Question

In: Accounting

1. Explain (120–150 words) and provide an example for three types of discrepancies an accounting information...

1. Explain (120–150 words) and provide an example for three types of discrepancies an accounting information system could identify.

2. What is the purpose of backup and recovery controls? Discuss in 80–100 words.

3. Why have organisational and management controls? Discuss in 80–100 words.

Thank you

Solutions

Expert Solution

Answer to Question 1:-

Accounting based information system are the most amenable for computer systems due to their highly quantitative nature and available standards for accounting which also helps to computerize these applications which carries and executes activities like accounting procedures, processes and reporting using computer based information system. It provides following functions-

a) Recording or capturing data inputs.

b) Classifying inputs as per nature of data such as receipt, payment, sale, purchases

c) Provide required reports such as ledger, daybooks,balance sheet

An Accounting system could identify following discrepancies-

  • Omission - It occurs when a transaction is completely ignored or omitted from the books of accounts like failure to record a sale transaction or a expense transaction and such transactions are very difficult to detect and could be corrected by timely entering of transactions as and when supporting documentations or invoices are available.
  • Reversal - It occurs when a transaction that should have been posted as debit has been posted as credit and such error will be reflected in trial balance as it will never tally.
  • Subsidiary Entry- It occurs when an clerical error is made while entering transactions. For example sale of $500 to a customer recorded as $50. Trial Balance will match but customer ledger will not as there will be shortfall of cash.

Answer to Question 2:-

A good backup and recovery control will serve various objectives like reducing the likelihood of a disruption, shorten the period of disruption, and limit the impact of disruption of core activities. It helps in maintaining integrity of data such as after an error in a region must restore the data to a consistent known state with minimal loss. It helps in minimizing the impact of errors on end to end users such that errors effects limits to a particular region or user or application. It helps in restoring critical and essential services quickly and efficiently.

Answer to Question 3:-

Organisation and Management Control is basically responsible for planning and controlling day to day operation of information systems. These controls are placed for performance mesurements, for appraisals, for setting standards, to better capacity planning. Such controls can be in the form of strategic, tactical and operational level. Such controls are needed as although an enterprise or organisation runs with profit objective but to acheive such there must be certain processes which needs to be adhered. These controls incorporates organisation goal and strategies are developed keeping such goal in mind.


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