Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
8. COMMUNICATIONS
Because businesspeople were not able to adequately express their needs and much of what
they did express was not fully understood by the systems analysts, many new systems projects
produced ineffective systems. Most business students now study the development process of
9. CHARACTERISTICS OF USEFUL INFORMATION
Record Type Primary Key
Accounts Receivable Customer Number
Accounts Payable Vendor Number
10. DATA ATTRIBUTES:
Accounts payable Record:
Chapter 1 Page 2
Invoice number (PK)
vendor number
Inventory:
part number (PK)
Description
Customer Sales Orders Record:
sales order number (PK)
customer number
Chapter 1 Page 3
Purchase Orders to Vendors:
purchase order number (PK)
vendor number
vendor’s part number
Cash Receipts from Customers:
cash receipt number (sequentially assigned) (PK)
customer number
Employee Payroll Earnings records
employee identification number (PK)
Hours worked-regular time
Chapter 1 Page 4
Hours worked-overtime
Current Gross Pay
ROLE OF INTERNAL AUDIT FUNCTION
Role of Management
SOX requires management of public companies to implement an adequate system of internal controls over their
Chapter 1 Page 5
Role of External Auditor:
The external auditor reviews the organization’s control structure per the COSO internal control model.
Role of Internal Auditor
The IA performs a wide range of activities on behalf of the organization:
including conducting financial audits
For cost reduction and efficiency purposes internal auditors often cooperate with and assist external auditors in
performing aspects of financial audits including tests of controls.
To Whom Should IA Report
Chapter 1 Page 6
The Director of Internal Audits should report to the Board of Directors Audit Committee.
Structure of Audit Committee
The audit committee needs to be reconstituted to be in compliance with SOX.
To be effective:
The audit committee should consist of people who are outsiders (not associated with the families of executive
INTERNAL AUDITOR INDEPENDENCE
Response:
Internal auditor independence implies no subordination of judgment to another and arises from an independent
i. The internal auditor’s independence is not impaired by the preparation of policy statements on internal control.
Chapter 1 Page 7
ii. Auditor independence is impaired to the extent that the internal auditor is involved in the design and installation of
iii. The internal auditor’s independence is impaired by reconciling bank statements. To maintain independence, the
iv. Objectivity is not impaired in the review of the budget for relevance and reasonableness if the internal auditor
v. The preparation of complex accounting transactions will materially impair the internal auditor’s objectivity by
involving the auditor in day-to-day operations.
Chapter 1 Page 8
