Accounting Information Systems
10th Edition
ISBN: 9781337619202
Author: Hall, James A.
Publisher: Cengage Learning,
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Chapter 15, Problem 1P
To determine
Explain the types of control required to mitigate the risk in the environment.
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The computer processing portion of a sales order system is represented by the flowchart. Answer the following questions.a. What type of data processing system is this? Explain, and be specific.b. The auditor suggests that this system can be greatly simplified by changing to direct access files. Explain the major operational changes that would occur in the system if this were done.c. The auditor warns of control implications from this change that must be considered. Explain the nature of the control implications.d. Sketch a flowchart (the computerized portion only) of the proposed new system. Use correct symbols and label the diagram.
Chapter 15 Solutions
Accounting Information Systems
Ch. 15 - Prob. 1RQCh. 15 - Prob. 2RQCh. 15 - Prob. 3RQCh. 15 - Prob. 4RQCh. 15 - Prob. 5RQCh. 15 - Explain discretionary access privileges.Ch. 15 - Prob. 7RQCh. 15 - Prob. 8RQCh. 15 - What is a vaccine, and what are its limitations?Ch. 15 - Prob. 10RQ
Ch. 15 - Prob. 11RQCh. 15 - What are the risks from equipment failure?Ch. 15 - Prob. 13RQCh. 15 - Prob. 14RQCh. 15 - Prob. 15RQCh. 15 - Prob. 16RQCh. 15 - Prob. 17RQCh. 15 - Prob. 18RQCh. 15 - Prob. 19RQCh. 15 - Prob. 20RQCh. 15 - Prob. 21RQCh. 15 - Prob. 22RQCh. 15 - Prob. 1DQCh. 15 - Prob. 2DQCh. 15 - Prob. 3DQCh. 15 - Prob. 4DQCh. 15 - Prob. 5DQCh. 15 - Prob. 6DQCh. 15 - Prob. 7DQCh. 15 - Prob. 8DQCh. 15 - Prob. 9DQCh. 15 - Prob. 10DQCh. 15 - Prob. 11DQCh. 15 - Prob. 12DQCh. 15 - Prob. 13DQCh. 15 - End-user computing has become extremely popular in...Ch. 15 - Prob. 15DQCh. 15 - Prob. 16DQCh. 15 - Prob. 17DQCh. 15 - Prob. 18DQCh. 15 - Prob. 19DQCh. 15 - Prob. 20DQCh. 15 - Prob. 21DQCh. 15 - Prob. 22DQCh. 15 - Prob. 23DQCh. 15 - Prob. 24DQCh. 15 - Prob. 25DQCh. 15 - Describe a digest within the context of a digital...Ch. 15 - What is a digital envelope?Ch. 15 - Prob. 28DQCh. 15 - Prob. 29DQCh. 15 - Prob. 30DQCh. 15 - Prob. 31DQCh. 15 - Discuss the unique control problems EDI creates.Ch. 15 - Prob. 33DQCh. 15 - Prob. 34DQCh. 15 - Prob. 1MCQCh. 15 - Prob. 2MCQCh. 15 - Prob. 3MCQCh. 15 - Prob. 4MCQCh. 15 - Prob. 5MCQCh. 15 - Prob. 6MCQCh. 15 - Prob. 7MCQCh. 15 - Prob. 8MCQCh. 15 - Prob. 9MCQCh. 15 - Prob. 10MCQCh. 15 - Prob. 1PCh. 15 - Prob. 2PCh. 15 - Prob. 3PCh. 15 - Prob. 4PCh. 15 - Prob. 5PCh. 15 - Prob. 6PCh. 15 - Prob. 7PCh. 15 - Prob. 8PCh. 15 - Better Business Company (BBC) is in the process of...Ch. 15 - Prob. 10PCh. 15 - Prob. 11PCh. 15 - Prob. 12PCh. 15 - Prob. 13P
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- Which of the following is an example of an input control? a.making sure report that are distributed to the proper people b.monitoring the work of data entry clerks. c. Collecting accurate statistics of historical transactions while gathering data. d. Performing a check-digit test on a customer acount number e.Having anothr person review the design of a business formarrow_forwardConsider the following list of internal controls. For each control classify it either as a preventive control or a detective control. Also classify each control as either a manual control, an IT dependent manual control, at IT application control, or a IT general control. a. b. C. d. e. Software will not allow a sale to be processed to a customer that has exceeded its credit limit. Personnel responsible for running computer programs are prevented from accessing and changing computer software. Computer software generates a daily report of all shipping documents (bills of lading) that have not resulted in a sales invoice. An accounting clerk follows-up on a computer-generated report of all shipping documents (bills of lading) that have not resulted in a sales invoice, to determine if an invoice should be generated. An accounting employee performs a monthly bank reconciliation.arrow_forwardWhat are the risks that are caused by the following combination of tasks? - The warehouse clerk who has custodial responsibility over inventory in the warehouse, updates the inventory subsidiary ledger and prepares an inventory summary for the general ledger department. - The billing clerk bills customers and records sales in the sales journal.arrow_forward
- Consider the following short case as you respond to the question:SPC Corporation sells computer security software. They maintain their AIS using general ledger software; data files are backed up twice a day. Sales staff can access the customer database, inventory files and general ledger, as well as sales-related documents such as invoices and sales orders. Newly hired sales staff members at SPC receive the company procedures manual which explains the process used to complete the steps in the sales/collection process. To minimize costs, SPC designates up to five sales staff members each month who can do credit checks for all new customers in addition to processing sales. SPC bills its clients monthly and uses the balance forward method of accounting for receivables; all cash receipts from clients are processed using a lockbox procedure. The lockbox firm's fee is 3% of all collections. SPC's accounting department estimates bad debts at the end of each fiscal year; they are normally…arrow_forwardIs the following a potential control weakness? A computer network and personal computers support Marco accounting and inventory management systems. Personal computers are located in the offices and warehouse and a central server handles all accounting and inventory files. Printers are located in areas where employees need printed documents and other records routinely. The computer is used to control and process most transactions, to print documents, prepare accounting records, and prepare periodic financial statements. Marco uses commercial software recommended by their auditor. To date, they have had only the usual startup problems. They have used it for two years and have upgraded it once. Briefly explain the potential mistatement and recommended correction.arrow_forwardhas hired you to review its sales order procedures for internal control compliance and to make recommendations for changes. You are required to:a. Create a data flow diagram of the current system. b. Create a system flowchart of the existing system. c. Analyze the internal control weaknesses in the system. ; andd. Prepare a system flowchart of a redesigned computer-based systemarrow_forward
- which, if any of the following situations represents improper segregation of functions? Explain your answer. a. the billing department prepares the customers' invoices and records the sale in the sales journal b. The mailroom clerk opens a cash receipt envelopes from customers and also prepared the remittance risk c. Accounting clerk receives journal vouchers from various departments and also posts to the GL accounts d. The sales department approves sales credit memos as the result of product returns and forwards these to the AR department, which adjusts the customer accounts to reflect the return.arrow_forwardDescribe briefly the processing of transactions, including internal control features, in the following functions under the sales and collection cycle:a. order entryb. customer billingarrow_forwardThe best way to enact a broad fraud prevention program is toa. Install airtight control systems of checks and supervision.b. Name an “ethics officer” who is responsible for receiving and acting on fraud tips.c. Place dedicated hotline telephones on walls around the workplace with direct communication to the company ethics officer.d. Practice management “of the people and for the people” to help them share personal and professional problems.arrow_forward
- Is it an entity inherent risk for the information below? A computer network and personal computers support Marco Inc's accounting and inventory management systems. Personal computers are located in the offices and warehouse and a central server handles all accounting and inventory files. Printers are located in areas where employees need printed documents and other records routinely. The computer is used to control and process most transactions, to print documents, prepare accounting records, and prepare periodic financial statements. Marco uses commercial software recommended by their auditor. To date, they have had only the usual startup problems. They have used it for two years and have upgraded it once. If it is an inherent risk, what is the feature of the firm that will possibly affect inherent risk and explain how and why; that is whether it increases or decreases inherent risk. Please address a specific risk to the accuracy of the financial statements with the "how" and whether…arrow_forwardLeonard Moses is planning to grow its customer base and is in the process of creating an online web-based sales ordering system for customers to purchase products using personal credit cards for payment. At a recent meeting with the internal auditors, it was highlighted that there are risk associated with this system. Identify three risks related to an online sales system that management should consider. For each risk, identify an internal control that could be implemented to reduce that risk.arrow_forwardThe following is a description of manufacturing company’s purchasing procedures. All computers in the company are networked to a centralized accounting system so that each terminal has full access to a common database.The inventory control clerk periodically checks inventory levels from a computer terminal to identify items that need to be ordered. Once the clerk feels inventory is too low, he chooses a supplier and creates a purchase order from the terminal by adding a record to the purchase order file. The clerk prints a hard copy of the purchase order and mails it to the vendor. An electronic notification is also sent to accounts payable and receiving, giving the clerks of each department access to the purchase order from their respective terminals. When the raw materials arrive at the unloading dock, a receiving clerk prints a copy of the purchase order from his terminal and reconciles it to the packing slip. The clerk then creates a receiving report on a computer system. An…arrow_forward
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