Mod 9 - Business Processes And Controls

Question 1

Limitations in business processes

RC CHUM

Answer 1

Relevancy/ obsolescence
Cost

Collusion
Human error
Unsual/infrequent transactions
Management override

Question 2

Key elements of a business process are:

Answer 2

Objectives (what does mgmt want the process to do)

Risks (what will prevent the achievement of these objectives)

Control activities (how can significant risks be controlled)

Question 3

Control activities are the…

Answer 3

Policies (establish what should be done)

Procedures (required to implement those policies)

Question 4

Why should management implement control activities?

Answer 4

Provide mgmt with reasonable assurance over the following objectives:

Effectiveness and efficiency of operations

Reliability of mgmt reporting, analysis and decision making

Reliability of financial reporting

Compliance with applicable laws and regulation

Question 5

Objectives for transactions

Answer 5

Authorised
Complete
Timely 
Correctly classified
Accurate
Valid

Question 6

Internal control is highly examinable: how should you set out your evaluate the design/implementation of business processes?

Answer 6

Objective
Risks
Control activities

Or

Fact
Implication
Recommendation

Question 7

Manual sales system

Answer 7

4 sales orders (orders pending file, customer, accounts department and open order file in warehouse)
4 GDN (closed/uninvoiced file, customer, sales department, uninvoiced order file in accounts dept)
2 invoices ( invoice order file, customer)

Question 8

Example approach to a business process question

Answer 8

1. Analyse the requirement
2. Think about the marks available
3. Identify the weaknesses
4. Analyse implications and recommend improvements
5. Write your answer

Question 9

Manual Credit purchases process

Answer 9

5 purchase orders (orders accepted file, supplier, warehouse, accounts department, user department)
4 GRNs (closed order/GRN file, user department, purchase department, accounts department)
1 invoice

Question 10

Big data: the four Vs

Answer 10

Volume - sheer quantity of data
Velocity - rate at which data is created and processed
Veracity - the need for big data to be trusted and trustworthy
Variety - range of data sources available (sometimes overwhelming)

Question 11

McKinsey & company ; company highlighted three main areas in which businesses have responded to the opportunities created by big data:

Answer 11

Techniques - range of tools available for the collection and examination of data streams (traditional techniques as well as social media)

Big data technologies - hardware and software required to support big data capabilities (traditional IT infrastructure would struggle to cope with these demands) e.g cloud computing

Visualisation- identified as this as coming under both techniques for analysing big data and big data technologies. Human perception - well designed visualisation is easier to understand and interpret than raw data

Traditional methods - bar or line graphs which can be scaled up to larger data streams

Need for timely data analysis and interpretation = trend towards dashboard approach (various analysis summarised on one page - KCW at work)

Question 12

Key objectives of the payroll system

Answer 12

• ensuring each employee is paid the correct amount based on the work performed
• ensuring only genuine employees are paid
• ensuring any liability is calculated correctly and deductions are also correctly calculated
• ensuring the liability is recorded accurately and statutory returns are made on time
• ensuring that some SoD are in place