1)
To determine: The control plan for the given system failure.
Introduction:
1)
Explanation of Solution
Given system failure:
Company W ordered 30 circuit breakers from Company E and received only 25. Other 5 circuit breakers were on the backorder at Company E. However, an invoice was received for 30 circuit breakers and paid fully.
Determine the control plan for the given system failure:
Match invoice, PO, and receiving report: Matching invoice with Purchase Order (PO) and the receiving report helps the firm to avoid the invoices for the goods which were not ordered or received.
2)
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.
2)
Explanation of Solution
Given system failure:
Company T usually does not receive invoices and record invoices in a timely manner for payment discounts.
Determine the control plan for the given system failure:
Tickler file of open POs and receiving reports: Tickler files are an electronic or manual area where the documents, which need follow-up will be stored. It will help the firm to follow up the vendors who have not sent invoices.
3)
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.
3)
Explanation of Solution
Given system failure:
Person N is a cashier at Company S who has been writing checks to herself and no one detected for years.
Determine the control plan for the given system failure:
Reconcile bank account: Reconcile bank account helps to make sure that the payments made by the bank are accurate and authorized.
4)
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.
4)
Explanation of Solution
Given system failure:
At Company E, some of the incoming invoices are not matched against receiving reports and PO. Person J would prepare a PO to cover the invoice if he cannot find a PO for the incoming invoices.
Determine the control plan for the given system failure:
Segregate duties among purchasing, receiving, and accounts payable: The duties of the purchasing and receiving department, and accounts payable should be segregated.
5)
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.
5)
Explanation of Solution
Given system failure:
The company I receive vendor invoices once each day as batches from the Value-Added Network (VAN) through EDI feed. However, some of the invoices are from the fake vendors.
Determine the control plan for the given system failure:
Compare input data with master data: Comparing the input data with the master vendor data helps to determine the invoices from the authorized vendors.
6)
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.
6)
Explanation of Solution
Given system failure:
Due to the cash flow diagrams, Company W loses discounts on vendor payments.
Determine the control plan for the given system failure:
Review of a cash planning report: On a regular basis, the treasurer should produce and review an aging of accounts payable to make sure that enough funds are available to pay obligations.
7)
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.
7)
Explanation of Solution
Given system failure:
Person A is an accounts payable clerk at Company F, who has grown drained of resolving discrepancies. Person A has changed the accounts payable invoice programs to allow large variances to reduce rejects.
Determine the control plan for the given system failure:
Program change controls: Program that performs a credit check and validation should be prevented from the unauthorized alternation which can be done with the help of program change controls.
8)
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.
8)
Explanation of Solution
Given system failure:
Person N is an account payable who send the batch of vendor invoices to the clerk in cash disbursements twice a week. However, it is discovered that not all the payments were made correctly.
Determine the control plan for the given system failure:
Reconcile run-to-run totals: The batch totals for approved payments should be created by the cash disbursement clerk and it must be compared with the actual amount paid.
9)
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.
9)
Explanation of Solution
Given system failure:
Company S receives the electronic invoice by the third party via a web portal. It is discovered that the invoices were altered in transit from the vendor, as most of the invoices are not correct.
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)
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.
10)
Explanation of Solution
Given system failure:
Person G is the cashier who received invoices and made payments as needed. Some of the payments are to fake vendors.
Determine the control plan for the given system failure:
Segregate duties between accounts payable and cashier: The duties of accounts payable and cashier should be segregated to take care of the things without difficulties.
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Chapter 13 Solutions
Accounting Information Systems
- The following is a list of six control plans from this chapter, and these are followed by a list of five definitions or descriptions of control plans. Match the five definitions or descriptions with a control plan that best matches the definition. Because there are six control plans, you should have one letter left over. Control Plans A. Limit checks B. Tickler files C. Public key cryptography D. Compare input data with master data E. One-for-one checking F. Manual reconciliation of batch totals (hash totals) Definitions or Descriptions 1. Determines if a customer number has been input correctly. 2. Ensures that transmitted messages can be read only by authorized receivers. 3. A control plan that confirms a value that was entered is within a valid range. 4. An area (electronic or manual) where documents or other items are stored that need follow-up. 5. Used to detect changes in batches of events to ensure the validity, completeness, and accuracy of the batch.arrow_forwardListed here are 20 control plans discussed in the chapter. On the blank line to the left of each control plan, insert a P (preventive), D (detective), or C (corrective) to classify that control most accurately. If you think that more than one code could apply to a particular plan, insert all appropriate codes and briefly explain your answer:arrow_forwardThe 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 Access control software (i.e., assignment of access rights to employees) Selection, hiring, and supervision of billing clerks to ensure that they can and do carry out their assigned responsibilities Physical controls for perimeter, building, and computer facilities to prevent loss or destruction of the computer resources Preventive maintenance of computer hardware to ensure reliability and availability Systems development life cycle (SDLC), including testing and approval before implementation of new or revised programs…arrow_forward
- 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 Access control software (i.e., assignment of access rights to employees) Selection, hiring, and supervision of billing clerks to ensure that they can and do carry out their assigned responsibilities Physical controls for perimeter, building, and computer facilities to prevent loss or destruction of the computer resources Preventive maintenance of computer hardware to ensure reliability and availability Systems development life cycle (SDLC), including testing and approval before implementation of new or revised programs…arrow_forwardThe following is a list of six control plans from this chapter or from Chapter 9 and Chapter 10. These are followed by a list of five statements describing either the achievement of a control goal (i.e., a system success) or a system deficiency (i.e., a system failure). Match the five control goals or system deficiencies with a control plan that would best achieve the desired goal or prevent the system deficiency. A letter may be used only once, with one letter left over. Control Plans Review shipped not billed sales orders Turnaround documents Deposit slip file Procedures for rejected inputs Computer agreement of batch totals Document design Control Goals or System Deficiencies The shipping clerk could not read the quantity picked that had been written on the picking ticket by the warehouse clerks. In a periodic/batch environment, helps to ensure the information system control goal of input completeness of the shipping notices. Helps to ensure that…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 of the following is a component of general controls? a. processing controls b. output controls c. back-up and contingency planning d. input controls Required: choose the correct answer and Justify your answers in at least 6 sentences.arrow_forwardGeneral Controls. Indicate the benefits of each of the following examples of general controls. a. Echo checks are designed and built into the computer by the manufacturer.b. The company schedules regular maintenance on its computer hardware.c. The company involves users in its design of programs and selection of prepackaged software and programs.d. New programs are tested and validated prior to being implemented.e. Documentation is required prior to modifying existing programs using “emergency”change orders.f. The duties of system analysts, programmers, and computer operators are appropriatelyseparated.g. Appropriate backup and data retention policies are implemented.h. The access rights granted to employees are periodically reviewed and evaluated, giving consideration to known changes resulting from promotions and transfers within the company.arrow_forwardAssumes that when conducting procedures to obtain an understanding of the control structure in the Fiona Company, you checked “NO” to the following internal control questionnaire items: Does access to on-line files requires specific passwords to be entered to identify and validate the terminal user? Are control totals established by the user prior to submitting data for processing? (order entry application subsystem). Are input control totals reconciled to output control totals? (Order entry application sub system). Required: Describe the errors, irregularities, or misstatements that could occur due to the weaknesses indicated by the lack of controls.arrow_forward
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