UNIVERSITY OF TASMANIA
EXAMINATIONS FOR DEGREES AND DIPLOMAS
OCTOBER – NOVEMBER 2016
BFA221 Accounting Information Systems
First and Only Paper
Examiner: Heinrich Oosthuizen
Time Allowed: THREE (3) hours
Reading Time: FIFTEEN (15) minutes
Instructions:
- Write your student number clearly at the top of this examination paper.
- Answer ALL questions.
- Question 3 offers some choices within it.
- Start your answer to each of the questions on a NEW page of your examination booklet.
- When you have finished the examination, place the examination paper inside your examination answer booklet. Do not remove any part of the examination paper from the examination room.
SECTION A
Question 1
Read the case study below and consider Figure 1. Then answer the two questions beneath the case study.
Alden Ltd has hired you to review its system for the purchase, receipt, storage, and issuance of raw materials. You observed the following:
Raw materials, which consist mainly of high-cost electronic components, are kept in a locked storeroom. Storeroom personnel include a supervisor and four clerks. Raw materials are removed from the storeroom only upon written or oral authorisation by a production supervisor.
No perpetual inventory records are kept; hence, the storeroom clerks do not keep records for goods received or issued. To compensate, the storeroom clerks perform a physical inventory count each month.
After the physical count, the storeroom supervisor matches quantities on hand against a predetermined reorder level. If the count is below the reorder level, the supervisor enters the part number on a materials requisition list that is sent to the accounts payable clerk. The accounts payable clerk prepares a purchase order for each item on the list and mails it to the supplier from whom the part was last purchased.
The storeroom clerks receive the ordered materials upon their arrival. The clerks count all items and verify that the counts agree with the quantities on the bill of lading. The bill of lading is then initialled, dated, and filed in the storeroom to serve as a receiving report.
Required
a Illustrate how the controls in the purchasing and inventory system described can be improved.
As a guide, write about a page and a half.
[15 marks]
b Explain how you would implement an integrated ERP control system using the latest developments in IT to implement the recommendations made in part a. (CPA Examination, adapted).
As a guide, write about one page.
[10 marks]
[Total for Question 1 = 25 marks]
Figure 1 Purchasing and inventory system for Alden Limited. Case study adapted from Romney, M., Steinbart, P., Mula, J., McNamara, R. and Tonkin, T. (2013) Accounting Information Systems, Pearson, Sydney, Australia.
Question 2
Modifying information and performing data analysis is part and parcel of any AIS. These processes facilitate management decision making. One of the roles of an accountant is to provide management with useful information. These analytical AIS processes are therefore important to produce useful information and should be understood by accountants.
From an accountant’s perspective, consider the information and data analyis processes below, and answer the related questions.
Required
- Most accountants are involved with databases through data entry, data processing querying or auditing. Explain the benefits of databases to organisations. What role can accountants play to ensure database integrity?
As a guide, write about one-half of a page.
[5 marks]
- End-user computing (EUC) allows users, rather than IS departments, to decide what systems should be developed and what information is important. This offers the advantage of timely, user-friendly and versatile systems. However, there are significant drawbacks to EUC computing. Identify the main disadvantages of EUC and explain how it may be possible for accountants to achieve a balance between EUC and IS control.
As a guide, write about one-half of a page.
[5 marks]
c The outsourcing of IT processes was initially driven by the need of organisations to acquire more efficient, standardised applications such as payroll and accounting. The advent of customer orders’ placed through social media platforms such as Facebook by using mobile devices such as smart phones, will lead to a demand for a variety of new applications, most of which will be developed by 3rd party vendors. Bearing in mind the risk of outsourcing failure, what are the advantages and disadvantages of outsourcing the development of new business applications?
As a guide, write about a page.
[10 marks]
d The 2016 Australian Bureau of Statistics (ABS) online census service was crippled by either a DoS-attack or a buffer-overflow-attack. Identify, and discuss, these techniques used by hackers to attack systems. Explain the aim of these attacks and discuss possible consequences to the ABS?
As a guide, write about a page.
[10 marks]
[Total for Question 2 = 30 marks]
Question 3
The following common accounting information systems (AIS)-related terms and approaches are presented. Choose four of the following pairs. For each pair, illustrate how these terms and approaches are used in AIS. Your answer must clearly illustrate the differences and similarities between the chosen terms and approaches.
As a guide, write a total of around half a page for each of the four (4) pairs considered.
- COBIT framework and COSO’s internal control framework
- Lapping and kiting
- MRP and JIT
- Symmetric and asymmetric encryption
- XML and XBRL
- Computer input fraud and computer processing fraud
- EFT and EDI
[5 marks each]
[Total for Question 3 = 20 marks]
SECTION B – Multiple Choice Questions
This section contains FIFTEEN (15) multiple-choice questions worth a total of 30 marks. All questions are worth equal marks. Select the BEST answer in each case by circling the appropriate letter on the attached fold out answer sheet. You will not be penalised for an incorrect answer. Write your student number on the answer sheet where indicated and place the complete examination paper inside your examination answer booklet BEFORE leaving the examination room.
1 Data differ from information in which way?
A data is output and information is input.
B information is output and data are input.
C data is meaningful bits of information.
D there is no difference.
2 Recording and processing information about a transaction at the time it takes place is referred to as which of the following?
A batch processing
B online, real-time processing
C captured transaction processing
D chart of accounts processing
3 Which of the following statements is FALSE?
A A flowchart is an analytical technique used to describe some aspect of an information system in a clear, concise and logical manner.
B Flowcharts use a standard set of symbols to describe pictorially the flow of documents and data through a system.
C Flowcharts are easy to prepare and revise when the designer utilises a flowcharting software package.
D A system flowchart is a narrative representation of an information system.
4 The data view that shows how the user or programmer conceptually organises and understands a databse is the
A record layout view
B logical view
C physical view
D None of the above
5 What type of internal controls finds the problem before it occurs?
A detective controls
B preventive controls
C general controls
D corrective controls
6 Aging of accounts receivable is possible because of the use of:
A sales order date
B picking ticket date
C invoice date
D bill of lading date
7 The document used to request that an item be ordered is the:
A purchase order
B purchase requisition
C purchase advice
D purchase auction
8 Internal control problems would be likely to result if a company’s payroll department supervisor was also responsible for
A reviewing authorisation forms for new employees
B comparing the payroll register with the batch transmittal data
C Authorising changes in employee pay rates
D Hiring subordinates to work in the payroll department
9 Which of the following represents a method of managing inventory designed to minimise a company’s investment in inventories by scheduling materials to arrive at the time they are needed for production?
A The economic order quantity (EOQ)
B Material resource planning (MRP)
C First-in, first-out (FIFO)
D Just-in-time (JIT)
10 A production planning method that is based on goods being produced based on customer demand is:
A pull manufacturing
B MRP-II
C push manufacturing
D MRP
11 A company’s database contains three types of records: vendors, parts and purchasing. The vendor records include the vendor number, name, address and terms. The parts records include part numbers, name, description and warehouse location. Purchasing records include purchase numbers, vendor numbers, part numbers and quantity. What structure of database is being used?
A Network
B Hierarchical
C Relational
D Sequential
12 A retail store chain is developing a new integrated computer system for sales and inventories in its store locations. Which of the following implementation methods would involve the most risk?
A Direct conversion
B Phase-in implementation
C Parallel conversion
D Pilot conversion
- An IT governance committee has several responsibilities. Which of the following is least likely to be the responsibility of the IT governance committee?
- Develop and maintain the database and ensure adequate controls over the database
- Develop, monitor and review security policies
- Oversee and prioritise changes to IT systems
- Align IT investments to business strategy
14 Which control total is the total of field values that are added for control purposes, but not added for any other purpose?
A Record count
B Field total
C Batch total
D Hash total
15 Which type of audit risk involves the chance that there will be a material risk when the controls are absent?
A external risk
B inherent risk
C internal risk
D control riskAccountants have some form of use of the AIS in all but which role?
Student Number: ________________________
BFA221 Accounting Information Systems
SECTION B– ANSWER SHEET
Circle the letter that BEST answers the question. You will not be penalised for an incorrect answer. Write your student number on the answer sheet where indicated and place the complete examination paper inside your examination answer booklet BEFORE leaving the examination room.
1 A B C D 9 A B C D
2 A B C D 10 A B C D
3 A B C D 11 A B C D
4 A B C D 12 A B C D
5 A B C D 13 A B C D
6 A B C D 14 A B C D
7 A B C D 15 A B C D
8 A B C D