INTERNAL CONTROLDuring the past year, Howard Industries has experiencedexcessive employee turnover in their IT function.Exit interviews with employees revealed thatthey were dissatisfied with the working environment.Howard employed the services of a managementconsulting firm that had expertise in employee relationshipmanagement. The consulting firm made recommendationto restructure IT operations to createa greater sense of “ownership” among the IT staff.After three months, under the new operation a surveyindicated a marked increase in the level of jobsatisfaction among the IT group.During the conduct of the audit planning phase ofthe annual financial audit, the auditor observed thefollowing practices: Individual IT professionals areassigned exclusively to support specific businessfunctions such as sales processing, billing, customeraccount maintenance, etc. Each professional providesa range of IT services for their respectiveusers including computer operations, programchanges, and documenting the system throughrecord layouts, system flowcharts, and program listings. They also reconcile computer output reportsand logs of transactions errors.Requireda. Identify and explain any control concerns youhave with the new operations.b. What potential computer fraud might this operationalapproach permit?
INTERNAL CONTROL
During the past year, Howard Industries has experienced
excessive employee turnover in their IT function.
Exit interviews with employees revealed that
they were dissatisfied with the working environment.
Howard employed the services of a management
consulting firm that had expertise in employee relationship
management. The consulting firm made recommendation
to restructure IT operations to create
a greater sense of “ownership” among the IT staff.
After three months, under the new operation a survey
indicated a marked increase in the level of job
satisfaction among the IT group.
During the conduct of the audit planning phase of
the annual financial audit, the auditor observed the
following practices: Individual IT professionals are
assigned exclusively to support specific business
functions such as sales processing, billing, customer
account maintenance, etc. Each professional provides
a range of IT services for their respective
users including computer operations,
changes, and documenting the system through
record layouts, system flowcharts, and program listings. They also reconcile computer output reports
and logs of transactions errors.
Required
a. Identify and explain any control concerns you
have with the new operations.
b. What potential computer fraud might this operational
approach permit?
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