A1 - M4: Business Process

Production Order (Manufacturing Cycle)

A document issued within a company authorize the manufacture of a specified quantity of a given product during a provided time period

Packing Slip (Revenue cycle)

A document listing the quantity and description of each item included in a shipment for verification

Preventive controls - Standing data controls / Spreadsheet controls

- Access and Authorization Control - Read-Only Rights - Change Control (whenever changes are made to standing data or spreadsheet, they should be reviewed and approved for standing data, and tracked, reviewed and approved for spreadsheet by appropriate personnel) - Regular backups

Segregation of Duties

- Custody of assets - Record keeping - Authorization

Preventive Processing Control

- Data Matching - Input Validation - Sequence Check - Cross-Footing

Differences between data flow diagram and flowchart

- Data flow diagram: only logical flow/ flowchart: logical and physical flow - Data flow diagram: not utilize symbols/ Flowchart: utilize symbols

Human Resources and Payroll Processes

- Hiring employees - Onboarding and training employees - Establishing a reporting structure - Assigning employees to departments, functions, and jobs - Monitoring, reviewing, and evaluating employee performance

Preventive supervisory and monitoring controls

- Hiring guideline - Organizational charts - Supervision - Formal Approval Controls - Verifications

Manufacturing Process Activities

- Product Design and Engineering - Product Development - Manufacturing forecasting and scheduling - Manufacturing operations - Manufacturing and fixed asset accounting and reporting

Detective controls - Standing data controls/ spreadsheet controls

- Periodic Reconciliation of Changes to the data - Review of Employee Access, Authorization, and Rights

Detective supervisory and monitoring controls

- Process Responsibility Reviews - Review of Key Performance Indicators - Budgets and Forecasts - Performance Reviews - Mandatory Job Rotation and/or Vacations - Audits - Business Resiliency Controls - Reconciliations

Revenue Process

- Sales order receipt and entry - Delivery of services or goods - Customer billing - Payment collections

Bill of Materials (Manufacturing Cycle)

A detailed document specifying all of the components and quantities required to manufacture a product

Paycheck

A digital or physical document that authorizes payment from the organization to the employee

Voucher (Expenditure Cycle)

A document containing a purchase order, receiving report, and a supplier invoice to verify that the invoice matches what was ordered and received

Payroll Register

A document detailing the breakdown of each employee's gross pay, & all of the employees' required & voluntary deductions & their resulting net pay

Sales Invoices (Revenue Cycle)

A document sent to a customer detailing goods and services ordered along with the total cost of the order and payment instructions

Supplier Invoice (Expenditure Cycle)

A document sent to the organization from the supplier detailing goods and services order along with the total cost of the order and payment instructions

Bill of Lading (Revenue Cycle)

A document that accompanies a shipment that provides a contract concerning the allocation of responsibilities between the seller, carrier, and customer.

Earnings Statement

A document that accompanies the paycheck detailing the employee's earnings & deductions for the current period & year-to-date totals

Receiving Report (Expenditure Cycle)

A document that indicates what goods or services were received, the quantity received, the timing of the receipt and, if applicable, the corresponding purchase order

Purchase Order (Expenditure Cycle)

A document that is sent by the buyer to the seller indicating the goods or services desired, the quantities and timing needs, and the agreed-upon price

Sales Order (Revenue Cycle)

A document that lists the details of the customer order including the items or services ordered, quantity, prices, & agreed-upon timing & delivery terms

Pick Ticket (Revenue cycle)

A list provided to the warehouse or inventory function detailing the items and quantities that should be picked and packaged and sent to the shipping department for an order

Remittance Advice (Revenue Cycle)

A notice of payment sent by the customer to the selling organization

Purchase Requisition (Expenditure Cycle)

A request generated by an individual or function requesting that goods or services be purchased by the purchasing function

Segregation of Duties - Authorization

Approving and or authorizing business process activities, transactions, and decisions

Segregation of Duties - Record keeping

Data entry, recording transactions, preparing reconciliations, maintaining databases, and managing and modifying accounting records and reports, such general ledgers and financial statements

Data flow diagram

Data flow diagrams visually depict the logical flow of data for business processes

Sign Check

Designates if a numeric value can be positive or negative

Field Check

Designates the character types that are allowed in the field (text, numeric, etc)

Production Schedule (Manufacturing Cycle)

Details the allocation of resources and time needed to manufacture each product in a specified quantity during a provided time period

Review controls (always detective)

Detective controls

Time Card

Documents detailing the amount of time each hourly wage employee worked and should be compensated for

Flowchart

Flowchart visualize not only the logical flow of data through a process but also the physical aspects of that flow

Limit or Range Check

Limit checks establish either upper or lower limits for input data, and range checks establish both upper and lower limits

Size Check

Limits the amount of characters input into a field

Standing data

Master files or general data files that contain long-term data that does not change often

Expenditure Process

Recurring business activities surrounding the purchase and subsequent payment for goods and services

Closed-Loop Verification

Retrieves and displays information related to the input to verify accuracy

Production Instructions (Manufacturing Cycle)

Sometimes referred to as an operations list, explains in detail the specific steps and sequence of those steps needed to accurately manufacture a product

Segregation of Duties - Custody of assets

The possession, receipt, or creation of assets at an organization

Sequence check

The process of having prenumbered documents and verifying that no documents or transactions are missing

Consistent Form

Use of consistent forms so the information gathered for each specific event is uniform

Completeness check

Verification that all required data has been input. If being performed online, this may be called prompting

When reviewing the sales made during the past week, he noticed there was an online sale for item No. 1509. The manager was confused because he had never seen this item before, and upon further investigation, he discovered that this item was found in the item master file. What control would have prevented this issue? a. Validity Check b. Reasonableness Check c. Completeness Check d. Field Check

a. Validity Check

Shawn is compiling a report of his sales for the sales. he created a grand total column on his spreadsheet. The grand total was copied to his income statement as reported sales for the year. During the year end audit, it was determined that the sales number was wrong. The auditor recalculated the total by summing each column and summing the row of column totals. What control could have precented this issue? a. data matching b. cross-footting c. input validation d. sequence check

b. Cross - footing: the process of testing the sum of a column of row totals to the sum of a row of column totals to verify identical results.

The process caused the problem that two customers had the same last name, and Steve sent a bill to the incorrect customer. What control could have prevented this issue? a. Size check b. Limit check c. Closed-loop verification d. Completeness check

c. Closed-loop verification

Rena is part of the management team at Brock Supplies, and she has been tasked with implementing controls over all expense accounts. Which of the following would be a detective supervisory and monitoring control that would allow her to ensure ongoing monitoring of performance of expenses? a. Input Validation b. Regular backups of data c. Expense budgets d. Clear organizational hierarchy charts

c. Expense budget

Referential Integrity (Validity) Check

creates a framework so values in data entered into a foreign key field must first be entered in a corresponding table with the primary key

Reasonableness Test

validates the logic of input values where fields are dependent or relevant to each other