...several processes could be improved by implementing accounting information system (AIS). The processes that will be targeted are accounts receivable, payroll, inventory, and accounts payable. The accounting firm recommended the use of AIS. The type of software recommended would be industry specific software that can be purchased of the rack. This was decided because of the reduction in cost to acquire the program compared to a customized system. Also the training on and maintenance of the program will be included in the purchase price. The next step would be to determine what type of audit that would best fit the processes that are targeted. There are four types of audits. There is the attestation audit, which according to "KHSA Karren, Hendrix, Stagg, Allen" (2012), "are assurance engagements that require procedures to be applied to financial reporting processes and controls, but do not necessarily require an audit. Then there are findings and recommendations that are used when implementing a system. The next type of audit is the SAS 70 audit. According to "NBD Accountants Consultants" (2008), “It is an auditing standard put forth by the AICPA that is utilized by auditors for examining internal controls in service organizations. Service organizations are the host of companies that provide critical, third-party outsourcing services to other companies.” The final type of audit is the Statement on Auditing Standards (SAS) 94: The effect of information technology on the Auditor’s consideration...
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...Malaysia PO Box, 10, 50728, Kuala Lumpur, Malaysia E-mail: maslina@iiu.edu.my Abstract Independence is the primary justification of the existence, and thus the hallmark of the auditing profession. It is recognized as the primary attribute to be maintained by auditors in all circumstances. This study attempts to explore the determinants of auditor independence as perceived by Malaysian accountants using a self-administered mail survey. It was evidenced from the survey that size of audit fees is the most important factor, followed by competition, size of audit firm, tenure, provision of management advisory service and finally audit committee. More specifically, the study indicates that (1) larger size of audit fees, (2) audit firms operating in a higher level of competitive environments, (3) smaller audit firms, (4) audit firms serving a given client over a longer duration, (5) audit firms providing MAS, and, (6) the non-existence of an audit committee, are perceived as having a higher risk of losing independence. This study provides a basis for the profession to establish policies relating to auditor independence. Also, it may assist policy makers and other relevant international accounting agencies in their attempt towards the international harmonization of auditing standards. The major contribution of this paper is that it supplies recent evidence on factors influencing auditor...
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...rights reserved. Course Description In this course, students examine the fundamentals of accounting systems design. Topics include business information systems, business processes and data flows, database concepts and tools, internal control and risks, auditing the information system, and using the information system to perform audit functions. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: University policies: You must be logged into the student website to view this document. Instructor policies: This document is posted in the Course Materials forum. University policies are subject to change. Be sure to read the policies at the beginning of each class. Policies may be slightly different depending on the modality in which you attend class. If you have recently changed modalities, read the policies governing your current class modality. Course Materials Bagranoff, N. A., Simkin, M. G., & Strand Norman, C. (2008). Core concepts of accounting information systems (10th ed.). New York, NY: Wiley. Hunton, J. E., Bryant, S. M., & Bagranoff, N. A. (2004). Core concepts of information technology auditing. Hoboken, NJ: Wiley. O’Brien, J. A. & Marakas, G. M. (2008). Management information systems (8th ed.). Boston, MA: McGraw-Hill. All electronic materials are available on the student website. Week One: Characteristics of Accounting Information...
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...success since their first store opened in 1998, opening a second store in 2000 and a third in 2003. Kudler’s success is dependent on their business model as well as an effective accounting information system (AIS). The current system is strong but could be enhanced to build productivity and profitability. Over the course of the last five weeks the following recommendations have been made to Kudler’s management team to make improvements to their existing system. Implementation of industry-specific software to improve the current AR, AP, inventory and payroll processes as well as developing new processes for sales and general ledger functions. The value-added and automation of the processes improves accuracy, eliminates double entry and allows for communication between locations. Refine the existing database with the use of flowcharts and ER diagrams to understand the flow of data and move away from broad spreadsheet reports and instead use pivot tables which will provide a summary of data useful for decision-making. Maintain, review, update, and test, policies and procedures, by means of developing good internal controls and auditing them regularly. The following brief will indicate how Kudler will also benefit from audit software and computer assisted auditing techniques (CAATs) to validate their system’s data integrity. Introduction Kudler Fine Foods (Kudler) recently upgraded their system software to be more industry-specific. Reliance on computers for accounting...
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...Design Science Research Methodology and Its Application to Accounting Information Systems Research,” asserts most of research currently conducted in the accounting information systems (AIS) and information systems (IS) areas focuses on understanding why things work the way they do, also known as “natural science (Geerts, 2011).” The primary goal of the paper was to introduce the design science research methodology (DSRM) into accounting information systems (AIS) literature by discussing the DSRM, applying the DSRM to different AIS design science papers, and then integrating the DSRM as part of the operational AIS literature (Geerts, 2011). “Currently, integration is increasingly needed in the business environment. This need emerges from the efficiency and synergy requirements necessary in a complex and turbulent environment. In other words, integration is needed to facilitate coordination, which is again related to the building of competitive advantage.” (Granlund & Malmi, 2002, p. 305). Detail Geerts’ introduction gives definitions and history of the concept of DSRM and AIS so that the reader may transition along with the article. There is discussion of each methodology giving the history and the science behind it and then he moves into how the application of DSRM was discussed in the AIS area. According to Geerts the DSRM has three objectives and aims at improving the production, presentation, and evaluation of design science research while being consistent with its...
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...Haron School of Management, Universiti Sains Malaysia ABSTRACT The Malaysian Approved Standards on Auditing, AI 240 on “Fraud and Error” (MIA, 1997) requires the auditor to assess the risk of fraud and error during the audit of financial statements. Based on the risk assessment, the auditor should design audit procedures to obtain reasonable assurance that misstatements arising from fraud and error that are material to the financial statements taken as a whole are detected. Inability of the external auditor to detect material misstatements, particularly intentional misstatements, may expose the external auditor to litigation. The present study aims to examine the effect of the external auditor’s ability to assess fraud risk on his/her ability to detect the likelihood of fraud. An experimental approach is adopted by sending case materials to audit partners and audit managers attached to auditing firms operating in Malaysia. The result shows that in a high fraud risk scenario, the external auditor’s ability to assess fraud risk has a positive effect on his/her ability to detect the likelihood of fraud, whereas in a low fraud risk scenario not. The findings may provide insights into the external auditors’ judgment in fraud risk assessment and detection of fraud which could be beneficial to auditing firms seeking to improve processes to maintain their viability in the auditing industry. Keywords: Fraud, External...
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... |School of Business | | |ACC/542 Version 2 | | |Accounting Information Systems | Copyright © 2009, 2007 by University of Phoenix. All rights reserved. Course Description In this course, students examine the fundamentals of accounting systems design. Topics include business information systems, business processes and data flows, database concepts and tools, internal control and risks, auditing the information system, and using the information system to perform audit functions. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: • University policies: You must be logged into the student website to view this document. • Instructor policies: This document is posted in the Course Materials forum. University policies are subject to change. Be sure to read the policies at the beginning of each class. Policies may be slightly different depending on the modality in which you attend class. If you have recently changed modalities, read the policies governing your current class modality. Course Materials Bagranoff...
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...accounting, accounting information systems (AIS) lacks a well-defined body of knowledge. Much controversy exists among college faculty as to what should and should not be covered in the AIS course. To some extent, however, the controversy is being resolved through legislation. The Sarbanes-Oxley Act (SOX) of 2002 established new corporate governance regulations and standards for public companies registered with the Securities and Exchange Commission (SEC). This wide-sweeping legislation impacts public companies, their management, and their auditors. Of particular importance to AIS students is the impact of SOX on internal control standards and related auditing procedures. Whereas SOX does not define the entire content of the AIS course, it does identify critical areas of study that need to be included for accountants. These topics and more are covered in the chapters of this text. The purpose of this chapter is to place the subject of AIS in perspective for accountants. Toward this end, the chapter is divided into three major sections, each dealing with a different aspect of information systems. The first section explores the information environment of the firm. It identifies the types of information used in business, describes the flows of information through an organization, and presents a framework for viewing AIS in relation to other information systems components. The section concludes with a review of the key elements of the general model for AIS. The second section of the chapter...
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...AUO1 – Auditing and Information Systems Additional Study Questions Accounting Information Systems Competency 302.1.1: Nature and Purpose The student understands the nature and purpose of information systems. * What is the difference between transaction processing systems, management information systems, and decision support systems? Transaction processing systems - document financial activities Management information systems - used to collect qualitative as well as quantitative information for decision making within organizations Decision support systems - help the developers of an AIS identify what information they need for their planning, decision making, and control functions * How is a flowchart used? A document flowchart traces the physical flow of documents through an organization—that is, the flow of documents from the departments, groups, or individuals who first created them to their final destinations. * How is the accounting information system documented? An accounting information system is a collection of data and processing procedures that creates needed information for its users. An information system's components: Data or information is input, processed, and output as information for planning, decision-making, and control purposes. Nine reasons to document an AIS are (1) to explain how the system works, (2) to train others, (3) to help developers design new systems, (4) to control system development and maintenance costs, (5) to standardize...
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...accountants. This is where AIS or Accounting Information Systems come in, this practice was originally handled “in house” by most businesses, but as technology changed and businesses became more web based, software packages from developers such as Microsoft and Oracle are sold to assist businesses with their accounting needs. AIS was developed for the collection, storage, and processing of financial and accounting data. In most organizations A.I.S. are made up of interrelated components that interact to achieve a common goal. Throughout this paper we will look at the history of AIS, why the A.I.S. is important to corporate America, and what future developments are necessary to move ahead with the system History of the AIS In order to understand Accounting Information Systems better it is important to break down what the term really means and why it is so important in modern day accounting. The development of AIS dates all the way back to Babylon, in the year 3600BCE, this is when the oldest known record of any business occurred. It is believed that AIS were used in many other countries before making it’s way to the U.S. Countries such as Greece, China, and Rome are all believed to have used this system during trade activities. A.I.S. were first comprised of someone jotting down notes with a pencil and paper and now years later it has developed into extensive software programs that take human error out of the equation. The emergence of the AIS discipline has arisen from...
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...Ashley Richardson 11/15/2013 Western Governors University AUO1 – Auditing and Information Systems Additional Study Questions/ Study Guide 1. Accounting Information Systems Competency 302.1.1: Nature and Purpose The student understands the nature and purpose of information systems. * What is the difference between transaction processing systems, management information systems, and decision support systems? 2. Transaction processing systems - document financial activities 3. Management information systems - used to collect qualitative as well as quantitative information for decision making within organizations 4. Decision support systems - help the developers of an AIS identify what information they need for their planning, decision making, and control functions * How is a flowchart used? 5. A document flowchart traces the physical flow of documents through an organization—that is, the flow of documents from the departments, groups, or individuals who first created them to their final destinations. * How is the accounting information system documented? 6. An accounting information system is a collection of data and processing procedures that creates needed information for its users. An information system's components: Data or information is input, processed, and output as information for planning, decision-making, and control purposes. 1. Data flow diagrams provide both a physical and a logical view of a system...
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...Kudler Fine Foods relies on Accounting Information System (AIS) for its daily business operations. Due to the complexity of the business today, Kudler needs to understand the potential risks and how to mitigate them by applying internal controls to the AIS. This paper will discuss the risks and internal controls of Kudler’s AIS. The Risks to Kudler’s AIS Risk represents the possibility of a loss or harm to an organization (Raval & Fichadia, 2007, p.29). In developing effective AIS, risks should be analyzed and identified to protect the company’s assets and to promote operational efficiency. Kudler’s AIS uses four systems. They are Accounts Payable (AP), Accounts Receivable (AR), Inventory, and Payroll systems. These four systems have potential risks that may arise due to separation of duties conflict, unauthorized access, and human errors. At Kudler, the AP system is designed as an automated system. The potential risks to the system are the accuracy of the invoices’ approval and the segregation of duties conflict in adding or changing and approving vendors’ details. The sales process at Kudler involves payment by cash and credit. Even though the AR system is designed as an automated system, potential risk occurs when separation of duty conflicts exist in receiving and depositing the cash. The Inventory system at Kudler is also designed as an automated system. The potential risks are unauthorized modification of inventory level, separation...
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...Polytechnic University of the Philippines Sta. Mesa, Manila College of Accountancy and Finance CHAPTER 1: ACCOUNTING INFORMATION SYSTEMS AND THE ACCOUNTANT Submitted By: Angeles, Jireh Nesamiel L. Carullo, Shery Lyn A. Gutierrez, Joe Mar C. Monforte, Roselyn G. Reyes, Edward Angelo A. BSA 3-9 Submittes To: Prof. Leandro Cruz Fua WHAT’S NEW IN ACCOUNTING INFORMATION SYSTEMS? Cloud Computing—Impact for Accountants According to Ron Gill, cloud computing is a way of using business applications over the Internet—such as the way you use the Internet for your bank transactions. Think of cloud computing as a way to increase IT capacity or add capabilities without investing in new infrastructure, training new people, or licensing new software. Mostly, we’re talking about a subscription-based or pay-per-use service that makes IT’s existing capabilities scalable whenever the need exists. Estimates suggest that the fast-growing cloud computing industry will reach $42 billion by 2012. Cloud computing resources may be categorized as data storage, infrastructure and platform, or application software (i.e., business applications such as purchases, HR, sales, etc.). If a firm would like to take advantage of cloud computing, it would most likely need to subscribe to all three of these categories from the service provider. For example, business applications depend on company data that is stored in the database, and data storage depends on the appropriate infrastructure...
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...produced by a system. Since the relation between ITGCs and the information produced by an organization’s various application programs is indirect, understanding how ITGCs interact and affect an auditor’s risk assessment is often challenging for students. This case helps students assess overall ITGC risk within an organization’s information systems. Students identify specific strengths and weaknesses within five ITGC areas, provide a risk assessment for each area, and then evaluate an organization’s overall level of ITGC risk within the context of an integrated audit. Keywords: internal controls; general control; ITGC; risk assessment. INTRODUCTION he Sarbanes-Oxley Act (SOX 2002) and the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 5 (PCAOB 2007) require that the organization’s chief executive officer (CEO) and chief financial officer (CFO) include an assessment of the operating effectiveness of their internal control structure over financial reporting when issuing the annual report. External auditors must review management’s internal control assessment as part of an annual integrated audit of an organization’s internal controls over financial reporting. In short, accountants—external auditors, internal auditors, and management accountants at all levels—are actively involved in helping their respective organizations comply with SOX-related internal control requirements. Because of the pervasiveness of IT in organizations, the information systems themselves...
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...Information System Auditing Assignment Name ACC/542 Date Sanders Moran Information System Auditing Assignment The article selected for this assignment is titled “Implementing the IT-Related Aspects of Risk-Based Auditing Standards”. It is an overview of the importance of performing a Risk-based audit and the necessary steps auditors take in implementing risk assessment within their audit. Two sets of standards drove the need for risk assessment for IT controls. The first; AICPA SAS 104-111 (Risk Assessment Standards Toolkit) which covers the risk assessment standards and the key points auditors need to consider when incorporating them in an audit. Second, PCAOB AS 5; Audit of Internal Control over Financial Reporting that is Integrated with an Audit of inherent risk. My paper will cover the following topics outlined in the article: benefits of risk-based auditing, planning a risk assessment procedure, gaining an understanding of the IT environment, risk assessment, determining whether further audit procedures (FAP) are necessary, designing and performing FAP, and evaluating Audit Findings. Recommended approach and Benefits of Risk-Based Auditing The layout of the article closely resembles the top-down approach that is required by AS 5. This approach is basically how the auditor performs their auditing procedures; not necessarily the order in which they do them. Top-down “begins at the financial statement level and with the auditor’s understanding of the overall risks...
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