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Accounting Information Systems for Customer Payments

1. For each of the scenarios listed below, and using Computer Controls for Organizations and Accounting Information Systems, identify the appropriate control(s) that would have prevented each one from happening.

A. Working through the main control console, the night-shift computer operator made a change in a payroll program to alter his pay rate.

B. A customer payment recorded on a remittance advice as $55.05 was entered into the computer as $550.50.

C. A new program to process accounts receivable was unreliable and would not handle common exceptions. The programmer who wrote the program recently quit the organization because he was repeatedly asked to document this program (which he never did do).

D. The current payroll master tape file was loaded incorrectly mounted as the output for a accounts receivable update and was thus overwritten.

E. A weekly payroll check issued to an hourly employee was based on 96 hours rather than 46 that she really worked.

F. The master inventory file, contained on a removable disk, was destroyed by a small fire next to the area where it was stored. The company had to take a special complete inventory to reestablish the file.

G. The magnetic tape containing accounts receivable transactions could not be located. A data processing supervisor said that its label could have been removed thus making it available for use in other processing.

H. In preparing payroll checks, the computer skipped 10 out of 550 checks that should have been processed. The error was not detected until the checks were distributed and the employees complained.

I. A sales order document was coded with an invalid customer account code (seven digits rather than eight). The error was not detected until the updating run, when it was found that there was no such account to which the transaction could be posted.

J. During data entry of customer payments, the digit 0 in a payment of $123.40 was mistakenly entered as the letter O. As a result, the transaction was not posted.

K. A programmer entered a special routine in the program that calculates interest payments on customer accounts one evening after work. Her routine summed the fraction of a penny of each customer's interest, which otherwise would be rounded off, and posted it to her own account at the bank.

L. A salesman entering a customer order from iPad entered an incorrect but valid product number. As a result, the customer received a delivery of
100,000 pounds of industrial salt rather than industrial sugar.

M. A customer called to inquire as to why he received a statement for 5 cents amount due when postage cost was 42 cents.

Solution Preview

1. For each of the scenarios listed below, and using Computer Controls for Organizations and Accounting Information Systems, identify the appropriate control(s) that would have prevented each one from happening.

A. Working through the main control console, the night-shift computer operator made a change in a payroll program to alter his pay rate.
Appropriate controls
Implement access controls so that only people authorised to access the payroll program can have access to such programs.
1. Implement password access to payroll programs
2. Implement no-access to computer operator to the payroll source code
3. Implement report on activity log where unauthorised activity is reviewed and reported

B. A customer payment recorded on a remittance advice as $55.05 was entered into the computer as $550.50.
Appropriate controls: Introduce a batch control to match totals at the end of batch process.

C. A new program to process accounts receivable was unreliable and would not handle common exceptions. The programmer who wrote the program recently quit the organization because he was repeatedly asked to document this program (which he never did do).
Appropriate controls:
1. Enforce documentation for all programs and review these documents for completeness
2. Implement a file library which contains the summary of what each file is supposed to ...

Solution Summary

The accounting information systems for customer payments are determined.

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