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Accounting Information Systems

11th Edition
Ulric J. Gelinas + 3 others
ISBN: 9781337552127

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BuyFindarrow_forward

Accounting Information Systems

11th Edition
Ulric J. Gelinas + 3 others
ISBN: 9781337552127
Textbook Problem

The following is a list of 12 control plans from Chapter 8. These are followed by a list of 10 B/AR/CR business process controls or deficiencies. Match the 10 B/AR/CR business process control plans with a pervasive control plan from Chapter 8 that could prevent the deficiencies noted in the preceding list or have an impact on the successful execution of the business process control. Explain the impact that the pervasive control could have.

Control Plans from Chapter 8

  1. A. Access control software (i.e., assignment of access rights to employees)
  2. B. Selection, hiring, and supervision of billing clerks to ensure that they can and do carry out their assigned responsibilities
  3. C. Physical controls for perimeter, building, and computer facilities to prevent loss or destruction of the computer resources
  4. D. Preventive maintenance of computer hardware to ensure reliability and availability
  5. E. Systems development life cycle (SDLC), including testing and approval before implementation of new or revised programs
  6. F. Segregate marketing (i.e., authorization of prices) from billing (i.e., authorization of changes to the billing process and programs)
  7. G. Segregate payment applications clerks from AR clerks who resolve customer complaints
  8. H. Segregate cashier who processes cash receipts from the treasurer
  9. I. Segregate controller functions (recordkeeping for AR) from treasurer functions (custody of cash)
  10. J. Continuous data protection (CDP) to ensure availability of sales order and AR master data
  11. K. Controls for physical and logical access to sales order master data to prevent, for example, unauthorized deletion of open sales orders
  12. L. Controls for physical and logical access to accounts receivable master data to prevent, for example, unauthorized deletion of open invoices

B/AR/CR Business Process Control Plans or Deficiencies

  1. 1. The treasurer reconciles bank accounts regularly.
  2. 2. Monthly statements are printed in the accounts receivable department and mailed to customers.
  3. 3. Cash receipts are reviewed to determine that the customer has taken the appropriate discounts. Exceptions are routed via workflow to the supervisor of AR for electronic approval. Sales clerks have been able to approve the taking of unauthorized discounts.
  4. 4. Each day, the computer processes the open sales orders to identify those that have been shipped but not yet billed. This list is presented to the billing clerk for action. Occasionally, the billing clerk does not bother to follow up on open sales orders, and invoices are not sent out in a timely manner.
  5. 5. Periodically, the billing program identifies open sales orders (shipped but not billed) and prepares and sends invoices. To prevent some invoices from being sent, someone in the organization has changed certain sales orders to indicate that they are closed.
  6. 6. When an invoice is prepared, the computer should employ authorized prices, terms, freight, and discounts. Frequent customer complaints include incorrect prices on invoices. Research determines that billing clerks are changing authorized prices prior to billing.
  7. 7. Prior to releasing a batch of invoices, the billing clerk compares the batch totals of the shipments to be billed to the totals prepared by the computer at the end of the invoicing process. The computer totals are often incorrect.
  8. 8. Upon receipt in the mailroom, checks are forwarded to the cashier and RAs are sent to the cash applications clerks.
  9. 9. The computer prepares an aging of open invoices, and accounts receivable clerks follow up on overdue balances.
  10. 10. Turnaround documents (e.g., RAs) are used to record customer payments. The scanner often does not read the remittance data correctly.

Summary Introduction

To match: The B/AR/CR Business process control plans or deficiencies with the control plans.

Introduction:

B/AR/CR process:

It is an accounting process with an interacting structure of different process supporting the decision-making activities of the financial managers.

Explanation

The B/AR/CR Business process control plans or deficiencies with the control plans:

1.

Correct answer: (H)

Segregate cashier who processes cash receipts from the treasurer.

The process of reconciliation will be effective only if the person who detects the fraud and the person who handles the cash receipts or disbursements are different. Hence, the treasurer and cashier must be separated.

2.

Correct answer: (G)

Segregate payment applications clerks from AR clerks who resolve customer complaints.

Customers will report errors to clerks in the accounts receivable. The person who apply payments must be different from the person who corrects the internal errors.

3.

Correct answer: (A)

Access control software (i.e., assignment of access rights to employees).

The presence of access control software will guarantee that the exceptions are directed to personnel who are authorized to handle those exceptions.

4.

Correct answer: (B)

Selection, hiring, and supervision of billing clerks to ensure that they can and do carry out their assigned responsibilities.

The selection, hiring and supervision of these billing clerks will ensure that shipments are selected for the process of billing at the appropriate time.

5.

Correct answer: (K)

Controls for physical and logical access to sales order master data to prevent, for example, unauthorized deletion of open sales orders.

The plans for the logical and physical access to the sales order prevents the unauthorized changes to the sales order...

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