Exam Preparation
26 Oct, 8h00-11h00
HP2
2
Bloom’s Taxonomy:
3
Paper:
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Section A:
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Theory, will be answered on Exam script
Section B:
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Practical, SFC
4
Section A: Test Prep
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Ch 1:
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What is discretionary reporting?
Why have re-engineering efforts been made to
integrate AIS and MIS?
Page 4-5; Fig 1-1: the internal and external flows
of information
Page 5: Information Objectives
Page 9: general model for AIS, Fig 1-4
Page 14: Fig 1-6: Application, next slide
5
Pr 5:
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Draw a diagram of functional segments for an
oil company that has the following operations:
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Head office in NY responsible for international
and national marketing, acquisition of leases and
contracts, and corporate reporting
Two autonomous regional facilities in Tulsa,
Oklahoma, and New Orleans. These facilities are
responsible for oil exploration, drilling, refining,
storage, and the distribution of petroleum
products to corporate service stations worldwide.
6
Ch 2
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What is destructive update?
Explain the types of coding schemes and give
examples of their use.
What are the reasons companies use coding
schemes in their accounting information
systems?
Compare and contrast the relative advantages
and disadvantages of sequential, block, group,
alphabetic and mnemonic codes.
7
Ch2, 1
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Categorize each of the following activities
into expenditure, conversion, or revenue
cycles, and id the applicable subsystem:
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Preparing the weekly payroll for manufacturing
personnel
Release raw materials for use in the
manufacturing cycle
Recording the receipt of payment for goods sold
8
9
DFD, SFC
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I provide you with a flowchart
Explain it
10
Ch 3:
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What is the relationship between COSO and
SAS 78? How are they similar/different?
What are the key points of the section 404 of
the Sarbanes-Oxley Act?
Describe the factors that constitute the fraud
triangle.
How does personal ethics influences fraud in
general
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Ch 3:
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Audit trail controls
Page 122 - 128
12
Ch 4
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Conceptual system:
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Page 146 – 155, Cash Receipts Procedures
Understand the process
13
Practical Component
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Draw a system flow chart
Questions on flow chart:
Page 115-118
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Segregation of duties, Fig 3-4
14
Typical Problem:
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Jabu Dube Is the warehouse manager for a large office supply
wholesaler. Dube receives two copies of the customer sales order from
the sale department. He picks the goods from the shelves and sends
them and one copy of the sales order to the shipping department. He
then files the second copy in a temporary file. At the end of the day, he
retrieves the sales orders from the temporary file and updates the
inventory subsidiary ledger from a terminal in his office. At that time, he
identifies items that have fallen to low levels, select a supplier, and
prepares three copies of a purchase order. One copy is sent to the
supplier, one is sent to the AP clerk, and one is filed in the warehouse.
When the goods arrive from the supplier, he reviews the attached
packing slip, counts and inspects the goods, places them on the
shelves, and updates the inventory ledger to reflect the receipt. He then
prepares a receiving report and sends it to AP department.
15
Questions:
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Draw SFC
Identify any control problems
What sorts of fraud are possible in this
system
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17
Control Problems:
Control Activity
Example
Authorization
general (purchase of inventory when level drops) or specific (credit approval
beyond normal limit)
Segregation of functions
separate authorization from processing separate custody of assets from record
keeping
Supervision
required when separation of duties is not possible, such as opening the mail
(cash receipts)
Accounting records
maintain an adequate audit trail
Access controls
maintain physical security
Independent verification
bank reconciliation, physical inventory count
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Control problems:
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The following segregation of functions
problems exist:
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Dube is the warehouse manager (asset custody)
and is responsible for updating the inventory
subsidiary ledger (record keeping).
Dube determines what should be ordered
(authorization) and the places the order
(transaction processing).
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Fraud:
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Kickback fraud—Since Dube selects the supplier and
also places the order, he could order inventory that is not
needed or that is above market price from a supplier with
whom he has a personal fraudulent arrangement. In
exchange, the supplier pays a kickback to the
warehouse manager.
Vendor fraud—Dube authorizes, orders, and receives
the goods; he could establish himself as a vendor and
process fraudulent transactions.
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Fraud:
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Theft of inventory—Dube can simply remove
the assets from the warehouse, sell them,
and adjust the inventory records. A
reconciliation between the physical inventory
on hand and the records would indicate no
discrepancies
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Fraud:
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The 3 P’s?
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Page 109-112
Page 106-108
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