Suppose you are an accounts payable clerk for a small home‐improvements contractor. This morning one of the site supervisors submitted an invoice requesting immediate payment to a new vendor for items he claims were delivered directly to a work site. The supervisor attached a note to the invoice asking that the check be returned to him upon issuance so that he could personally deliver it to the vendor. This would ensure the timeliness of future deliveries. He claims that unless the payment is made immediately, there will be delivery delays on items needed to complete this job, as well as delays on items for another contract in progress. Although you are suspicious of this unusual request, you are tempted to accommodate it. You know that timely completion and collection on these contracts is critical to the company’s production scheduling and cash management. Moreover, the company president is on vacation and therefore not available to grant special authorization for this payment. Speculate on the type of fraud that could be in process here. What (if anything) could you do to ascertain the propriety of the transaction and still make the payment today?
> What occurs in an accounting information system that classifies accounting transactions?
> What is the purpose of source documents?
> Are manual systems and processes completely outdated?
> Why is it important that IT systems be aligned with the business strategy?
> What is the relationship between business processes and the accounting information system?
> How do other processes (revenue, expenditures, conversion) affect the general ledger?
> Millennium Tech Stop is a regional retailer of consumer electronics, with warehouses and stores located in several large cities in California. The board and top management of Millennium are considering updating their accounting, inventory, and retail sal
> Consider the real‐world example of Cole Haan presented in this chapter. a. Use Exhibits 2‑3 and 2‑4 to help you determine the approximate range of Cole Haan’s annual revenues. b. What are the advantages Cole Haan likely realized as a result of having r
> Middleton Corporation just became a public corporation when shares of its stock were sold to the public three months ago. A new board of directors has been appointed to govern the corporation. Assume that you will be giving a presentation to the board me
> Describe the ethical obligations of companies to their online customers.
> Read the article at https://xbrl.us/wp- content/uploads/2013/12/20131023-RobertHurt. pdf. Briefly describe what this article says about how XBRL has affected financial reporting.
> EDIPipeline is an Internet EDI solution for small to mid-size companies. View the Web page at http://www.edipipeline.com. Click on the link called “Trading Partners.” Examine two or three company names you recognize. Describe how this EDI system might be
> Enter the website of a popular retail company that sells a large volume of goods or services on the Internet. Search for the company’s “Privacy Policies” on that website. If you do not find any privacy policies, continue visiting other company websites u
> Visit the website www.cpawebtrust.org and answer the following questions: a. What is a WebTrust seal? b. Which organization sanctions the WebTrust seal? c. What kind of professional can provide a WebTrust seal to a company? d. What must this professi
> Using a search website, enter the term “privacy seal” and search. Answer the following questions: a. What is the purpose of a Web privacy seal? b. Which organizations provide Web privacy seals to Web-based companies? c. What are the advantages to a co
> Sweet Susanna’s is a local chain of bakeries in Austin, Texas. The chain has 18 locations throughout the city and its suburbs. The management is considering opening a website to conduct e-commerce with customers. Describe any benefits that might be deriv
> Explain the hardware and technology standards that were developed during the ARPANET that were an important foundation for the Internet of today.
> List and describe the ten privacy practices recommended by the AICPA Trust Services Principles Privacy Framework. If you have ever made a purchase online, you have likely seen these practices in use. Provide any examples from your own personal experience
> Both Gmail and iCloud for iTunes were mentioned as examples of cloud computing. Can you describe any other examples of cloud computing?
> Are there business processes that do not in some way affect accounting records or financial statements?
> Using a Internet search engine, search using the terms Spanner and “distributed database.” Describe how and why Google uses a distributed database. What problems is Google encountering related to its distributed database?
> Read the article at http://www.eweek .com/c/a/Enterprise‐Networking/IBM‐moves‐ customers‐to‐SmartCloud‐for‐Collaboration‐147563. Explain how the IBM customers mentioned in the article are using IBM’s Smart Cloud.
> Describe the ethical obligations of companies to their online customers.
> What are some benefits and outcomes that can result from examining Big Data with regard to a firm’s inventory processing?
> Consider how auditing has changed by comparing auditing techniques prior to the 1980s when many firms prepared manual accounting records and there were manual audits, versus audits today that use computerized techniques to analyze data.
> Explain how CPA firms are using Big Data and data analytics in the audits of their clients.
> Explain how a healthcare organization, such as a hospital or medical clinic, may use Big Data and data analytics as compared to a manufacturing firm.
> Big Data is increasingly important to companies and to accountants. Using a web search on Google or other search sites, find an article within the last 12 months on “Big Data” and accounting. Summarize how the article describes the use of Big Data in an
> Read the online article at http://www. xconomy.com/boston/2010/09/20/netezza‐sold‐to‐ ibm‐for‐1‐7b‐will‐help‐big‐blue‐tackle‐big‐data/. Describe the services that Netezza offered and why IBM desired to purchase this company.
> Describe the advantages and disadvantages of using a distributed database and distributed data processing. Do you think the advantages are worthwhile? Explain your answer.
> Describe the purpose of each of the following parts of a manual system: a. Source document b. Turnaround document c. General ledger d. General journal e. Special journal f. Subsidiary ledger
> List and describe the steps involved in building a data warehouse.
> Arminello, Inc. does not use a database system; rather, it maintains separate data files in each of its departments. Accordingly, when a sale occurs, the transaction is initially recorded in the sales department. Next, documentation is forwarded from the
> Differentiate between batch processing and real‐time processing. What are the advantages and disadvantages of each form of data processing? Which form is more likely to be used by a doctor’s office in preparing the monthly patient bills?
> Exhibit 12‑9 shows a screen capture from Microsoft Dynamics GP accounting/ERP software. The following modules in Dynamics GP are shown: • Financial • Sales • Purchasing • Inventory • Payroll • Manufacturing • Fixed Assets For each of the following
> Compare investment processes with sales processes in terms of a. the frequency of transactions b. the volume of transactions c. the magnitude in dollars of a single transaction d. the manner of authorization
> Compare source of capital processes with sales processes in terms of a. the frequency of transactions b. the volume of transactions c. the magnitude in dollars of a single transaction d. the manner of authorization
> Using an Internet search engine, locate a publication called “RFID Journal.” Find a recent article that describes the use of RFID in manufacturing. Briefly describe the example(s) discussed in the article.
> Price discounts are commonly used in the business world as incentives for customers. How may this practice (or its misuse) be deemed unethical?
> Explain how the over‐production of inventories can be seen as unethical in an absorption costing environment.
> Using an Internet search engine, search for the terms “just in time” + “automotive.” From the results you find, explain why just‐in‐time inventory systems are such an important factor in the competitive automotive industry.
> Which type of accounting information system reports would likely be prepared most frequently by financial accountants? By managerial accountants?
> Using an Internet search engine, search for the terms “CAD” + “industrial robots.” Identify a company (name and location) that provides manufacturing automation by using robotics. Describe some of the robotic operations that are featured on the company’s
> Suppose a company is experiencing problems with omitted transactions in the conversion process— i.e., inventory transactions are not always being recorded as they occur. Refer to Exhibit 7‑7 to describe at least three internal controls that should be in
> Using an Internet search engine, search for the terms “Patti Dale” and “theft.” (Be sure to include the quotation marks around the name.) Explain the unethical behavior that occurred. Also, explain any internal controls that you believe were missing or n
> Read the article at this link: www.offthe gridnews.com/privacy/how‑car‑insurance‑ companies‑are‑tracking‑your‑every‑move/. Describe any ethical considerations in using such technology. Consider both the company and employee perspectives. Also discuss whe
> Using an Internet search engine, search for the phrase “fixed asset software.” (Be sure to include the quotation marks.) Examine the results to find companies that sell fixed asset software. List and explain some of the features of fixed asset software t
> Using an Internet search engine, search for the phrase “biometric time clock.” (Be sure to include the quotation marks.) From your search results, describe a biometric time recording system and its advantages.
> Explain the process of approval of purchases for fixed assets. How does this process differ from that of purchasing raw materials?
> Using a search engine, search the Internet for an article titled “The advantages of customer self-service for B2B Electronic Invoice Presentment and Payment (EIPP)” Briefly explain what the article describes as the advantages of adopting EIPP.
> Using a search engine, search the Internet for information about electronic invoice presentment and payment. You may have more success searching for the terms “EIPP” and “invoices” together in one search. On some websites, it may be called EIP rather tha
> Think about your most recent appointment at the dentist’s office. Describe the business processes that affected you as the patient/customer. In addition, describe the administrative and accounting processes that are likely to support this business.
> Koler Manufacturing Company operates two plants that manufacture shelves and display units for retail stores. To manufacture these items, the purchasing agents purchase raw materials such as steel, aluminum, plastic, lexan, and miscellaneous screws, rubb
> Using a search engine, search the Internet for information about evaluated receipt settlement, or ERS. You may have more success searching for the terms “ERS” and “invoices” together in one search. From what you read about ERS on the Web, what do you thi
> Kittner, Inc., is a small company with three people working in the expenditures processes. One of the three employees is the supervisor of the other two. Some tasks that must be accomplished within the expenditures processes are the following: a. Account
> Since the accounts payable system of matching POs, invoices, and receiving reports can often be complex, organizations must routinely check to ensure that they are not making a duplicate payment. The textbook website contains a spreadsheet titled “invoic
> The following list presents statements regarding the expenditures processes. Each statement is separate and should be considered to be from a separate company. Determine whether each statement is an internal control strength or weakness; then describe wh
> Holsten Company is considering a business process reengineering (BPR) project whereby its current (mostly manual) expenditures processing would be converted to an automated system. Brainstorm ideas for this project. Specifically, what processes could be
> Joy Tucker started a new business: a coffee and pastry cart located at the local library. Joy hired her brother, Eric, as her assistant. Joy and Eric personally make all the purchases of items needed to stock the cart, using procurement cards issued in t
> Compare how a company with a manual process of matching a PO, receiving report and vendor invoice would differ from a company that uses Microsoft Dynamics GP or other integrated ERP solution where automated (electronic) matching of a PO, receiving report
> Identify an internal control procedure that would reduce the following risks in automated fully integrated ERP system such as Microsoft Dynamics GP: a. The purchasing department may not be notified when goods need to be purchased. b. Accounts payable m
> Identify an internal control procedure that would reduce the following risks in a manual system: a. The purchasing department may not be notified when goods need to be purchased. b. Accounts payable may not be updated for items received. c. Purchase ord
> Melissa Simpson is currently pursuing her accounting degree at Fairfield University. She has excelled in each of her major courses to date; however, she tends to struggle in her computer classes and with assignments requiring use of computer technology.
> Refer to the Real World example for City Harvest and the details in the chapter. Outline the business process improvements that can occur in the inventory and purchasing processes when a manual or nonintegrated system is replaced with a fully integrated
> This chapter mentioned alleged fraudulent revenue reporting at Coca‐Cola and McAfee. Using a search engine, search the phrase “SEC Channel Stuffing.” Give one more example of a company that was investigated, or is being investigated, by the SEC. What are
> Using a search engine, locate an article written by Vangie Beal titled “Top 2012 eCommerce Trends.” Briefly describe the main point of this article.
> Visit the financial education website created by Equade Internet Ltd. at www.investopedia.com. Note the definition for channel stuffing. According to this site, what is the primary motivation for channel stuffing?
> The following list presents various internal control strengths or risks that may be found in a company’s revenues and cash collection processes: ——— Credit is authorized by the credit manager. ——— Checks paid in excess of $5,000 require the signatures o
> When an order for inventory items is fulfilled, in Microsoft Dynamics GP the items are reviewed to see if there is available stock to fill the order for the line item. If there is no available stock, the user may select one of the following options: a. S
> Identify an internal control procedure that would reduce each of the risks that follow in a manual system. Also, describe how (or if) an IT system could reduce these risks: a. Revenues may be recorded before the related shipment occurs. b. Employees re
> Caleb Westerfield is the owner of CW Sports, a consignment shop for used sporting goods. Caleb accepts consigned goods and offers them for sale to the general public. Caleb rents business space, including a retail store where the consigned goods are disp
> You are the recent heir of $40,000 cash, with which you are considering opening a sushi bar in the university community. You would accept cash and credit card payments, which would be handled primarily by your servers. You also plan to offer introductory
> In 1990, Luigi Romano opened a pizza restaurant that he named Romano’s in St. Louis, Missouri. Over the years, he opened both company and franchise locations and grew the business to include over 40 restaurants that serve the three states around the St.
> Describe why accountants should be concerned about ethics.
> Perform an Internet search to determine the nature of Xerox Corporation’s management fraud scheme and to find out what happened to the company after the problems were discovered.
> Visit the ISACA website at www.isaca.org and click the Knowledge Center tab, then select ITAF (Information Technology Assurance Framework) and click on the IT Audit Basics tab to find articles covering topics concerning the audit process. Locate an artic
> In order to preserve auditor independence, the Sarbanes Oxley Act of 2002 restricts the types of non-audit services that auditors can perform for their public‐company audit clients. The list includes nine types of services that are prohibited because the
> Given is a list of audit standard‑setting bodies (shown on the left) and a description of their purpose (shown on the right). Match each standard‐setting body with its purpose. I. PCAOB a. Established by the AICPA
> Using the Internet or other research tool, search for “Microsoft Dynamics GP software” and describe the type of company where Great Plains would be a good choice for an ERP system.
> Using the Internet or other research tool, search for “SAP software” and describe the type of company where SAP would be a good choice for an ERP system.
> Using the Internet or other research tool, search for “compare ERP software” and describe pros and cons of two Midmarket/tier two ERP systems.
> Using the Internet or other research tool, search for “Total Cost of Ownership” and “ERP Software” and describe costs to consider when calculating the total cost of ownership for an ERP system.
> Using the Internet or other research tool, search for “ERP software in the cloud” and outline (a) pros, (b) cons, and (c) considerations of adopting cloud deployment for an ERP system.
> Using the Internet or other research tool, search for the terms “ERP” and “SME.” Describe why a small to medium‐sized entity might choose an ERP system.
> Give a brief summary of each of the following: a. enterprise risk management b. corporate governance c. IT governance
> Using the Internet or other research tool, search for the terms “big bang” and ERP. Identify at least one company that represents a success story with regard to this ERP implementation method (other than Marathon, as described in this chapter’s RealWorld
> Using the Internet or other research tool, search for the terms “best of breed ERP systems strategy” and ERP. Locate information that addresses the debate and dilemma faced by many companies regarding the implementation choice between best of breed techn
> Suppose a company is experiencing problems with omitted transactions in the conversion processes—that is, inventory transactions are not always being recorded as they occur. How can an ERP system help to alleviate such a problem?
> Compare and contrast the functionality of the logistics module and supply chain management activities.
> Identify and describe the first generation of ERP systems used in the 1970s and the second generation of ERP systems used in the 1980s.
> Describe the ERP’s modular interface that is necessary in a typical manufacturing environment.
> Go to any website that sells goods. Examples would be BestBuy, Staples, and J. Crew. Pretend that you wish to place an order on the site you choose and complete the order screens for your pretend order. Do not finalize the order or enter either real or f
> Using the Internet or other research tool, look up the terms “disaster recovery,” along with “9/11.” The easiest way to search for both terms together is to type into the search box the following: “disaster recovery” “9/11.” Find at least two examples of
> Visit the AICPA website at www.aicpa.org. Search for the terms “WebTrust” and “SysTrust.” Describe these services and the role of Trust Services Principles in these services.
> Using the Internet or other research tool, look up the term “penetration testing.” Describe the software tools you find that are intended to achieve penetration testing. Describe the types of systems that penetration testing is conducted upon.
> The networks discussed in this chapter were LANs, Internet, intranet, and extranet. Explain each.
> The IT governance committee should comprise top level managers. Describe why you think that is important. What problems are likely to arise with regard to IT systems if the top level managers are not involved in IT governance committees?
> Explain how each of the following input validation checks can prevent or detect errors: a. Field check b. Validity check c. Limit check d. Range check e. Reasonableness check f. Completeness check g. Sign check h. Sequence check i. Self checking
> Control totals include batch totals, hash totals, and record counts. Which of these totals would be useful in preventing or detecting IT system input and processing errors or fraud described as follows? a. A payroll clerk accidentally entered the same t
> Many IT professionals feel that wireless networks pose the highest risks in a company’s network system. Required: a. Why do you think this is true? b. Which general controls can help reduce these risks?
