IS 414 CH. 16 (System and Threats)

Question 1

G/L and Reporting System

Answer 1

Update G/L
Post Adjusting entries
prepare financial statements
produce managerial reports

Question 2

Update G/L

Answer 2

updating consists of posting journal entries that originate from two sources:
accounting subsystem
treasurer (non routine transactions: issuance of retirement of debt, etc)

Question 3

Update G/L threats

Answer 3

4. Inaccurate updating of general ledger
5. 1 Data entry processing integrity controls
6. 2 Reconciliation and control reports
7. 3 Audit trails creation and review
8. Unauthorized journal entries
9. 1 Access controls
10. 2 Reconciliations and control reports
11. 3 Audit trail creation and review

Question 4

Posting Adjusting entries

Answer 4

originate from controllers office and fall into 5 categories: 
accruals
deferrals
estimates
revaluations
corrections

Question 5

accruals

Answer 5

entries made at the end of the accounting period to reflect events that have OCCURRED but for which cash HAS NOT YET BEEN RECEIVED

ex: interest revenue and wages payable

Question 6

deferrals

Answer 6

entries made at the end of the accounting period to reflect the exchange of cash prior to performance of the related event

ex: prepaid rent, insurance, interest

Question 7

estimates

Answer 7

entries that reflect a portion of expenses expected to occur over a number of accounting periods

ex: depreciation, bad debt

Question 8

revaluations

Answer 8

entries made to reflect either differences between the actual and recorded value of an asset or a change in accounting principle

ex: change in method in counting inventory, reducing value of inventory to reflect obsollescence, or adjusting inventory records to reflect the results noted during a physical count of inventory

Question 9

corrections

Answer 9

entries made to counteract the effects of error found in the general ledger.

Question 10

post adjusting entries threats

Answer 10

6. Inaccurate adjusting entries
7. 1 Data entry processing integrity controls
8. 2 spreadsheet error protection controls
9. 3 standard adjusting entries
10. 4 reconcilations and control reports
11. 5 audit trail creation and review
12. Unauthorized adjusting entries
13. 1 Access controls
14. 2 reconcilations and control reports
15. 3 audit trail creation and review

Question 11

prepare financial statement threats

Answer 11

8. Inaccurate financial statements
9. 1 Processing integrity controls
10. 2 Use of packaged software
11. 3 training and experience in applying IFRS and XBRL
12. 4 audits
13. Fraudulent financial reporting
14. 1 audits

Question 12

Product managerial report threats

Answer 12

10. Poorly designed reports and graphs
11. 1 Responsibility accounting
12. 2 Balanced scorecard
13. 3 Training on proper graph design