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Backup data maintenance

Discuss about the Acceptance and Adoption of Continuous Research.

In the case under consideration, after reviewing the information, the equipment group has been linked to the manufacturing software and computer aided design which do not get any support from supplier- provided antivirus protection and security. Thus the entire system as a whole is deeply subjected to corruption risk. The risk of corruption occurs when there is the loss of relevant data fed into the system. As a result the company may face several problems (Zadek,    Evans and Pruzan 2013).

A single supplier is involved in providing the LAN facilities as well as purchasing the information technology related equipment. This is understood by reviewing the system further. It can also be said that only one person provides the services and also maintains the security files. Due to increasing chances of fraud, no sort of segregation or demarcation of duties has been allowed by the company. As an example, it can be stated that, Mr. Tony Lee has access to all the individual accounts. Thus, it is possible for him to make changes to the accounting system amounts in relation to the payments when the company owes him due to the facilities and the IT supplies he provides.

Security controls are bound to be hampered when a number of people use the same password. Problems arise when a majority of the personnel use a particular password. In cases of fraud, the blame or the confrontation passes from employee to employee but does not lead to a valuable solution. It should also be understood that in such cases even the accounting clerk has access to the highly confidential information of the company. The clerk can easily leak out the valuable information to the competitors of the particular company in the industry. The accounting clerk can also carry out fraudulent transactions for his benefit or for the benefit of other parties (Scapens 2012).

Again, the supervisors also use similar passwords for time sheet data entering. There has been no limitation to the authorisation of the access in the entire system. It is highly probable for the supervisors to easily change the time sheet data of different departments by using the same password. Although there have been a differentiation or segregation of duties in the accounting system possible by the individual passwords provided to the accounting staff. This has been done for word processing but the staff still use a single password for the entry of data. There is also the possibility of conducting frauds on behalf of other employees by the use of a common password and account, which is hugely detrimental for the company. The detection of fraudulent transactions in such cases is extremely difficult and a challenging task (Davidson, Desai and Gerard 2013).

Employee attendance monitoring

According to the framework of internal control, backup files or harm copy format of data should be kept out of the surroundings of the office to ensure protection of the valuable documents from the risk of loss or damage of some sort. There might be the possibility of occurrence of any natural disaster or any mishap in the office and in such cases the backup to the valuable data will be maintained in some secure place outside the office. Tiffany’s Office stores the backup data of the MTI in the form of tapes. There is the possibility of easy alteration of the data stored as backup. This can be accompanied by alterations in the accounting software. In such cases, even reconciliation of the information cannot help the fraud to be detected. For hiding the fraudulent activities, the setup of explosion activities in the office premises can lead to the loss of backup data also. In connection to the analysis of the past statement, it can be said that, in several situations in the past, there has been the loss of backup files but even after informing the concerned authorities, no real action has been taken by them (Bell and Griffin 2012).

It can be inferred from the provided information that there is the existence of a healthy relationship between the supervisors George and Tiffany. The company provides the supervisors will several additional facilities including the provision of microcomputers to facilitate the work from home possibility as well as help them meet the deadlines of production for important and big customers of the organisation. The company system is extremely effective where the supervisors have the facility of being mobile in their nature of work and they are not bound to work only in the office. The issue of huge concern is the security of the office system. The security  of the office system has been identically copied in the microcomputers (Vasarhelyi et al. 2012). The probability of the company’s strengths and weaknesses being disclosed to the industry competitors is huge and of great concern. The data need to be protected from the risk of disclosure. In case the computer system has been stolen, the party involved in theft can easily access the data of the company. Even the tasks, which are confidential, like the quotations or designs are accessible. The microcomputers being remote can be taken anywhere and the confidential data accessed (Richardson 2012).

Accounting and administrative staff

Attendance and calculation of the office hours require an efficient and easy system and hence the use of the employee plastic card is ideal. The card can be easily linked to the accounting processes accounts and time sheets making it effective. In the office, at MTI, the system of the card has been implemented where the employees can swipe their individual cards both while entering as well as leaving the office. The card system however needs a careful monitoring by the gatekeepers or the guards in the office to prevent any fake entries or fraudulent activities. It is possible that the employees use other cards to fake the entry of those employees into the office who are absent. Any unauthorised person can conduct prohibited activities in the working area by using the card. People involved in any criminal or fraudulent activities can access the office data. The systems of costing and the employee card has been linked. Scanning of relevant information has been done by a laser pen.. Despite these facilities and services, the presence of manual monitoring is of utmost importance to prevent any sort of numerical errors and frauds and to facilitate the costing services (Ivers et al. 2012).

To avoid the work evaluation or monitoring by the same individual the segregation of the duties has been recommended by the authorities. It is natural for the employees to feel hesitant in finding faults in their own tasks or work. In case the accounting system of MTI is considered, tasks involved with the entering of a high volume of data, the accounting department requires the help of at least two admin staff members. The staff members are also involved with the filing activities and the reconciliation of the data with the related documents (Kogan et al. 2014). The errors done by the members will not be corrected by the admin staff when they reconcile the documents with the annual documents. Successively the system will have errors and they will be automatically forwarded in the successive steps. Thus the final steps will contain errors in the data entry as well as the mistakes are bound to be forwarded and it will lead to the assumption that mistakes have not been recognised correctly by members of the office staff (Andress 2014).

The process and activities of accounting point to the fact that Tiffany and George is extremely dependent on a particular employee Isabel, involved in the accounting and purchasing process at MTI. The number of linked activities has been performed by this particular employee Isabel as it has been found. Despite her origin being in a different country and being not really trained in the accounting activities, she was appreciated for her quality of work and a positive relation with the suppliers (Ng, Harrison and Akroyd 2013).

However there is the possibility of Isabel being involved in fraudulent activities and providing extra benefits to the suppliers and involved in the fraud coordination of supplies. It is also possible that Isabel is a secret member of another company which is a competitor and is employed with the task of providing all significant and confidential information to her company. She may also be working in order to supply material of desired quality and price to the company.

Louis has provided the information regarding the server crash of the company and the system of accounting should be connected with a solo server with which other systems are also attached. In this case, it is possible for the other departments to access the information thus leading to fraud (Johnson et al. 2014).

It needs to be ensured that the procedure in the balance of progress and inventory which is shown in the year end must be connected to the orders that have been obtained at the time of the MTI reporting period. Due to this, the dates on those orders, which are put into the spreadsheet, need to be checked and reconciled, ensured if they are at par with the time span or not.

It should be ensured that all job orders and the sequential numbering related to the work orders in progress during the reporting period should be entered in the system. This should be done to confirm the completeness of all the orders.

To assure the existence of inventory, there should be a physical counting of the numbers of the jobs, which are entered into the spreadsheet. This is done to facilitate identification of items being added without having any sort of physical existence. Apart from this the assertion of completeness can also be audited with the help of this system, along with the identification of items which cannot be recognized in the spreadsheet.

A sample of orders require to be selected for the reconciliation of the physical quantity of those items which are produced as well as the orders which the customers receive as mentioned in the spreadsheet. The existence as well as the assertions of completeness can be attained with the help of this reconciliation procedure.

There are two types of inventory in the hands of the company, including the individual components as well as the raw materials. The ownership of the said items should be verified by understanding and analysing the documents, which are related to the GRNs or purchase invoices.

Going by the system the completion percentage has been recognised as per the task number, which have been done for each of the job orders. A physical examination of the sample of the items should be executed for the checking the accuracy of the percentage of completion. The review of the physical completion and items of reconciliation should be done with those mentioned in the spreadsheet. Complex manufacturing processes involve tasks, which are performed simultaneously. There lies a difficulty in obtaining an accurate percentage in case of difficult and complicated manufacturing processes. In such cases however, the services of the expert can also be utilized.

Depending on the information provided by George and Tiffany, the information available need to be explained clearly to check the practical implications as well as its reliability. The different factors on which the multiple cases have been computed need to be reviewed. This facilitates fulfilment of the assertion of valuation.

In order to check the measurement assertion and accuracy there needs to be a recalculation of the items which constitute the sample.  The materials, which are used, for every order as well as the hours of labour in the selected sample need to be identified. The multiple factor needs to be changed as well to calculate the overall amount to reconcile with that written in the spreadsheet (Griffith, Hammersley and Kadous 2015).

The invoices of the suppliers obtained in reality require to be verified and reconciled to the different changes performed in the system of costing. In situations where there are varied prices for similar material in different months, the utility as well as the allocation of the costing method of inventory should be recognized and the accuracy of the orders as well as “work in progress” inventory should be checked. This particular procedure helps in the fulfilment of allocation assertion. The external confirmations related to the invoice detail and the costs and quantity should be obtained.

The data entered into the time sheet and the number of hours worked by the employees in reality should be reconciled. Any further checking requires the manual sheet to be obtained from the managers to review any dissimilarity regarding the number of hours worked and the attendance. Moreover, the number of cards issued as well as the employee number mentioned in the spreadsheet requires to be reconciled and the inspection of the outcomes should also be done.

The customers who pay advance against the material under the billing process need to be identified and inspection of the connected items should be conducted to verify that the customer owned material is not added in the spreadsheet as “work in progress”.

Starting at the beginning to the billing order, an audit trail is needed to be performed in order to analyse all the supported documents and also to reconcile. The completeness, accuracy, existence and also the measurement assertion in the “work in progress” section should be identified.

The formula Isabel used to recalculate the final value of “work in progress” to be given in the balance sheet should be used. The corrections should also be incorporated and inspected in the formula for reconciliation of the calculated amount.

During the inspection of the physical counts and inventory movements of the inventory in transit the reporting period has to be identified. The present reporting period is related to the inventory and the rewards need to be transferred, it should be shown in the year end.

The reconciliation of the selling price of the orders with their actual cost is done to identify the orders whose cost have exceeded the selling price.

The damaged inventory also needs to be examined physically and the value also needs to be obtained through the market. Damaged goods should also be identified by physical inspection.

References:

Andress, J., 2014. The basics of information security: understanding the fundamentals of InfoSec in theory and practice. Syngress.

Bell, T.B. and Griffin, J.B., 2012. Commentary on auditing high-uncertainty fair value estimates. Auditing: A Journal of Practice & Theory, 31(1), pp.147-155.

Davidson, B.I., Desai, N.K. and Gerard, G.J., 2013. The effect of continuous auditing on the relationship between internal audit sourcing and the external auditor's reliance on the internal audit function. Journal of Information Systems, 27(1), pp.41-59.

Griffith, E.E., Hammersley, J.S. and Kadous, K., 2015. Audits of complex estimates as verification of management numbers: How institutional pressures shape practice. Contemporary Accounting Research, 32(3), pp.833-863.

Ivers, N., Jamtvedt, G., Flottorp, S., Young, J.M., Odgaard?Jensen, J., French, S.D., O'Brien, M.A., Johansen, M., Grimshaw, J. and Oxman, A.D., 2012. Audit and feedback: effects on professional practice and healthcare outcomes. The Cochrane Library.

Johnson, D.M., Friedrich, N.G., Walser, B.J. and Warner, R.D., Bank Of America Corporation, 2014. Facility maintenance and management system U.S. Patent 8,645,495.

Kogan, A., Alles, M.G., Vasarhelyi, M.A. and Wu, J., 2014. Design and evaluation of a continuous data level auditing system. Auditing: A Journal of Practice & Theory, 33(4), pp.221-245.

Ng, F., A. Harrison, J. and Akroyd, C., 2013. A revenue management perspective of management accounting practice in small businesses. Meditari Accountancy Research, 21(2), pp.92-116.

Richardson, A.J., 2012. Paradigms, theory and management accounting practice: A comment on Parker (forthcoming)“Qualitative management accounting research: Assessing deliverables and relevance”. Critical Perspectives on Accounting, 23(1), pp.83-88.

Scapens, R.W., 2012. How important is practice-relevant management accounting research?. Qualitative Research in Accounting & Management, 9(3).

Vasarhelyi, M.A., Alles, M., Kuenkaikaew, S. and Littley, J., 2012. The acceptance and adoption of continuous auditing by internal auditors: A micro analysis. International Journal of Accounting Information Systems, 13(3), pp.267-281.

Zadek, S., Evans, R. and Pruzan, P., 2013. Building corporate accountability: Emerging practice in social and ethical accounting and auditing. Routledge.

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