menu
bartleby
search
close search
Hit Return to see all results
close solutoin list

OUTDOOR ADVENTURE: WHITE WATER AND CAMPING SUPPLIES (NETWORKED COMPUTER SYSTEM AND MANUAL PROCEDURES) Outdoor Adventure is a Montana-based wholesaler of rafting and camping equipment that serves outdoor sports camping retailers throughout the northwest. You hate been hired by Outdoor Adventure to evaluate its processes, risks, and internal controls. The following paragraphs describe Outdoor Adventure’s payroll and lived asset systems. Payroll System Each day Outdoor Adventure employees record their hours worked on time cards, which their supervisors review for correctness and submit to the payroll department at the end of the work week Using a terminal connected to the central payroll system, which is located in the data processing department, the payroll clerk inputs the time card data, prints hard copies of the paychecks, prints two copies of the payroll register, and posts to digital employee records. The payroll clerk files the time cards in the payroll department and sends the employee paychecks to the various supervisors for review and distribution to their respective department employees. The payroll clerk then sends one copy of the payroll register to the AP department, and files the other with the time cards in the payroll department. The AP department clerk reviews the payroll register and manually prepares a disbursement voucher. The clerk sends the voucher and the payroll register to the general ledger department. The AP clerk then writes a check for the entire payroll and deposits it in the imprest account at the bank. Finally the clerk files a copy of the check in the AP department. Once the general ledger clerk receives the voucher and payroll register, the clerk posts to the general ledger from the department terminal and files the voucher and payroll register in the department. Fixed Asset System Asset acquisition begins with the departmental manager recognizing the need to obtain a new asset or replace an existing one. The manager prepares two copies of a purchase requisition: one is filed within the department, and the other is sent to the purchasing department. The purchasing department clerk manually prepares three copies of a purchase order from the purchase requisition. One copy of the purchase order is sent to the supplier, another copy is sent to the AP department, and the third copy to filed within the purchasing department. The AP clerk receives a packing slip and invoice from the vendor and visually reconciles them with the purchase order reversed from the purchasing department. The clerk enters the information into the department computer terminal and sets up an AP liability. Using a computer terminal, the AP clerk then updates the purchases journal, prints a hard-copy journal voucher, and sends it to the general ledger department, and sends a cash disbursement voucher to the cash disbursements department with the supplier invoice. The clerk files the packing slip and purchase order in the AP department. Using information from the supplier’s invoice and the cash disbursement voucher, the cash disbursements clerk prints a check from her terminal and records it in the digital check register. She sends the check to the vendor and the cash disbursement voucher to the general ledger department. The user department manager handles both asset maintenance and asset disposal. The manager adjusts the lived asset subsidiary account balances to match asset depreciation schedules over time. When an asset reaches the end of its useful life, the manager issues a disposal report. The manager sends a fixed asset summary to the general ledger department. The general ledger department clerk reconciles the cash disbursement voucher, journal voucher, and fixed asset summary; posts to the GL accounts from the department terminal; and files the remaining documents. Required a. Prepare a data floss diagram of the current payroll and fixed asset systems. b. Prepare system flowcharts for the payroll and fixed asset systems. c. Describe the uncontrolled risks associated with these systems as they are currently designed. d. Describe the physical and IT controls needed to reduce the risks identified in “c” above.

BuyFindarrow_forward

Accounting Information Systems

10th Edition
Hall + 1 other
Publisher: Cengage Learning,
ISBN: 9781337619202

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting Information Systems

10th Edition
Hall + 1 other
Publisher: Cengage Learning,
ISBN: 9781337619202
Chapter 6, Problem 5ICC
Textbook Problem
251 views

OUTDOOR ADVENTURE: WHITE WATER AND CAMPING SUPPLIES (NETWORKED COMPUTER SYSTEM AND MANUAL PROCEDURES)

Outdoor Adventure is a Montana-based wholesaler of rafting and camping equipment that serves outdoor sports camping retailers throughout the northwest. You hate been hired by Outdoor Adventure to evaluate its processes, risks, and internal controls. The following paragraphs describe Outdoor Adventure’s payroll and lived asset systems.

Payroll System

Each day Outdoor Adventure employees record their hours worked on time cards, which their supervisors review for correctness and submit to the payroll department at the end of the work week Using a terminal connected to the central payroll system, which is located in the data processing department, the payroll clerk inputs the time card data, prints hard copies of the paychecks, prints two copies of the payroll register, and posts to digital employee records. The payroll clerk files the time cards in the payroll department and sends the employee paychecks to the various supervisors for review and distribution to their respective department employees. The payroll clerk then sends one copy of the payroll register to the AP department, and files the other with the time cards in the payroll department.

The AP department clerk reviews the payroll register and manually prepares a disbursement voucher. The clerk sends the voucher and the payroll register to the general ledger department. The AP clerk then writes a check for the entire payroll and deposits it in the imprest account at the bank. Finally the clerk files a copy of the check in the AP department.

Once the general ledger clerk receives the voucher and payroll register, the clerk posts to the general ledger from the department terminal and files the voucher and payroll register in the department.

Fixed Asset System

Asset acquisition begins with the departmental manager recognizing the need to obtain a new asset or replace an existing one. The manager prepares two copies of a purchase requisition: one is filed within the department, and the other is sent to the purchasing department. The purchasing department clerk manually prepares three copies of a purchase order from the purchase requisition. One copy of the purchase order is sent to the supplier, another copy is sent to the AP department, and the third copy to filed within the purchasing department.

The AP clerk receives a packing slip and invoice from the vendor and visually reconciles them with the purchase order reversed from the purchasing department. The clerk enters the information into the department computer terminal and sets up an AP liability. Using a computer terminal, the AP clerk then updates the purchases journal, prints a hard-copy journal voucher, and sends it to the general ledger department, and sends a cash disbursement voucher to the cash disbursements department with the supplier invoice. The clerk files the packing slip and purchase order in the AP department.

Using information from the supplier’s invoice and the cash disbursement voucher, the cash disbursements clerk prints a check from her terminal and records it in the digital check register. She sends the check to the vendor and the cash disbursement voucher to the general ledger department.

The user department manager handles both asset maintenance and asset disposal. The manager adjusts the lived asset subsidiary account balances to match asset depreciation schedules over time. When an asset reaches the end of its useful life, the manager issues a disposal report. The manager sends a fixed asset summary to the general ledger department.

The general ledger department clerk reconciles the cash disbursement voucher, journal voucher, and fixed asset summary; posts to the GL accounts from the department terminal; and files the remaining documents.

Required

  1. a. Prepare a data floss diagram of the current payroll and fixed asset systems.
  2. b. Prepare system flowcharts for the payroll and fixed asset systems.
  3. c. Describe the uncontrolled risks associated with these systems as they are currently designed.
  4. d. Describe the physical and IT controls needed to reduce the risks identified in “c” above.

a.

To determine

Prepare a data flow diagram of the current payroll and fixed asset systems.

Explanation of Solution

Payroll System:

Payroll system is an arrangement within an organization that manages the payment of salaries and wages to employees. This system covers the payment of employment taxes to the government and related deductions.

The data flow diagram of the current payroll systems is as shown below:

Fig (1)

In Fig (1), a supervisor prepares the time cards and sends the time card data to the payroll department. Payroll department processes the data and updates the employee data by using time card’s detail. Payroll department also sends the copy of payroll register to the accounts payable department...

b.

To determine

Prepare the system flowcharts for the payroll and fixed asset systems.

c.

To determine

Explain the uncontrolled risks associated with current systems.

d.

To determine

Explain the physical and IT controls needed to reduce the risks.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Chapter 6 Solutions

Accounting Information Systems
Show all chapter solutions
add
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 - What is the auditors role with respect to the...Ch. 6 - Which department performs the formal recordkeeping...Ch. 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 - Are any time lags in recording economic events...Ch. 6 - The management of an organization with a remote...Ch. 6 - Discuss the main advantages of payroll...Ch. 6 - Discuss some specific examples in which...Ch. 6 - Discuss some service industries that may require...Ch. 6 - What are the risks associated with payroll...Ch. 6 - If an asset that is not fully depreciated is sold...Ch. 6 - Discuss the fundamental risk and control issues...Ch. 6 - Describe an internal control that would prevent an...Ch. 6 - Describe an internal control that would prevent...Ch. 6 - Describe an internal control that would prevent...Ch. 6 - Describe an internal control that would prevent...Ch. 6 - What negative consequences result when fixed asset...Ch. 6 - Which one of the following functions is...Ch. 6 - Which of the following is not a payroll system...Ch. 6 - An independent verification control in the payroll...Ch. 6 - Who below is most likely to distribute paychecks?...Ch. 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 - Which one of the following documents captures the...Ch. 6 - PAYROLL FRAUD John Smith worked in the stockyard...Ch. 6 - PAYROLL CONTROLS Refer to the flowchart for...Ch. 6 - PAYROLLRISKS AND CONTROLS Sherman Company employs...Ch. 6 - FLOWCHART ANALYSIS Discuss any control weaknesses...Ch. 6 - SEPARATION OF DUTIES Human resource management...Ch. 6 - PAYROLL FLOWCHART ANALYSIS Discuss the risks...Ch. 6 - COMPREHENSIVE FLOWCHART ANALYSIS Discuss the...Ch. 6 - FIXED ASSET SYSTEM-RISKS AND CONTROLS The fixed...Ch. 6 - FIXED ASSET SYSTEM-FRAUD POTENTIAL Holder Co....Ch. 6 - FIXED ASSET FLOWCHART ANALYSIS Discuss the risks...Ch. 6 - PAYROLL PROCEDURES The following describes the...Ch. 6 - PAYROLL FLOWCHART ANALYSIS Discuss the risks...Ch. 6 - HOLLY COMPANYPAYROLL SYSTEMS (SMALL COMPANY USES...Ch. 6 - GREEN POND NURSERY (STANDALONE PC-BASED ACCOUNTING...Ch. 6 - TURNER PATIO FURNITURE (MANUAL AND STAND-ALONE PC...Ch. 6 - GENERATORS R US (MANUAL AND STAND-ALONE PC...Ch. 6 - OUTDOOR ADVENTURE: WHITE WATER AND CAMPING...Ch. 6 - CLASSIC RESTORATIONS (MANUAL AND STAND-ALONE...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions add
Fill in the blanks:

Brief Principles of Macroeconomics (MindTap Course List)

Define manufacturing overhead.

Managerial Accounting: The Cornerstone of Business Decision-Making

CAPM AND PORTFOLIO RETURN You have been managing a 5 million portfolio that has a beta of 1.25 and a required r...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Define Web Services.

Pkg Acc Infor Systems MS VISIO CD