ACCOUNTING INFORMATION SYSTEMS

ACTIVITY

Name: ANGA, BREMT CLOYD R.

Course and Year: BSA 2A

Time Schedule: 12:00 – 1:30

Date Submitted: NOVEMBER 16, 2020

PREPARED BY: SIATON, 2020

Answer all the questions. Explain and do not limit your answers. Use the materials uploaded in the LMS.
Do not forget to include the references, if you have acquired your answers from other sources.

QUESTIONS:

1. In the basic technology system, the inventory control clerk reviews the purchase
requisition file to identify inventory needs. Explain how this file is created.

2. Discuss the importance of supervision controls in the receiving department and the
reasons behind blind fields on the receiving report.

3. The level of day-to day department activity in advance technology systems is

significantly lower than that of basic technology systems. Are these departments no
longer necessary?

4. What purpose/s does multilevel security control play in an integrated

purchases/cash disbursements system?

5. How important it is to know the basic model for purchase and cash disbursements
system?

____________________________________________________________________________________

EXPLANATIONS:

1. The file is created once the inventory level touches down a significant level or a
predetermined reorder point as orchestrated by the entity’s management. Afterwards,
this triggers the preparation of purchase requisition to be sent to the prepare purchase
order function, initiating the purchase cycle.

Specifically, the cycle begins when the assigned inventory control clerk prints copy of
purchase requisitions by accessing the purchase requisition file on the entity’s
computer system. Let us be reminded that this file was created during the sales activity
when the inventories dropped to their predetermined reorder point, since they are
being bought thus there is a need to replenish if the entity wishes or sees reasonable
profit from it. One copy of the requisition will be delivered to the purchasing
department, and one copy is placed in the physical copy open purchase requisition file.

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PREPARED BY: SIATON, 2020

Take note that to provide proper authorization control, segregating the inventory
control department from the purchasing department, which executes the purchase
transaction, must be procured.

2 . The convenient moment to compromise the company’s financial assets and affecting
its financial standing reclines in the receiving department. Withholding the previous
iteration, it is of high significance to enter a supervision body in such department.

The blind copy would compel the receiving clerks to adequately count and confirm the
items inflows before signing the bill of lading. This is to hold them accountable and
mitigate instances of fraud by manipulating the detailed source documents. Hence,
the above stanchions the notion of blind copy.

Following to that, cash disbursements and accounts payable are then set up, which also
serve as the basis of correct information and receipts. Fraudulent behavior, such as
manipulation or fabrication, is as extremely important on tracing inventory and
recording it at correct levels. Any fabrication can impact the financial standing of the
business entirely.

3. No, they are necessary. The significantly low level of day-to-day department activity
is a sign of efficiency, not uselessness. Embedding advance technology that could
replicate the clerical work of a typical human in a much walloping rate not only allows
the business to downsize, but also to focus more on decision-making and analysis.

However, this does not mean these departments should not be separated. Separation
of duty must remain intact in as it is critical that companies keep the necessary areas
of business discrete from each other to avoid misrepresentation from fraud.

Even if the technological advancement allows the automatic three way match, those
updating the essential information need to be independent of one another to uphold
the integrity of the match intact.

4. It facilitates the segregation of duties, which is an essential internal control feature.

This is usually procured by limiting access to an information or updating it in

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PREPARED BY: SIATON, 2020

accordance to one’s rank, role, or position as may deemed reasonable by the

management in preventing fraud and strengthening internal control.

Again, separating the completely independent roles of purchasing, receiving, accounts

payable, cash disbursement and general ledger access avoids serious internal control
flaws that incites fraud.

5. It is in an utmost importance to know the basic model for purchase and cash
disbursements system as one’s understanding of this allows comprehensions to risks
associated with purchases and cash disbursement activities and be familiar with the
controls that reduce these risks. Hence, it mitigates the risk from these risk convenient
areas of the business.

Furthermore, being are of the operational features of the basic model is a precursor
to the in-depth understanding to the complex and varying structures of purchase and
cash disbursement system. We can easily trace who is accountable and responsible, as
well as, trace the discrepancies efficiently and effectively to maximize the luxurious
time in real of business.

References:

Hall, J. (2019). Accounting Information Systems (10th ed.). Boston, Massachusetts:

Cengage Learning.

Shaw, A. (2016). AIS Chpt 5 Discussion. Retrieved on November 16, 2020 on

https://www.coursehero.com/u/file/14448300/AIS-Chpt-5-
Discussion/?justUnlocked=1#question

Boudreaux, K. (2019). A303:Chapter 5. Retrieved on November 16, 2020 on

https://quizlet.com/437951534/a303chapter-5-flash-cards/