Enron was one of the most publicized fraud cases of the late 20th century; it was so serious that it not only led to its own demise, but to the dissolution of Arthur Andersen, one of the (then) “Big Five” CPA firms. Enron and related cases led to the most sweeping legislation impacting the accounting profession since the 1930s: the Sarbanes-Oxley Act of 2002. In “Trials and Tribulations of Enron and S-Ox” (Forbes, 23 January 2006), Pitt stated: “The principal deficiencies that led to Enron’s demise are easy enough to catalog. They include a serious lack of meaningful internal controls.” a. What is internal control? b. Explain the importance of COSO’s 2013 Internal Control—Integrated Framework in establishing strong internal control. c. Consider the following risk exposures at Enron: insufficient cash for operations, fraudulent accounting, too close a relationship with auditors, declines in stock price. For each risk exposure, indicate the relevant category of the Brown taxonomy; suggest at least one internal control to address the risk.
> Please match each item on the left with the most appropriate item on the right. 1. Autonomy of practice 2. Considering audience characteristics 3. Determining whether goodwill has been impaired 4. Finance, management, information systems 5. Holland'
> Consider the following case as you respond to the questions below: Alberto and Cristina were partners in a travel agency that specialized in arranging corporate travel. Because the partnership was on the verge of bankruptcy, they invited Alberto’s cousin
> The chapter discussed five types of Big Data. Indicate which category best fits each of the following examples; if an example fits more than one category, explain why. a. Airline ticket reservations b. Blood type c. Cell phone tower usage d. Daily credit
> Please refer to the following short case as you answer these questions: After earning both her accounting degree and her CPA license, Barb opened her own public accounting practice. One of her clients was looking for a way to make transaction processing
> Do a Google search for the Fortune 100 companies. Choose two of the companies from the list and prepare a risk/control matrix similar to the one illustrated in the chapter. Include five to seven risks for each company you choose. (You’ll find an example
> Please match each item on the left with the most appropriate item on the right. 1. Behaviors, values, and assumptions a. Type of Big Data b. Parts of "identifying" in Steps for Better Thinking c. Information overload countermeasure d. Goal of knowle
> Several data items that might be included on a payroll form are listed below on the left. The standard payroll forms discussed in the chapter are listed below on the right. For each data item, indicate the form(s) on which you’d find it
> Which business process (conversion, financing, or human resources) is most closely associated with each transaction listed below? f. Retained earnings Capital stock g. Work in process Manufacturing overhead h. Interest expense Premium on bonds payab
> 1. A company that reproduces fine works of art, such as the Mona Lisa, would most likely use what kind of production process? a. Hybrid b. Conversion c. Job d. Process 2. A journal entry in a company’s accounting information system debited retained earn
> Please match each item on the left with the most appropriate item on the right. 1. Custom-made bicycles a. Associated with dividend payments b. Human resource process internal control c. Internal control for missed payments d. Job costing product e.
> The documents discussed in this chapter are listed below on the right. Various information items that might appear in them are listed on the left. For each information item listed on the left, indicate the document(s) in which it would most likely appear
> The steps in the sales/collection and acquisition/payment processes are listed below, but they are out of order. Put the statements in the proper order based on how they occur in organizations. a. An operating department in the buying organization reques
> 1. PLP Corporation maintains an electronic database fi le for all its vendors and purchases. Which of the following amounts would you be least likely to find in the “vendor” table? a. Total amount owed b. Vendor name c. Part numbers commonly purchased d.
> Please match each item on the left with the most appropriate item on the right. 1. Authorize a purchase a. A way to monitor inventory needs b. Audit trail components c. Internal control to manage the risk of embezzlement d. One reason for consolidat
> Several risks are paired with potential internal controls in the list below. Place an “X” in the appropriate column to indicate if the internal control addresses the risk with which it is paired. Be prepared to explain
> Visit the Web site of the Wild Cat Zoo in southern California (www.cathouse-fcc.org). Classify each of the following risks using Brown’s taxonomy. Also suggest one or more internal controls to address each risk. For each internal control you suggest, spe
> These questions will help you assess your understanding of the text readings. If you’ve studied the chapter thoroughly, you should be able to answer them without reference to the text itself. Although these questions appear first, you may find them easie
> Please refer to the case in Problem 12 as you respond to these questions. 1. In a systems flowchart, which of the following is most likely to be depicted with a predefined process symbol? a. Browse catalog b. Make bank deposit c. E-mail client d. None o
> Match each item on the left with the most appropriate item on the right. 1. Bill of lading 2. Face-to-face, Internet, mail, phone 3. For deposit only 4. Independent order checking 5. Information technology 6. Outbound logistics 7. Picking list a. Su
> Please match each item on the right to the most appropriate item on the left. 1. Confidentiality 2. Creating fake refunds to a. Computers used to carry out a crime b. Crime classification that does not necessarily benefit a friend require a computer
> Which type(s) of business risks/threats described in the chapter best applies to each situation below? If more than one applies, explain why. a. Blackmail based on stolen information. b. Concurrent attacks against a determined target. c. Digital graffiti
> Consider the following short case in responding to these questions: Tim was upset with his accounting instructor because of the grade he earned in her class. As an act of revenge, Tim used a computer program he downloaded from the Internet to discover th
> 1. The Web site www.sco.ca.gov/upd.html is an example of which form of e-business? a. B2C b. G2C c. G2B d. C2C 2. Web Trust and Sys Trust are forms of: a. Internal control. b. E-business. c. Systems documentation. d. Transaction processing software. 3.
> Please match each item on the left with the best item on the right. 1. Brick-and-mortar 2. Computer network 3. Financial management 4. Hershey 5. Human resource management a. A well-known ERP system b. Another name for “old economy" organizations c.
> Please match each item on the left with the most appropriate item on the right. 1. Context a. The quality of XBRL that allows users to add tags as 2. Cost savings and improved investor relations needed b. The relationship between XBRL and the Extens
> This series of questions deals with XBRL’s Global Ledger taxonomy. Before attempting to answer them, point your Web browser to the 4 February 2014 post in my AIS blog on XBRL. Use the link provided to access the presentation titled “Key Features of XBRL-
> Consider the following REA model in responding to the questions below; it represents the system by which members of the accounting club at Big State University are reimbursed when they incur expenses on the club’s behalf. 1. Which of
> Internal control has four basic purposes: safeguarding assets, ensuring financial statement reliability, promoting operational efficiency, and encouraging compliance with management’s directives. Consider each of the internal control procedures described
> Match each item on the left with the most appropriate item on the right. 1. Cardinality a. Unique record identifier in a database table 2. Decision/management event b. Supports the preparation of financial statements c. Purchasing supplies d. Prepar
> Consider the REA model presented below. Write a narrative description of the business process it depicts. (1,*), (1,") (1,1) Schedule grooming appointment Pet owner (0,") (1,1) (1,1) Pet (1,1) (1,1) (1,1) (0,") (1,") Grooming staff (1,1) Groom pet
> Please match each item on the left with the most appropriate item on the right. 1. Data flow a. A compilation of fields in a database b. A primary key posted to another table c. Accounts receivable file 2. Data store 3. External entity 4. Field d. C
> Consider the following narrative in responding to the questions that follow: The Rancho Cucamonga Humane Society (RCHS) is open from 7 a.m. to 7 p.m., seven days a week. It maintains a computerized inventory of animals available for adoption, which inclu
> Please match each item on the left with the best item on the right 1. Areas of responsibility a. A flowchart depicting the process of buying a car b. Based on lines of computer code c. Can trace remittance advices and invoices 2. Document flowchart
> Consider the following narrative as you respond to these questions: When staff at IGV Corporation need to travel on company business, they first submit a travel request to their immediate supervisor. The travel request includes the employeeâ€&
> 1. As a future accounting professional, which phase of the SDLC are you least likely to be involved in? a. Build b. Requirements analysis c. Operations/maintenance d. Test 2. If a system does poorly during the testing phase of the SDLC, it may be due to
> Match each item on the left with the most appropriate item on the right. 1. “Ad hoc" processes a. Test (SDLC) 2. Business rules b. Risk of SDLC c. Repeatable (CMM) d. Optimized (CMM) e. Managed (CMM) f. Initiation/planning (SDLC) g. Design (SDLC) h.
> Which element of the COSO ERM framework is most closely associated with each of the following? a. ALG Corporation bonds key employees. b. Based on previous experience, TRG Corporation’s management believes the risk of inventory shortages is moderate. c.
> 1. In business process management, decision makers must collect and analyze data. Which of the following tools would best be used to collect useful data? a. Journal entries b. Interviews c. Financial statements d. Expectancy theory 2. Employees of BRN C
> a. Consider the four vignettes presented in the last section of the chapter. For each one, suggest one additional internal control procedure. Discuss whether the procedure you suggest is preventive, detective, or corrective; also identify the type of ris
> Match each item on the left with the most appropriate item on the right. 1. Behavioral issues a. First step in BPM b. Fraud & resistance to change c. Key idea when using consultants d. Reduce, accept, avoid, share e. Second step in BPM f. Specific a
> 1. Which of the following best explains the relationship between “monitoring” and “information and communication” as the terms are used in the COSO Internal Control framework? a. Monitoring must be done by an individual, while information and communicati
> Please match each item on the right with the best item on the left. 1. Business strategy risk 2. Foreign Corrupt Practices Act a. 1977 legislation b. 2002 legislation c. A section of the COSO framework d. Internal control example 3. Information and
> A well-designed accounting information system can help an organization’s financial reporting fulfill many parts of the conceptual framework of accounting. Please complete each statement below with an appropriate word/phrase from the conceptual framework.
> 1. BRN Corporation has two divisions: California and Nevada. Both divisions have the same basic chart of accounts, which numbers current assets in the 100s, plant assets in the 200s, and so on. BRN differentiates them with an appended “
> Please match each item on the right with the most appropriate item on the left. 1. Accrued revenue a. Book of original entry b. Cash is received before service is provided c. Decreases to revenue d. Increases to liabilities e. Purchase orders, invoi
> Which type of coding system is indicated in each of the following independent situations? Be prepared to explain your reasoning. a. Airport codes (LAX, OGG) b. Automatically assigned transaction numbers in a cash register c. Consecutively numbered purcha
> The multiple choice questions presented in Question 2 are “low context.” You should be able to answer them simply by a careful reading of the chapter. These questions, on the other hand, are “high context.” They will require critical thinking and reasoni
> Each chapter in the book includes a problem like this one; beyond helping you master each chapter’s vocabulary, you may encounter similar problems on your class exams and on accounting professional exams (like the CPA exam). Please matc
> Which characteristics of a professional is Alex demonstrating by preparing for and presenting the webinar?
> Could Big Marker be considered an application service provider? Justify your response. If Big Marker is an ASP, which category (e.g., enterprise, specialist) best describes it?
> Most observers would agree that Big Marker is engaged in e-business. a. Which e-business categories apply to Big Marker? (e.g., B2B) b. Which benefits of e-business does Big Marker provide to its customers? Which costs apply?
> One ethical issue related to budgeting is “padding” the budget; that is, deliberately overstating resources needed. How would an ethical egoist view the practice of padding the budget? A utilitarian? A deontologist? A virtue ethicist?
> Use Steps for Better Thinking to help Alex decide whether to present the webinar.
> Complete the partial knowledge map below by suggesting connections between the four elements. Technical elements of zero-based budgeting Behavioral issues in zero-based budgeting Strategic advantages of zero-based budgeting Information technology to
> In preparing for the webinar, what causes of information overload is Alex likely to experience? Why? For each cause, discuss at least one countermeasure Alex can use.
> John C. Beale was a senior policy advisor with the U.S. Environmental Protection Agency. In late 2013, however, he was sentenced to prison for stealing close to $900,000 in taxpayer funds. According to Marimow and Bernstein (2013): Beale had skipped out
> a. List and discuss the seven types of audits described in the chapter. b. Explain the 10 generally accepted auditing standards that guide financial audits. c. Describe the common steps associated with an audit. d. Prepare a response to the questions for
> In this exercise, we’ll use Excel’s “sampling” function to create a random sample. Random samples of transactions are often used in financial statement audits. a. Access the Excel da
> a. Consider the five generic AIS elements discussed in Chapter 1. A financial statement auditor might examine input documents like purchase orders for mathematical accuracy, complete information, and proper recording in the AIS. How might a financial sta
> The internal audit department of JTJ Corporation set up an anonymous hotline for reporting suspected internal control breaches. After receiving several tips through the hotline alleging breaches in JTJ’s purchasing department, internal
> Determine whether each of the following statements is (i) always true, (ii) sometimes true, or (iii) never true. For those that are (ii) sometimes true, explain when the statement is true. a. A disclaimed audit opinion means the financial statements cont
> For each independent case presented below, use as a guide in explaining the steps you would take to uncover fraud. Also suggest at least two internal controls that could have prevented the fraud described. a. KC Group is basically a high-integrity compan
> Fill in the blanks below based on the ideas in the Audit Clarity Project. a. As structured under the ACP, each standard concludes with ___. b. Audit reports prepared under the ACP must have a ___ at the start of each paragraph. c. Auditors must obtain ma
> Barb is an auditor for Vicenti, Lloyd and Stutzman (VLS), a regional CPA firm; she earned her CPA license three years ago and is supervising the audit team for CDR Corporation, a company that manufactures blank CDs. Last year’s audit resulted in a qualif
> Olympus Corporation (www.olympus-global.com) is a Japan-based company that makes digital cameras, accessories, and other devices. In April 2011, Michael Woodford was appointed president of the corporation; he was the first non-Japanese president of Olymp
> a. List and discuss at least five characteristics of a professional and/or professional behavior. Where possible, include a specific example of each characteristic from your own experience as a student. b. Define ethics. Explain why ethics is so importan
> Consider the data set below, which you’ll also find in the 3 February 2014 post on my AIS blog. a. Use Excel’s correlation function to calculate the correlation between annual sales and number of ethics code violatio
> a. Check out the post titled “AIS coverage in professional exams” on my AIS blog (http:// bobhurtais.blogspot.com/). It spells out the topics you’ve studied in your AIS course elative to the CPA exam. Choose another professional certification exam, such
> Please indicate whether each of the following statements is (i) always true, (ii) sometimes true, or (iii) never true. For those that are (ii) sometimes true, explain when the statement is true. a. As part of their commitment to professionalism, accounti
> Which school of ethical thought is described in each of the following independent scenarios? Justify your choices. Reword each scenario so that it reflects a different school of ethical thought. a. Sean was working with a group of three other students on
> Indicate whether each of the following statements is (i) always true, (ii) sometimes true, or (iii) never true. For those that are (ii) sometimes true, explain when the statement is true. a. Audits are less time consuming and less expensive in organizati
> Federico Buenrostro was the CEO of the California Public Employees’ Retirement System (CalPERS) from 2002 to 2008; Alfred Villalobos was a CalPERS board member from 1993 to 1995. Buenrostro created false documents that enabled Villalobos to make money as
> Parmeet is currently pursuing a degree in accounting because she heard that jobs are plentiful in the field. However, she is not doing well in her accounting courses and is considering changing her major to some form of engineering. Use Steps for Better
> American Express (www.americanexpress.com) offers four broad types of credit cards: personal, small business, corporate, and prepaid. Each card type is tailored to a specific group of customers. A knowledge management system would help American Express d
> a. What is information overload? What causes it? What are its effects? How can decision makers deal with information overload in their professional lives? b. Explain the idea of knowledge management. Why is it important? What are some techniques you can
> This exercise will show you one way to generate a random sample using Excel. a. Consult the 3 February 2014 post on my AIS blog; download the Chapter 15 data file you’ll find there. b. In Column B of the data file, use Excelâ€
> a. This chapter outlined seven steps for creating a knowledge management system, using Netflix as an example. Think about the steps in the broader context of a functionally organized corporation; who should complete each of the steps for creating the sys
> Indicate whether each of the following statements is (i) always true, (ii) sometimes true, or (iii) never true. For those that are (ii) sometimes true, explain when the statement is true. a. An organizational culture comprises three parts: assumptions, p
> a. Viola completed her accounting degree in 2000; she has had three professional positions since that time. She summarized information about each position as indicated below. Organize the information into a knowledge management system. Dewey, Cheatam and
> a. Critter Sitters (www.stlouiscrittersitters.com/) is an in-home pet care company based in St. Louis, Missouri. Their Web site lists several services available to pet owners, including midday dog walking, puppy care, and in-home dog training. Suppose C
> Consider the list of current and classic issues in accounting presented below (or others specified by your instructor). With your instructor’s help and guidance, form a team of students to investigate one of the issues. Use the Steps for Better Thinking
> Look up the following references online or in your school’s library. Using the criteria and specific questions from the UMUC Web site referenced in the chapter, evaluate and discuss the quality of each reference. (Note: To do a thorough evaluation of the
> Throughout the text so far, we’ve examined the following companies in the various chapter openers: Starbucks, Amazon, Papa John’s, Google, Barnes & Noble, Microsoft, and Target. Choose one of those companies as the
> a. What is the basic purpose of each business process discussed in this chapter (conversion, financing, human resources)? b. What are the similarities and differences between job costing and process costing systems? How is each system reflected in the or
> RVO Corporation makes and sells decorative picture frames and scenic photographs. Each unit is sold for $32 and incurs $17 variable cost per unit. RVO’s total fixed costs are $18,000 annually. a. Use the preceding data to create a cost-
> a. You read a bit about Porter’s value chain at the beginning of Chapter 12. The value chain links together most, if not all, of the business processes we’ve examined in the last three chapters. To illustrate how, point your Web browser to www.heatercraf
> Indicate whether each statement below is (i) always true, (ii) sometimes true, or (iii) never true. For statements that are (ii) sometimes true, explain when the statement is true. a. All five business processes discussed in the text are required to crea
> In each of the following independent cases, indicate primary and foreign keys in the usual way. a. Consider the Dreambox Creations case presented in the preceding problem. Create specifications for the following tables: employee, report hours. Suggest at
> In each of the following independent cases, document the system using whatever technique(s) your instructor specifies. a. Dreambox Creations (www.dreamboxcreations.com/) in Diamond Bar, California, partners with Automatic Data Processing Inc. (ADP) for i
> In each independent situation below, identify and describe at least three risks. For each risk, suggest two internal controls to address it. a. (CMA adapted, June 1992) Midwest Electronics Corp. manufactures computers. Recently, its products have met sti
> Explain what is happening in each transaction presented in the previous exercise. For example, in transaction (a) , the company is paying its share of payroll taxes.
> Indicate whether each of the following types of businesses would be more likely to use a job or process costing system. Justify your choices. f. Landscaper g. Magazine publisher h. Management consultant a. Architect b. Attorney c. Dentist d. Heavy-e
> On 10 January 20x4, TPL Corporation purchased equipment for use in its operations. TPL made a down payment on the equipment of $25,000 and financed the remainder of its $65,000 total cost with a 6 percent, one-year note payable. TPL expects to use the e
> a. What is the basic purpose of the acquisition/payment process? b. What steps do companies commonly complete as part of the acquisition/payment process? c. How are the generic elements of the AIS exemplified in the acquisition/payment process? d. What r
> Consider the data array below (also available in the 3 February 2014 post in my AIS blog): a. Use Excel’s “Sum Product” function to calculate the total cost of all units purchased in Transactions 1
> In many business processes, resources and agents have no relationship outside the context of a specific event. For example, a customer has no relationship with an inventory item unless the customer buys the item. A REA model of that scenario appears belo
> a. Point your Web browser to www.download.com, and search for inventory management software packages, such as in Flow Inventory Software and Inventoria Stock Manager. Choose two or three such packages, and use the weighted rating technique discussed in C
> Indicate whether each statement below is (i) always true, (ii) sometimes true, or (iii) never true. For any statements that are (ii) sometimes true, explain when the statement is true. a. A bill of lading is required in the acquisition/payment process. b
> LCK Corporation manufactures small tools such as hammers and screwdrivers. Many of LCK’s employees pocket some of the firm’s manufactured tools for their personal use. Since the quantities taken by any one employee were typically immaterial, the individu
> Brock Company is a manufacturer of children’s toys and games. The company has been experiencing declining profit margins and is looking for ways to increase operating income. Because of the competitive nature of the industry, Brock is unable to raise its
