top of page
  • BAE

There are occasional discrepancies between the daily bank deposits and the cash receipts

Question 1

The Tesco case was discussed in the Week 2 Interactive Tutorial. Companies like Tesco gather a massive amount of data through different loyalty card programs. Typically, the shoppers fill out an application form in the shop and receive a plastic card and a key fob* in the mail that is scanned before they make a purchase. In this way, the companies gather massive amounts of data about their customers’ millions of purchases each week. From a company perspective, this is the sales data which plays an essential role in the accounting information system. Then, the data analysts of these companies analyze these sales data and turn it into useful information.


1.a) How can this information be used to get a competitive advantage?

2.b) What else can these companies accomplish from this collected data?

3.c) What are the risks associated with these types of loyalty cards?

Question 2 David Savage, a business graduate, started a manufacturing business known as HARDA Manufacturers. Over the last three years, the company has experienced steady growth. There are seven vice presidents, who represent; (1) Finance, (2) Marketing, (3) Manufacturing, (4) Information System and Services, (5) Human Resources, (6) Administration, and (7) Research and Development. These seven vice presidents report to David Savage, the Chief Executive Officer (CEO) of this business. The Information Systems and Services department was established last year when HARDA Manufacturers began developing a new information system consisting of a server connected to each employee's personal computer. This is a limited information system, and the PCs can download and upload data to the server.

Question 3 HARDA Manufacturers is still designing and developing applications for its new system. David Savage received a letter from the external auditor. He called a meeting with his vice presidents to review the recommendation that HARDA Manufacturer should form an information system steering committee.


a) Explain the possible reasons for the fact that auditors have recommended forming a steering committee. Also discuss the specific responsibilities of this steering committee.

b) Discuss the benefits and the composition of this steering committee.

Question 4 Internal controls play an integral role in developing reliable financial records that facilitates the decision-making process. Further, a well-designed internal control system helps in preventing or detecting errors and fraud. Realising the importance of internal controls, the internal auditing department of Dynamic Sportswear periodically reviews the accounting records of the company to determine the effectiveness of the internal controls. During the latest review, the internal audit department found the following conditions:

1.There are occasional discrepancies between the daily bank deposits and the cash receipts.

2.One employee is preparing and approving the bad debt write-offs.

3.There are also occasional discrepancies between physical inventory counts and perpetual inventory records. Furthermore, alterations have been made to the physical inventory counts and to the perpetual inventory records.

4.The customer's records reveal that there are many customer refunds and credits.

5.Many original documents are missing or lost. However, there are substitute copies of all missing originals.

6.There is a substantial decrease in the gross profit percentage. This decrease is not explained.

7.Many documents are not approved. Required: Describe the possible reasons for these identified conditions above (from 1. – 7.) and recommend effective internal control(s) for each condition.

Question 5 The given system flowchart presents different business activities and data processing operations involved in the revenue cycle. Required: Describe five (5) control weaknesses depicted in the system flowchart, as shown on page 5 of this document.

Question 6 a) In Chapter 9 (Week 9 Tutorial) we discussed the integration of the Human Resource Management and Payroll databases. In particular, we discussed different benefits of this integration in the Week 9 Tutorials. Some companies believe in the integration of HRM and Payroll systems. However, many firms do not agree with this integration. These companies maintain separate HRM information systems and Payroll.

Required: a)Discuss both arguments. For this discussion, think in terms of (1) difference in employee background, and (2) functions performed by the HRM and payroll departments. b) Mr Peter is the treasurer of a small charity and you asked him to explain the business activities and data processing operations involved in the payroll cycle of the charity. During this discussion, Peter explained that the charity is not using a separate cheque account to manage their Payroll due to the extra monthly services fee. Peter further explained that the benefits of a separate cheque account are not worth the additional fee. Required: As a student of accounting information systems, how would you respond to Peter?

Question 7

Mr. Peter is working as a Purchases Journal clerk in a small firm located on the Gold Coast. David is his friend, who works as an Accounts Payable Ledger clerk in the same firm. Peter periodically enters fictitious acquisitions. After creating a fictitious purchase, Peter notifies his Accounts Payable Ledger clerk. David enters these transactions in his ledger. When the payables are processed, the payment is mailed to the non-existent supplier's address, a post office box rented by Peter. He deposits the cheque in an account he opened in the non- existent supplier's name. In the Week 11 tutorial, we discussed the different procedures that can be followed to uncover the fraudulent behaviour of employees.

a) Discuss two (2) procedures that can be applied to find Mr. Peter's fraud.

b) Discuss indicators of personal fraud that can reveal the possibility of such fraud.

Recent Posts

See All


bottom of page