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Identify and describe FOUR weaknesses in Shane’s approach to implementing the new AIS

Shane Matthews is the new accountant of Brubeck’s Furnishings. Shane wants to revamp the information system, placing increased emphasis on decentralised data access and online systems and developing a new system that integrates the company’s accounting functions. Shane provides design characteristics and reporting formats that he used at a former company. He sends these details of the new AIS to the departments that interface with accounting, including inventory control, purchasing, human resources, production control, and marketing. If they do not respond with suggestions by a prescribed date, he will continue the development process. Shane has established a new schedule for many of the reports, changing the frequency from weekly to monthly. After a meeting with the director of Information Systems, Shane selects a programmer to help him with the details of the new reporting formats. Most control features of the old system are maintained to decrease the installation time, with a few new ones added for unusual situations. The procedures for maintaining the controls are substantially changed. Shane makes all the AIS control change and program-testing decisions, including screening the control features related to payroll, inventory control, accounts receivable, cash deposits, and accounts payable. As each module is completed, Shane has the corresponding department implement the change immediately to take advantage of the labour savings. Incomplete instructions accompany these changes, and specific implementation responsibility is not assigned to departmental personnel. Shane believes operations people should learn as they go, reporting errors as they occur. Accounts payable and inventory control are implemented first, and several problems arise. The fortnightly payroll runs, which had been weekly under the old system, have abundant errors, requiring numerous manual pay cheques. Payroll run control totals take hours to reconcile with the computer printout. To expedite matters, Shane authorises the payroll clerk to prepare payroll journal entries. The new inventory control system fails to improve the carrying level of many stock items. This causes critical stock outs of raw material that result in expensive rush orders. The new system’s primary control procedure is the availability of ordering and user information. The information is available to both inventory control and purchasing personnel so that both departments can issue timely purchase orders. Because the inventory levels are updated daily, Shane discontinues the previous weekly report. Because of these problems, system documentation is behind schedule, and proper backup procedures have not been implemented. Shane has requested budget approval to hire two systems analysts, an accountant, and an administrative assistant to help him implement the new system. Required a. Describe at least FIVE steps Shane should have taken while designing the AIS to ensure that end user needs were satisfied. (10 marks) b. Identify and describe THREE ways Shane violated internal control principles during the AIS implementation. (6 marks) c. Identify and describe FOUR weaknesses in Shane’s approach to implementing the new AIS. (8 marks) d. For each of the weaknesses identified in ‘c,’ above, recommend improvements for the development process for the remaining parts of the AIS? (6 marks)

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