TIGHT LINES FISHING AND CAMPING SUPPLIES (NETWORKED COMPUTER SYSTEM AND MANUAL PROCEDURES) Tight Lines Fishing and Camping Supplies is a New York–based wholesaler of fishing and camping equipment that serves fishing and camping retailers throughout the north east. Tight Lines uses a centralized accounting system with networked terminals in the departments. You have been hired by Tight Lines to evaluate their processes, risks, and internal controls. The following paragraphs describe Tight Lines payroll and fixed asset systems. Payroll System Each day Tight Lines employees record their hours worked on time cards, which their supervisors review for correctness and submit to the payroll department at the end of the workweek.Using a terminal connected to the central payroll system, which is located in the data processing department, the payroll clerk inputs the time-card data, prints hard copies of the paychecks, prints two copies of the payroll register, and posts to digital employee records. The payroll clerk files the time cards in the payroll department and sends the employee paychecks to the various supervisors for review and distribution to their respective department employees. The payroll clerk then sends one copy of the payroll register to the AP department, and files the other with the time cards in the payroll department. The AP department clerk reviews the payroll register and manually prepares a disbursement voucher. The clerk sends the voucher and the payroll register to the general ledger department. The AP clerk then writes a check for the entire payroll and deposits it in the imprest account at the bank. Finally the clerk files a copy of the check in the AP department. Once the general ledger clerk receives the voucher and payroll register, the clerk posts to the general ledger from the department terminal and files the voucher and payroll register in the department. Fixed Asset System Asset acquisition begins with the departmental manager recognizing the need to obtain a new asset or replace an existing one. The manager prepares two copies of a purchase requisition; one is filed within the department, and the other is sent to the purchasing department. The purchasing department clerk manually prepares three copies of a purchase order from the purchase requisition. One copy of the purchase order is sent to the supplier, another copy is sent to the AP department, and the third copy is filed within the purchasing department. The AP clerk receives a packing slip and invoice from the vendor and visually reconciles them with the purchase order received from the purchasing department. The clerk enters the information into the department computer terminal and sets up an account payable liability. Using a computer terminal, the AP clerk then updates the purchases journal, prints a hard copy journal voucher and sends it to the general ledger department, and sends a cash disbursement voucher to the cash disbursements department with the supplier invoice. The clerk files the packing slip and purchase order in the AP department. Using information from the supplier’s invoice and the cash disbursement voucher the cash disbursements clerk prints a check from her terminal and records it in the digital check register. She sends the check to the vendor and the cash disbursement voucher to the general ledger department. The user department manager handles both asset maintenance and asset disposal. The manager adjusts the fixed asset subsidiary account balances to match asset depreciation schedules over time. When an asset reaches the end of its useful life the manager issues a disposal report. The manager sends a fixed asset summar to the general ledger department. The general ledger department clerk reconciles the cash disbursement voucher, journal voucher, and fixed asset summary, posts to the general ledger accounts from the department terminal, and files the remaining documents. Required a. Prepare a data flow diagram of the current payroll and fixed asset systems. b. Prepare system flowcharts for the payroll and fixed asset systems. c. Describe the uncontrolled risks associated with these systems as they are currently designed. d. Describe the physical and IT controls needed to reduce the risks identified in “C” above.

TIGHT LINES FISHING AND CAMPING SUPPLIES (NETWORKED COMPUTER SYSTEM AND MANUAL PROCEDURES) Tight Lines Fishing and Camping Supplies is a New York–based wholesaler of fishing and camping equipment that serves fishing and camping retailers throughout the north east. Tight Lines uses a centralized accounting system with networked terminals in the departments. You have been hired by Tight Lines to evaluate their processes, risks, and internal controls. The following paragraphs describe Tight Lines payroll and fixed asset systems. Payroll System Each day Tight Lines employees record their hours worked on time cards, which their supervisors review for correctness and submit to the payroll department at the end of the workweek.Using a terminal connected to the central payroll system, which is located in the data processing department, the payroll clerk inputs the time-card data, prints hard copies of the paychecks, prints two copies of the payroll register, and posts to digital employee records. The payroll clerk files the time cards in the payroll department and sends the employee paychecks to the various supervisors for review and distribution to their respective department employees. The payroll clerk then sends one copy of the payroll register to the AP department, and files the other with the time cards in the payroll department. The AP department clerk reviews the payroll register and manually prepares a disbursement voucher. The clerk sends the voucher and the payroll register to the general ledger department. The AP clerk then writes a check for the entire payroll and deposits it in the imprest account at the bank. Finally the clerk files a copy of the check in the AP department. Once the general ledger clerk receives the voucher and payroll register, the clerk posts to the general ledger from the department terminal and files the voucher and payroll register in the department. Fixed Asset System Asset acquisition begins with the departmental manager recognizing the need to obtain a new asset or replace an existing one. The manager prepares two copies of a purchase requisition; one is filed within the department, and the other is sent to the purchasing department. The purchasing department clerk manually prepares three copies of a purchase order from the purchase requisition. One copy of the purchase order is sent to the supplier, another copy is sent to the AP department, and the third copy is filed within the purchasing department. The AP clerk receives a packing slip and invoice from the vendor and visually reconciles them with the purchase order received from the purchasing department. The clerk enters the information into the department computer terminal and sets up an account payable liability. Using a computer terminal, the AP clerk then updates the purchases journal, prints a hard copy journal voucher and sends it to the general ledger department, and sends a cash disbursement voucher to the cash disbursements department with the supplier invoice. The clerk files the packing slip and purchase order in the AP department. Using information from the supplier’s invoice and the cash disbursement voucher the cash disbursements clerk prints a check from her terminal and records it in the digital check register. She sends the check to the vendor and the cash disbursement voucher to the general ledger department. The user department manager handles both asset maintenance and asset disposal. The manager adjusts the fixed asset subsidiary account balances to match asset depreciation schedules over time. When an asset reaches the end of its useful life the manager issues a disposal report. The manager sends a fixed asset summar to the general ledger department. The general ledger department clerk reconciles the cash disbursement voucher, journal voucher, and fixed asset summary, posts to the general ledger accounts from the department terminal, and files the remaining documents. Required a. Prepare a data flow diagram of the current payroll and fixed asset systems. b. Prepare system flowcharts for the payroll and fixed asset systems. c. Describe the uncontrolled risks associated with these systems as they are currently designed. d. Describe the physical and IT controls needed to reduce the risks identified in “C” above.