Chapter 8 Problems for the Web
Chapter 8 Internet Cases and Problems
Internet Case 8.1
Blount, Inc.
The following narrative describes Blount Inc.’s processing of cash disbursements.
On the day preceding the due date of vendor invoices, the accounts payable department forwards to the treasurer a two-part disbursements check, accompanied by the approved invoices and supporting documentation. The original of the check form comprises the check plus a detachable remittance advice. The check duplicate is used for recording and filing purposes.
The treasurer reviews the approved invoices to ensure that appropriate procedures were applied in approving them for payment. She also examines the remittance advice portion of the check to ensure that all cash discounts were taken. If satisfied, the treasurer batches the checks in groups of 25, takes batch totals, records the batches in her control log, and forwards the batches of duplicate check forms and batch total tapes to the data control group of the data processing department. The treasurer retains the check originals and approved invoices.
Data control checks the batches for completeness and the treasurer’s signature on the batch control tape. The batches are logged and then forwarded to data preparation, where data entry clerks enter the disbursement onto a disk using a PC that is not connected to the main computer. The disk, which includes the batch totals as well as disbursement details, is forwarded to the computer librarian. Duplicate check forms and batch total tapes are returned to data control, where they are logged and temporarily filed.
Each evening, the librarian issues to the computer operators the disbursements disk and the disk containing the accounts payable master data and the computer update program. The update run occurs overnight and results in printing a Cash Disbursements Journal and an Exception and Summary Report. The following morning, these output reports are sent to data control, where the totals are compared to the batch total tapes and the outputs are logged in the batch control log. Then the reports, duplicate check forms, and batch total tapes are sent to the treasurer.
The treasurer does a “one-for-one” comparison of the duplicate check forms to the line items in the Cash Disbursements Journal. She also compares the report totals to the totals of the batch control tapes and makes the appropriate entries in her control log. The Cash Disbursements Journal is then forwarded to the general ledger department. Each approved invoice is stamped “paid,” and the payment date and check number are noted on it. The paid invoices and supporting documentation are returned to accounts payable. The treasurer files the Error and Summary Report, the batch total tapes, and the duplicate check copies together by date. She signs the checks and gives them to her assistant to be mailed.
Internet Case 8.1 Problem 1: Using the guidelines in Chapter 3, draw a systems flowchart from the narrative. In addition to an “entity” column for the treasurer, show four columns within data processing, one column each for:
- Data control.
- Data preparation.
- Computer operations.
- Computer librarian.
Internet Case 8.1 Problem 2:
Refer to the description of Blount Inc.’s cash disbursements system in Problem 1. Also, if you solved Problem 1, consult the systems flowchart that you prepared.
In one to two paragraphs, discuss how this system implements the concept of segregation of duties. Specify which entity performs each of the four transaction processing functions mentioned in the chapter (assuming that all four functions are illustrated by the system).
Internet Problem 8.2
Refer to the 10 “situations” in the first list in Problem 8-4 in your text on page 271.
For each of the 10 situations, name a control plan from this chapter that would have prevented, detected, or corrected the situation. Do not use any of the plans listed in the second list in Problem 6. (In other words, suggest one “other” plan for each situation, even though the other plan might not be as effective as one listed in Problem 6.)
Identify each plan as preventive, detective, or corrective in nature, and provide a one-sentence explanation of how the plan would address the related situation.