IS 414 CH. 12 (Systems and Docs)

Question 1

What are the 4 systems?

Answer 1

1. Sales Order Entry
2. Shipping
3. Billing
4. Cash Collections

Question 2

General issues throughout the cycle

Answer 2

1. Inaccurate or invalid master data
2. Unauthorized disclosure of sensitive information
3. Loss or destruction of data
4. Poor performance

Question 3

1. Inaccurate or invalid master data

Answer 3

1. 1 Data processing integrity controls
2. 2 Restriction of access to master data
3. 3 Review of all changes to master data

Question 4

2. Unauthorized disclosure of sensitive information

Answer 4

2. 1 Access controls

2. 2 Encryption

Question 5

3. Loss or destruction of data

Answer 5

3.1 Backup and disaster recovery plan procedures

Question 6

4. Poor performance

Answer 6

4.1 Managerial reports

Question 7

Sales order entry subsystems

Answer 7

1. Taking customer orders
2. Checking and approving credit
3. Checking inventory
4. Responding to customer inquiries

Question 8

Taking customer orders threats

Answer 8

5. Incomplete/inaccurate orders
6. 1 Data entry controls
7. 2 Restriction of access to master data
8. Invalid orders
9. 1 Digital signatures or written signatures

Question 9

Checking and approving credit threats

Answer 9

7. Uncollectible accounts
8. 1 Credit limits
9. 2 Specific authorization to approve sales to new customers or sales that exceed a customer’s credit limit
10. 3 Aging of A/R

Question 10

Checking inventory threats

Answer 10

8. Stockouts or excess inventory
9. 1 Perpetual inventory system control
10. 2 Use of barcode or RFID
11. 3 Training
12. 4 Periodic physical counts of inventory

Question 11

Responding to customer inquiries threats

Answer 11

9. Loss of customers

9. 1 CRM systems, self-help websites, and proper evaluation of customer service ratings

Question 12

Shipping subsystems

Answer 12

1. Pick and pack

2. Ship goods

Question 13

Pick and pack threats

Answer 13

10. Picking the wrong items
11. 1 Barcode & RFID
12. 2 Reconciliation of picking lists to sales order details
13. Theft of inventory
14. 1 Restriction of physical access to inventory
15. 2 Documentation of all inventory transfers (shipping and warehouse employee sign or make appropriate acknowledgement of the transfer online)
16. 3 RFID and barcode
17. 4 Periodic physical counts of inventory and reconciliation to recorded quantities

Question 14

Ship goods threats

Answer 14

12. Shipping errors (delay or failure to ship, wrong quantities, wrong items, wrong addresses, duplication)
13. 1 Reconciliation of shipping documents with sales orders, picking lists, and packing slips
14. 2 Use RFID systems to identify delays
15. 3 Data entry via bar-code scanners and RFID
16. 4 Data entry edit controls (if shipping data entered on terminals)
17. 5 Configuration of ERP system to prevent duplicate shipments

Question 15

Billing subsystems

Answer 15

Invoicing

Update A/R

Question 16

Invoicing threats

Answer 16

13. Failure to bill
14. 1 Separation of billing and shipping functions
15. 2 Periodic reconciliation of invoices with sales orders, picking tickets, and shipping documents
16. Billing errors
    14.1 Configuration of system to automatically enter pricing data
    142 Restriction of access to pricing master data
    14.3 Data entry edit controls
    14.4 Reconciliation of shipping documents (picking tickets, bill of lading, and packing ticket) to sales orders

Question 17

Update A/R threats

Answer 17

15. Posting errors in A/R
16. 1 Data entry controls
17. 2 Reconcilation of batch totals
18. 3 Mailing of monthly statements to customers
19. 4 Reconciliation of subsidiary accounts to general ledger
20. Inaccurate or invalid credit memos
21. 1 Segregation of duties of credit memo authorization from both sales order entry and customer account maintenance
22. 2 Configuration of system to block credit memos unless there is either corresponding documentation of return of damage goods or specific authorization by management

Question 18

Cash collections threats

Answer 18

17. Threft of cash
18. 1 Segregation of duties - the person who handles (deposits) payment from customers should not also post remittances to customer accounts, create or authorize credit memos, or reconcile the bank account
19. 2 use of EFT, FEDI, and lockboxes to minimize handling of customer payments by employees
20. 3 Obtain and use UPIC to receive EFT and FEDI payments from customers
21. 4 Immediately upon opening mail, create list of all customer payments received
22. 5 Prompt, restictive endorsement of all customer checks
23. 6 Having two people open all mail likely to contain customer payments
24. 7 Use of cash registers
25. Cash flow problems
26. 1 Lockbox arrangements, EFT, or credit cards
27. 2 Discounts for prompt payment by customers
28. 3 Cash flow budget