Question

The following common accounting information systems (AIS)-related terms and approaches are presented. Choose four of the following pairs. For each pair, illustrate how these terms and approaches are used in AIS. Your answer must clearly illustrate the differences and similarities between the chosen terms and approaches. As a guide, write a total of around half a page for each of the four (4) pairs considered. a COBIT framework and COSO’s internal control framework b Lapping and kiting c MRP and JIT d Symmetric and asymmetric encryption e XML and XBRL f Computer input fraud and computer processing fraud g EFT and EDI

Answer 1

a. COBIT Framework and COSO:

1. COBIT and COSO have very different functions in organizations while they seem similar. COBIT 5 provides a framework that builds best practice and the controls required in organizations. Whereas COSO directs guides the organizations on how to minimize fraud and establish risk tolerances.
2. COSO - supported by five organizations: Institute of Management Accountants , the American Accounting Association , the American Institute of Certified Public Accountants , the Institute of Internal Auditors and Financial Executives International .COBIT - supported by ISACA, an international professional organization focused on IT governance.
3. Eg: COBIT 5 gives direction to the organizations where to put the electrical systems, plumbing, and then puts up the drywall. This framework is the basis for the COSO plan to be put into action with details that allow organizations to secure the IT environment.

b. Laping and Kiting : These are typical examples of stealing money or embezelment as cash is the most liquid asset and highly proine to mis-statement.

1. Lapping occurs when cash is stolen it is from one customer's account. ... Kiting happens when funds are stolen from the company and, to cover this theft, the employee transfers money from one bank account to another account before the close of the year.
2. Lapping is the term used to defer the actual receipt of money. Eg If A has paid the amount of $ 100, than it will be recorded as the receipt in the financial statement when the amount is received from another person at some later date. The amount will be adjusted to conceal the understatement of the amount earlier received from A i.e say when the amount of $ 100 is received from B. It will be shown as it has been received from A and the B amount will be shown as received when the amount is received from C and this continues
3. c. JIT and MRP: JIT and MRP are completely different, but are complementary concepts used for the purpose of material planning and control.

1.MRP stands for Manufacturing Resource Planning, while JIT is Just in Time.

2. MRP is a resource and planning tool that is forward-thinking in nature, and time-phased too. The philosophy of JIT, on the other hand, is based on the concept of riddance of waste.

3. While operating a manufacturing business, it is possible to function only with MRP, but that is not possible with JIT, because it does allow for forward planning which is an important and essential planning requirement in the case of the operation of a manufacturing business.

The JIT system focuses on the increase in the value of the processes whereas MRP focuses more on the control aspect

d. Symmetric and Asymmetric Encryption: Information security has become a very important factor in the modern communication networks as a result of loopholes that could be in turn lead to grave effects and therefore the two popular encryption schemes that can be used to tighten thre communication security is the Symmetric and Asymmetric Encryption

1. Symmetric encryption uses a single key that needs to be shared among those persons who need to receive the message while asymmetrical encryption uses a pair of public key and a private key to encrypt and decrypt messages when communicating. .
2. Asymmetric encryption takes relatively more time as compared to the symmetric encryption.
3. Symmetric encryption is strong method and asymmetric encryption is weak method or approach.
4. Symmetric is one way function and asymmetric is a two way function.
5. Symmetric does not use a key, and asymmetric makes use of keys