Name and distinguish among the three types of internal controls.
> Explain how an audit trail might get “lost” within a computerized system.
> Differentiate between a compliance audit and an operational audit.
> Why would errors be reduced if a company switched input methods from manual keying of source documents to a bar code system?
> How can an ERP system assist a company in its efforts to comply with the Sarbanes–Oxley Act of 2002?
> Which method of conversion to an ERP system is sometimes referred to as a “pilot” method? Why is this name appropriate?
> Differentiate between location‐wise and modular implementation approaches to the conversion to an ERP system.
> Why should customization of an ERP system be limited?
> Why is business process reengineering an important aspect of ERP implementation?
> Which of the tier one ERP companies is likely to provide the “best fit” for a manufacturing firm? for a human resources placement company?
> What are some of the features of an ERP module for customer relationship management?
> What are some of the activities included in an ERP module for supply chain management?
> Differentiate between the features of SAP’s R/1, R/2, and R/3. What does the “R” stand for in this name?
> What was unique about SAP’s first ERP system?
> What do you think would be the advantages of an e‐payables system over a traditional system that uses paper purchase orders and invoices?
> Differentiate between the enterprise‐wide and nonvolatile features of a company’s data warehouse.
> What are the two databases used by ERP systems?
> What is an MRP II system and how is it different from the ERP systems in use today?
> How has ERP increased the responsibilities of customer service representatives?
> How are accountants involved in data conversion?
> How can control totals serve as input, processing, and output controls?
> Explain some examples of input validation checks that you have noticed when filling out forms on websites you have visited.
> Why is it critical that source documents be easy to use and complete?
> Why is it true that the use of EDI means that trading partners may need to grant access to each other’s files?
> How does the use of public cloud computing reduce costs?
> Given the business and accounting environment today, do you think it is still important to understand the manual input of accounting data?
> Can you think of any procedures in place at McDonald’s that are intended to ensure the accuracy of your order?
> What kinds of risks are inherent when an organization begins conducting business over the Internet?
> How do telecommunicating workers pose IT system risks?
> What kinds of risks are inherent when an organization stores its data in a database and database management system?
> Why is it true that increasing the number of LANs or wireless networks within an organization increases risks?
> Why should accountants be concerned about risks inherent in a complex software system such as the operating system?
> Why do you think the uppermost managers should serve on the IT governance committee?
> What kinds of duties should be segregated in IT systems?
> What is the difference between business continuity planning and disaster recovery planning? How are these two concepts related?
> What kinds of risks exist in wireless networks that can be limited by WEP, WPA, and proper use of SSID?
> How does encryption assist in limiting unauthorized access to data?
> How is an extranet different from the Internet?
> A firewall should inspect incoming and outgoing data to limit the passage of unauthorized data flow. Is it possible for a firewall to restrict too much data flow?
> Why should an organization be concerned about repudiation of sales transactions by the customer?
> Explain the general controls that can be used to authenticate users.
> What kinds of risks or problems can occur if an organization does not authenticate users of its IT systems?
> Is it necessary to have both general controls and application controls to have a strong system of internal controls?
> What is the difference between general controls and application controls?
> What does section 404 of the Sarbanes– Oxley Act require of management regarding internal control systems?
> Distinguish between the Trust Services Principles of privacy and confidentiality.
> Identify and describe the five categories of the AICPA Trust Services Principles.
> What does it mean when information flows “down, across, and up the organization”?
> Why is data contained in the data warehouse called nonvolatile?
> Why is a policies and procedures manual considered an element of internal control?
> Distinguish between Internet spoofing and e‐mail spoofing.
> Describe three popular program manipulation techniques.
> Identify and explain the three types of internal source computer fraud.
> Distinguish between internal and external sources of computer fraud.
> Do you think it is possible that a business manager may perpetrate fraud and still have the company’s best interest in mind? Discuss.
> What are the advantages to using some form of IT systems for input, rather than manual input?
> Why would accounting software development companies be interested in expanding their software products into other market segments?
> What are some of the differences between ERP systems and accounting software for small companies?
> How would accounting software requirements for large corporations differ from requirements for small companies?
> Why might it be important to have internal documents produced as an output of the accounting information system?
> What are the distinguishing characteristics of cloud computing?
> How do internal reports differ from external reports?
> How does client–server computing divide the processing load between the client and server?
> Why might the time lag involved in batch processing make it unsuitable for some types of transaction processing?
> What is the difference between general controls and application controls?
> In what ways are the characteristics of e-business different from those of e-commerce?
> How is e-business a broader concept than e-commerce?
> The Gas and Java Mart (G & J) is a gas station and convenience market similar to any BP, Shell, or Speedway gas and convenience stores. G & J is a regional chain located in eastern Missouri, with 14 locations. Required: The section of this chapter ide
> The following description is excerpted from “Coupon Accounting Abuse,” Management Accounting, January 1993, p. 47. It’s November 15, and Gary, brand manager for a major consumer products firm, is contemplating his year‐end bonus. It is becoming increasi
> Explain why random access files would be preferable to sequential access files when payroll personnel are changing a pay rate for a single employee.
> At the old city hall, mail was sorted in a glorified closet—not the sort of place you’d expect to be frequented by a high‐ranking city official with multiple degrees. However, the city of Weston’s chief financial officer, Steve Kaufmann, had an unusual i
> Refer to case 48. Describe which parts of the design phase Miller should undertake to ensure that the purchased software matches with the business processes that it will use. From case 48: Miller International Corp. is in the process of purchasing a new
> Miller International Corp. is in the process of purchasing a new accounting software system. Miller is in a very specialized industry, with an international market. The company manufactures specialized parts to sell to companies in the oil exploration an
> The ElectroShock is a retailer of electronics such as cell phones, satellite radios, mp3 players, and highend LCD and plasma TVs. The ElectroShock is a large chain with stores in strip shopping centers throughout the United States. However, each store is
> Putnam Sound, Inc. (PSI) is a manufacturer of stereo speaker systems. The company prepares special journals and subsidiary ledgers for its revenue, expenditures, payroll, and conversion processes. For administrative processes, however, journal vouchers a
> Clouse Analytics is a financial services consulting firm that assists its clients with financial analyses surrounding proposed business ventures. John Y. Clouse is the firm’s founder and project director. As such, he is responsible for preparing most of
> Trudy’s Trendy Threads (TTT) is a regional wholesaler of women’s casual attire. The company is located in Jacksonville, Florida, and it sells to retail stores in resort communities in Florida, Georgia, and the Carolinas. TTT employs six salespeople, with
> The screen capture that follows shows the relation‑ ships in a Microsoft Access database. For each relationship, explain the following: a. The type of parent–child relationship it represents. b. Which attributes in t
> Kroger Co., a large, nationwide grocery chain, maintains a customer reward system titled the “Kroger Plus” card. Customers who enroll in this system are entitled to discounts on products at Kroger stores and on gasoline. To earn discounts and other rewa
> Zip Shuttle Service operates airport shuttle vans in 12 large cities: Los Angeles, San Diego, San Francisco, Phoenix, Las Vegas, Houston, Dallas, Chicago, New York City, Washington DC, Miami, and Orlando. Zip operates passenger vans to shuttle travelers
> Explain the differences between a field, a record, and a file.
> Bentley Dynamics, Inc., produces computer chips for personal electronic devices used to record music. The chips are sold primarily to large manufacturers; however, occasional production overruns may be discounted and sold to small manufacturers. Since Be
> Sole Footwear, Inc., is a manufacturer of a popular line of casual shoes and sandals that has experienced significant growth within the past 18 months. The unique design of its product line has always been the key to the company’s success. It is currentl
> Ski Slope, Inc. is a manufacturer of equipment used for snow skiing and snow boarding. The company’s products are sold under two brand names, one comprising its top‐of‐the‐line equipment and the other comprising its line of moderately priced equipment an
> Bloomington Enterprises is a manufacturer of model trains that sell under the name Bloomington Toy Trains in toy stores and hobby shops throughout the United States and Europe. The company employs 160 people in its home office and sole manufacturing and
> Rider Co. makes automobile parts for sale to major automobile manufacturers in the United States. The following information is available regarding internal controls over machinery and equipment: When a departmental supervisor needs a new item of machine
> The Crishner Company has the following processes related to fixed assets: When a department manager determines a need for a new fixed asset, he prepares a purchase requisition, which is forwarded to the chief financial officer. If the requested fixed ass
> Wilson Enterprises is a midsize manufacturing company with 120 employees and approximately $45 million in sales. Management has established a set of processes to purchase fixed assets, described in the following paragraphs: When a user department determ
> Rossi Industries has payroll processes as described in the following paragraphs: When a new employee is hired, the human resources department completes a personnel action form and forwards it to the payroll department. The form contains information such
> Glazer Company is a small manufacturing firm with 60 employees in seven departments. When the need arises for new workers in the plant, the departmental manager interviews applicants and hires on the basis of those interviews. The manager has each new em
> The document flowchart on the next page shows part of the purchasing and cash disbursement processes for Wilson, Inc., a small manufacturer of gadgets and widgets. Some of the flowchart symbols are labeled to indicate operations, controls, and records.
> Why do you think a company would benefit from using cloud computing rather than client– server computing?
> The United States General Accounting Office (GAO) Office of Special Investigations was responsible for investigating a potential purchase fraud case. The man who allegedly committed the fraud was Mark J. Krenik, a former civilian employee of the U.S. Air
> Krandolph Metals, Inc., is a manufacturer of aluminum cans for the beverage industry. Krandolph purchases aluminum and other raw materials from several vendors. The purchasing process at Krandolph occurs as follows: When inventory of any raw material se
> Melcher Enterprises is a wholesaler that purchases consumer merchandise from many different suppliers. Melcher then sells this merchandise to many different retail chain stores. The following paragraphs describe the expenditures processes at Melcher: Wa
> Notting, Inc., has the following processes related to purchasing: When it is determined that an item should be ordered, the purchasing department prepares a three‐copy PO. The first copy is mailed to the vendor, the second copy is filed by PO number in t
> Radleigh, Inc., processes its sales and cash receipts documents in the following manner: Cash Receipts Each morning a mail clerk in the sales department opens the mail containing checks and remittance advices, which are then forwarded to the sales depar
> Niagara Pediatrics is a partnership of 6 pediatrician owners, 2 nurse practitioners, 10 nurses, 3 accounting clerks, 2 receptionists, and an office manager. The office manager and all of the accounting clerks have their own PCs, and the receptionists sha
> Lewis LLC is in the process of updating its revenues and receivables systems with the implementation of new accounting software. James Holden, Inc., is an independent information technology consultant who is assisting Lewis with the project. James has de
> Inner Artist is a retailer of arts and craft supplies in the suburban Chicago area. It operates a single retail store and also has extensive catalog sales on account to area schools, churches, and other community organizations. Retail customers pay for s
> Katrupi, Inc., has five departments that handle all sales, billing, and collection processes. The five departments are sales, billing, accounts receivable, warehouse, and general ledger. These processes occur as follows: a. A customer mails a purchase or
