Describe the similarities and differences between limit checks and reasonable checks. Give examples where each may be appropriate.
> Explain how a tax credit policy for first-time home buyers can raise the demand for, and price of, houses.
> In this chapter, we discussed three types of transfers. Identify and explain each.
> Individuals sometimes disagree over the preferred quality and quantity of a non-excludable public good. Why?
> Under what condition would an individual choose to spend additional time producing instead of stealing? Under what condition would an individual choose to spend additional time stealing instead of producing?
> What does it mean to say that a currency is overvalued? Undervalued?
> A country whose currency is the primary reserve currency can likely borrow at lower interest rates than it could if its currency were not the primary reserve currency. Do you agree or disagree? Explain.
> The discussion of supply and demand in Chapter 3 noted that, if two goods are substitutes for each other, the price of one and the demand for the other are directly related. For example, if Pepsi-Cola and Coca-Cola are substitutes, an increase in the pri
> Explain the details of the purchasing power parity (PPP) theory.
> What are the strong and weak points of the flexible exchange rate system? What are the strong and weak points of the fixed exchange rate system?
> Give an example of how a change in the exchange rate alerts the relative price of domestic goods in terms of foreign goods.
> Suppose the United States and Japan have a flexible exchange rate system. Explain whether each of the following events will lead to an appreciation or depreciation of the U.S. dollar and Japanese yen. (a) U.S. real interest rates rise above Japanese rea
> What does it mean to say that the U.S. dollar has depreciated in value in relation to the Mexican peso? What does it mean to say that the Mexican peso has appreciated in value relative to the U.S. dollar?
> The lower the dollar price of a peso, the higher is the quantity demanded of pesos, and the lower is the quantity supplied of pesos. Do you agree or disagree? Explain.
> If everyone in the world spoke the same language, would the world be closer to or further from being an optimal currency area? Explain.
> How important is labor mobility in determining whether an area is an optimal currency area?
> Country 1 produces good X, and country 2 produces good Y. People in both countries begin to demand more of good X and less of good Y. Assume that there is no labor mobility between the two countries and that a flexible exchange rate system exists. What w
> What is an optimal currency area?
> Both activists and non-activists make good points for their respective positions. Do you think activists could say anything to non-activists to convince them to accept the activist position, and vice versa? If so, what is it that they would say? If not,
> Country X wants to lower the value of its currency on the foreign exchange market. Under a flexible exchange rate system, how can it do that?
> Under a fixed exchange rate system, setting the official price of a peso in terms of dollars automatically sets the official price of a dollar in terms of pesos. Do you agree or disagree? Explain.
> Under a flexible exchange rate system, if the equilibrium exchange rate is 0.10 USD = 1 MXN and the current exchange rate is 0.12 USD = 1 MXN, will the U.S. dollar appreciate or depreciate? Explain.
> Explain the link between the Mexican demand for U.S. goods and the supply of pesos. Next, explain the link between the U.S. demand for Mexican goods and the supply of dollars.
> Even though Jeremy is a better gardener and novelist than Bill, Jeremy still hires Bill as his gardener. Why?
> Suppose the landmass known to you as the United States of America had been composed, since the nation’s founding, of separate countries instead of separate states. Would you expect the standard of living of the people who inhabit this landmass to be high
> Suppose the U.S. government wants to curtail imports. Would it be likely to favor a tariff or a quota to accomplish its objective? Why?
> Consider two groups of domestic producers: those which compete with imports and those which export goods. Suppose the domestic producers that compete with imports convince the legislature to impose a high tariff on imports—so high, in fact, that almost a
> Neither free trade nor prohibited trade comes with benefits only. Both come with benefits and costs. Therefore, free trade is no better or worse than prohibited trade. Comment.
> Whatever can be done by a tariff can be done by a quota. Discuss.
> Suppose it were proved that liquidity traps are not real and that investment is not interest insensitive. Would this be enough to disprove the Keynesian claim that expansionary monetary policy is not always effective at changing Real GDP? Why or why not?
> Consider the following: Two researchers, A and B, are trying to determine whether eating fatty foods leads to heart attacks. The researchers proceed differently. Researcher A builds a model where fatty foods may first affect X in one’s body, and if X is
> Contact a CPA firm to find out about current expectations regarding the technical knowledge required as an entry-level staff person. Write a brief memo (your professor will tell you how long) summarizing what you learned.
> Using Internet resources, locate openings for at least three jobs, other than traditional public accounting positions, which require strong accounting and technology skills. Select one of these jobs, and develop a plan to get you from your current level
> Assume that a manager can obtain information from the organization’s database in three ways: by direct inquiry using a computer, by a daily printout, and by a monthly report. Using the qualities of information discussed in this chapter—understandability,
> Conduct research on the implementation of Section 404 of the Sarbanes- Oxley Act of 2002. Write a paper (your professor will tell you how long the paper should be) to discuss how accountants within an organization are involved in helping their organizati
> Conduct research on the expansion of the role of the accountant into areas such as forensics, nonfinancial information, assurance services, and similar functions. Write a paper (your professor will tell you how long the paper should be) to discuss the op
> An enterprise system supports a business process by: a. Facilitating the functioning of the business process. b. Providing records that business events have occurred. c. Storing data for decision making. Describe how the enterprise system depicted in Fig
> Describe how Web 2.0 tools might be used by any of the managers depicted in Figure 10.1, a horizontal perspective of the OE/S process, or in Figure 10.2, a vertical perspective of the OE/S process.
> Describe how data mining and a CRM system might be used by any of the managers depicted in Figure 10.1, a horizontal perspective of the OE/S process, or in Figure 10.2, a vertical perspective of the OE/S process.
> What goals for the OE/S process (both operations process and information process goals) would be more difficult to achieve with an enterprise system?
> Examine the systems flowchart in Figure 10.11. Figure 10.11: Discuss how this process implements the concept of segregation of duties, discussed in Chapter 8. Be specific as to which entity (or entities) performs each of the four event processing fun
> Give several examples not mentioned in the chapter of potential conflicts between pairs of information qualities.
> A control plan that helps to attain operational effectiveness by ‘providing assurance of creditworthiness of customers’ also helps to achieve the information process control goal of sales order input validity.” Do you agree? Discuss fully.
> Explain how and where the control goals for effectiveness of operations would be shown in the control goal columns of a control matrix prepared for the OE/S process. At a minimum, include the following topics from Chapter 7 in your discussion: a. Differe
> On October 2, 2002, a clerk at Bear Stearns had erroneously entered an order to sell nearly $4 billion worth of securities. The trader had sent an order to sell $4 million worth. Only $622 million of the order was executed, and the remainder of the order
> Referring to Appendix 9A, discuss fully the following statement: “Protecting the private key is a critical element in public key cryptography
> One control that is applicable for almost any system is “enter data close to the originating source.” A customer entering a purchase into a sales system (such as at Amazon.com) is an excellent example of this control. Describe the details of why this pro
> Describe situations in your daily activities, working or not, where you have experienced or employed controls in this chapter.
> The mere fact that event data appear on a prenumbered document is no proof of the validity of the event. Someone intent on defrauding a system by introducing a fictitious event probably would be clever enough to get access to the prenumbered documents or
> 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 t
> Explain why input controls are so important. Discuss fully.
> Examine Figure 1.9. Discuss how vertical information flows may be important to the executive director of an organization that is a public charity. FIGURE 1.9 Management Problem Structure and Infomation Requirements INFORMATION REQUIREMENTS Less In
> If a business process is implemented with OLRT processing, we do not need to worry about update completeness and update accuracy.” Do you agree? Discuss fully.
> Technology Summary 9.1 seems to indicate that the business process and application control plans in this chapter cannot be relied on.” Do you agree? Discuss fully.
> Discuss why the control matrix is custom-tailored for each business process.
> Preventing the unauthorized disclosure and loss of data has become almost impossible. Employees and others can use iPods, flash drives, cameras, and PDAs, such as iPhones, to download data and remove it from an organization’s premises.” Do you agree? Des
> Contracting for a hot site is too cost-prohibitive except in the rarest of circumstances. Therefore, the vast majority of companies should think in terms of providing for a cold site at most.” Discuss fully.
> Debate the following point: “Business continuity planning is really an IT issue.”
> A key control concern described in Table 8.2 regarding the systems development manager is that “systems development can develop and implement systems without management approval.” Discuss a control described in this chapter that reduces the risk that una
> Monitoring must be performed by an independent function such as a CPA.” Do you agree? Discuss fully.
> If personnel hiring is done correctly, the other personnel control plans are not needed.” Do you agree? Discuss fully.
> No matter how sophisticated a system of internal control is, its success ultimately requires that you place your trust in certain key personnel.” Do you agree? Discuss fully.
> Examine Figure 1.9. Discuss the importance of horizontal information flows and vertical information flows to the daily operations of a manufacturing entity. FIGURE 1.9 Management Problem Structure and Infomation Requirements INFORMATION REQUIREMEN
> In small companies with few employees, it is virtually impossible to implement the segregation of duties control plan.” Do you agree? Discuss fully.
> For each of these control plans, suggest a monitoring activity: a. Credit approval b. Removal of terminated employee access to computer system c. New employee background check
> Your boss was heard to say, “If we implemented every control plan discussed in this chapter, we’d never get any work done around here.” Do you agree? Discuss fully.
> The Enterprise Risk Management (ERM) framework introduced in Chapter 7 can be used by management to make decisions on which controls in this chapter should be implemented.” Do you agree? Discuss fully.
> What, if anything, is wrong with the following control hierarchy? Discuss fully. Highest level of control Pervasive control plans The control environment Application controls Business process control plans Lowest level of control IT general contr
> How does this text’s definition of internal control differ from COSO? How does it differ from the controls that are subject to review under Section 404 of SOX?
> Section 404 of SOX has not been a good idea. It has been too costly and it has not had its intended effect.” Do you agree? Discuss fully
> If input data are entered into the system completely and accurately, then the information system control goals of ensuring update completeness and ensuring update accuracy will be automatically achieved.” Do you agree? Discuss fully.
> Discuss how the efficiency and effectiveness of a mass-transit system in a large city can be measured.
> Provide five examples of potential conflict between the control goals of ensuring effectiveness of operations and of ensuring efficient employment of resources.
> Do you think your accounting education is preparing you effectively to practice accounting? Why or why not? Discuss, from both a short-term (i.e., immediately on graduation) and a long-term (i.e., 5 to 10 years after beginning your career) standpoint.
> If it weren’t for the potential of computer crime, the emphasis on controlling computer systems would decline significantly in importance.” Do you agree? Discuss fully.
> Enterprise Risk Management is a process for organizational governance.” Discuss why this might be correct and why it might not.
> Recently, the U.S. federal government and the American Institute of Certified Public Accountants (AICPA) have taken aggressive steps aimed at ensuring the quality of organizational governance. What are these changes, how might they change organizational
> Although SQL is the de facto standard database language, there are many variations of the language. Using the Internet (or other sources), answer the following questions. What is a de facto standard? Provide examples (other than SQL) of such standards. H
> Although today’s enterprise systems incorporate many of the REA concepts, many organizations continue to use legacy systems. Why do you believe this is true? (Although the obvious answer is in the chapter, you may want to look to other sources to support
> Refer to Figure 6.12. Figure 6.12: To implement a many-to-many (M:N) relationship between two relations, the figure demonstrates creating a new relation with a composite key made up of the primary keys (Client_No and Employee_No) of the relations to
> Several steps are required when designing a database. List and describe the main steps of this process.
> How can primary keys and the linking of tables in a relational database affect controls?
> Discuss how you determine the placement of primary keys in relational tables to link the tables to each other.
> What is a model? How is modeling a database or information system useful and important from a business or accounting perspective?
> Why must you have knowledge of a system’s objectives to study that system?
> What is the relationship between business intelligence (BI) and enterprise systems, especially ERP systems?
> The centralized database approach to data management is a good alternative to using enterprise systems such as ERP and CRM.” Do you agree? Discuss fully.
> What are the different logical database models (or structures)?
> What problems are solved by transforming a set of relational tables from second normal form (2NF) to third normal form (3NF)?
> What is three-tier architecture? What are some of its advantages over two-tier architecture?
> What are the differences between a logical view and a physical view of a database? Which would be more important for accountants who are involved in the design of a database that will store business event information?
> How is a DBMS different from a database?
> What is data independence? Why is it important in a comparison of application and database approaches to storing data?
> How has the technological availability and implementation of DBMSs benefited decision makers in organizations?
> What are the comparative advantages of the various data coding types discussed in Technology Summary 5.2 when applied to each of the following? Discuss fully.
> Why might you have more trouble assessing the success of a not-for-profit organization or federal government entitlement program than you would have judging the success of a business organization?
> Demonstrate your understanding of some of the coding schemes discussed in Technology Summary 5.2 by indicating which type of code is represented by each of the following. You should be prepared to explain and defend your answers.
> Why have object-oriented databases not replaced relational databases in business information system applications?
> What are the basic components of a database management system (DBMS)? Discuss the relationship between the components of DBMS and the functional model of information systems discussed in Chapter 1.
> Because there are computer-based documentation products that can draw data flow diagrams and systems flowcharts, learning to draw them manually is a waste of time.” Do you agree? Discuss fully.
> PCAOB Audit Standard No. 5 (AS5) paragraph 37 and Statement on Auditing Standard Section 319 (AU 319) paragraph 75 suggest that management, business process owners, and auditors prepare and analyze systems documentation to understand the flow of transact
