1. DISCUSSION QUESTIONS
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1. Since general ledger clerks have access to the general ledger, they should not
have access to the journal vouchers in the source departments. If these journal
vouchers are acquired by the general ledger clerks, or anyone else with
2. The data comes from the various transaction processing departments.
Specifically, the cash receipts journal, sales journal, purchases journal, and any
another miscellaneous transactions are the various sources of data which are
3. If journal vouchers are missing, or are fabricated, or are erroneous, and
information is misrepresented in the financial statements, then any decisions
made by investors and governmental agencies is based upon bad data. If an
investor provides capital to a firm based upon its financial statements and
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4. Ultimately, the purpose is to be able to take any account on the financial
statement and trace back to the source documents which comprise the
number. However, the audit trail must also be examined from the other
direction to ensure that all transactions end up being reflected in the financial
5. In batch GL systems, transaction processing applications summarize and
capture transactions in journal vouchers where they are held, reviewed, and
later posted to the GL. In such systems, journal vouchers are the authority and
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6. If the standards are unrealistic or outdated, then variances will be reported
constantly and probably ignored. For example, if 5 ounces of a raw material is
set as the standard based upon past data, but the most realistic amount to be
used for each unit is actually 5.25 ounces (the unit specifications have changed
slightly), then the exception reports will constantly show a variance since the
7. Audit implications include:
Taxonomy Creation. Taxonomy may be generated incorrectly, resulting in an
incorrect mapping between data and taxonomy elements that could result in material
Validation of Instance Documents. As noted, once the mapping is complete and tags
have been stored in the internal database, XBRL instance documents (reports) can
Audit Scope and Timeframe. Currently, auditors are responsible for printed financial
statements and other materials associated with the statements. What will be the
impact on the scope of auditor responsibility as a consequence of real-time
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8. Although both use tags (words that are bracketed by the symbols < and >) and
attributes such as Doe, John, the way in which these tags and attributes are used
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9. Much of the data used for middle and higher level decision making must come
from data sources outside of the traditional information systems. Examples of
such data would be marketing data collected by the marketing department,
10. Both types of reports are very important. The scheduled reports are important
for controlling the day-to-day operations. The on-demand reports are very
11. Scheduled reports are prepared according to an established time frame. The
reports contain information in a pre-formatted manner. The multiple users
become accustomed to the reports and are able to focus on the information
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12. An example where timeliness is more important in accounting information
systems occurs for year-end accruals. An exact number regarding the cost of
utilities may not be available for three or four weeks, yet the accrued liability
13. Downward flows represent goals for managers such as budget goals. The
goals are used to direct and motivate managers. Upward flows report
14. The verification model uses a drill-down technique to either verify or reject a
user’s hypothesis. The discovery model uses data mining to discover
previously unknown but important information that is hidden within the data.
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15. A data warehouse is a relational database management system that has been
designed specifically to meet the needs of data mining. The warehouse is a
central location that contains operational data about current events (within the
past 24 hours) as well as archived operational data relating to events that have
16. The production department is held accountable for controllable costs which
relate to the production demand. Profit centers are not appropriate since they
include non-controllable items and measure the performance by the profit
17. A performance measure based solely upon quantity of production output can
adversely affect the quality of the product. The foreman may push for
production of more units, while disregarding the quality. Further, in an attempt
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18. Managers may choose not to replace equipment when it needs to be replaced,
in order to reduce the asset base, thus decreasing the denominator in the ROI
figure. Not replacing old equipment may cause a firm to produce less efficiently,
and actually in the long-run drive up raw materials scrap cost and labor costs
due to reworks. These manipulations are not good for the firm in the long-run
19. Too much information can cause the user to spend unproductive and
unnecessary time weeding through reports to get to the relevant components.
2. MULTIPLE CHOICE
1. B
2. A
