What are the factors that limit the effectiveness of internal controls?
> Describe the type of information that a human resources department should maintain for each employee.
> Describe how a procurement card improves the efficiency of purchasing supplies.
> Describe how an ERS system could improve the efficiency of expenditures processes.
> Describe how the matching of key information on supporting documents can help a company determine whether purchase transactions have been properly executed.
> Expenditures systems are crucial in the automobile manufacturing industry, where hundreds or thousands of parts must be purchased to manufacture cars. Briefly describe how EDI would be beneficial in this industry.
> Describe what is likely to occur if company personnel erroneously recorded a purchase transaction for the wrong vendor. What if a cash disbursement were posted to the wrong vendor? Identify internal controls that would detect or prevent this from occurri
> Briefly describe an example from your personal experience where you purchased something from a company that uses a POS system. How might your experience have been different if the POS system did not exist in the experience you described?
> Describe how a POS system could be useful to a company’s marketing managers. How could it be useful to purchasing agents?
> Why would the training of employees be an impediment to updating legacy systems?
> Describe how the use of prenumbered forms for receiving reports and credit memos can help a company determine that sales return transactions have not been omitted from the accounting records.
> Use the process maps in this chapter to answer the following questions: a. What would a credit manager do if a sales order received caused a customer to exceed its credit limit? b. What happens after the shipping department verifies that the quantities
> Revenue systems are crucial in the health care industry, where hundreds of billions of dollars are spent annually reconciling revenues and billing data from the perspectives of providers (doctors and clinics, etc.) and payers (insurance companies). Brief
> Debate the logic used in the following statement: The person responsible for handling cash receipts should also prepare the bank reconciliation because he is most familiar with the deposits that have been made to the bank account.
> Describe what is likely to occur if company personnel erroneously recorded a sales transaction for the wrong customer. What if a cash receipt were applied to the wrong customer? Identify internal controls that would detect or prevent this from occurring.
> Distinguish between the various service organization controls (SOC) reporting options available to auditors who evaluate cloud computing service providers.
> Explain why continuous auditing is growing in popularity. Identify and describe a computer assisted audit technique useful for continuous auditing.
> How is it possible that a review of computer logs can be used to test for both internal access controls and external access controls? Other than reviewing the computer logs, identify and describe two types of audit procedures performed to test internal a
> One of the most important tasks of the planning phase is for the auditor to gain an understanding of internal controls. How does this differ from the tasks performed during the tests of controls phase?
> Kim and Kresiki are assigned to perform the audit of Ying & Yang’s Yoga Company. During the audit, it was discovered that the amount of sales reported on Ying & Yang’s income statement was understated because one week’s purchasing transactions were not r
> What are some examples of turnaround documents that you have seen?
> From an internal control perspective, discuss the advantages and disadvantages of using IT‐based accounting systems.
> Why is it necessary for a CPA to be prohibited from having financial or personal connections with a client? Provide an example of how a financial connection to a company would impair an auditor’s objectivity. Provide an example of how a personal relation
> Explain how an ERP system can enhance internal controls. Specifically, how can it facilitate the separation of duties?
> Name the AICPA Trust Services Principles’ five operations risks. Why are these risks greater for ERP systems than for other IT systems?
> What are Shang and Seddon’s five dimensions of ERP benefits?
> What are the primary benefits of an ERP system? What are the primary risks?
> Discuss the potential advantages and disadvantages that exist with respect to engaging a consultant for an ERP implementation.
> Match the ERP modules on the left with their purpose of the related processes on the right: I. Financials a. Taking customer orders and preparing for the impending revenue and cash collection II. Human Resources b. Maintaining of the general ledger
> Refer to the Ethical Dilemma: Mail Order Case presented in Chapter 3. What term introduced in this chapter applies to the type of mail order deceit? What could the mail order company do to avoid a loss resulting from an event, assuming that it uses an e‐
> Two of the most common ways that employees commit fraud against their employers is the misstatement of reimbursable expense accounts and the misuse of office supplies for personal purposes. Although these schemes are usually not individually significant,
> What are some benefits and outcomes that can result from examining Big Data with regard to a firm’s purchasing transaction processing?
> What are some benefits and outcomes that can result from examining Big Data with regard to a firm’s revenue transaction processing?
> Keller Company is a small company with four people working in the revenue processes. One of the four employees supervises the other three. Some tasks that must be accomplished within the revenue processes are the following: a. Accounts receivable record
> Look at Exhibit 2‑4 and pick one accounting software product from the midmarket segment and one software product from the tier 1 ERP segment. Using those brand names of software, search the Internet for information about those products. Based on your inv
> What are the five most common reasons for increased spending on ERP systems in the early 2000s? Which of these reasons was the impetus for Viper’s ERP implementation in 2003?
> What are the advantages of purchased software when compared with software developed in house?
> During the systems analysis phase, which two data collection methods help determine user requirements?
> What is the advantage of studying the current system during the systems analysis phase?
> How does the analysis of feasibilities in the systems planning phase help to prioritize system changes?
> What is the difference between technical feasibility and operational feasibility?
> Why would IT governance include measuring the performance of IT systems?
> Near the beginning of Chapter 5, the real‐world example of Allstate’s IT expenditure is mentioned. Prior to the implementation of its IT governance committee, “whoever spoke the loudest or whoever had the biggest checkbook” got to select IT projects. Wha
> What dangers exist related to computer output such as reports?
> Why is a private cloud less risky than a public cloud?
> How can a redundant array of independent disks (RAID) help protect the data of an organization?
> Why was there so much growth in the sales of ERP systems in the late 1990s?
> Describe how sales data is captured and recorded at a restaurant such as Applebee’s.
> Describe some recent news stories you have seen or heard regarding computer viruses.
> What is two factor authentication with regard to smart cards or security tokens?
> Provide examples of continuous monitoring and periodic monitoring.
> Many companies have mandatory vacation and periodic job rotation policies. Discuss how these practices can be useful in strengthening internal controls.
> Due to cost/benefit considerations, many business organizations are unable to achieve complete segregation of duties. What else could they do to minimize risks?
> Name the COSO report’s five internal control activities.
> Identify the COSO report’s five interrelated components of internal controls.
> How does documenting a system through a pictorial representation offer benefits?
> What are the objectives of a system of internal control?
> What is the underlying purpose of the restrictions on CPA firms in Section 201 of the Sarbanes–Oxley Act?
> Is there a difference between ethical obligations and legal obligations with regard to online privacy?
> What are some of the ethical obligations of companies related to e-commerce?
> In what ways are XBRL financial statements advantageous compared with traditional paper financial statements?
> Why is the use of XML advantageous in Internet EDI?
> What types of controls should be used to properly limit access in intranets and extranets?
> Which type of users should have access to an extranet?
> Which type of users should have access to an intranet?
> What are the three levels of network platforms that are utilized in e-business, and which groups use each level?
> How are activities in the supply chain interdependent?
> Which functions within the supply chain can be enhanced through the use of e-business?
> There are four methods of system conversion: parallel, direct cutover, pilot, and phase‐in. Describe these four methods and how they differ.
> Why is it important to ensure an efficient flow of goods throughout the supply chain?
> Describe the concept of a supply chain.
> What is meant by “monitoring and enforcement” regarding online privacy practices?
> If you could condense the ten areas of Online Privacy in the AICPA Trust Services Principles, into a shorter list (three-, four-, or five-point list), how would you word that list?
> According to the Online Privacy section of the AICPA Trust Services Principles, what types of personal information should be protected?
> What are the differences between bricks-and mortar retailers and clicks-and-mortar retailers?
> Which types of costs can be reduced when a company decides to engage in B2C e-commerce on the Internet?
> How quickly did Internet usage by the public grow after the Internet was opened to business transactions in 1994?
> Why is a standard protocol necessary in computer networks?
> Why was ARPANET designed with many different alternative routes for network traffic?
> Describe the purpose of business process reengineering during the system analysis phase.
> What was the original purpose of the network of computers that eventually became the Internet?
> Why is data considered a valuable resource worthy of extensive protection?
> What are the first three rules of normalization? What is meant by the statement that the rules of normalization are additive?
> Which type of database model has the most flexibility for querying? How does this flexibility assist management?
> What language is used to access data from a relational database? Why is the language advantageous when accessing data?
> How is the primary key used in a relational database?
> Within a hierarchical database, what is the name for the built‐in linkages in data tables? Which data relationships can be contained in a hierarchical database?
> What four conditions are required for all types of databases?
> What is the term for the software program(s) that monitors and organizes the database and controls access and use of data? Describe how this software controls shared access.
> Differentiate between data redundancy and concurrency.
> Briefly explain a situation at your home, university, or job in which you think somebody used computers unethically. Be sure to include an explanation of why you think it was unethical.
> Which type of data storage medium is most appropriate when a single record of data must be accessed frequently and quickly?
> How does data differ from information?
> Explain the importance of full disclosure in source of capital processes.
> How do processes with large volumes of transactions make fraudulent behavior easier?
> How does time horizon affect the type of information in internal reports?
> In an IT accounting system, which IT controls ensure the security of the general ledger?
> How is a special journal different from a general journal?
> Why are internal controls less effective in capital and investment processes?
> How are IT systems potentially useful in monitoring funds flow?
> How does the specific authorization and management oversight of source of capital processes affect internal controls?
