers regarding proper data security procedures. Identify the problems and explain them in relation to the internal environment.arrow_forwardYou are an audit manager at Hall & Associates, who have been approached to conduct the audit of Computer Games Ltd (CGL), a manufacturer of interactive computer games, for the year ended 30 June 2013.Hall & Associates has not previously audited CGL’s financial report, although it has undertaken other types of engagements for CGL. Last year CGL hired Hall & Associates to assist in the redesign ofCGL’s accounting software to ensure that internal controls over internet sales were adequate to ensure the confidentiality of customer data and accuracy of recording. The new software was implemented at the beginning of the current year and appears to be working satisfactorily. As part of this year’s audit,youexpectto reviewtheinternalcontrolsatCGL,includingthecontrolswithintheITsystems.As part of CGL’s financing arrangements with its bank, Easymoney Ltd, it has a loan covenant that stipulates that the quick asset ratio cannot be less than 1:1 or Easymoney Ltd has the right to…arrow_forwardYour company, Tractors, Inc., is employing the SDLC for its new information system. You have been chosen as a member of the development team because of your strong accounting background. This background includes a good understanding of both financial and managerial accounting concepts and required data. You also possess a great understanding of internal control activities. You do not, however, fully understand exactly what the internal auditors will need from the system in order to comply with Section 404 of the Sarbanes-Oxley Act. Lay out the fact-gathering techniques you might employ to increase your understanding of this important component of your new system.arrow_forward
- You are an audit supervisor assigned to a new client which is listed on a Stock Exchange. You visited the corporate headquarters to become acquainted with key personnel and to conduct a preliminary review of the company’s accounting policies, controls, and systems. During this visit, (c) You learned that the financial vice president manages a staff of five internal auditors. Identify the problems and explain them in relation to the internal environment.arrow_forwardYou are an audit supervisor assigned to a new client which is listed on a Stock Exchange. You visited the corporate headquarters to become acquainted with key personnel and to conduct a preliminary review of the company’s accounting policies, controls, and systems. During this visit, (a) You met with the audit committee, which consists of the corporate controller, treasurer, financial vice president, and budget director. Identify the problems and explain them in relation to the internal environment.arrow_forwardLee Wong, CPA, is auditing the financial statements of the Alexandria Corporation, which has a batch-processing IT-based system for shipping and invoicing that it purchased from a software vendor. The following comments have been extracted from Wong’s notes on IT operations and the processing and control of shipping notices and customer invoices. Each type of computer run is assigned to a specific employee who is responsible for making program changes, running the program, and answering questions. This procedure has the advantage of eliminating the need for records of IT operations because each employee is responsible for his or her own computer runs. At least one IT department employee remains in the computer room during office hours, and only IT department employees have keys to the computer room. The corporation considered the desirability of program controls but decided to retain the manual controls in place prior to the conversion to the software vendor’s system. Company products…arrow_forward
- Randall, Inc. is a private company that manufactures heavy machinery. The company has an active audit committee and board of directors. The audit committee consists of two outside directors and Howard Kress, the company chief financial officer. The audit committee meets quarterly to provide oversight of financial reporting, including reviewing new accounting policies and unusual transactions. Howard Kress personally reviews and approves any related party transactions. Internal audit of operating units are performed by the internal auditor, who reports directly to Laura Howe, the chief operating officer. The company has written code of conduct and employees agree to adhere to the code when they are hired. The company also has a hotline for confidential reporting of unethical behavior that is staffed by the corporate controller. The audit committee reviews summaries of all incidents and investigations performed. Required: Identify the weaknesses in Randall’s system of corporate…arrow_forwardAs an audit manager at Gung & Ho, CPAs, you have been scheduled to serve as the discussion leader for an in-office training session on consideration of the internal control structure in a financial statement audit. Gung & Ho’s audit practice consists of audits of privately-owned companies and not-for-profit organizations. RequiredPrepare an outline of comments you plan to make to indicate similarities and differences in how each of the following items is handled under a primarily substantive approach versus reliance on controlsapproach.a. Understand entity-level controls.b. Understand the flow of transactions.c. Identify what can go wrong (WCGW) for financial statement assertions.d. Identify relevant controls to test.e. Determine preliminary audit strategy.f. Perform tests of controls.g. Evaluate audit evidence, assess control risk, and re-evaluate audit strategy (if necessary).h. Report internal control weaknesses to those charged with governance.arrow_forwardOrganizations often rely on their in-house audit department to ensure that their internal controls are being properly evaluated. Internal auditors at Babylion Company are subordinates of the controller. Comment on how well this framework works.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub