Solutions Manual sw
Accounting Information Systems A Practitioner Emphasis, 7e
sw sw sw sw sw sw
sw Cynthia Heagy Constance Lehmann|| All Chapters Covered, 100%
sw sw sw sw sw sw sw
sw Original Verified, A+ Grade
sw sw sw
Nursestar1 Stuvia
sw sw
,Chapter 1 sw
Significance of Accounting Information Systems and thesw sw sw sw sw sw
Accountant’s Role
sw sw
INTRODUCTORY SCENARIO: SUGGESTED SOLUTIONS TO QUESTIONS
sw sw sw sw sw
1. Employee overtime hours, customer information (e.g., age groups), inventory levels, reorder
sw sw sw sw sw sw sw sw sw sw
points, EOQ calculation, volume/quantity discount analysis, square footage in use v. storage,
sw sw sw sw sw sw sw sw sw sw sw sw
customer flow data, spoilage
sw sw sw sw
2. How much is client willing to pay? System that is easy for servers to use with proper controls.
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
Bob’s hourly rate would be a concern for client. Will Bob be around ―after the sale‖ (i.e., tech
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
support)? What types of pre-packaged systems are available?
sw sw sw sw sw sw sw sw
3. Information to help with software division (e.g., total sales dollars, complexity of accounting
sw sw sw sw sw sw sw sw sw sw sw sw
system). How many computers needed? Any expansion planned? What types of employees do
sw sw sw sw sw sw sw sw sw sw sw sw sw
they have (e.g., waiters would want quick touch screens)?
sw sw sw sw sw sw sw sw sw
4 The owner of the restaurant wants a new accounting system because he needs up-to-date
sw sw sw sw sw sw sw sw sw sw sw sw sw
information on how the business is doing. Waiting until the end of the year, or even the
sw sw sw sw sw sw sw s w sw sw sw sw sw sw sw sw sw
quarter, does not give Marshall the information he needs to make those day-to-day decisions that
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
will ensure the success of his restaurant.
sw sw sw sw sw sw sw
CHAPTER VIGNETTES: SUGGESTED RESPONSES TO QUESTIONS
sw sw sw sw sw
Vignette 1.1
sw
1. Closer relationships with remaining suppliers, the ability to carry less inventory (reducing
sw sw sw sw sw sw sw sw sw sw sw
carrying costs and risks of theft or loss of inventory), sharing of planning information with
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
suppliers, easier to monitor vendor performance. Might lose volume discounts if trying to
sw sw sw sw sw sw sw sw sw sw sw sw sw
minimize inventory on hand by having smaller shipments from vendors shipped more often.
sw sw sw sw sw sw sw sw sw sw sw sw sw
2. Reduction in paperwork, reduction in input errors, ordering and cash receipt processes more
sw sw sw sw sw sw sw sw sw sw sw sw
efficient, increases in efficiency in meeting changes in demand. One disadvantage would
sw sw sw sw sw sw sw sw sw sw sw sw
relate to problems with settling disputed orders or payments with loss of ―paper trail‖ that
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
includes authorized signatures.
sw sw sw
Vignette 1.2
sw
1. Managers would probably find information in units to be most useful for planning decisions
sw sw sw sw sw sw sw sw sw sw sw sw sw
because this information would represent things over which he/she has control. While the
sw sw sw sw sw sw sw sw sw sw sw sw sw
manager might not have control over salaries, he/she does have control over the amount of
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
overtime and the approval of vacation of the employees.
sw sw sw sw sw sw sw sw sw
2. Managers would probably want information related to production numbers (to determine
sw sw sw sw sw sw sw sw sw sw
seasonality; during slow times, more employees could be on vacation), the number of vacation
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
hours per employee, the number of overtime hours per employee, backorder information, and
sw sw sw sw sw sw sw sw sw sw sw sw sw
information to help the manager match staffing levels with production.
sw sw sw sw sw sw sw sw sw sw
Vignette 1.3
sw
1. The privacy of information is a major consideration, as the customer might not want their
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
spending pattern information shared with other parties. Loss of confidential information can be
sw sw sw sw sw sw sw sw sw sw sw sw sw
disastrous to a company’s reputation and lead to significant financial losses (lost sales, fines,
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
etc.) Information about customers must be protected from information leakage to other third
sw sw sw sw sw sw sw sw sw sw sw sw sw
parties who gain authorized (or unauthorized) access
sw sw sw sw sw sw sw
, to information. At the very least, confidential information about the customers should be
sw sw sw sw sw sw sw sw sw sw sw sw
encrypted and have limited access.
sw sw sw sw sw
2. Inventory management (e.g., turnover, obsolescence, supply/demand, reorder levels), potential
sw sw sw sw sw sw sw sw
markets or product lines for expansion, frequent buyer programs.
sw sw sw sw sw sw sw sw sw
Vignette 1.4
sw
1. The situation could have been avoided if employees had been part of the decision-making and
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
testing early in the project. Employee buy-in is essential to the success of any new system
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
implementation. It is key that the system provide managers with information that they need for
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
decision-making. It is also important to have a maintenance contract in place, with better
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
reporting to management and regular follow-up. It appears that this decision was not made by
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
executive management, so its success was questionable since the ―tone at the top‖ with regard
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
to the project was ―ignorance‖. Since executive management did not monitor the project, they
sw sw sw sw sw s w sw sw sw sw sw sw sw sw
could not respond to Kluger’s complaints, nor could they provide ―strong encouragement‖ for
sw sw sw sw sw sw sw sw sw sw sw sw sw
continuation of the project originally started by Lehmann. In fact, it appears that executive
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
management was not involved in the decision to take on the new system. Kluger was not
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
given the opportunity to learn the new system, nor was there motivation to learn the new
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
system. The company also had inadequate backup so that the project could continue in the
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
absence of a key employee.
sw sw sw sw sw
2. .Here are some suggested ―next steps‖
sw sw sw sw sw
Improve the governance process and the ―tone at the top‖ to get executive management
sw sw sw sw sw sw sw sw sw sw sw sw sw
involvement and oversight of system projects—this includes aligning any system projects with
sw sw sw sw sw sw sw sw sw sw sw sw
the strategy of the company
sw sw sw sw sw
Determine that any system chosen by management will provide quality information useful for
sw sw sw sw sw sw sw sw sw sw sw sw
decision- making at all levels
sw sw sw sw sw
Reinstate the maintenance contract and set up a training contract if it is determined more cost-
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
effective and in line with the company business plan to use the new system
sw sw sw sw sw sw sw sw sw sw sw sw sw
Provide training and employee involvement in developing the system
sw sw sw sw sw sw sw sw
Provide better oversight of the controller function
sw sw sw sw sw sw
Vignette 1.5
sw
1. The redesign process can be improved using the following suggestions:
sw sw sw sw sw sw sw sw sw
Set up end-user groups to get input regarding output needs, data collection needs, screen, and form layouts
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
Develop a schedule of tests to be conducted with representative end users for pilot testing
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
Allow end user input for changes and improvements to system
sw sw sw sw sw sw sw sw sw
Set up training for all affected employees
sw sw sw sw sw sw
Get management and programmer buy-in for essential controls and audit trails at the
sw sw sw sw sw sw sw sw sw sw sw sw
front end of development
sw sw sw sw
Emphasize the importance of controls, protection of information assets, and
sw sw sw sw sw sw sw sw sw
protection of confidential/private information
sw sw sw sw
SOLUTIONS TO DISCUSSION QUESTIONS AND PROBLEMS
sw sw sw sw sw
1. The project that Finkelstein and Associates is considering is a capital investment that requires
sw sw sw sw sw sw sw sw sw sw sw sw sw
information on the estimated initial investment and the estimated future return. The future return
sw sw sw sw sw sw sw sw sw sw sw s w sw sw
would be measured by net incremental cash flows to the mall (incremental cash inflows less
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
incremental cash outflows).
sw sw sw
Estimated initial investment would include:
sw sw sw sw
• Architects fees sw
• Renovation of existing facilities sw sw sw
• Construction of new facilities and food court sw sw sw sw sw sw
• Cost of disruption of trade during project
sw sw sw sw sw sw
, Estimated net incremental cash flows would include:
sw sw sw sw sw sw
Cash inflows: sw
• Increased store rents from existing facilities
sw sw sw sw sw
• Rents from new facilities and food court
sw sw sw sw sw sw
Less cash outflows:
sw sw
• Increased janitorial costs sw sw
• Increased security costs sw sw
Estimates of the future cash inflows and outflows could be based on the mall's historical
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
accounting data. Estimates of the renovation and construction costs would be based primarily
sw sw sw sw sw sw sw sw sw sw sw sw sw
on the architect's judgment and experience. It would be difficult to make precise estimates of
sw sw sw sw sw sw s w sw sw sw sw sw sw sw sw
the cost of trade disruption, although some data may be available from industry sources.
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
Additional useful information would include demographic data for the local community and
s w sw sw sw sw sw sw sw sw sw sw sw
estimates of local economic activity and consumer buying power.
sw sw sw sw sw sw sw sw sw
2. a. and b.
sw sw
Purchasing data might reveal the degree of competition among vendors and vendors' pricing
sw sw sw sw sw sw sw sw sw sw sw sw
policies. An organization might decide to integrate vertically by buying an equity position in
sw s w sw sw sw sw sw sw sw sw sw sw sw sw
key vendors or by producing some of the needed goods and services itself.
sw sw sw sw sw sw sw sw sw sw sw sw sw
Perpetual inventory records indicate inventory carrying costs and might reveal buying patterns for
sw sw sw sw sw sw sw sw sw sw sw sw
different classes of goods. An organization might decide to drop some product lines that are
sw sw sw sw s w sw sw sw sw sw sw sw sw sw sw
expensive to carry in inventory and for which demand is decreasing, erratic, or highly seasonal.
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
Manufacturing cost data might shed light on an organization's ability to compete in its market.
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
An organization with unusually low manufacturing costs, because of a high degree of automation
s w sw sw sw sw sw sw sw sw sw sw sw sw sw
or for other reasons, would enjoy a distinct competitive advantage.
sw sw sw sw sw sw sw sw sw sw
Customer credit and accounts receivable data contain valuable information on customers' financial
sw sw sw sw sw sw sw sw sw sw sw
condition. An organization would wish to target high-income customers or customers with good
sw s w sw sw sw sw sw sw sw sw sw sw sw
credit histories in its promotional campaigns. Some organizations might also be tempted to sell
sw sw sw sw sw sw s w sw sw sw sw sw sw sw
credit data to other firms to aid their promotional efforts. However, except for credit companies
sw sw sw sw sw sw sw sw sw sw s w sw sw sw sw
themselves, such sale of credit data is restricted by law and may also raise serious ethical
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
concerns.
sw
Personnel and payroll records contain valuable information about employees' financial condition
sw sw sw sw sw sw sw sw sw sw
and possibly about their tastes and habits. Such information might be used to target an
sw sw sw sw sw sw sw s w sw sw sw sw sw sw sw
organization's own employees in promotional campaigns. The release of personnel and payroll
sw sw sw sw sw sw s w sw sw sw sw sw
data to other organizations, except to credit companies, is prohibited by privacy laws.
sw sw sw sw sw sw sw sw sw sw sw sw sw
3. External auditors and accountants need a basic understanding of accounting information systems,
sw sw sw sw sw sw sw sw sw sw sw
their components, their modes of operation, and their supporting technologies. Auditors are
sw sw sw sw sw sw sw sw sw sw s w sw
likely to be involved primarily because of their expertise in internal controls and their
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
knowledge of what enhances or detracts from a system's auditability. Accountants are likely
sw sw sw sw sw sw sw sw sw sw s w sw sw
to be involved primarily because of their expertise in evaluating and designing a system's
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
outputs in relation to the needs of the organization and its users.
sw sw sw sw sw sw sw sw sw sw sw sw
4. Under Section 201of the Sarbanes-Oxley Act of 2002, auditors are prohibited from providing any
sw sw sw sw sw sw sw sw sw sw sw sw sw
non-audit service, including information systems design and implementation, to its audit clients.
sw sw sw sw sw sw sw sw sw sw sw sw
(This Act does not
s w sw sw sw
Accounting Information Systems A Practitioner Emphasis, 7e
sw sw sw sw sw sw
sw Cynthia Heagy Constance Lehmann|| All Chapters Covered, 100%
sw sw sw sw sw sw sw
sw Original Verified, A+ Grade
sw sw sw
Nursestar1 Stuvia
sw sw
,Chapter 1 sw
Significance of Accounting Information Systems and thesw sw sw sw sw sw
Accountant’s Role
sw sw
INTRODUCTORY SCENARIO: SUGGESTED SOLUTIONS TO QUESTIONS
sw sw sw sw sw
1. Employee overtime hours, customer information (e.g., age groups), inventory levels, reorder
sw sw sw sw sw sw sw sw sw sw
points, EOQ calculation, volume/quantity discount analysis, square footage in use v. storage,
sw sw sw sw sw sw sw sw sw sw sw sw
customer flow data, spoilage
sw sw sw sw
2. How much is client willing to pay? System that is easy for servers to use with proper controls.
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
Bob’s hourly rate would be a concern for client. Will Bob be around ―after the sale‖ (i.e., tech
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
support)? What types of pre-packaged systems are available?
sw sw sw sw sw sw sw sw
3. Information to help with software division (e.g., total sales dollars, complexity of accounting
sw sw sw sw sw sw sw sw sw sw sw sw
system). How many computers needed? Any expansion planned? What types of employees do
sw sw sw sw sw sw sw sw sw sw sw sw sw
they have (e.g., waiters would want quick touch screens)?
sw sw sw sw sw sw sw sw sw
4 The owner of the restaurant wants a new accounting system because he needs up-to-date
sw sw sw sw sw sw sw sw sw sw sw sw sw
information on how the business is doing. Waiting until the end of the year, or even the
sw sw sw sw sw sw sw s w sw sw sw sw sw sw sw sw sw
quarter, does not give Marshall the information he needs to make those day-to-day decisions that
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
will ensure the success of his restaurant.
sw sw sw sw sw sw sw
CHAPTER VIGNETTES: SUGGESTED RESPONSES TO QUESTIONS
sw sw sw sw sw
Vignette 1.1
sw
1. Closer relationships with remaining suppliers, the ability to carry less inventory (reducing
sw sw sw sw sw sw sw sw sw sw sw
carrying costs and risks of theft or loss of inventory), sharing of planning information with
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
suppliers, easier to monitor vendor performance. Might lose volume discounts if trying to
sw sw sw sw sw sw sw sw sw sw sw sw sw
minimize inventory on hand by having smaller shipments from vendors shipped more often.
sw sw sw sw sw sw sw sw sw sw sw sw sw
2. Reduction in paperwork, reduction in input errors, ordering and cash receipt processes more
sw sw sw sw sw sw sw sw sw sw sw sw
efficient, increases in efficiency in meeting changes in demand. One disadvantage would
sw sw sw sw sw sw sw sw sw sw sw sw
relate to problems with settling disputed orders or payments with loss of ―paper trail‖ that
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
includes authorized signatures.
sw sw sw
Vignette 1.2
sw
1. Managers would probably find information in units to be most useful for planning decisions
sw sw sw sw sw sw sw sw sw sw sw sw sw
because this information would represent things over which he/she has control. While the
sw sw sw sw sw sw sw sw sw sw sw sw sw
manager might not have control over salaries, he/she does have control over the amount of
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
overtime and the approval of vacation of the employees.
sw sw sw sw sw sw sw sw sw
2. Managers would probably want information related to production numbers (to determine
sw sw sw sw sw sw sw sw sw sw
seasonality; during slow times, more employees could be on vacation), the number of vacation
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
hours per employee, the number of overtime hours per employee, backorder information, and
sw sw sw sw sw sw sw sw sw sw sw sw sw
information to help the manager match staffing levels with production.
sw sw sw sw sw sw sw sw sw sw
Vignette 1.3
sw
1. The privacy of information is a major consideration, as the customer might not want their
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
spending pattern information shared with other parties. Loss of confidential information can be
sw sw sw sw sw sw sw sw sw sw sw sw sw
disastrous to a company’s reputation and lead to significant financial losses (lost sales, fines,
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
etc.) Information about customers must be protected from information leakage to other third
sw sw sw sw sw sw sw sw sw sw sw sw sw
parties who gain authorized (or unauthorized) access
sw sw sw sw sw sw sw
, to information. At the very least, confidential information about the customers should be
sw sw sw sw sw sw sw sw sw sw sw sw
encrypted and have limited access.
sw sw sw sw sw
2. Inventory management (e.g., turnover, obsolescence, supply/demand, reorder levels), potential
sw sw sw sw sw sw sw sw
markets or product lines for expansion, frequent buyer programs.
sw sw sw sw sw sw sw sw sw
Vignette 1.4
sw
1. The situation could have been avoided if employees had been part of the decision-making and
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
testing early in the project. Employee buy-in is essential to the success of any new system
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
implementation. It is key that the system provide managers with information that they need for
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
decision-making. It is also important to have a maintenance contract in place, with better
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
reporting to management and regular follow-up. It appears that this decision was not made by
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
executive management, so its success was questionable since the ―tone at the top‖ with regard
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
to the project was ―ignorance‖. Since executive management did not monitor the project, they
sw sw sw sw sw s w sw sw sw sw sw sw sw sw
could not respond to Kluger’s complaints, nor could they provide ―strong encouragement‖ for
sw sw sw sw sw sw sw sw sw sw sw sw sw
continuation of the project originally started by Lehmann. In fact, it appears that executive
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
management was not involved in the decision to take on the new system. Kluger was not
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
given the opportunity to learn the new system, nor was there motivation to learn the new
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
system. The company also had inadequate backup so that the project could continue in the
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
absence of a key employee.
sw sw sw sw sw
2. .Here are some suggested ―next steps‖
sw sw sw sw sw
Improve the governance process and the ―tone at the top‖ to get executive management
sw sw sw sw sw sw sw sw sw sw sw sw sw
involvement and oversight of system projects—this includes aligning any system projects with
sw sw sw sw sw sw sw sw sw sw sw sw
the strategy of the company
sw sw sw sw sw
Determine that any system chosen by management will provide quality information useful for
sw sw sw sw sw sw sw sw sw sw sw sw
decision- making at all levels
sw sw sw sw sw
Reinstate the maintenance contract and set up a training contract if it is determined more cost-
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
effective and in line with the company business plan to use the new system
sw sw sw sw sw sw sw sw sw sw sw sw sw
Provide training and employee involvement in developing the system
sw sw sw sw sw sw sw sw
Provide better oversight of the controller function
sw sw sw sw sw sw
Vignette 1.5
sw
1. The redesign process can be improved using the following suggestions:
sw sw sw sw sw sw sw sw sw
Set up end-user groups to get input regarding output needs, data collection needs, screen, and form layouts
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
Develop a schedule of tests to be conducted with representative end users for pilot testing
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
Allow end user input for changes and improvements to system
sw sw sw sw sw sw sw sw sw
Set up training for all affected employees
sw sw sw sw sw sw
Get management and programmer buy-in for essential controls and audit trails at the
sw sw sw sw sw sw sw sw sw sw sw sw
front end of development
sw sw sw sw
Emphasize the importance of controls, protection of information assets, and
sw sw sw sw sw sw sw sw sw
protection of confidential/private information
sw sw sw sw
SOLUTIONS TO DISCUSSION QUESTIONS AND PROBLEMS
sw sw sw sw sw
1. The project that Finkelstein and Associates is considering is a capital investment that requires
sw sw sw sw sw sw sw sw sw sw sw sw sw
information on the estimated initial investment and the estimated future return. The future return
sw sw sw sw sw sw sw sw sw sw sw s w sw sw
would be measured by net incremental cash flows to the mall (incremental cash inflows less
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
incremental cash outflows).
sw sw sw
Estimated initial investment would include:
sw sw sw sw
• Architects fees sw
• Renovation of existing facilities sw sw sw
• Construction of new facilities and food court sw sw sw sw sw sw
• Cost of disruption of trade during project
sw sw sw sw sw sw
, Estimated net incremental cash flows would include:
sw sw sw sw sw sw
Cash inflows: sw
• Increased store rents from existing facilities
sw sw sw sw sw
• Rents from new facilities and food court
sw sw sw sw sw sw
Less cash outflows:
sw sw
• Increased janitorial costs sw sw
• Increased security costs sw sw
Estimates of the future cash inflows and outflows could be based on the mall's historical
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
accounting data. Estimates of the renovation and construction costs would be based primarily
sw sw sw sw sw sw sw sw sw sw sw sw sw
on the architect's judgment and experience. It would be difficult to make precise estimates of
sw sw sw sw sw sw s w sw sw sw sw sw sw sw sw
the cost of trade disruption, although some data may be available from industry sources.
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
Additional useful information would include demographic data for the local community and
s w sw sw sw sw sw sw sw sw sw sw sw
estimates of local economic activity and consumer buying power.
sw sw sw sw sw sw sw sw sw
2. a. and b.
sw sw
Purchasing data might reveal the degree of competition among vendors and vendors' pricing
sw sw sw sw sw sw sw sw sw sw sw sw
policies. An organization might decide to integrate vertically by buying an equity position in
sw s w sw sw sw sw sw sw sw sw sw sw sw sw
key vendors or by producing some of the needed goods and services itself.
sw sw sw sw sw sw sw sw sw sw sw sw sw
Perpetual inventory records indicate inventory carrying costs and might reveal buying patterns for
sw sw sw sw sw sw sw sw sw sw sw sw
different classes of goods. An organization might decide to drop some product lines that are
sw sw sw sw s w sw sw sw sw sw sw sw sw sw sw
expensive to carry in inventory and for which demand is decreasing, erratic, or highly seasonal.
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
Manufacturing cost data might shed light on an organization's ability to compete in its market.
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
An organization with unusually low manufacturing costs, because of a high degree of automation
s w sw sw sw sw sw sw sw sw sw sw sw sw sw
or for other reasons, would enjoy a distinct competitive advantage.
sw sw sw sw sw sw sw sw sw sw
Customer credit and accounts receivable data contain valuable information on customers' financial
sw sw sw sw sw sw sw sw sw sw sw
condition. An organization would wish to target high-income customers or customers with good
sw s w sw sw sw sw sw sw sw sw sw sw sw
credit histories in its promotional campaigns. Some organizations might also be tempted to sell
sw sw sw sw sw sw s w sw sw sw sw sw sw sw
credit data to other firms to aid their promotional efforts. However, except for credit companies
sw sw sw sw sw sw sw sw sw sw s w sw sw sw sw
themselves, such sale of credit data is restricted by law and may also raise serious ethical
sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw sw
concerns.
sw
Personnel and payroll records contain valuable information about employees' financial condition
sw sw sw sw sw sw sw sw sw sw
and possibly about their tastes and habits. Such information might be used to target an
sw sw sw sw sw sw sw s w sw sw sw sw sw sw sw
organization's own employees in promotional campaigns. The release of personnel and payroll
sw sw sw sw sw sw s w sw sw sw sw sw
data to other organizations, except to credit companies, is prohibited by privacy laws.
sw sw sw sw sw sw sw sw sw sw sw sw sw
3. External auditors and accountants need a basic understanding of accounting information systems,
sw sw sw sw sw sw sw sw sw sw sw
their components, their modes of operation, and their supporting technologies. Auditors are
sw sw sw sw sw sw sw sw sw sw s w sw
likely to be involved primarily because of their expertise in internal controls and their
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
knowledge of what enhances or detracts from a system's auditability. Accountants are likely
sw sw sw sw sw sw sw sw sw sw s w sw sw
to be involved primarily because of their expertise in evaluating and designing a system's
sw sw sw sw sw sw sw sw sw sw sw sw sw sw
outputs in relation to the needs of the organization and its users.
sw sw sw sw sw sw sw sw sw sw sw sw
4. Under Section 201of the Sarbanes-Oxley Act of 2002, auditors are prohibited from providing any
sw sw sw sw sw sw sw sw sw sw sw sw sw
non-audit service, including information systems design and implementation, to its audit clients.
sw sw sw sw sw sw sw sw sw sw sw sw
(This Act does not
s w sw sw sw
