Chapter 6 Solutions IT Governance
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Turner/Accounting Information Systems, 2e
Solutions Manual
Chapter 6
Concept Check
1. b
2. b
3. c
4. a
5. d
Discussion Questions
13. (SO 3) At the beginning of the chapter, the real world example of
Allstate’s IT expenditure is mentioned. Prior to the implementation of
their IT governance committee, “whoever spoke the loudest or
whoever had the biggest checkbook,” got to select IT projects. What
14. (SO 1) Why is it important that IT systems be aligned with the business
strategy? IT systems are critical systems that support and enhance
business processes and business strategy. If the IT systems do not
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15. (SO 1) Why would IT governance include measuring the performance
of IT Systems? IT governance is the proper management of IT.
16. (SO 3) What is the difference between technical feasibility and
operational feasibility? Technical feasibility examines whether
technology exists to accomplish the objectives in a proposed IT
17. (SO 3) How does the analysis of feasibilities in the systems planning
phase help to prioritize system changes? A feasibility analysis may
18. (SO 4) What is the advantage of studying the current system within the
systems analysis phase? It is easier to determine how to improve ther
efficiency and effectiveness of a system if that system is well
understood. A study of the current system helps determine which
areas need improvement.
19. (SO 4) During the systems analysis phase, which two data collection
methods help determine user requirements? Interviews and
20. (SO 5) What are the advantages of purchased software when
compared with software developed in-house? Purchased software is
usually less costly, more reliable, and has a shorter implementation
time.
21. (SO 5) Why might it be important follow some or all of the SDLC
phases for purchased software? Even when software is purchased, it
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23. (SO 5)Within the system design phase, what are the purposes of
evaluation and selection? The purpose is to assess the feasibility of
24. (SO 5) Which part of the system design phase would include designing
rows and columns of output reports? Why is it important to design
reports? The detailed design part of system design includes creating
25. (SO 6) What is the purpose of software testing? The purpose is to
uncover problems in the system that would lead to erroneous
accounting data.
26. (SO 6) How are accountants involved in data conversion?
27. (SO 6) Why is a direct cutover conversion risky? It is risky because
28. (SO 6) Why is parallel conversion costly? It consumes more time and
money because it requires running two systems at the same time.
29. (SO 6) Why is user acceptance important? The project team is more
likely to solicit and use feedback from users if they know that users
must sign off on the new system. In other words, the project team
cannot say their job is finished until the user sign off occurs.
30. (SO 6) Why is post-implementation review undertaken? It is
31. (SO 8) How does the SDLC serve as an internal control? It is an
32. (SO 9) What ethical obligations do employees have as IT systems are
revised? Employees should make an honest effort to participate as
requested in the SDLC, learn new system processes that result, and
properly use the new systems and processes.
Chapter 6 Solutions IT Governance
Brief Exercises
33. (SO 1) Describe the role that the Board of Directors should play in IT
governance. The board must oversee all aspects of IT within the
34. (SO 3, 5) Two feasibility studies occur during the SDLC: one during
systems planning, and one during systems design. Describe the
differences between these two feasibility studies. In the systems
35. (SO 4) There are four methods of data collection used in the study of
the current system: observation, documentation review, interviews, and
questionnaires. Compare and contrast these four methods. In
36. (SO 4) Describe the purpose of Business Process Reengineering
during the System Design phase. During the system design phase,
the changes inherent in a new IT system may require changes in the
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37. (SO 6) There are four methods of system conversion: parallel, direct
cutover, pilot, and phase-in. Describe these four methods and how
they differ. A parallel conversion is the operation of both the old
system and the new system for a limited period of time. A direct
38. (SO 7) Operation and maintenance is the longest and costliest part of
the SDLC. Explain why this is true. When a company has completed
39. (SO 7) Describe how IT performance reports are important in IT
governance. Regular monitoring of IT systems is necessary to ensure
40. (SO 9) What is the underlying purpose of the restrictions on CPA firms
in Section 201 of the Sarbanes Oxley Act? These restrictions are
intended to increase the independence of CPA firms that provide audit
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Problems
41. (SO 1) Mega Corporation just became a public corporation when
shares of stock were sold to the public three months ago. A new board
of directors has been appointed to govern the corporation. Assume
that you will be giving a presentation to the board members on their
responsibilities for IT systems. Write a report that could be delivered to
the board.
The board of directors of a company has a set of very important
* Align IT strategy with the business strategy
* Cascade strategy and goals down to lower levels of the organization
* Provide structures that facilitate implementation of strategy and goals
The more detailed activities needed to carry out these board
responsibilities are as follows:
* Articulate and communicate long-term strategy
* Stay aware of latest developments in IT
* Insist that IT be a regular agenda item at board meetings
* Stay aware of the company’s investments, and competitors
investments in IT
If the board of directors focuses on these activities, it will help the
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42. (SO 2) Brumarch MultiMedia Stop is a regional retailer of consumer
electronics, with warehouses and stores located in several large cities
in California. The board and top management of Brumarch are
considering updating their accounting, inventory, and retail sales
IT systems are crucial to the success and profitability of Brumarch. To
enhance long-term performance, the company must choose and use
the IT systems that best support the company’s goals and objectives.
To ensure you are selecting and using the most effective IT systems,
you should follow a systematic and formal process to select, design,
and implement IT systems. A failure to follow a systematic and formal
process in selecting and implementing IT systems is likely to lead to a
mismatch between Brumarch’s strategic objectives and the capabilities
of its IT systems.
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The phases of the SDLC are: systems planning; systems analysis;
systems design; systems implementation; and operation and
maintenance. These phases occur in the sequence given as a planned
and controlled approach to implementing new IT systems. The
following are brief descriptions of each of these phases.
Systems analysis is the study of the current IT system to determine its
strengths and weakness, and to get user feedback about the needs in
a new IT system.
Systems design is the creation of the system that meets user needs as
and improves the weaknesses of the old IT system. In other words,
the data collected and analyzed in the systems analysis phase will
guide the design of the new IT system.
43. (SO 4) Assume that you are the project team manager that is engaged
in a systems analysis. The company is a large, national retailer with
several stores and warehouses located throughout the United States.
The corporate headquarters are in Atlanta, and all major accounting
takes place at the corporate headquarters. Describe how you would
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Interviews and questionnaires both solicit feedback from users. Due to
the number of stores and warehouses, it would be more effective to
send surveys to these locations for certain users to complete. At the
corporate headquarters, it would be possible to use both interviews
and questionnaires. Because of the time consuming nature of
interviews, they would be used on the smaller set of managers who
use the IT system. The questionnaires would be used to survey the
larger group of users who are not managers.
44. (SO 5) CEEMCO Corp. is a small, privately owned manufacturing
company in Cincinnati. CEEMCO manufactures custom products as
well as store display products to sell to other companies such as
retailers. Using an Internet search engine, do a search using the
search terms “CEEMCO” and “Cincinnati.” Examine the kind of
b. Although you do not know much about the company, develop a list of
requirements you believe any accounting software should have for
CEEMCO to consider the software as a viable alternative. Since it
produces many different categories of products (store displays, metal
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accounts payable, and general ledger. It is not possible to determine
whether CEEMCO does its own payroll or whether it outsources
payroll. If payroll is handled in-house, CEEMCO would need a payroll
module. In addition, since the company sells the window-ornament
products online, there would be a need for an e-commerce module.
There is no mention of locations other than two in Cincinnati.
Therefore, there is not likely to be any need for a system that handles
international currencies.
c. Choose an accounting software from your Web search, and describe
why you believe it is a good match for CEEMCO. There is no single
45. (SO 2) There are several approaches to applying an SDLC
methodology to IT system change. Using an Internet search engine,
search for these terms: SDLC, waterfall, JAD (joint application
development), RAD (rapid application development), build and fix, and
spiral model. For example, you might try entering these search terms:
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development time and to increase customer (end user) satisfaction
with the system. It is a method that involves a series of meetings with
the end users or clients that will use the system. These meetings with
end users are called JAD sessions.
The build and fix method is very open-ended and can be very risky.
The method does not have formal steps such as in the waterfall
method. In this method, a system is simply built (code is written) and
then it is fixed until the customer is happy with it.
In the spiral approach, an initial model of the system is developed and
then successively refined with input from end users. The development
of each successive version of the system is undertaken using the
carefully controlled steps in the SDLC waterfall approach. In addition,
after each development of each successive version, a risk assessment
is undertaken to determine whether it is worthwhile to move to the next
development version, or to stop.
46. (SO 9) Tannell Johnson is an accounting software consultant at Fipps
and Associates Consulting. Fipps is a value-added reseller of
accounting software for midsize companies, which normally have
revenue between 50 million and 500 million dollars. One of Johnson’s
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responsibilities is to solicit new client companies and to meet with their
management to recommend the best accounting software system for
them. Midmarket accounting software typically offers several modules
that the client may choose from. For example, not all clients would
need an e-business module for their accounting software. Since part
of Johnson’s compensation is a percentage of software sales and
consulting revenue that he generates, what are the ethical conflicts he
faces when soliciting new clients and recommending software and
software modules?
The nature of a consultant’s business can cause ethical issues to be
raised because there can be a conflict between what is best for the
A consultant could inflate hours worked and/or bill for extra hours not
really worked for that client. In both cases, the consultant is dishonest
and unethical. These fictitious billing acts are also fraudulent and
illegal. The other two ethical issues mentioned above are not as easily
proven to be illegal, but they are unethical. If a consultant feels two
Cases
47. The Electronics Shak is a retailer of electronics such as cell
phones, satellite radios, mp3 players, and high-end LCD and
plasma TVs. The Electronics Shak is a large chain with stores in
strip shopping centers throughout the United States. However,
each store is small, with generally five to six employees and a
manager. Each store sells much less volume than large electronic
retailers such as Best Buy or Circuit City.
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Top management has recently become concerned with what
appears to be an excessive amount of inventory loss (shrinkage) at
many of its stores. At this point, the management team is uncertain
A systems analysis would require a cost benefit analysis and a
feasibility study. Describe steps that The Electronics Shak should
undertake to complete a cost-benefit analysis and a feasibility study
for a new IT system to track inventory.
A feasibility study assesses feasibility in four areas: technical,
operational, economic, and scheduling feasibility. To conduct the
technical feasibility, The Electronics Shak should determine the
kind of inventory management software systems that are available
in the market. For example, some companies are now using Radio
Frequency Identification systems (RFID). These newer technology
systems are the kind of inventory systems that The Electronics
Shak should investigate during the technical feasibility study. The
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operational standpoint.
An examination of economic feasibility is a cost-benefit analysis.
To conduct economic feasibility, The Electronics Shak should
compare cost estimates for each potential system to the monetary
benefits expected for each system. Usually, the monetary benefits
are cost savings that result from efficiencies of the new system.
The Electronics Shak would need to estimate the costs of new
systems and the cost savings of those systems. Those potential
systems in which benefits are greater than costs are more feasible.
48. Schibey International is in the process of purchasing a new
accounting software system. Schibey is in a very specialized
industry, with an international market. The company manufactures
specialized parts to sell to companies in the oil exploration and
drilling industry. The corporate headquarters are in Fort Worth,
Texas, and a significant number – approximately one-half – of their
operations are U.S.-based. They also maintain production plants
and a sales and support staff in most oil-producing countries.
Explain the factors that Schibey should consider when determining
which software system will best suit its needs.
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49. Refer to case 48. Describe which parts of the design phase
Schibey should undertake to ensure that the purchased software
matches with the business processes that it will use.
First, Schibey must determine whether it should employ a
consulting firm to assist in the purchase and implementation of the
software. If a consulting firm is hired, Schibey should interview,
request bids, and select a consulting firm early in the process. The
consulting firm would then assist with all steps in selecting and
implementing the software. If so desired, Schibey could also bring
in a consulting firm for the later stages of the design.
* The price of the software
* The match of the software to user needs