Information Systems Assignment: Critical Appraisal of Accounting Information System
The questions to be answered in this information systems assignment are:
Question 1: a) Internal controls play an important role in reducing the risks of fraudulent activities in any organization. Further, advanced technology helps accountants in reducing fraud. Explain how an advanced technology transaction processing system reduces fraudulent activities from any organizing.
b) Refer to the given system flowchart, and we have discussed the control weakness and the risk associated with these control weaknesses. Based on these control weaknesses and the associated risk, what types of frauds are possible in this business environment.
Question 2: The flowchart below illustrates two alternative inventory ordering methods. Answer part 1 to 3 based on this flowchart.
1. Some organizations prefer using alternative two. What are the advantages of using alternative two instead of the alternative one Be specific.
2. What is the difference between purchase requisition and purchase order
3. Under what circumstances can you envision management using alternative one rather than alternative two
4. Some accountants argue that the receiving department should be eliminated. Discuss the objective of eliminating the receiving function. What accounting/audit problems need to be resolved.
Question 3: HARDA Limited employs 650 workers in ten different departments. These workers work in various capacities, including the manufacturing workers, technician, and janitorial workers. Each department has a supervisor who is responsible for supervising departmental activities. In addition to supervising operations, the supervisors of the departments are responsible for recruiting, hiring, and firing workers within their areas of responsibility. The organization attracts casual labour and experiences a 20 to 30 per cent turnover rate in employees per year.
Employees clock on and off the job each day to record their attendance on time cards. Each department has its clock machine located in an unattended room away from the main production area. Each week, the supervisors gather the time cards, review them for accuracy, and sign and submit them to the payroll department for processing. Besides, the supervisors submit personnel action forms to reflect newly hired and terminated employees. From these documents, the payroll department signs the paychecks, which are drawn on the general cash account, and sends them to the department supervisors for distribution to the employees. A payroll register is sent to the cash disbursements department where it is filed.
Required: a) Discuss the risks for payroll fraud in the HARDA Limited payroll system.
b) What controls would you implement to reduce the risks.
Question 4: Marketing system provides some useful insights regarding the sales order. Different departments use this information. For instance, the production process uses this information to forecast the expected sale for next month. The production clerk uses this to create an online production schedule. From this schedule, the system automatically prepares weekly online work orders to be used by the production department.
The production supervisor assesses the work orders from his terminal and prepares the necessary paper-based move tickets and materials requisitions. Then, the move tickets and two copies of the materials requisitions are distributed to each work centre. Later, work centre employees submit the two copies of the materials requisitions to the warehouse in exchange for materials and sub-assemblies. If additional new materials are needed beyond the standard quantity, the supervisor issues additional materials requisitions.
Work centre employees record their work hours on paper-based job cards and send them to the accounting department. After the production is completed in a work centre, the move ticket is submitted to the accounting department. Upon the completion of a production batch, the production supervisor closes the open work order file.
The warehouse manager files one copy of the materials requisition and updates the materials inventory file in the computer in her office. The manager then sends a second copy of the materials requisition to the accounting department. At the end of the day, the manager prepares a digital journal voucher and post it to the general ledger control account. The accounting clerk assesses the work orders and set up a work-in-process account for a production batch. Throughout the production period, the clerk also receives move tickets, job tickets, and materials requisitions, which he uses to post to the work-in-process account. At the end of each day, the accounting clerk prepares a digital journal voucher and post it to the general ledger control account to reflect the status of work-in-process and to record transfers of work-in-process to finished goods inventory. Required: Analyse the risks associated with the following business processes of a manufacturing company.
Question 5: You are working in a mid-size company for the last couple of years. Recently you are promoted as a Chief Information Officer (CIO) and excited to perform your new role efficiently. David Savage, Chief Operation Officer (CEO) of your company has decided to implement an Enterprise Resource Planning (ERP) system. David Savage has met with a consulting ERP firm based on a recommendation from a friend at his club. During a recent meeting, David Savage introduced the chief consultant, who was charming, was personable, and seemed very knowledgeable. The CEO’s first instinct was to sign a contract with the consultant, but he decided to hold off until he had received your input.
Required: David Savage asked you to write a memo presenting the issues and the risks associated with consultants. Further, outline a set of procedures that could be used as a guide in selecting a consultant.
Question 6: a) Lecture 10 and Interactive Tutorial 11 discusses the acronym TELOS which provides guidance for accessing project feasibility. The term stands for technical, economic, legal, operational and schedules feasibility. Discuss these feasibilities briefly. And elaborate cost-benefit analysis under economic feasibility. b) Accountants should be involved in the detailed design and implementation of the system development life cycle. Comment on the statement.
The report has been generated with the idea of providing the answers to the questions that have been proposed for the venture. Thus, the study takes account and accesses the knowledge that would be critical for the completion of the venture. This would be inclusive of various questions with significant subparts.
Reducing fraudulent activities
It is critical to note that the possibilities associated with transaction processing system would be an important prospect associated with the reduction of fraudulent activities. A transaction processing system (TPS) would be mentioned as a set of methods that would be processing the transaction information within a database. Additionally, the data or the information that would be processed within a TPS would be related to the constant monitoring for potential frauds. This related to the process of monitoring the transactions for significant transaction programs to detect frauds. Thus, it could be mentioned that the system would be critically useful while selling and considering transactions over the internet (Vergara-Martínez, Pereaand Leone-Fernandez, 2020). This is placed through the modulation of time between the accruement of the product and the sales of the product. This allows significant time-delay that would be aiding the prospect of verification of any possible fraud. However, the detection of fraud would be based on third-party software or algorithms that would be placed by an organisation.
Possible frauds in the business environment
The fraud could be from the perspective of the billing department. This would be further associated with the prospect that the flowchart shows that the billing department would be directly interacting with the customers for the creation of the invoice. This would be open to the possibility that the billing department would be imposing higher costing to the customers than the assumed price for a product or a service. Therefore, it is essential to note that the mentioned would be associated with the consideration of no potential authorisation of the data by the administrative (SolimanandKaria, 2017). This promotes the possibility of significant frauds by the customer over the billing department on an alternative prospect. This would be associated with the possibility where the customer frauds the authenticity of the payable amount due to the lack of authorisation and verification of the shared invoice.
Advantages of using alternative two
Alternative two would be related to less consideration of redundant values and creation of sub-sets of the available data. The analysis of the datawouldbe associated only in the data processing department to keep the processing functionality at the least. Additionally, this would be related to the simpler and faster purchase process and systematic data analysis process (Heet al., 2018).
Difference between purchase requisition and purchase order
It is essential to note that the aspect of purchase requisition would be associated as an internal document. The mentioned document would be further related to the potential purchase of an item or a service. This would be related as a potential document that would be passed from a department to another to propose permission to buy the product or services as per the requirement of the department. However, the prospect of a purchase order would be generated after the requisitionhas been accepted and carried-out (CostanandPascu, 2019). Thus, the purchase order is associated as a document that would be used for the purchase of goods or products as per the desire.
Envision of management
The prospect of envisioning management would be associated with the prospects of considering the future of the product or the service that would be related to the venture. Apart from the mentioned, the prospect of envisioning management would be associated with financial understating for the future of the establishment and for the mentioned case of alternative one it would be the preference of the purchase by the customer (Elgohary, 2019). Therefore, it could be mentioned that alternative one would be used for the proposal or the understanding of possible purchase of the products or services before the analysis of the data is considered.
Solving accounting problems
The prospect of the objective of eliminating the receiving function would be associated with the reduction of time taken at the production area. In the mentioned case, this would be related to alternative one and the section of alternative two over the possibility of one. The flowchart can show the simplified technique of data gathering and analysis in alternative tow to reduce the possibility of redundancy of data while auditing (Konthong, Suwan-natadaandSompong, 2016).
Risks for payroll fraud
The payroll system at HARDA Limited could be mentioned as a legacy system. This related to the human-made calculations by the supervisors for every department. Additionally, this would be considered as a modular system with the potential increase of complexity for every department with a possible rate of 2-3% every year. It is critical to note that the managers or the supervisors would calculate the calculations of the employees and labour time. This system would be open to significant biasness and could relate to biased mix-ups of details of the employees' time at work. This would be critical for the employee as this would be the final stage where the employee would be provided with the payment as per the work shown by the timecards of approx. 650 employees at a single instance.
Implementation of controls
The potential measure that would be applicable for the elimination of the potential mix-ups and the potential biasness would be associated with the implementation of adequate technology. This would be associated with the opportunities and the possibilities considering the aspects of automation technology. This would be attained with the implementation of the automated timecards that would be storing the data in a centralised database. This could be further used as the specific ERP tool that would be related to the management of the employees and their payroll through a biasness-free space for the calculation of the payable amount (Xu, Wangand Chen, 2018). This would be related to the stream that would be free of human errors for data analysis.
Analysis of the risks
It could be observed that most of the business or the manufacturing company would be associated with the implementation of tickets. These tickets would be proposing the opportunities of causing specific disruption during the completion of the business operations. This would be further related to the consideration of the rules that would be associated with the completion and the implementation of human interactions that would be related to the future of the venture. Apart from the mentioned, this would be associated with the completion and the prospect of possibilities surrounding the prospect of risks associated with human biasness. Therefore, the implementation of a digitalised ERP would be desirable for the elimination of the risk (Liet al., 2018). This could be additionally utilised as the particular ERP device that would be identified with the administration of the representatives and their finance through a without biasness space for the estimation of the payable sum. This would be identified with the stream that would be liberated from human blunders for information examination. It is essential to note that the mentioned possibility of the venture would be further associated with the considerations of the business process and the consideration of the timecards that would be automated for future use. This would fundamentally decrease the possibilities of risks associated with the time management of the same.
Memo presenting the issues
To: David Savage, Chief Operation Officer (CEO)
From: Chief Information Officer (CIO)
CC: Chief Financial Officer (CFO)
Subject: Potential risks associated with the consultant and strategies to strike a better deal
This is to address the CEO of the company, David Savage. The memorandum related to the possible risks associated with the potential issues that could pose a significant threat to the company business. Therefore, it is specifically important to note that the primary issue with the consultant would be the fact that the organisation does not know its value and personal branding that may be valuable to the organisation. Additionally, the importance to implement measures that would be associated with the understating of the internal requirement of the market needs to be completed before striking a deal of a contract. The consideration of alternate consultants and associated firms as per the requirement of the company would be aiding the elimination of unwanted complications in the process.
It is important to note that the set of procedures that would be associated with the possible measures that would be aiding the business developments for the implementation of the desired ERP system. Hence, alternate possibilities need to be addressed before striking a deal with the consultant. This would be associated with the implementation of the best-suited procedure and the understating of the internal and the external factors that would be critical for the implementation of the ERP system (Tarigan, SiagianandJie, 2020). This would be a cost-effective process that would be rational to the progress of the venture and would be related to the further development of the business prospect.
Cost-benefit analysis under economic feasibility
TELOS, which is also termed as “teleology.” However, it is important to note that the aspect of TELOS is associated with the prospect of technical, economic, legal, and operational and schedules feasibility that would be associated with the association of a business (RamliandWidayat, 2017).The prospect of feasibility in the mentioned case would be gained with the aid of purposiveness. This would be further associated with the clear understating of the objects with relation to the organisational aims, purposes, or intentions for business operations. It is critical to note that the mentioned prospect of TELOS would be associated with the consideration of the feasibility study of the organisation of the business operation that would be related to the consideration of the business prospects for the organisational growth. This would be in consideration of the sustainability and the potential future of the business in the theoretical approach of the business. It is important to note that the mentioned would be associated with the possibility of placing various technologies and the consideration of various advancements that would be concerning the possibilities associated with the same.
Implementation of the systemdevelopment life cycle
Association of system development lifecycle would be essential form any particular point of view. Therefore, it is essential to note that Accountants are no different in the mentioned case. It is critical to note that the accountants would be related to the association and engagement with the mentioned system. This would aid the accountants to understand the system from its root level and related to the TELOS of the developed system. This would specifically assist the accountants in understanding the primary functionalities associated with the mentioned system and provide better opportunities regarding the development and the implementation of auditing techniques at the basic level (Leeet al., 2019). Hence, better and accurate results after an audit could be attained through the association of accounts with SDLCs.
It could be safely concluded that the relative questions had been able to relate to the critical appraisal of the accounting information system in the current scenario. Additionally, the investigation of a real-life system has been prominent throughout the study. It is essential to note that this would be associated with the prospect of e-commerce and their related stakeholders.
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