Accounting Information Systems
10th Edition
ISBN: 9781337619202
Author: Hall, James A.
Publisher: Cengage Learning,
expand_more
expand_more
format_list_bulleted
Question
Chapter 14, Problem 12P
To determine
Discuss the assessment of internal controls by the CPA firm with respect to mission critical transactions.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Your client portfolio as an audit manager at CC & Co also includes TT Co which is a listed financial institution offering loans and credit facilities to both commercial and retail customers. You have received an email from the audit supervisor who is currently supervising interim testing on systems and controls in relation to the audit for the year ending 31 October 2018. The email gives the following details for your consideration:
One of the audit team members, Jones, has provisionally agreed to take out a loan with Thomas Co to finance the purchase of a domestic residence. The loan will be secured on the property and the client’s business manager has promised Jones that he will ensure that she gets ‘the very best deal which the bank can offer.’
The payroll manager at TT Co has asked the audit supervisor if it would be possible for CC & Co to provide a member of staff on secondment to work in the payroll department. The payroll manager has struggled to recruit a new…
Consider the following independent situations, all of which apply to audits of entities for the year ended 31 December 2019:
In July 2019, Alpha Ltd started using a new general ledger software package. The Financial Controller is impressed with the new system, because management accounts are easily produced and allow detailed comparisons with budgets and prior-period figures across product lines and geographical areas. The conversion to the new system went smoothly. As it is a popular computer package, it required only minor
As part of a computer systems conversion in Beta Ltd, the position of Systems Administrator was created. This position is responsible for all systems maintenance, including data backups and modifications. These tasks were previously the responsibility of the
Gamma Ltd is a large supermarket chain with outlets in all major cities in the country. In August 2019 Gamma Ltd contracted out its payroll data processing in each city to an independent computer…
Lamar LLC is in the process of updating its revenues and receivables systems with the implementation of new accounting software. James Loden, Inc. is an independent information technology consultant who is assisting Tamar with the project. James has developed the following checklist containing internal control points that the company should consider in this new implementation:
Is it appropriate to program the system for general authorization of certain sales, within given limits?
Chapter 14 Solutions
Accounting Information Systems
Ch. 14 - Prob. 1RQCh. 14 - Prob. 2RQCh. 14 - Prob. 3RQCh. 14 - Prob. 4RQCh. 14 - Prob. 5RQCh. 14 - Prob. 6RQCh. 14 - Prob. 7RQCh. 14 - Prob. 8RQCh. 14 - Prob. 9RQCh. 14 - Prob. 10RQ
Ch. 14 - What are the three primary IT functions that must...Ch. 14 - Prob. 12RQCh. 14 - Prob. 13RQCh. 14 - What are the primary reasons for separating...Ch. 14 - Prob. 15RQCh. 14 - Prob. 16RQCh. 14 - Prob. 17RQCh. 14 - Prob. 18RQCh. 14 - Prob. 19RQCh. 14 - Prob. 20RQCh. 14 - Prob. 21RQCh. 14 - Prob. 22RQCh. 14 - Prob. 23RQCh. 14 - Prob. 24RQCh. 14 - Prob. 25RQCh. 14 - Prob. 26RQCh. 14 - Prob. 27RQCh. 14 - Prob. 28RQCh. 14 - Prob. 29RQCh. 14 - Prob. 30RQCh. 14 - Prob. 31RQCh. 14 - Prob. 32RQCh. 14 - Distinguish between errors and irregularities....Ch. 14 - Prob. 34RQCh. 14 - Prob. 35RQCh. 14 - Prob. 36RQCh. 14 - Prob. 37RQCh. 14 - Prob. 38RQCh. 14 - Prob. 39RQCh. 14 - Define commodity IT asset.Ch. 14 - Prob. 41RQCh. 14 - Prob. 42RQCh. 14 - Prob. 1DQCh. 14 - Prob. 2DQCh. 14 - Prob. 3DQCh. 14 - Prob. 4DQCh. 14 - Prob. 5DQCh. 14 - Prob. 6DQCh. 14 - Prob. 7DQCh. 14 - Prob. 8DQCh. 14 - Prob. 9DQCh. 14 - Prob. 10DQCh. 14 - Prob. 11DQCh. 14 - Who should determine and prioritize the critical...Ch. 14 - Prob. 13DQCh. 14 - Define the management assertions of existence or...Ch. 14 - Prob. 15DQCh. 14 - Prob. 16DQCh. 14 - Prob. 17DQCh. 14 - Prob. 18DQCh. 14 - Prob. 19DQCh. 14 - Prob. 20DQCh. 14 - Prob. 21DQCh. 14 - Prob. 22DQCh. 14 - Prob. 23DQCh. 14 - Explain how IT outsourcing can lead to loss of...Ch. 14 - Prob. 25DQCh. 14 - Prob. 26DQCh. 14 - Prob. 27DQCh. 14 - Prob. 1MCQCh. 14 - Prob. 2MCQCh. 14 - Prob. 3MCQCh. 14 - Prob. 4MCQCh. 14 - Prob. 5MCQCh. 14 - Prob. 6MCQCh. 14 - Prob. 7MCQCh. 14 - Prob. 8MCQCh. 14 - Prob. 9MCQCh. 14 - Prob. 10MCQCh. 14 - Prob. 1PCh. 14 - Prob. 2PCh. 14 - Prob. 3PCh. 14 - Prob. 4PCh. 14 - Prob. 5PCh. 14 - Prob. 6PCh. 14 - DISASTER RECOVERY PLAN Hexagon is an online...Ch. 14 - Prob. 8PCh. 14 - Prob. 9PCh. 14 - Prob. 10PCh. 14 - Prob. 11PCh. 14 - Prob. 12PCh. 14 - Prob. 13P
Knowledge Booster
Similar questions
- You are an audit supervisor assigned to a new client which is listed on a Stock Exchange. You visited the corporate headquarters to become acquainted with key personnel and to conduct a preliminary review of the company’s accounting policies, controls, and systems. During this visit, (i) After a careful review of the budget for data security enhancement projects, you feel the budget appears to be adequate. Identify the problems and explain them in relation to the internal environment.arrow_forwardSandoval Research is required to file its audited financial statements with the Government Accountability Office. Cain & Scutaro, CPAs has been hired to perform the engagement for the year ending December 31, 20x7. Cain & Scutaro has identified several threats to its independence with respect to Sandoval. which of the following potential safeguards might be effective in reducing threats to an acceptable level? a. Consulting with an independent third party. b. Having a professional staff member who was a member of the audit team review the work performed. c. Having a professional staff member who was a member of the audit team review the work performed .d. Allowing a member of the audit tem to have aarrow_forwardThe Directors of Aspen PLC have recently appointed your audit firm to act as their external auditor. Aspen PLC is a FTSE-250 fast growth company specialising in cloud computing solutions. As part of the audit services, you have been requested by the Directors of Aspen PLC to undertake the following services:▪ the external audit of the company’s annual financial statement▪ taxation services; and ▪ consultancy services relating to the trialling and implementation of a new, stateof-the-art information technology systemYour audit firm has not worked for Aspen PLC before but does act as auditor for its biggest rival, another FTSE-250 company Priory Mason PLC. Required: (a) Identify and explain the professional and ethical issues that your firm should consider with regards to the services requested by Aspen PLC, stated above. What safeguards should be implemented to address these issues? (b) Critically discuss the five key principles of ethics. (c) An auditor must never disclose a…arrow_forward
- The Sarbanes-Oxley Act (SOX) requires that an auditor must issue an internal control report following the evaluation of internal controls. provide continuous consulting services to help prevent fraud. issue a sustainability report along with the internal control report. rotate who can lead an audit every three years.arrow_forwardYou are auditing a client that supplies electrical products to retail stores and electrical contractors throughout the country.The client keeps its accounts receivable records on a computer system, which is updated at the end of each business day.You plan to audit accounts receivable balance as at the end of the financial year, and you have a generalised audit software (GAS) package available to help in this task.Required:Identify ten (10) substantive audit procedures that you could perform using generalised audit software (GAS) in relation to auditing the accounts receivable account.arrow_forwardLamar LLC is in the process of updating its revenues and receivables systems with the implementation of new accounting software. James Loden, Inc. is an independent information technology consultant who is assisting Tamar with the project. James has developed the following checklist containing internal control points that the company should consider in this new implementation: Is the sales department separate from the credit office and the IT department?arrow_forward
- Consider the following independent situations, each of which applies to an audit of a client for the year ending 30th June 2019. XYZ Ltd is a large machinery manufacturer that uses business-to business e-commerce to transmit purchase orders to its many suppliers. Each supplier electronically transmits an invoice, which is credited directly to the accounts payable file. The goods usually take one or two weeks to arrive. Once they have been received, a goods received notes is raised by XYZ and matched with the supplier’s invoice, and payment is authorised. Spiral Ltd’s credit officer, whose prime responsibility was setting and reviewing customers’ credit limits, retired during the year. The position has remained unfilled for six months, as no suitably qualified and experienced replacement has yet not been found. Kent Ltd failed to discover an employee fraud on a timely basis because bank reconciliations were not being done each month. Required: For each of the above situations: What…arrow_forwardYou are an audit manager at Hall & Associates, who have been approached to conduct the audit of Computer Games Ltd (CGL), a manufacturer of interactive computer games, for the year ended 30 June 2019. Hall & Associates has not previously audited CGL’s financial report, although it has undertaken other types of engagements for CGL. Last year CGL hired Hall & Associates to assist in the redesign of CGL’s accounting software to ensure that internal controls over internet sales were adequate to ensure the confidentiality of customer data and accuracy of recording. The new software was implemented at the beginning of the current year and appears to be working satisfactorily. As part of this year’s audit, you expect to review the internal controls at CGL, including the controls within the IT systems. As part of CGL’s financing arrangements with its bank, Easymoney Ltd, it has a loan covenant that stipulates that the quick asset ratio cannot be less than 1:1 or Easymoney Ltd has…arrow_forwardMoranda and Sills, LLP, has served for over 10 years as the auditor of the financialstatements of Highland Credit Union. The firm is conducting its audit planning for the currentfiscal year and is in the process of performing risk assessment procedures. Based on inquiries andother information obtained, the auditors learned that the credit union is finalizing an acquisitionof a smaller credit union located in another region of the province. Management anticipatesthat the transaction will close in the third quarter, and, while there will be some challenges inintegrating the IT systems of the acquired credit union with Highland systems, the bank shouldrealize a number of operational cost savings over the long term.During the past year, the credit union has expanded its online service options for customers, who can now remotely deposit funds into and withdraw funds from chequing and savingsaccounts. The system has been well received by customers and the credit union hopes to continue…arrow_forward
- Lamar LLC is in the process of updating its revenues and receivables systems with the implementation of new accounting software. James Loden, Inc. is an independent information technology consultant who is assisting Tamar with the project. James has developed the following checklist containing internal control points that the company should consider in this new implementation: Has the company identified an off‐site alternative computer processing location?arrow_forwardIn reviewing the processes, procedures, and internal controls of one of your audit clients, VeronicaCorporation, you notice the following practices in place. Veronica has recently installed a new electronicdata processing (EDP) system that affects the accounts receivable, billing, and shipping records. Thecompany identified a computer operator who is permanently assigned to each of the functions ofaccounts receivable, billing, and shipping. Each of these computer operators is given the responsibilityof running the program for transaction processing, making program changes, and reconciling thecomputer log. To prevent an operator from having exclusive access to the tapes and documentation,the computer operators randomly rotate the custody and control tasks every two (2) weeks over themagnetic tapes and the system documentation. Access controls to the computer room consist ofmagnetic cards and a digital code for each operator. Moreover, the system analyst and the computeroperation…arrow_forwardYou've been assigned to the risk advisory department at the CPA firm of Debits & Credits. You are planning an annual IT Audit at your client. Which of the following will most influence the planning and scope of your engagement? 1) Applicable regulatory requirements 2) Applicable corporate standards 3) Applicable industry good practices 4) Organizational policies and proceduresarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning