Reference no: EM131710281
Accounting Information Systems Homework
Human Resources
Compu-Fix, Inc. is an independent contractor that provides technical support services under contract to government and nongovernment entities. The following process is used by Compu-Fix to process weekly payroll for hourly support and service personnel. Compu-Fix payroll personnel have online access to payroll Masterfile via PCs on their desks.
Each week, the computer prints time sheets using the employee payroll masterfile data. After receiving the time sheets from information technology, the payroll department distributes them to the various department supervisors, who give them to employees. The employees fill in the time sheets each day and give them to their supervisors at the end of each week. Department supervisors review and sign the time sheets and return them to the payroll department. Payroll clerks key the time sheets into the current week's payroll activity data and then file them alphabetically by department.
At the start of the weekly payroll process, the computer creates the current week's pay data using the employee payroll Masterfile and the current week's activity data. The following items are then printed from the pay data: checks with attached stubs, stubs for directly deposited checks, bank deposit list for directly deposited payroll (one deposit list for each bank, which lists all the accounts to be credited), a single EFT for each bank receiving direct deposits, a check register, and various payroll reports. The computer operator gets the check signing machine from the cashier and signs the checks. The checks, stubs, direct deposit list and check register are given to the cashier. The payroll reports are given to the payroll department.
The cashier checks the total and the number of checks against the payroll register and then sends the checks with attached stubs and the stubs for direct deposits to the department supervisors, who give them to the employees. The cashier uses EFT to transfer funds for direct deposit and payroll to the banks.
1. Draw a systems flow chart.
2. Prepare a list of recommended controls and the threats that are being addressed by the control.
3. Indicate on the flowchart where the controls are applied.
Expenditure Cycle
The ACME Manufacturing Company employs you as an internal auditor. Your current assignment is to perform an operational audit of the purchasing department, composed of 12 buyers and several secretaries and headed by the purchasing manager. "We run a fairly efficient operation here," the purchasing manager comments to you. "We have established purchasing policies and procedures. The buyers have an average of 12 years of purchasing experience, and all have long tenure with the firm. They have received on the job training, and a few have been sent out to outside seminars for management training. Our main task is to get the right product in the right quantity to the right department. If you refer to the statistics on the number of purchase orders we handle each year, you will see that in recent years we have processed more purchase orders than ever with no increase in staff. I am pleased with my staff's performance."
During your review of operations you note the following:
a. The firm is spending huge sums on microcomputers and related products. It acquires a variety of different makes from a variety of different suppliers. The purchasing department orders the microcomputer that meets the capability requirements and has the lowest possible price. However, some of the suppliers have declared bankruptcy or have stopped producing the product lines the firm purchased.
b. The purchasing department insists on ordering a certain chemical product from a supplier for the production department because the supplier is "stable and reliable and because the firm has always purchased form this supplier in the past." Some competing firms have successfully used a substitute product that has a much lower price.
c. The firm normally purchases from local suppliers. Through inquiries you determine that these local suppliers acquire their materials from two major producers in the East; any firm such as yours can order directly from these producers.
d. One reason the number of purchase orders has increased is the increased frequency of gasoline purchases. It is possible to negotiate bulk purchases of gasoline.
e. Only one quote is received from a supplier in the case of each product acquired, even though for most products ordered there are several suppliers available.
f. Branch managers can order supplies in amounts less than $500 without following the purchasing department procedures. You note a few instances in which a purchase of an item costing more than $500 was made without the purchasing manager's approval by means of issuing several purchase orders for the item.
g. One buyer is acquiring goods for Acme from a supplier owned by his wife and her brother.
1. Identify each deficiency in the operations of the purchasing department.
2. Discuss the risks related to each deficiency.
3. Recommend controls to address the risks identified.
4. Develop recommendations for the company to be more efficient and reduce the costs of purchasing materials.
5. What additional controls would need to be implemented if the recommendations are implemented?