Page 233 - Accounting Information Systems

204 PART II Transaction Cycles and Business Processes

than one day. Star-Bright is a small store that employs mail and in local newspapers. You are particularly inter-
only four people other than the owner. The owner ested in access controls over inventory and cash.
and one of the employees help customers with their Required
electrical needs. One of the employees handles all
Design a carefully controlled system and draw a system
receiving, stocking, and shipping of merchandise.
flowchart to represent it. Identify and discuss the key
Another employee handles the purchasing, payroll, gen-
control issues.
eral ledger, inventory, and AP functions. Elaine handles
all of the point-of-sale cash receipts and prepares the 11. SYSTEM CONFIGURATION
daily deposits for the business. Furthermore, Elaine
opens the mail and deposits all cash receipts (about 30 The computer processing portion of a sales order system
percent of the total daily cash receipts). Elaine also is represented by the flowchart for Problem 11. Answer
keeps the AR records and bills the customers who pur- the following questions.
chase on credit.
a. What type of data processing system is this?
Explain, and be specific.
Required
b. The auditor suggests that this system can be greatly
Point out any control weaknesses you see in the sce-
simplified by changing to direct access files. Explain
nario. List some recommendations to remedy any weak- the major operational changes that would occur in
nesses you have found working under the constraint the system if this were done.
that no additional employees can be hired.
c. The auditor warns of control implications from this
change that must be considered. Explain the nature
9. INTERNAL CONTROL of the control implications.
d. Sketch a flowchart (the computerized portion only)
Iris Plant owns and operates three floral shops in Mag-
of the proposed new system. Use correct symbols
nolia, Texas. The accounting functions are performed
and label the diagram.
manually. Each of the shops has a manager who over-
sees the cash receipts and purchasing functions for the 12. SYSTEM CONFIGURATION
shop. A clerk at the central shop pays all the bills and
also prepares payroll checks and maintains the general The flowchart for Problem 12 represents the computer
journal. Iris is seriously considering switching to a com- processing portion of a sales order system. Answer the
puterized system. With so many information system following questions.
packages on the market, Iris is overwhelmed.
a. What type of data processing system is this?
Required Explain, and be specific.
Advise Iris as to which business modules you think her b. The marketing manager suggests that this system
organization could find beneficial. Discuss advantages, can be greatly improved by processing all files in
disadvantages, and internal control issues. real time. Explain the major operational changes that
would occur in the system if this were done.
c. The auditor warns of operational efficiency implica-
10. INTERNAL CONTROL tions from this change that must be considered.
You are investing your money and opening a fast-food Explain the nature of these implications.
Mexican restaurant that accepts only cash for payments. d. Sketch a flowchart of the proposed new system.
You plan on periodically issuing coupons through the Use correct symbols and label the diagram.

Internal Control Cases

1. Smith’s Market (Small Business Pos
supply of frozen goods. Today Smith’s Market is a full
Accounting System) range farmers’ market with a strong local customer
In 1989 Robert Smith opened a small fruit and vegeta- base. Indeed, the market’s reputation for low prices and
ble market in Bethlehem, Pennsylvania. Originally high quality draws customers from other Pennsylvania
Smith sold only produce grown on his family farm and cities and even from the neighboring state of New
orchard. As the market’s popularity grew, however, he Jersey. Currently Smith’s Market has 40 employees.
added bread, canned goods, fresh meats, and a limited These include sales staff, shelf stockers, farm laborers,