Neil Rogers is the controller for North Gate Manufacturing (NGM), a company with headquarters in College Station, Texas. NGM has seven concrete product plants located throughout the Southwest region of the United States. The company recently switched to a decentralized organizational structure. In the past, all revenues and expenses were consolidated to produce just one income statement. Under the new organizational structure, each plant is headed by a general manager, who has responsibility for operating the plant like a separate company. Neil asked one of his accountants, Scott McDermott, to organize a small group to be in charge of performance analysis. This group is to prepare monthly reports on performance for each of the seven plants. These reports consist of budgeted and actual income statements. Written explanations and appraisals are to accompany variances. Each member of Scott’s group has been assigned to a plant and is encouraged to interact with management and staff in that plant to become familiar with operations. After a few months, Neil began receiving complaints from the general managers at several of the plants, claiming that the reports were slowing down operations and they felt like someone was constantly “looking over their shoulders” to see if they are operating in line with budget. They pointed out that the performance analysis staff is trying to do its job (i.e., explanation of variances). The most vocal plant manager claimed that “those accountants can’t explain the variances—they don’t know anything about the industry!” The president of NGM, Ross Stewart, also complained about the new system for performance evaluation reporting. He claims that he is unable to wade through the seven detailed income statements, variances, and narrative explanations of all variances each month. As he put it, “I don’t have time for this, and I think much of the information I am receiving is useless!” Requirements: 1. Is it a good idea to have a special staff in charge of performance evaluation and analysis? Explain. 2. In a decentralized organization such as this one, what would seem to be the best approach to performance evaluation? 3. What information would you include in a performance evaluation report for Mr. Stewart?
> In Discussion Question 2-1, you discussed intranets and extranets, and identified the importance of each to accountants. Now, assume that you are a partner in a medium sized, local CPA firm. Your firm has 4 partners,10 staff accountants, 1 research assistan
> Visit the home page of a DTSS. How much does your service charge? Do you think these fees are reasonable? Why or why not?
> A number of accounting journals now post back issues or even publish their entire journals online. Access the Journal of Accountancy website at www.aicpa.org (or another website selected by your instructor). Select an article that pertains to a topic in
> The messages below were encrypted using the technique illustrated in Figure 2-11 (using displacement keys other than 5). Using trial and error, decode them. Hint: This task becomes easy if you use an Excel spreadsheet and V Look Up formulas that referenc
> The Internet uses many acronyms. Within the context of the present chapter, what words were used to form each of the following? a. B2B b. B2C c. C2C d. DNS e. EC f. EDI g. Email h. HTTP i. ICANN j. IDEA k. IDS l. IETF m. IoT n. IP address o. ISP p. SaaS
> Springsteen, Inc. is a large furniture manufacturer located in Asbury Park, New Jersey. It sells to furniture wholesalers across the United States and internationally. Revenues last year exceeded $500 million. Currently, the company has over 100 legacy i
> The business models of the breakthrough Internet companies in Figure 2-6 have often been controversial. For example, homeowners often violate local rules governing the rental of their private dwellings, Tesla’s plans to sell cars throug
> Select three Internet websites whose owners sell goods or services and create a table similar to Figure 2-6. Classify each of your websites as B2B, B2C, or C2C. If you are not sure, feel free to use more than one classification. How does t
> Write a one-page paper on each of the following topics as they relate to XBRL: a. What is the history of XBRL? What professional accounting organization helped in the early stages of this concept? b. What is an XBRL specification, and what is the latest v
> Visit the XBRL home page at www.XBRL.org, and read the section entitled “What is XBRL.” Then, do each of the following: a. Select an article from the “What” list of on the home page and write a one-page summary of your findings. b. Search the Internet for
> At the time this book was written, the US Securities and Exchange Commission still supported Edgar—a depository of corporate accounting filings. Log onto Edgar at www.sec.gov/edgar.shtml, click on “Search for Company Filings.” Finally, find and select two
> Create an HTML document of your own, using the example in Figure 2-1 to guide you. Put the name of this assignment in the tag for the heading. Put your name in bold. Include at least one hyperlink to a favorite Web page using the anchor tag. Finally, in
> In this chapter’s “AIS at Work” feature, we discuss the events and SAR surrounding the case of Bernard Madoff. A financial analyst by the name of Harry Markopolos believed it was legally and mathematically impossible for Madoff to be posting such outrageo
> The website of FinCen—the Financial Center Crimes Enforcement Center Network (a department of the US Treasury)—maintains a website at www.fincen.gov. Under “RESOURCES”, you will find links to information for various types of financial institutions including
> Many companies now provide a wealth of information about themselves on their websites. But how much of this information is useful for investment purposes? To help you answer this question, imagine that you have $10,000, which you must invest in the commo
> The participants of such recreational activities as hang gliding, soaring, hiking, rock collecting, or skydiving often create local “birdsof-a-feather” (affinity) organizations. Two examples are the Chicago sky divers (www. chicagoskydivers.com) or the so
> Linda Stanley is the Vice President for Computing and Information Services at State University (SU), a medium-sized, urban university that has experienced a 3% growth in enrollments every year for more than a decade. The university now has almost 22,000
> Select one new trend in the field of accounting information systems today that is not mentioned in the chapter, but that you feel is important. Write a short report describing your findings. Be sure to provide reasons why you feel that your choice of topic
> Shervonne Thomas is the controller at a large manufacturing company located in Chesterfield, Virginia. The company has several divisions that evaluate their performance using a return on assets (ROA) formula (calculated by dividing net profit by the book v
> Look again at the list of assurance services shown in Figure 1-5. What other assurance services can CPAs offer which would take advantage of their AIS expertise? Figure 1-5: Risk Assessment Provide assurance that an organization's set of business r
> Managerial accounting is impacted by IT in many ways, including enhancing corporate performance measurement. How might a university use a scorecard or dashboard approach to operate more effectively?
> Discuss suspicious activity reporting. For example, should such reporting be a legal requirement, or should it be just an ethical matter? Is the majority of SAR activity illegal, or are these just mostly false alarms?
> XBRL is becoming established as the language to create interactive data that financial managers can use in communication. How do you think the use of interactive data might enhance the value of a company’s financial statements?
> Advances in IT are likely to have a continuing impact on financial accounting. What are some changes that are occurring in the way financial information is gathered, processed, and communicated as a result of increasingly sophisticated information technolo
> Hiring an employee and taking a sales order are important business activities, but are not accounting transactions requiring journal entries. Make a list of some other business activities that would not be captured as journal entries in traditional AISs.
> What are intranets? What are extranets? Why are intranets and extranets important to accountants?
> What are some of the unique challenges that mobile devices pose to an organization? What do you see are the trade-offs associated with mobile devices? What are the pros and cons of BYOD?
> Over the past decade, The Retail Cooperative (TRC) successfully acquired a number of smaller retailers, enabling it to grow significantly. As a result, TRC is now one of the largest retailers in Europe, employing over 230,000 people in 25 countries. The c
> Discuss the different backup site options available to organizations. How does the nature of the business influence which site option is chosen?
> What is backup, and why is it important when operating an accounting system?
> What is backup, and why is it important when operating an accounting system?
> Why are business continuity planning and disaster recovery planning so important? How do they complement each other? Identify several reasons why testing these plans is a good idea.
> What controls must be used to protect data that is transmitted across wireless networks?
> What guidance or framework would you use to establish IT governance if you were a senior executive in a firm? If you were a mid-level IT manager who was designing IT general controls? A manager who was responsible for identifying the appropriate applicati
> What do we mean when we talk about multifactor authentication? What are the examples of multifactor authentication in your personal life?
> Discuss the following statement: “The separation of duties control is very difficult in computerized accounting information systems because computers often integrate functions when performing data processing tasks. Therefore, such a control is not advisab
> What is the difference between logical access to the computer and physical access to the computer? Why is the security of both important?
> Explain how each of the following can be used to control the input, processing, or output of accounting data: (a) edit tests, (b) check digits, (c) passwords, (d) activity listings, and (e) control totals.
> Access the full case story of Mar-Bal Company (the AIS-at-Work for this chapter) at www.iqms.com. Then, respond to each of the following requirements: Requirements: 1. Review the items in Figure 5-10, which lists indicators that a company may need a new
> What is a security policy? What do we mean when we say organizations should have an integrated security plan?
> Discuss some of the advantages to an organization from using a voucher system and pre numbered checks for its cash disbursement transactions.
> How can separation of duties reduce the risk of undetected errors and irregularities?
> Why are competent employees important to an organization’s internal control system?
> Discuss what you consider to be the major differences between preventive, detective, and corrective control procedures. Give two examples of each type of control.
> Why are accountants so concerned about their organization having an efficient and effective internal control system?
> Briefly discuss the interrelated components that should exist within an internal control system. In your opinion, which component is the most important and why?
> Why are the COSO and COBIT frameworks so important?
> What were the primary drivers for the redesign of COSO’s ERM Framework? Briefly discuss the five components of effective ERM.
> Why did COSO think it was so important to issue the 2009 Report on monitoring?
> Why is it important for managers to evaluate internal controls?
> What role does cost–benefit analysis play in an organization’s internal control system?
> What are the primary provisions of the 2013 COSO Internal Control—Integrated Framework?
> What are some of the benefits of a centralized database? What are some of the difficulties in moving from multiple databases or files to a centralized database structure?
> What are the four basic components of an ERP’s architecture? How do these components differ from a set of independent accounting systems—for example, separate systems for accounts payable, accounts receivable, inventory control, and payroll?
> Discuss some of the basic features of an ERP. How do these features distinguish an ERP from an integrated accounting software program?
> Discuss the differences between traditional ERP and extended enterprise systems.
> The difference in price for middle-market accounting software versus for an ERP system can be millions of dollars. What can these high end systems do that the less-expensive enterprise accounting packages cannot?
> What are some of the advantages of the cloud computing feature of integrated accounting software? What are some of the disadvantages of a hosted solution?
> What features should a small organization look for when thinking about acquiring a new integrated accounting package? Would it make any difference if the organization were a not-for profit concern?
> The annual report is considered by some to be the single most important printed document that companies produce. In recent years, annual reports have become large documents. They now include sections such as letters to the stockholders, descriptions of t
> How are the integrated accounting systems for small businesses like those for larger businesses? How are they different?
> What is a dashboard? What is a mashup? Discuss how these items relate to ERPs and how they might help a business manager in his or her job.
> Why do businesses typically need to engage in business process reengineering when they adopt an ERP? Identify at least four key aspects of a successful BPR project.
> What are some of the consequences to a company that makes a poor decision in selecting a new AIS?
> While you are likely to purchase a middle end accounting software package from a value added reseller (VAR), why should you be cautious about hiring one to recommend a software package for your business?
> Find an article about a company that has adopted a business application suite. Identify the company and its basic characteristics (such as location, products, number of employees). What are some cost savings realized by the company? Were there specific ef
> A new company will have no business processes in place. How would the owner go about selecting an appropriate AIS for the new company? Should the owner consider acquiring an ERP package immediately?
> What are some important features of integrated accounting software for small businesses? Why are they important?
> What is image processing? How is image processing used in AISs?
> What is the function of secondary storage? Describe three types of secondary storage media, and describe the advantages and disadvantages of each type.
> Robert Berry is the managing partner for Berry & Associates (B&A), LLP. He was recently reviewing the firm’s income statement for the previous quarter, which showed that auditing revenues were about 5% below last year’s totals while tax revenues were abou
> How does information technology auditing differ from financial auditing? Make a list of the skills you think are important for financial auditors and for IT auditors. Do you think all auditors should have all the skills on both lists? Why or why not?
> Identify several types of printers. What are the advantages and disadvantages of each type?
> Identify the three sections of a CPU, and describe the functions of each component. How are microprocessor speeds measured? Why are such speeds rarely important to AISs?
> How do you feel about red-light cameras? Should cities be allowed to use them? Why or why not?
> Name several types of computer input devices, and explain in general terms how each one functions.
> Why do most AISs try to avoid data transcription?
> Why is information technology important to accountants?
> The Business Software Alliance (www.BSA.org) is a non profit organization dedicated to fighting illegal software copying (software piracy). The organization estimates that one in five software programs is unlicensed and therefore illegal. Is copying a sprea
> What are computer programming languages? Name some specific languages, and describe briefly an advantage of each.
> Name some general classes of application software. What tasks do each of your software classes perform?
> What are windowing operating systems, multitasking operating systems, and graphical user interfaces? Why are they useful to AISs?
> Blazer Interactive is a software company that focuses on first-person player video games. In 2013, Blazer’s CEO, Alexander James, introduced a revolutionary new gaming console to his company’s product line. The z/Station’s primary draw was a virtual reali
> What are the names of some current cloud computing vendors other than those discussed in the text? Should all firms use cloud vendors, or are there some reasons why they should be avoided?
> What is client/server computing? How does it differ from host/mainframe computing? What are some of the advantages and disadvantages of client/server systems?
> What are local area networks? What advantages do LANs offer accounting applications?
> What are data communication protocols? Why are they important?
> Why is it important to view an AIS as a combination of hardware, software, people, data, and procedures?
> What is EDI? Why do companies use EDI?
> Describe some important uses of electronic commerce and explain why electronic commerce is important to accountants.
> How does XBRL compare to the IDEA database?
> What is HTML? How does it differ from XML and XBRL? (Note: For a more comprehensive description of the differences, you may want to search the Internet.)
> How are the comments on social media sites useful to businesses? How are these sites useful to accountants?
> Mattie and Jaime have been friends since grammar school, but they now both attend State University. As agreed, they met under the big tree—a common meeting place for students. “How did your interview go at Forest Meadows?” asked Mattie as they both sat d
> Is bitcoin still a viable currency? Use an Internet search engine to find out. If so, what is the exchange rate for one bitcoin in the currency of your country? Would you buy a bitcoin? If so, why? If not, why not?
> What are blogs? How are they used? Who is using them?
> What is click fraud? Who benefits and who loses when click fraud occurs?
> Most retail sales websites require customers to use their credit cards to make purchases online. How comfortable are you in providing your credit card number in such applications? Why do you feel this way?
> Analysts claim that businesses can increase sales on the Internet, but not profits. What evidence does this chapter provide to support or refute this claim? Discuss.
> What are digital signatures? Why do businesses use them? How can businesses use a digital certificate for Internet security?
