Question Details

ACC 571
FINAL EXAM
As a member of a development team, you’ve been asked to develop and test the new AIS.

Discuss the eight basic steps required in the implementation phase of the SDLC in the proper order they should occur. (Points : 30) 

Explain the preparation of financial statements as the third step in the general 
ledger and reporting system.
Identify and discuss the common systems for approving vendor payments.
“Dinners-Done-Right is a very successful dinner service that delivers healthy dinners to customers in a medium-sized city. D-D-R has four locations, one on each side of town (north, south, east, and west.) In order to provide quick delivery (30 minutes or less or the customer gets $5 off) and delicious food to the majority of the city, D-D-R owner, Jessica, frequently generates and analyzes reports that give her information about her company's customers. Using these reports, Jessica decides whether to change the menu items, prices, delivery areas, etc. She is able to gauge relative performance of the four store locations. D-D-R has approximately sixty employees. Order clerks take customer orders over the telephone and instruct the cooks on what they need to prepare. The cooks prepare the requested food and give it to the order clerks who package it for delivery. Delivery people take the final packaged orders to the customers' residences using company-owned delivery vehicles. Delivery people accept credit card, check and cash payments. Delivery people return a copy of the delivery ticket along with the customer's remittance to the order clerk who records the payment using the company's electronic cash register. Each day- receipts are totaled and Jessica decides into which of D-D-R's bank accounts those receipts should be deposited.”

Required: (a) List the operating events and the decision/management events discussed in this example; (b) Identify and discuss any risks associated with the events; (c) Propose at least one or more internal controls that would mitigate the risks.

Provide three reasons or benefits of AIS skills to any accounting-related career
There are three (3) important business functions that are performed by the six (6) components of an AIS. 
Discuss redundancy as it applies to database design and explain how redundancy can be reduced.
Discuss the collection of evidence in audits.
 Evaluate the benefits of a database approach to data management over old file-
oriented systems. 
Several years ago a ring of foreign-based hackers broke into Town Bank- system and stole $10 million from its customers’ accounts. Discuss how systems can become vulnerable to computer crimes and then evaluate controls that strengthen those weaknesses.

Required:

a) Provide at least three weaknesses of AIS that hackers can exploit for gain 
b) Suggest at least one control for each weakness
(TCO A) How can an AIS add value to the organization?

Question 7.
Question :
(TCO A)  Name two reasons why it is important to have a working knowledge of DFDs and flowcharting.

Question 7.
Question :
(TCO B) What is the difference between general and specific authorization? 

Question 7.
Question :
(TCO G) Explain why the auditor's role in program development and acquisition should be limited. 

Question 7.
Question :
 (TCO D) How can information technology be used to improve the vendor invoice approval process? 

Question 7.
Question :
(TCO F) What are the four basic activities involved in the general ledger and reporting system? 

 
Student Answer:
 
Application service provider is where companies can rent software over the internet. This provides scalability as the business grows and global access to information. It automates software upgrades, allows companies to focus on core financial competencies rather than information technology issues, and can reduce software costs and administrative overhead. 
 
Instructor Explanation:
An application service provider (or ASP) is a third-party provider of software to organizations. An ASP is Web-based, providing delivery of software to its clients over the Internet. An organization that uses an ASP "rents" the software, thus eliminating the tasks of buying, installing, and maintaining the software. Among the advantages to using this approach as opposed to the outright purchase of software is a reduction of software costs and administrative overhead, automated software upgrades, scalability as the organization itself grows, global access to information, access to skilled IT personnel, and ability to focus on core competencies rather than IT requirements.  (Chapter 21, p. 614)

Question 7.
Question :
(TCO H) Explain the concept of an application service provider. 

90) Classify each of the following controls as preventive, detective, or corrective.
Periodic bank reconciliation
Separation of cash and accounting records
Maintaining backup copies of master and transaction files
Pre-numbering of sales invoices
Chart of accounts
Retina scan before entering a sensitive R & D facility
Resubmission of error transactions for subsequent processing 
Internal auditor rechecking the debits and credits on the payment voucher
Depositing all cash receipts intact
Hiring qualified accounting personnel