Page 321 - Accounting Information Systems

292 PART II Transaction Cycles and Business Processes

department for processing. In addition, the supervisors 5. HUMAN RESOURCE DATA
submit personnel action forms to reflect newly hired MANAGEMENT
and terminated employees. From these documents, the
In a payroll system with real-time processing of human
payroll clerk prepares payroll checks and updates the
resource management data, control issues become very
employee records. The supervisor of the payroll depart-
important. List some items in this system that could be
ment signs the paychecks and sends them to the depart-
very sensitive or controversial. Also describe what types
ment supervisors for distribution to the employees.
of data must be carefully guarded to ensure that they are
A payroll register is sent to accounts payable for ap-
not altered. Discuss some control procedures that might
proval. Based on this approval, the cash disbursements
be put into place to guard against unwanted changes to
clerk transfers funds into a payroll clearing account.
employees’ records.
Required 6. PAYROLL FLOWCHART ANALYSIS
Discuss the risks for payroll fraud in the Sherman Com-
Discuss the risks depicted by the payroll system flow-
pany payroll system. What controls would you imple-
chart for Problem 6. Describe the internal control
ment to reduce the risks? Use the SAS 78/COSO
improvements to the system that are needed to reduce
standard of control activities to organize your response.
these risks.
4. INTERNAL CONTROL
7. COMPREHENSIVE FLOWCHART
Discuss any control weaknesses found in the flowchart ANALYSIS
for Problem 4. Recommend any necessary changes.
Discuss the internal control weaknesses in the expendi-
ture cycle flowchart for Problem 7. Structure your an-
swer in terms of the control activities within the SAS
PROBLEM 4: INTERNAL CONTROL
78/COSO control model.
Accounts Cash
Personnel Production Payroll Payable Disbursements 8. FIXED ASSET SYSTEM
The fixed asset acquisition procedures for Turner Broth-
New New
Employee Employee ers, Inc., are as follows:
Forms Forms Supervisors in the user departments determine their
fixed asset needs and submit bids or orders directly to
Terminated Terminated contractors, vendors, or suppliers. In the case of com-
Employee Employee
Forms Forms petitive bidding, the user makes the final selection of
the vendor and negotiates the prices paid. The assets are
delivered directly to the user areas. The users inspect
and formally receive the assets. They submit the invoice
Time Time
Cards Cards to the cash disbursements department for payment.
Required
Discuss the risks associated with this process. Describe
the controls that should be implemented to reduce these
risks.
Employee
Records
9. FIXED ASSET SYSTEM
Payroll Holder Co. maintains a large fleet of automobiles,
Checks
trucks, and vans for their service and sales force. Super-
visors in the various departments maintain the fixed
Payroll
Register asset records for these vehicles, including routine main-
tenance, repairs, and mileage information. This informa-
tion is periodically submitted to the fixed asset
department, which uses it to calculate depreciation on
Payroll Paymaster
Checks the vehicle. To ensure a reliable fleet, the company dis-
poses of vehicles when they accumulate 80,000 miles