Test 3

inventory master data

A file or table of data that contains a record of each item stocked in the warehouse or regularly ordered from a vendor.

Describe the four common programmed edit checks.

1. Limit checks - test whether the contents of the data entered fall within predetermined limits 2. Document/record hash totals - reflect a summarization of any numeric data field within the input document or record, such as item numbers or quantities on a customer order 3. Mathematical accuracy checks - compare calculations performed manually to those performed by the computer to determine whether a document has been entered correctly 4. Check digits - are an extra digit added to the identification number of entities such as customers and vendors

What are the steps involved in preparing a control matrix?

1. Specify control goals 2.. Identify operations process control goals 3. Identify information process control goals 4. Identify recommended control plans 5. Identify present control plans and annotate them on the system flowchart 6. Evaluate present control plans 7. Identify and evaluate missing control plans 8. Examine the control matrix 9. Analyze the systems flowchart for further risk exposures

Automated Clearing House Network

A batch processing system for the interbank clearing of electronic payments.

post-billing system

A billing system in which invoices are prepared after goods have been shipped and the sales order notification (sales order) has been matched to shipping's billing notification (shipping notice).

pre-billing system

A billing system in which invoices are prepared immediately on acceptance of a customer order—that is, after inventory and credit checks have been accomplished but before the goods have been shipped.

remittance advice (RA)

A business document used by the payer to notify the payee of the items being paid.

invoice

A business document used to notify the customer of an obligation to pay the seller for the merchandise (or service) ordered and shipped (or provided, if a service).

open-item system

A complex accounts receivable system appropriate in situations where invoices are prepared and sent for each sale (i.e., each shipment), and the customer typically makes payments for specific invoices when those invoices are due.

preformatted screens

A computer screen designed to control the entry of data by defining the acceptable format of each data field, automatically moving to the next field, requiring that certain fields are completed, and/or by automatically populating fields.

bill of lading

A contract between the shipper and the carrier in which the carrier agrees to transport the goods to the shipper's customer.

procedures for rejected inputs

A control plan designed to ensure that erroneous data (i.e., not accepted for processing) are corrected and resubmitted for processing.

document design

A control plan in which a source document is designed to make it easier to prepare the document initially and later to input data from the document.

key verification

A control plan in which documents are keyed by one individual and then rekeyed by a second individual. The data entry software compares the second keystrokes to the strokes keyed by the first individual. If there are differences, it is assumed that one person misread or miskeyed the data.

populate input screens with master data

A control plan that operates when a clerk enters the identification code for an entity, such as a customer, and the system retrieves data about that entity from the master data, to eliminate the need for re-entry of those data.

online prompting

A control plan that requests user input or asks questions that the user must answer.

manual reconciliation of batch totals

A control plan that works in the following manner: (1) batch totals are established manually; (2) as individual source documents are entered, a computer program accumulates independent batch totals; (3) the computer prepares a report that includes the relevant totals that must be manually reconciled with the totals established prior to the particular process; (4) the person who reconciles the batch totals must determine why the totals do not agree and make corrections as necessary to ensure integrity of the input data.

computer agreement of batch totals

A control plan that works in the following manner: (1) batch totals are established manually; (2) the manually prepared total is entered into the computer and is written to the computer batch control totals data; (3) as individual source documents are entered, a computer program accumulates independent batch totals and compares these totals to the manually prepared totals; (4) the computer prepares a report, which usually contains batch details and whether the totals agreed or disagreed.

customer credit check

A control process performed to ensure that an organization does not extend more credit to a customer than is prudent. Usually performed before accepting a customer's order.

Referring to Appendix 9A, distinguish among data encryption, public key cryptography, and digital signatures.

A data encryption procedure involves a single key that is used both by the sender to encrypt the message and by the receiver to decrypt it.; Public cryptography helps to solve this problem by employing a pair of matched keys for each system user, one private and one public.; Digital signatures enhance security by ensuring that the message comes from an authorized source and that the message hasn't been changed during transmission.

picking ticket

A data flow—often a sales order copy—that authorizes the warehouse to "pick"the goods from the shelf and send them to shipping.

sales event data

A file comprised of invoice or sales order records created as the sales process captures sales events, through the preparing and sending of an invoice.

debit card

A form of payment that authorizes the collector to transfer funds electronically from the payer's bank account to the collector's bank account.

lapping

A fraud by which funds being received by one customer are stolen, and the theft is covered up by applying funds received from another customer to the first customer's account.

tickler file

A manual file of documents, or a computer file, reviewed on a regular basis, that contains business event data that is pending further action.

credit card

A method of payment whereby a third party (such as a bank), for a fee, removes from the collector the risk of noncollection of the account receivable; also known as a charge card.

lockbox

A postal address, maintained by the firm's bank, which is used solely for the purpose of collecting checks. The bank processes the receipts, providing a quick update to the firm's bank balance, and provides the collecting company with the remittance advice (RA) data to update customer accounts.

batch sequence check

A process to check event data within a batch including the following steps: (1) the range of serial numbers constituting the documents in the batch is entered; (2) each individual, serially prenumbered document is entered; (3) the computer program sorts the input documents into numerical order, checks the documents against the sequence number range, and reports missing, duplicate, and out-of-range data.

compare input data with master data

A process to determine the accuracy and validity of the input data. Such comparisons may be done manually or by the computer.

Web 2.0

A set of tools that allow people to build social and business connections, share information, and collaborate on projects online. Tools include blogs, wikis, social networking and other online communities, and virtual worlds.

packing slip

A shipping document that is included with a package and identifies the customer and the contents of the package.

written approvals

A signature or initials on a document to indicate that an event has been authorized.

enter data close to the originating source

A strategy for the capture and entry of event-related data close to the place (and probably time) that an event occurs, reducing the likelihood that events will be lost and not entered into the system and that errors will be introduced into the system.

automated data entry

A strategy for the capture and entry of event-related data using technology such as OCR ,bar codes, RFID, and EDI.

hash totals

A summation of any numeric data existing fo rall documents in the batch, such as a total of customer numbers or invoice numbers in the case of remittance advices; used for control purposes only.

dollar totals

A summation of the dollar value of items in the batch, such as the total dollar value of all remittance advices in a batch.

sequence checks

A type of control in a batch processing system where documents that are numbered sequentially are used to determine that all documents have been processed (completeness) and that no extra documents have been processed (completeness, if a duplicated document, or validity, if a bogus document).

reasonableness check

A type of programmed edit check that tests whether the contents (e.g., values) of the entered data fall within predetermined limits; also called limit checks.

limit checks

A type of programmed edit check that tests whether the contents (e.g., values) of the entered data fall within predetermined limits; also called reasonableness checks.

electronic funds transfer (EFT)

A variety of procedures for transmitting cash funds between entities via electronic transmission instead of using paper checks

ePayments

A variety of procedures for transmitting cash funds between entities via electronic transmission instead of using paper checks.

balance-forward system

Accounts receivable records consist of a customer's balance, categorized as current and past-due, and current account activity includes items such as current charges, finance charges for past-due balances, and payments.

one-for-one checking

An business process control that uses a detailed comparison of individual elements of two or more data sources to determine that they agree.

programmed edit checks

An edit that is automatically performed by data entry programs upon entry of the input data.

compare picking ticket to picked goods

An example of one-for-one checking that ensures that the correct goods are picked from the shelf and that any errors are detected and corrected in a timely manner (e.g., before the goods get to the shipping department).

compare shipment to sales order and picking ticket

An example of one-for-one checking that ensures that the shipment will be authorized and accurate. Any discrepancy among these items might indicate an unauthorized or duplicate shipment (no open sales order) or an inaccurate shipment (quantities to be shipped do not agree with the picking ticket or open sales order).

Electronic bill presentment and payment

B2C systems that use a Web site to post customer bills and to receive their electronic payments.

billing/accounts receivable/cash receipts (B/AR/CR)

An interacting structure of people, equipment, activities, and controls designed to create information flows and records that support repetitive work routines of the credit department, cashier, and accounts receivable department, support the problem-solving processes of financial managers, and assist in the preparation of internal and external reports.

order entry/sales (OE/S) process

An interacting structure of people, equipment, activities, and controls that is designed to create information flows that support the repetitive work routines of the sales order department, credit department, and shipping department and the decision needs of those who manage various sales and marketing functions.

Distinguish buy-side and sell-side systems.

Buy side and sell side systems are distinguishable from each other in that the former is an internet based management tool used to control assets and the vendors which these purchases are bought. The latter as the name implies allows a corporation the ability to market, sell, deliver, and service goods and services to domestic and international clients by means of the internet

review file of open sales orders (tickler file)

By reviewing a file of open sales orders, i.e., shipments that should have taken place, we can ensure that all shipments are made in a timely manner

Discuss how customer relationship management systems aid a customer service representative (CSR) in providing service to customers.

CRM systems aid a customer service representative in providing services to customers intuit it is the primary software used to cope with all the information associated with clients, such as field service, marketing, and contact management data. Therefore CSRs use com to help develop client relationship by searching, obtaining, and prrserving communication

digital image processing systems

Computer based systems for capture, storage, retrieval, and presentation of images of objects such as pictures and documents.

customer master data

Contains a record of every customer with whom a company is authorized to regularly do business.

batch control plans

Control plans used to regulate information processing by calculating control totals at various points in a processing run and subsequently comparing these totals.

item or line counts

Counts of the number of items or lines of data entered, such as a count of the number of invoices being paid by all the customer remittances. Also known as line counts.

accounts receivable (AR) adjustments events data

Created as sales returns, bad debt write-offs, estimated doubtful accounts, or similar adjustments are processed.

Describe the five master data stores employed by the OE/S process.

Customer master data, inventory master data, marketing data, sales order master data, and accounts receivable master data

Describe several ways that data warehouses and data mining can support the marketing function.

Data warehouses can support the marketing function by assisting in providing decision makers with the knowledge required to observe and manage their business practices. Datamining allows company members to better understand customer, process, and markets

optical character recognition

Data entry into a system using light reflection for pattern recognition of handwritten or printed characters.

bar code readers

Devices that use light reflection to read differences in bar code patterns to identify a labeled item.

How is digital image processing used to support the input and management of images and documents?

Digital image processing is used to support the input and management of images and documents by making them readily available to any partner around the globe. Contraty to the antiquated system of manually delivering documents, digital image utilize optical input technology, which can be easily changed into electronic digital signals

Name and explain four different types of batch totals that could be calculated in a batch processing system.

Document/record counts: Simple count of the number of documents entered. Minimum level required to control input completeness (i.e., input the document once).; Item or line counts: Counts of number of items or lines entered. Improves input validity, completeness, and accuracy by reducing possibility that line items or entire documents could be added to the batch or not be input.; Dollar totals: Sum of dollar value of batch items. Reduces possibility that documents could be duplicated, added to or lost from a batch or that amounts were incorrectly input and improves input validity, completeness, and accuracy.; Hash totals: Sum of any numeric data existing for all batch documents, such as a total of customer numbers or purchase order numbers. Can determine if inputs have been altered (accuracy) , added (validity), or deleted (completeness).

turnaround documents

Documents such as remittance advices that are used to capture and input a subsequent event.

Describe the impact that entity-level controls (i.e., control environment, pervasive controls, and general/IT general controls) can have on theeffectiveness of OE/S business process controls.

Entity level controls such as control environment, pervasive controls, and general IT general controls maty have an impact on OE/S business process controls in that they create an aded step of security and accountability. If these controls were not in place then the business process would not be as valid and accurate as it is currently

Good funds

Funds on deposit and available for use.

scanners

Input devices that capture printed images or documents and convert them into electronic digital signals (i.e., into binary representations of the printed image or document) that can be stored on computer media.

With what internal and external entities does the OE/S process interact?

It interacts with customer, carriers, other business process such as filing and general ledger

What is the billing/accounts receivable/cash receipts (B/AR/CR) process?

Its an interacting arrangement of personnel, equipment, activities, and controls intended to produce information flows and records that achieve the following. Assists with the daily work schedule of the accounts receivable department, credit department, and the cashier. Sustain the problem solving procedures of financial managers. Help in the training of internal and external reports

Explain the difference between the category of business process control and application control covered in this chapter and the business process controls and application controls to be covered in Chapters 10 through 16.

Manual controls depend on the ability, training, and dilligence of the data entry personnel. Automated controls are performed by the computer system and depend on IT general controls.

What primary activities does the B/AR/CR process perform? Explain each activity.

Performs 3 activities it bills customer, manages customer accounts and secures ships goods to customers. It accomplishes these tasks by completing the order to cash process

cumulative sequence check

Provides input control when the serial numbers are assigned within the organi-zation (e.g., sales order numbers issued by the sales order department) but later are not entered in perfect serial number sequence (i.e., picking tickets do not necessarily arrive at the shipping department in sequence).

agree run-to-run totals

Reconciling totals prepared before a computer process has begun to totals prepared at the completion of the computer process.

sales order master data

Records in the sales order master data are created on completion of a sales order.

accounts receivable master data

Repository of all unpaid invoices issued by an organization and awaiting final disposition.

customer acknowledgement

Sent to the customer to provide notification of an order's acceptance and expected shipment date.

document/record counts

Simple counts of the number of documents entered (e.g., 25 documents in a batch). This procedure represents the minimum level required to control input completeness.

Describe the relationship between the control matrix and the systems flowchart.

The control matrix is a tool used to analyze a systems flowchart (and related narrative) to determine the control plans appropriate to that process and to relate those plans to the processes control goals. It establishes criteria to be used in evaluating a particular process. The control matrix provides a means to explain and analyze the controls that have been annotated on a systems flowchart.

cash receipts event data

The data created when customer payments are recorded, which contains the details of each payment as reflected on the RA accompanying a payment.

What "key players" would you expect to find in the marketing function's organization chart?

The key players in the marketing functions organization chart would be the vide president of marketing, followed irrespective of order, by advertising manager, product development manager, customer sales and service manager, marketing intelligence manager and sales promotions manager followed by the supervisor of the sales order department

What is the order entry/sales (OE/S) process?

The order entry sales process is a dynamic web off interrelating variables including people, equipment, actions, and controls all focus in accomplishing a define objective

What are the major functions performed by the OE/S process? Explain each function.

The order entry sales process major functions include constructing a pathway for the flow of information that will assist in maintaining the managerial needs of sales and marketing departments while also assisting daily routines of the sales order, credit, and shipping departments

document/record hash tools

These totals reflect a summarization of any numeric data field within the input document or record, such as item numbers or quantities on a customer order.

Describe the key control plans associated with OE/S processes.

They key control plans associated with this process include customer credit check, comparing picking ticket to picking goods, independent shipping authorization, comparing shipment to sales order and picking ticket, independent customer master data maintenance and review file of open sales orders

mathematical accuracy checks

These edit checks compare calculations performed manually to those performed by the computer to determine whether a document has been entered correctly.

independent customer master data maintenance

This assumes that there is a segregation of duties between the personnel who create the customer record (to authorize sales to the customer) and the personnel who create the sales order (execute the sale).

confirm input acceptance

This control causes the data entry program to inform the user that input has been accepted for processing.

independent shipping authorization

This establishes, for the shipping personnel, that someone other than the warehouse personnel authorized the shipment. Typically this would be accomplished by sending a copy of the sales order from customer service directly to the shipping department or by giving the shipping personnel access to open sales order records on the sales order master data.Without this control, warehouse personnel could cause a shipment by simply sending goods to the shipping department. This control assumes a segregation of duties among sales, the warehouse, and shipping.

exception and summary report

This report reflects the events—either in detail, summary, or both—that were accepted or rejected by the system.

digital signatures

This technology validates the identity of the sender and the integrity of an electronic message to reduce the risk that a communication was sent by an unauthorized system or user or was intercepted/modified in transit.

electronic approvals

Using a computer system's work flow facility to route business events to persons authorized to approve the event online.

Describe Web 2.0. What tools does Web 2.0 include?

Web 2.0 is an interactive method in which people utilize social media and other internet tools to network and feely exchange ideos

float

When applied to cash receipts, the time between the customer tendering payment and the availability of good funds

Each of the following questions concerns the control matrix for the OE/S process (Figure 10.13, pp. 384-385) and its related annotated systems flowchart (Figure 10.11, pg. 381): a.What three effectiveness goals does the matrix show?b.In this process, what particular resources do we want to secure? c.What are the two data inputs in this system?d.What constitutes a valid sales order? A valid shipping notice?

a. It includes assurance of customers creditworthiness, timely acknowledgement of customer orders, and timely shipment of goods to customers; b. The plan design is needed to prevent duplicating, altering, profiting or damaging the customer master data. cONTROL PLAN IS NECESSARY TO PRECLUDE STEALING AND OR SELLIG MERCHANDISE INVENTORY; c. Include sales order and shipping notice; d. The validity of the sales order and shipping notice are determined of the former is an approved customer and if there has been a fgenuine shipment of goods

a.Explain how bar code readers work. b.Explain how optical character recognition (OCR) works and how it differs from bar code technology. c.Explain how scanners are used to capture data.

a. The bar code reader works by capturing data electronically using image based technology. iT UTILIZES LIGHT REFLECTION TO DECIPHER THE VARIATIONS IN BAR CODES DESIGN TO RECOGNIZE A TAGGED ITEM; b. It works similarly to bar codes in that it utilizes pattern recognition software however differ because it only recognizes hand written or printed characters; c. Scanners work similarly to bar codes in that they utilize optical input technology but differ in that they capture documents or printed images then change them into electronic digital signals

The following questions concern the logical description of the OE/S process: a.Whatare the three major processes? Describe the subsidiary processes of each major process. b.What three exception routines may occur when a customer order is processed?

a. The three major processes of OE/S include validating the sales order, completing the picking ticket and executing and executing the shipping notice. Validating the sales order includes verifying inventory availability, checking credit, and completing sales order. Comleting the picking ticket steps are matching goods with the picking ticket and enter quality picked. Executing the shipping notice begins by matching orders and ends by producing a shipping notice; b. The three exception routines that may occur when a customer order is processed are back orders, reject stub. When validating the sales order the order can be rejected when verifying inventory availability or when checking customers credit. When completing the picking ticket each step the order can also be ejected