Accounting Information Systems
10th Edition
ISBN: 9781337619202
Author: Hall, James A.
Publisher: Cengage Learning,
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Chapter 6, Problem 8P
To determine
Explain the risks associated with this process also explain the controls that should be implemented to reduce these risks.
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Discuss the risks depicted by the fixed asset system flowchart. Describe the internal control improvements to the system that are needed to reduce these risks.
CAATs Application—PP&E. You are supervising the audit fieldwork of Sparta Springs Company and need certain information from Sparta’s equipment records, which are maintained on a computer file. The particular information is (1) net book value of assets so that your assistant can reconcile the subsidiary ledger to the general ledger control accounts (the general ledger contains an account for each asset type at each plant location) and (2) sufficient data to enable your assistant to find and inspect selected assets. The record layout of the master file follows:Asset number.Description.Asset type.Location code.Year acquired.Cost.Accumulated depreciation, end of year (includes accumulated depreciation at the beginning of the year plus depreciation for year to date).Depreciation for the year to date.Useful life.From the data file described earlier,a. List the information needed to verify correspondence of the subsidiary detail records with the general ledger accounts. Does this work…
Superior Co. manufactures automobile parts for sale to the major U.S. automakers. Superior’s internal audit staff is to review the internal controls over machinery and equipment and make recommendations for improvements when appropriate. The internal auditors obtained the following information during the assignment:
Requests for purchase of machinery and equipment are normally initiated by the supervisor in need of the asset. The supervisor discusses the proposed acquisition with the plant manager. A purchase requisition is submitted to the purchasing department when the plan manager is satisfied that the request is reasonable and that there is a remaining balance in the plant’s share of the total corporate budget for capital acquisitions.
Upon receiving a purchase requisition for machinery or equipment, the purchasing department manager looks through the records for an appropriate supplier. A formal purchase order is then completed and mailed. When the machine or equipment is…
Chapter 6 Solutions
Accounting Information Systems
Ch. 6 - Which document is used by the cost accounting...Ch. 6 - Prob. 2RQCh. 6 - Prob. 3RQCh. 6 - Why should employee paychecks be drawn against a...Ch. 6 - Prob. 5RQCh. 6 - Prob. 6RQCh. 6 - Prob. 7RQCh. 6 - Prob. 8RQCh. 6 - Prob. 9RQCh. 6 - Prob. 10RQ
Ch. 6 - What are the objectives of a fixed asset system?Ch. 6 - How do fixed asset systems differ from purchases...Ch. 6 - What are three tasks of the fixed asset system?Ch. 6 - What information is found on the depreciation...Ch. 6 - Why is it crucial to the integrity of the...Ch. 6 - Prob. 16RQCh. 6 - Prob. 17RQCh. 6 - What document shows when fixed assets are fully...Ch. 6 - Who should authorize disposal of fixed assets?Ch. 6 - Assets used for production are secured in a...Ch. 6 - What is the importance of the job ticket?...Ch. 6 - Prob. 2DQCh. 6 - Prob. 3DQCh. 6 - Prob. 4DQCh. 6 - Discuss some specific examples in which...Ch. 6 - Discuss some service industries that may require...Ch. 6 - Prob. 7DQCh. 6 - If an asset that is not fully depreciated is sold...Ch. 6 - Discuss the fundamental risk and control issues...Ch. 6 - Prob. 10DQCh. 6 - Prob. 11DQCh. 6 - Describe an internal control that would prevent...Ch. 6 - Prob. 13DQCh. 6 - What negative consequences result when fixed asset...Ch. 6 - Prob. 1MCQCh. 6 - Prob. 2MCQCh. 6 - Prob. 3MCQCh. 6 - Prob. 4MCQCh. 6 - Which one of the following documents captures the...Ch. 6 - Which of the following are not fixed asset system...Ch. 6 - All of the following controls are likely to apply...Ch. 6 - All of the following data items are likely to be...Ch. 6 - The following are all transactions processed in...Ch. 6 - Prob. 10MCQCh. 6 - PAYROLL FRAUD John Smith worked in the stockyard...Ch. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Prob. 7PCh. 6 - Prob. 8PCh. 6 - FIXED ASSET SYSTEM-FRAUD POTENTIAL Holder Co....Ch. 6 - Prob. 10PCh. 6 - Prob. 11PCh. 6 - Prob. 12PCh. 6 - Prob. 1ICCCh. 6 - Prob. 2ICCCh. 6 - Prob. 3ICCCh. 6 - Prob. 4ICCCh. 6 - Prob. 5ICCCh. 6 - Prob. 6ICC
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- Which of the following management assertion is the most suitable assertion for “inspecting invoices to determine if the services provided by an electrical contractor are repairs or improvements to the client’s offices” evidence: Select one: a. Accuracy or valuation and allocation b. Occurrence or existence c. Cut-off d. Completenessarrow_forwardWhich of the following groups would be classified as intangible assets for financial accounting and reporting purposes? Computer software costs, development costs for internally developed patents, research, and goodwill Long-term notes receivable, copyrights, goodwill, and trademarks Start-up costs, goodwill, costs of employee training programs, and trademarks Patents, software development costs, franchises, copyrights, and trademarksarrow_forwardThe procurement process for Omni Wholesale Company includes a series of activities that transforms a materials requisition into a vendor check. The process begins with a request for materials. The requesting department prepares and sends a materials request form to the Purchasing Department. The Purchasing Department then places a request for a quote to vendors. Vendors prepare bids in response to the request for a quote. A vendor is selected based on the lowest bid. A purchase order to the low-bid vendor is prepared. The vendor delivers the materials to the company, whereupon a receiving ticket is prepared. Payment to the vendor is authorized if the materials request form, receiving ticket, and vendor invoice are in agreement. These three documents fail to agree 40% of the time, initiating effort to reconcile the differences. Once the three documents agree, a check is issued. The process can be diagrammed as follows: An activity analysis indicated the following activity costs with…arrow_forward
- Duties of controller as defined by the controllers institute of U.S.A? Ans: 1.The installation and supervision of all accounting records. 2.The preparation and interpretation of financial reports and statements. 3.The continuous audit of accounts and records. 4.The compilation of production and distribution costs. 5.The taking and costing of all physical inventories 6.The maintenance of adequate records of all contacts and leases. 7.The approval for payment of all cheques, promissory notes etsarrow_forwardThe following are typical questions that might appear on an internal control questionnaire relating to plant and equipment: Has a dollar minimum been established for expenditures to be capitalized? Are subsidiary ledgers for plant and equipment regularly reconciled with general ledger controlling accounts? Describe the manner in which each of the above procedures might be tested.arrow_forwardDirection: discussed the process of auditing the followingtransactions/accounts: b. Midstream and Downstream Sectors• Inventories• Property, plant, and equipment (PPE) c. Sector-Wide• Joint-Arrangements• Decommissioning costsarrow_forward
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