Week 7 Homework Questions 1) This question is based on Tom's Trailer Sales case included at the end of this assignment. The text lists nine IT duties roles (Figure 12-2)[footnoteRef:1]. Without adding any new employees but including Carla, describe how you would segregate these duties for Tom. Tom does not have the resources to develop an MIS internally and will need to outsource part of the process to Carla. Your plan should provide as much control as possible while being practical for an operation as small as Tom's Trailer Sales. You will not be able to segregate all the duties completely for a firm as small as Tom's. In addition, you need to consider how Tom operates and realize that all the employees run the computer system for some tasks. [1: Chief Information Officer or IT Manager, Security Administrator, Systems Analyst, Programmer, Computer Operations, Librarian, Network Administrator, Data Input/Output Control, and Database Administrator.] 1 Person Duties Reason Duties are assigned to this person Carla Tom Bookkeeper Other Staff members 2) Segregation of duties is only one form of controls over information production and distribution. Describe four additional general controls related to information systems that Tom should consider implementing and explain why you would recommend the control. Do not include any application controls. Control Description Purpose 3) The following are several multiple choice questions adapted from the CPA exam that cover types of audit tests. For each question, selected the best answer and then explain why it is better than all the alternatives. Your explanations should address all the possible alternatives presented in the question. a) The auditor looks for an indication on duplicate sales invoices to see whether the accuracy of invoices has been verified. This is an example of i) a test of details of balances. ii) a test of control. iii) a substantive test of transactions iv) both a test of control and a substantive test of transactions Answer: Explanation: b) A conceptually logical approach to the auditor's evaluation of internal controls consists of the following four steps: I. Determining the internal controls that should prevent or detect errors or fraud II. Identifying control deficiencies to determine their effect on the nature, timing, or extent of auditing procedures to be applied and suggestions to be made to the client. III. Determining whether the necessary internal control procedures and are prescribed and being followed satisfactorily. IV. Considering the types of errors and fraud that can occur. What should be the order in which these four steps are performed? i) I, II, III, IV ii) I, III, IV, II iii) III, IV, I, II iv) IV, I, III, II Answer: Explanation: 4) The following are several multiple choice questions adapted from the CPA exam that cover tests of controls. For each question, selected the best answer and then explain why it is better.