What control policies and procedures in a production information system would provide
the best protection against the following errors?
Protection is used broadly here to include
prevent, detect, and correct.
List ONE (and only one) item for each item, A-F; each part is
worth 2 points.
relate the controls to the specific scenario
in each part (that is,
generic answers such as “separation of duties” are NOT
A stock clerk stole items from the raw materials stock room.
Two clerks are employed
but since the company runs two shifts, only one clerk is on duty at any one time.
A production employee stole partially completed items from the work-in-process
The items were sitting on a cart in the isle after the polishing process was
Production workers continued to produce the product even though its quality was below
The company uses a process cost system.
Containers with lids in which finished product are stored are always used in pairs.
containers and lids are always purchased in pairs.
However, the inventory records
consistently show more lids than containers.
After the inspector finished inspecting the finished goods (a batch of chairs in a job
costing systems) he entered “20” good chairs, rather than “200” good chairs.
original job order specified 220 chairs.
This created an error in both finished goods
inventory and the amount of scrap for the job.
Production workers in a process costing system posted some of their time that they
actually spent working in Department B to Department A. The workers don’t like the
manager of Department A, and they want to get him fired.
In May, 2001, the SEC sued the former top executives at Sunbeam, charging the group
with financial reporting fraud which allegedly cost investors billions in losses.
Corporation is a recognized designer, manufacturer, and marketer of household and
leisure products, including Coleman, Eastpak, First Alert, Grillmaster, Mixmaster, Mr.
Coffee, Oster, Powermate, and Campingaz.
In the mid-1990s, Sunbeam needed help:
profits had declined by over 80%, and in 1996, its stock price was down over 50% from
To the rescue:
Albert Dunlap, also known as “Chainsaw Al” based on his
reputation as a ruthless executive known for his ability to restructure and turn around