Chapter 5 - Control and Information Systems

Question 1

Internal contol system objectives/benefits

Answer 1

• Reliability of financial statements
• Efficiency/Effectiveness of operations
• Compliance with laws + regulation

Question 2

2 key elements of internal control systems

Answer 2

• Control environment - management sttitude and philosophy
  
  • org structure, audit function?, culture
• Control procedures - polices/procedures
  
  • e.g. time sheets, inventory count

Question 3

Control Procedures

(SOAPSPAM)

Answer 3

• Supervision of subordinated
• Organisation - structure, autyonomy, centralised?
• Authorisation e.g. POs, overtime
• Personnel - recruitment, training
• Segregation of duties
• Physical - lock, password
• Arithmentic and accounting - bank rec, VAT return
• Management
• Internal audit
• Audit committee

Question 4

Open / Closed Systems

Answer 4

• Open system - interacts with other systems/outside environment
• Closed system - little / no interaction

Question 5

Costs of |nformation

Answer 5

• Direct data capture
• Processing costs
• Indirect costs - ‘info overload’, staff could be used elsewhere

Question 6

Systems Development Life Cycle (SDLC)

Answer 6

• Planning/Feasibility
• Analysis
• Design
• Development - dpcument changes, training
• Implementation - e.g. direct/parallel, testing
• Maintenance - post implementation review

Question 7

2 types of system controls

Answer 7

• General - password, virus, physical, training, recruitment
• Application - validation, verification

Question 8

Disaster recovery plan

Answer 8

• Responsibilities
• Priorities
• Backup/standby
• Communication/PR

Question 9

Internal Control Systems

(defn)

Answer 9

The policies/procedures adopted by management to assist in achieving their objectives