Chapter 17 Homework The Eureka Company Requests Bids From Vendors

Unlock access to all the studying documents.

View Full Document

Accounting Information Systems, 10e 1

SOLUTIONS FOR CHAPTER 17

Each end-of-chapter question in the Solutions Manual is tagged to correspond with AACSB, AICPA

and CISA standards, allowing professors to more easily manage the task of reporting outcomes to these

professional and accrediting bodies. Please see the corresponding spreadsheet file for the tagging

information.

Discussion Questions

DQ 17-1 Discuss several factors affecting (negatively or positively) the achievement of

systems development objectives.

ANS. AIS acquisition and development objectives include acquiring/developing an AIS

that satisfies an organization’s strategic informational and operational needs in an

efficient and effective manner. Possible factors affecting achievement of this

include the following:

a. Lack of senior management support. Management controls the budget for the

acquisition project and directs the priorities for time, effort, and money.

2 Solutions for Chapter 17

DQ 17-2 How might the absence of an organization’s strategic plan for the information

system affect the conduct of a preliminary survey? Hint: Discuss the potential

difficulties of making preliminary survey decisions in the absence of each of the

strategic plan components.

ANS. The purpose of conducting a system survey is to evaluate the importance and need

for the potential system—individually and relative to other projects—and to

DQ 17-3 In doing a preliminary survey for the proposed automation of the payroll system

of Grant Black, Inc, the analyst in charge reached the tentative conclusion that

Ron Clay, the popular cashier with more than 30 years of company service, will

be displaced and perhaps asked to consider early retirement. Discuss how this

scenario relates to the concept of “operational feasibility” presented in this

chapter. Discuss the potential impact on the success of the new disbursements

system.

ANS. An information system is more than hardware, software, and policies. The users

of the system are a very important component, and their attitudes can have an

DQ 17-4 “Choosing among renting, leasing, and purchasing an AIS is strictly a financial

decision and should be done by the finance staff.” Do you agree? Discuss fully.

ANS. In addition to the obvious financial differences among these choices, other

considerations include the following:

• Flexibility

Accounting Information Systems, 10e 3

DQ 17-5 “A vendor would never propose a system that would not meet an organization’s

needs. Therefore, external validation of vendor proposals is not really needed.”

Do you agree? Discuss fully.

ANS. A vendor might submit a proposal that did not meet an organization’s needs in

many situations. For example:

DQ 17-6 “As long as we plan a systems development project and carry out the project in

an orderly manner, we don’t need a formal, documented systems development

methodology.” Do you agree? Discuss fully.

ANS. In one sense, the statement is correct. However, a systems development

methodology offers some features that may improve the development effort:

DQ 17-7 One of the tasks of systems analysis is to choose and justify one of the alternative

design solutions. Would it not be more effective, efficient, and practical for the

systems analyst to pass along all alternative design solutions to top management

(perhaps to the IT steering committee), together with arguments for and against

each alternative, and let top management choose one of them? After all, top

management has a broad perspective that the systems analyst does not possess.

Discuss fully.

ANS. Note: The following answer assumes that the information technology steering

committee (SC) is the top management body to which the systems analyst (SA)

makes her recommendations.

4 Solutions for Chapter 17

• Recall from Chapter 8 in the textbook that the SC generally is composed of

executives from the organization’s major functional areas. This top-level

management committee should be concerned only with broad, global issues

involving resource allocation, goal congruence, and progress in achieving the

firm’s strategic plan. The members have neither the time nor, in general, the

technical expertise to immerse themselves in the details of alternative designs.

For the detailed evaluation of technical, operational, and economic feasibility,

they must delegate responsibility to the experts (i.e., users and SAs), who will

filter the information that is reported upward to the SC.

• Typically, the analysis team does perform a cost/effectiveness study for more

than one alternative. The systems analysis document that is submitted to the

SC might well contain comparative summaries of several alternatives.

DQ 17-8 Discuss the decisions that must be made prior to initiating structured systems

analysis. Indicate how the systems survey contributed to the decision.

ANS. A review of the systems survey goals helps us answer this question. The purpose

of the systems survey was to determine the existence, nature, and scope of the

Accounting Information Systems, 10e 5

DQ 17-9 Indicate who you would include on a systems analysis project team in each of the

following situations, and discuss fully the reasons why you would include each

member you suggest.

ANS. Note: As is the case with many open-ended discussion questions such as this one,

we can only suggest some possibilities in the solution that follows. Obviously,

ANS. In addition to a systems analyst from the information systems department, a

representative from each of the following departments is a likely candidate for

inclusion on the project team. Each department or function is represented because

it has different information needs in respect to the student:

• Admissions

• Student affairs (we assume that this department would embody such

nonacademic student activities as campus housing, meal plans, student

counseling, campus security, and legal)

ANS. Note: This answer assumes that the customer is an individual rather than a

business. However, for a business, some of the departments would be similar (i.e.,

commercial lending rather than mortgage lending for the individual).

6 Solutions for Chapter 17

department is represented because it has different (but sometimes overlapping)

information needs in respect to the customer:

• Depositor accounts (i.e., checking accounts, savings accounts, including

preparing and mailing periodic statements of account activity)

ANS. In addition to a systems analyst from the information systems department, we

would include the following individuals/departments (or their representatives) on

the project team. We include each team member because he interacts either

directly or indirectly with the materials requirements planning system.

• Master production scheduler

DQ 17-10 “If the results of the cost/benefit analysis do not agree with those of the

effectiveness analysis, there is probably no difference among the alternatives.”

Discuss fully.

ANS. The cost/benefit analysis deals with questions of efficiency, addressing only those

factors on which a monetary value can be placed. The end result is a ranking of

DQ 17-11 Discuss why the knowledge of documentation procedures (such as DFDs and

systems flowcharts) is important to the acquisition/development process.

Accounting Information Systems, 10e 7

ANS. It is nearly impossible to understand an existing system without a visual

representation of the system. Typically, when moving to a new system, it is not

enhanced when employees see how their jobs fit into the overall system.

DQ 17-12 The Eureka Company requests bids from vendors for specific configurations

rather than bids for general performance objectives because it “knows what it

needs.” Discuss fully.

ANS. Even if an organization knows what it needs, requests for specific configurations

sacrifice the following advantages of using an RFP with performance objectives:

DQ 17-13 “An organization puts itself at a disadvantage by asking only one vendor (versus

asking several vendors) for a proposal for hardware or software.” Do you agree?

Discuss fully.

ANS. In general, this statement is true. With only one vendor proposal an organization

cannot do the following:

• Obtain much help in generating ideas regarding possible solutions to the

information processing problem

8 Solutions for Chapter 17

DQ 17-14 Compare and contrast the efficiency and effectiveness of an in-house data center,

an arrangement with an outsourcing vendor to own and operate a data center for

you, a service bureau, an applications service provider (ASP),Business Process

Outsourcing (BPO) and software as a service (SaaS).

ANS. In general, a data center over which we have relatively more control will be more

effective at meeting our needs. For example, a decentralized data center will be

designed and operated to meet the needs of the local (decentralized) managers,

A service bureau may be as efficient as a centralized data center because it can

distribute the costs for certain hardware, software, and personnel to many users.

For example, the data center will only need one site license for its systems

software. That software can then be used for multiple clients, and the cost for that

software can be factored into the prices charged to those clients. Each client then

pays only a fraction of the total cost. However, the service bureau may not be

tailored to any particular user’s needs.

An application service provider combines some of the positive and negative

qualities of the service bureau and the outsourced data center; in particular, while

the ASP can provide some of the economies of scale advantages of BPOs, their

primary advantage is in that they can employ highly skilled experts in the service

provided. As with a service bureau, variable pricing often applies; that is, you pay

for only what you use. Like the service bureau, the services may not be tailored to

the particular needs of the acquiring organization.

Accounting Information Systems, 10e 9

DQ 17-15 Assume that you are the manager of an accounts receivable department. How

might you be involved in system testing? Discuss fully.

ANS. As a user, the accounts receivable manager can be involved in a system test, an

acceptance test, and an operations or environmental test. The manager’s

involvement might be as follows:

• Determine that the system accomplishes all user requirements. For example,

does the system produce required outputs such as invoices and statements?

DQ 17-16 a. Which, if any, of the categories of application system maintenance—

corrective, perfective, or adaptive—presents the greatest risk from a control

standpoint? Explain.

ANS. Emergency corrective fixes are normally conducted on the spot when a problem

arises. Unless these systems changes are later reviewed for accuracy and

ANS. Among the control plans from Chapter 8 that might be mentioned are the

following:

10 Solutions for Chapter 17

• Personnel control plans can ensure an adequate supply of qualified systems

development staff, thereby reducing the need for systems maintenance and

improving the quality of systems maintenance activities.

DQ 17-17 Refer to the typical contents of a project completion report. Which parts of the

report would be useful in performing a post-implementation review? Discuss

fully.

ANS. The goals of the post-implementation review can guide us in answering this

question. For example:

Post-Implementation Review Goals

Elements of the Project Completion Report

Determine user satisfaction.

Summary of requirements satisfied.

Test results.

Accounting Information Systems, 10e 11

DQ 17-18 Periodically, students comment that they are studying to be an accountant, not an

IS worker. Discuss the flaw in such reasoning.

ANS. In today’s environment, it is not possible to be an accountant without working

with computers. Per IFAC Guideline #11, at a minimum, every accountant will be

Short Problems

SP 17-1 ANS.

A. Cost per workstation = Monthly maintenance cost / maximum workstations.

Correct Answer: Option C: $448 / 32 = $14 per workstation

Option A: $422/8 = $52.75

Option B: $515/32 = $16.10

Option C: 6/32 * 60 = 11.25

SP 17-2

12 Solutions for Chapter 17

a. Improved competitive advantage.

ANS. A system can provide improved competitive advantage in any number of ways.

Benefits may be tangible or intangible, direct or indirect, depending on the

b. Decreased worker productivity.

ANS. Decreased worker productivity is an intangible, indirect cost. Determining one

precise cause for a decline is difficult—and even more difficult to quantify. A

rough measure may be achieved by comparing trends in output and labor costs

c. Increased customer support in the form of improved product service and

maintenance.

ANS. A system may allow for more efficient scheduling of preventive maintenance

routines on goods leased to customers and better routing of personnel for

d. Increased customer support in the form of more timely and accurate responses

to customer inquiries.

Accounting Information Systems, 10e 13

ANS. A system that gives access to information in a manner that improves the quality

and timeliness of responses to customer inquiries should increase customer

e. Improved management decision making.

ANS. How much revenues grow specifically due to better decision making is not

certain. It could be argued that any increase in revenues comes from better

decisions, but we can also say that improved market conditions and other forces

f. Deteriorated vendor relations, as evidenced by longer lead times, poorer

quality goods, and more frequent backorder situations.

ANS. Costs associated with longer lead times, poorer quality goods, and more frequent

backorders are indirect costs that could be either tangible or intangible. The costs

g. Deteriorated vendor relations, as evidenced by more stringent credit terms

offered by vendors.