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Unformatted text preview: Accounting Information Systems, 8e 1 SOLUTIONS FOR CHAPTER 9 Discussion Questions DQ9-1 Discuss why the control matrix is custom-tailored for each business process. ANS. The control matrix is customized for each business process because the following elements of the control goals vary depending on the process being analyzed: Process name Effectiveness goals Resources (for security and efficiency) Inputs Master data DQ9-2 Explain why input controls are so important. Discuss fully. ANS. Perhaps the most error-prone and inefficient steps in an operations or information process are the steps during which data is entered into a system. Although much has been done to improve the accuracy and efficiency of the data entry process, problems still remain, especially when humans enter data into a system. Once input, event data will affect a number of processes and will cause the update of master data. For example, upon input, a shipping notice will affect the OE/S process, the billing/accounts receivable/cash receipts process, the inventory process, and, possibly, the general ledger process. The shipping notice will likely cause the update of the sales order data, the accounts receivable master data, the inventory master data, and, possibly, the general ledger master data. Therefore, input controls must ensure that the shipping notice is valid and accurate at the time of input. Otherwise, all master data must be corrected and, until they are corrected, the effect could be significant. Should the data be input to an enterprise system, the impact would certainly be significant. The processes/subsystems are tightly connected, and each depends on receiving accurate, valid data from other portions of the system. If the data is input to an application that is connected to other organizations, such as with e-business , the data needs to be accurate and valid. Otherwise, we may undertake a purchase or a sale with a trading partner that is not in our best interest (because it is based on invalid or inaccurate data). DQ9-3 In evaluating business process controls and application controls, some auditors differentiate between the point in the system at which the control is established and the later point at which that control is exercised. Speculate about the meaning of the terms establish a control and exercise a control by discussing those terms in the context of the following: 2 Solutions for Chapter 9 a. Batch total procedures ANS. We establish the control when we calculate the original batch total. We exercise the control when we reconcile the original batch total with a total calculated at some later point in the process. b. Turnaround documents ANS. We establish the control when we prepare a turnaround document, typically by having a document printed by a computer as, for example, the stub of a customer invoice. We exercise the control when we use that document for input to a subsequent process. For example, we use the invoice stub (i.e., the remittance advice or RA) that is received example, we use the invoice stub (i....
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- Spring '11