Chapter 12, Problem 4P

1)

Summary Introduction

To determine: The control plan for the given system failure.

Introduction:

Accounting Information System (AIS) is said to be the specialized subsystem of the Information System (IS). AIS can be used in the business events for the purpose of collecting, processing, and reporting the financial information.

Explanation of Solution

Given system failure:

Inventory shortages have been discovered at Company B by the warehouse managers. They realized that the goods have arrived in the warehouse while investigating the paperwork.

Determine the control plan for the given system failure:

Perimeter and building controls: Accessing control over the warehouse building helps to prevent the losses.

2)

Summary Introduction

To determine: The control plan for the given system failure.

Introduction:

Accounting Information System (AIS) is said to be the specialized subsystem of the Information System (IS). AIS can be used in the business events for the purpose of collecting, processing, and reporting the financial information.

Explanation of Solution

Given system failure:

The vendors claimed that they are billing for the goods they have shipped. However, the accounts payable clerks at Company G have trouble in reconciling the quantities as received and the quantities on invoices sent by the vendors.

Determine the control plan for the given system failure:

Count goods and compare to vendor packing slip: Vendor packing slip should be compared with the goods that are counted.

3)

Summary Introduction

To determine: The control plan for the given system failure.

Introduction:

Accounting Information System (AIS) is said to be the specialized subsystem of the Information System (IS). AIS can be used in the business events for the purpose of collecting, processing, and reporting the financial information.

Explanation of Solution

Given system failure:

Person C ordered unneeded inventory items from the company for which she is the owner.

Determine the control plan for the given system failure:

A written code of conduct: The buyers should sign in a written code of conduct of the firm to avoid conflict of interest between their financial interest and responsibility.

4)

Summary Introduction

To determine: The control plan for the given system failure.

Introduction:

Accounting Information System (AIS) is said to be the specialized subsystem of the Information System (IS). AIS can be used in the business events for the purpose of collecting, processing, and reporting the financial information.

Explanation of Solution

Given system failure:

Person D is working in the receiving department. He once received goods and he is unable to find PO for the goods. Hence, he created PO and received the good. However, later he found that the firm never ordered the goods.

Determine the control plan for the given system failure:

Independent authorization to record receipt: There must be a purchase order on file and the person in logistics should not create the PO.

5)

Summary Introduction

To determine: The control plan for the given system failure.

Introduction:

Accounting Information System (AIS) is said to be the specialized subsystem of the Information System (IS). AIS can be used in the business events for the purpose of collecting, processing, and reporting the financial information.

Explanation of Solution

Given system failure:

Person K created a vendor record for Company E, as she is in need to buy a part from Company E. Afterwards, others began to use Company E for other purchases.

Determine the control plan for the given system failure:

Independent vendor master data maintenance: Vendor master data should be maintained. The firm should need a process to approve the vendors to find that they can deliver goods with the prices.

6)

Summary Introduction

To determine: The control plan for the given system failure.

Introduction:

Accounting Information System (AIS) is said to be the specialized subsystem of the Information System (IS). AIS can be used in the business events for the purpose of collecting, processing, and reporting the financial information.

Explanation of Solution

Given system failure:

When gotten into some financial difficulties, Person S who is working in Company L started to work for Company H. Person S created PO from Company H and recorded a receipt. However, no goods were received. Afterward, Company H sends a bill and gets paid from Company L.

Determine the control plan for the given system failure:

Segregate warehouse and receiving functions: The warehouse and receiving functions should be segregated.

7)

Summary Introduction

To determine: The control plan for the given system failure.

Introduction:

Accounting Information System (AIS) is said to be the specialized subsystem of the Information System (IS). AIS can be used in the business events for the purpose of collecting, processing, and reporting the financial information.

Explanation of Solution

Given system failure:

At Company W, there are discrepancies between the items ordered and recorded that includes wrong quantities and wrong items.

Determine the control plan for the given system failure:

Compare PO data to input receipt data: The purchase order should be matched with the invoice received for the order

8)

Summary Introduction

To determine: The control plan for the given system failure.

Introduction:

Accounting Information System (AIS) is said to be the specialized subsystem of the Information System (IS). AIS can be used in the business events for the purpose of collecting, processing, and reporting the financial information.

Explanation of Solution

Given system failure:

Most of the times, Company S would run out of inventory of some items. They investigated and found that the PO was issued but items are not received. They have also noted that these delayed deliveries and poor performance are from the same vendors.

Determine the control plan for the given system failure:

Compare vendors for price, terms, quality, and availability: Available vendors should be compared with respect to the price, terms, availability, and quality. Hence, vendors who can provide the best services can be selected.

9)

Summary Introduction

To determine: The control plan for the given system failure.

Introduction:

Accounting Information System (AIS) is said to be the specialized subsystem of the Information System (IS). AIS can be used in the business events for the purpose of collecting, processing, and reporting the financial information.

Explanation of Solution

Given system failure:

The vendors of Company M received POs that seemed to be from the firm but actually bogus. Usually, Company M uses the internet to send purchase orders.

Determine the control plan for the given system failure:

Digital signature: Digital signatures make sure that there is only authorized access to the computer.

10)

Summary Introduction

To determine: The control plan for the given system failure.

Introduction:

Accounting Information System (AIS) is said to be the specialized subsystem of the Information System (IS). AIS can be used in the business events for the purpose of collecting, processing, and reporting the financial information.

Explanation of Solution

Given system failure:

There were several discrepancies in inventory data of Company D. The inventory in the shelf has not reflected in the balances.

Determine the control plan for the given system failure:

Monitor open PO: Open purchase orders should be monitored to avoid discrepancies.