Information System Auditing - Assignment Example

Information System Auditing Insert Insert Chapter 10 problem 12 Management of the human resource is one of the greatest challenges organizations have to deal with in the present day. However, it is a stepping stone if an organization needs to grow its profits. Managing salaries for the employees is by far a very significant challenge. As such, affected institutions should endeavor to find means to re-examine and improve policies and activities in these payroll systems. Automation of these systems is a step towards ensuring timely, efficient and accurate processing of salaries. The latter is a motivation factor for employees to continue to deliver quality work to the institution. The payroll system is a very sensitive system that handles the payment details of the employees over a certain period called the accounting period. It encounters a number of challenges that include errors in the payroll and irregularities (Bragg, 2003). The system should, therefore, ensure an accurate and timely payment. The government requires accurate and concise records of the company concerned. As a result, the expenditures involved in the payroll will significantly affect the income statement that finally reflects the companys state. Since the register on payment keeps changing and elements adjust now and then, a lot of precautions in alteration of such variables are put into consideration. These include the hours the employees work. If the scrutinizing is not proper, the reflection entered in the ledgers will be false. The latter will affect the paychecks that the system will issue to employees. In addition, the information that will be used to update the earnings of the employees will be false. The data on employees is applicable in updating wage, tax returns and tax statements (Joshi, 2013). The final impact is the income statement of the company is affected since its preparation relies on the information recorded in the ledgers. To prevent such malicious changes being made on the employees records; we include controls for the payroll system. Such control measures include the use of a voucher to verify and support claims being made. Frequently, this is provided by the personnel department that determines inclusion or removal of the named personality from the payroll system. To justify this, there has to be an authentic written statement to prove this. Despite these departments having fraud, the problem is reduced since we now have a path to trace responsible persons. They should take responsibility for their actions. The personnel also records how the employees feature. The information will be useful when establishing payments and benefits such as leave in case of sickness. Further, benefits relating to vacations are also put into consideration. The other control strategy that is very useful is the use of identification signatures or cards for the employees. The preceding gives accurate information on the person asking for a change in their information or receiving payments to avoid claims in the future (Bragg, 2013). The advances in technology have also been useful in the way these digital identity cards are put to use. It is now possible to just swipe the employees card and the entire information concerning the person are readily available at the control desk. Some institutions have changed their policies so that the employees will only receive service after their cards swiping retrieves their personal details otherwise it is not possible for them to make the transaction. Conclusion The payroll system is highly sensitive. Its use should have lots of control measures to ensure accurate and efficient use. The information fed into the system will affect many parties including the employees, the employer and the general state of the institution concerned. Thus, use of cards and written statements that are verifiable from the personnel are needed to add or alter the information contained in such a system. Chapter 11 Problem 6 Data warehousing is not a product. It is the surrounding of an information system. It is a very vital concept as far as analysis of data especially with the sophistication level of DMV. They replace querying of operational databases for reasons that it is difficult to establish elaborate questions necessary to achieve a sophisticated analysis of data (Inmon, 2005). Since the data warehouse uses relational databases to store data in the stores of the warehouse, extracting information from the legacy system for this purpose is relatively dependent on a number of factors. First is the compatibility. These legacy systems may require that transformation is done manually to reconcile the differences with the intent to map it with relational databases. Such sources usually cannot undergo alteration. After this tedious process, it has to undergo a transformation to a solo unison of codes then feeding to the warehouse will follow. The process is worse if the operational legacy system has a lot of errors in validation (Seacord, Plakosh & Lewis, 2003). Other challenges involve inconsistencies in the data after extraction. Further, there may be need of using transformation tools such as Data Transformation Services contained in SQL Server when extracting the data to aid in reconciliation, encoding of data and correct additional inconsistencies. The business culture of the organization is affected irrespective of the system having bugs or not. The business culture is diverse and focused on the customers, innovation, risk taking, and family. The implementation of the new system led to long lines and more times in waiting thus employees quit. Most have frustrations to their family schedules. Further, they fail to meet customer’s needs. Consequently, some had to leave. Drivers on the other hand also did not renew their licenses or obtain new ones. The latter greatly had an impact on the corporate culture the city of Nevada has built over a number of years. The employee now has a hell of a working surrounding. In addition, despite the system being functionally ok, users would still experience challenges shifting from the legacy system to the new system. The latter implies a delay in service because the employees are struggling to acclimatize them with the new system. The organization should, have engaged the employees in a training session before installation and shifting to the new system. In the big bang approach, users are given a designated date of the change to the new system and completely removing the previous system from use. The advantages for this include all people moving forward on the same day, shorter time to implement the system and lower costs incurred. Others include singularly running the computer system. Trainers will only work on the new system other than changing over-inclusive. Further, the pain as well as frustrations will run in a consolidated period. The mechanism, however, has challenges like a lot of risks with a probability of many things going wrong being very high (Law & Perez, 2005). Employees are trained to master the system in a very short time. Sidelining minor details may cause failure in sections of the system that will interfere with the functionality of the entire system. Worse cases are a poor performance with unbearable working environments. Phased in is a case where smaller changes are under implementation over a stretched period. The transition is smooth and could be done on a location basis, the functionality of the module or the units in the business. Its advantages over big bang include offering users a broad span of time to adjust and fix issues while the system is in use. It also has fewer risks, and the environment is accommodative to the workers. It also has challenges that include the system taking an extremely long period to be fully functional. Cases of gaps, since some modules are dependent on each other and bridges, may need to inference from the old system. The big bang outsmarts it when it comes to the focus required. Conclusion A shift from an old to a new system has challenges despite the system being buggy or not. What is important, however, is to train workers on how to use the new system to minimize challenges they face as they adjust. The means to change to the new system is necessary as it affects both the working environment and the performance of the system and the organization. Precautions should be taken to alleviate the damages that may result. Chapter 12 Problem 1 a) The situational pressures in the company can either be financial constraints of the business or personal, situational demands. For instance, the dissatisfaction levels in the company. An unhappy lot of people working in the company are more likely to engage in fraud activities. They do so to meet their personal needs. Typical cases are when the company has plans to retrench workers, and the word is out (Petrucelli, 2013). Further, reduction in benefits results in the same scenario. Some companies also just decide out of nowhere that there will be no promotion and the concerned individuals can trace malice in the situation. The management may be put under tight working conditions by investors so as to report a projected result of the financial situation. The management is consequently likely to use fraudulent means to attain the targets that will enable them to get extra benefits such as bonuses or qualify for financing. b) First, is a case where there is a single monopoly of dominance regarding decisions in the management. The fact accelerates with a weaker director’s board. The person will overshadow the board into doing things that are geared to benefit them at the expense of the institution. Second, is the time employees are expected to take a full dose of the offseason. The employees may make adjustments that make it difficult to trace since they will lay blame on the other persons that took over from them. The company may not also have an internal auditing system. Lack of such an organization leads to accelerated cases of inappropriate businesses occurring in the company. They may never be identified or traced whatsoever. c) 1. Industry When the economic situation is not favorable, and there is unexpectedly very stiff competition. Other cases also result when the size of inventory increases very rapidly while the sales do not increase in an equivalent manner. 2. business environment The company may undergo a lot of losses or investments. The capital available may not be enough especially with the company owes a lot of debts. The business may involve in signing agreements that end up restricting their activities. The business may also be under the compromise of relying upon few products or a considerably small number of customers. 3. Legal and regulatory environment The businesses may be delisted from a stock exchange thus greatly compromise its capabilities. Further, there can be misunderstanding between various stakeholders or management that may lead to cases of litigation arising (Cendrowski, Martin & Petro, 2007). The nation could also undergo unpredicted changes in the taxation that may curtail the very existence of the business. d) The causes of fraud in reporting financial cases are many some of which are beyond the scope of the management. However, the management should be vigilant enough to be able to analyze situations that are within their control and those outside so as to take the necessary precautionary measures (McMillan, 2006). First, the management should dissolve complex structures in the business to make it easy to trace fraud. They should also take precautions when turning over employees especially those that are chief to the business processes in the organization. They should ensure that the accounting department produces excellent records of accounting. In that regard, they should have an in-house auditing group and engage services of various outstanding auditing firms. Employees also need to be in rotation to avoid getting too familiar with the operations that increase their chances to cover up things. In essence, the management should take charge of their employees meeting their needs at every level. Further, they should engage the board and the related bodies on issues outside their scope. References Bragg, S. (2003). Essentials of payroll. Hoboken, N.J.: J. Wiley. Bragg, S. (2013). Accounting best practices. Hoboken, N.J.: John Wiley & Sons. Cendrowski, H., Martin, J., & Petro, L. (2007). The handbook of fraud deterrence. Hoboken, N.J.: Wiley. Inmon, W. (2005). Building the data warehouse. Indianapolis, IN: Wiley Pub. Joshi, G. (2013). Management information systems. New Delhi: Oxford University Press. Law, W., & Perez, K. (2005). Cross-cultural implementation of the information system. Hershey, PA: Idea Group Pub. McMillan, E. (2006). Policies and procedures to prevent fraud and embezzlement. Hoboken N.J.: John Wiley. Petrucelli, J. (2013). Detecting fraud in organizations. Hoboken, N.J.: Wiley. Seacord, R., Plakosh, D., & Lewis, G. (2003). Modernizing legacy systems. Boston: Addison-Wesley. Read More