Explain the weakness of the internal control over the information and data flows and the procedures for processing shipping notices and customer invoices and recommend improvements for the given weaknesses.

Question

Want to see the full answer?

Answer 1

Question

Chapter 8, Problem 37P

To determine

Explain the weakness of the internal control over the information and data flows and the procedures for processing shipping notices and customer invoices and recommend improvements for the given weaknesses.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

One of your Firm’s Managers, Colin Cronen is responsible for the auditing the financial statements of the Roman Corporation, which has a batch-processing IT-based system for shipping and invoicing that it purchased from a software vendor. The following comments have been extracted from Cronen’s notes on IT operations and the processing and control of shipping notices and customer invoices. Each type of computer run is assigned to a specific employee who is responsible for making program changes, running the program, and answering questions. This procedure has the advantage of eliminating the need for records of IT operations because each employee is responsible for his or her own computer runs. At least one IT department employee remains in the computer room during office hours, and only IT department employees have keys to the computer room. The corporation considered the desirability of program controls but decided to retain the manual controls in place prior to the conversion to the…

In reviewing the processes, procedures, and internal controls of one of your audit clients, VeronicaCorporation, you notice the following practices in place. Veronica has recently installed a new electronicdata processing (EDP) system that affects the accounts receivable, billing, and shipping records. Thecompany identified a computer operator who is permanently assigned to each of the functions ofaccounts receivable, billing, and shipping. Each of these computer operators is given the responsibilityof running the program for transaction processing, making program changes, and reconciling thecomputer log. To prevent an operator from having exclusive access to the tapes and documentation,the computer operators randomly rotate the custody and control tasks every two (2) weeks over themagnetic tapes and the system documentation. Access controls to the computer room consist ofmagnetic cards and a digital code for each operator. Moreover, the system analyst and the computeroperation…

Case 1: The CARE Corporation uses an IBM mainframe computer system with peripheral optical reader and high-speed laser printer equipment. Transaction information is initially recorded on paper documents and then read by optical equipment that produces a magnetic disk containing the data. These data file disks are processed by a computer program, and printed listings, journals, and general ledger balances are produced on the high-speed printer equipment. Required: Explain how the audit standard requiring “adequate technical training and proficiency” is complied with the audit of CARE Corporation’s financial statements.