CHAPTER 5: PROBLEM 7.

IT CONTROLS – CENTRALIZED SYSTEM

Using the flowchart for Problem 7, describe the IT application controls that would apply to system. Be
specific as to the role each control plays.

 IT application control is consist of input controls, processing controls and output controls.
 Hard – copy check prepared by the Purchases system was sent to the vendor. The Cash
Disbursement Department should be the one to mail the Hard – copy check to the vendor.
 The on page connector C – Cash Disbursement and Purchasing Personnel are limited in access
assigned to them

CHAPTER 6: PROBLEM 4. FLOWCHART ANALYSIS

Discuss any control weaknesses found in the flowchart for Problem 4. Recommend any necessary
changes.

 Flowchart is a diagram that represent a process or procedures of the transactions in the

organizations. The control weakness found in the flowchart is that the company preparing form
for new employees and terminated employees in which could be result in wasting of time. My
recommendation is to eliminate or remove the Personnel Department.

CHAPTER 6: PROBLEM 9. FIXED ASSET – FRAUD POTENTIAL

Discuss the potential for abuse and fraud in this system. Describe the controls that should be
implemented to reduce the risks.

 The Supervisor of Holder Co. is the one who authorized the disposal of automobile instead of
Fixed Asset Department.
 Supervisor sell the automobile privately.
 The Supervisor also the one who maintain the asset records for vehicles, including routine
maintenance, repairs and mileage information.
 The Supervisor disposed the vehicle when reaches 80,000 miles even if it has a remaining life.

CHAPTER 8: PROBLEM 9. DECISION LEVEL

1. Strategic Planning. Determining the mix of products to manufacture this year.

2. Tactical Planning. Examining whether the number of defective goods manufactured is within a
certain range.
3. Strategic Planning. Expanding a product line overseas.
4. Strategic Planning. Determining the best distribution route.
5. Tactical Planning. Examining whether the cost of raw materials is within a certain range.
6. Managerial Control. Examining whether personnel development cost is rising.
7. Managerial Control. Employing more automated manufacturing this year.
8. Operational Control. Examining whether the amount of scrap materials is acceptable.
9. Strategic Planning. Building a new plant facility.
10. Managerial Control. Examining whether employees attitude are improving.
11. Tactical Planning. Examining whether production levels are within a predicted range.
12. Operational Control. Making a purchasing arrangement with a new supplier.
13. Strategic Planning. Increasing production capabilities this year by purchasing a more efficient
piece of machinery.
14. Operational Control. Closing a plant.