From the e-Activity, evaluate the gaps between the educational requirements and the expectations for independence and ethical considerations, providing a recommendation for how these gaps may be closed. Explain whether the educational requirements address the standards imposed by Sarbanes-Oxley (SOX). Justify your answer.
Evaluate the impact of SOX on the education and training requirements to become a CPA who provides audit and advisory services, indicating whether these additional qualifications provide adequate assurance to prospective investors that were anticipated by the SOX regulations. Justify your answer.
Imagine that you are the manager of Information Technology department working on a system conversion for an Accounting Department. Consider the activities in Accounts Payable and Accounts Receivables, and identify those duties that may be incompatible for a manual system but highly effective in an automated system. Compare and contrast the general and application controls used in both systems. Recommend an approach to automating the process. Explain your answer.
Accounts payable is the short-term debts from a company to its creditors which is regarded as a liability in the statement of the financial position of a company. Accounts receivable on the other hand is the opposite as it is the money that is owed to the company from the clients which is usually considered as an asset. The accounts payable is usually operated in most cases on a monthly cycle of accounting. Invoices are recorded daily as they are received while posting the necessary adjustments where necessary.
A computerized and automated accounting ensures that the transactions are effected very fast and automatically upon request. In fact in the computerized accounting transactions are of a complex category which does not only include the sales or acquisitions but also aspects such as depreciation, calculation of wages as well as dividends. Computerized accounting therefore provides an accurate calculation as well as produces smart reports. However, this takes a significant period of time, resources as well as efforts.
The manual accounting systems requires accountants who are qualifies and are in a position of keeping a record of the different transactions of the business. A computerized accounting requires accountants who can effectively manipulate specific software in producing results for an accounting entity. The various computer software that are used in accounting do the calculation very much promptly. However, they do not know what one needs until they are in a position of explaining clearly what information they need through the different applicable commands of the software. A computerized accounting provides effective internal control reporting systems for a period of time very fast while the manual systems takes significantly more time because of the fact that the accounting information and records are being analyzed manually.
I would recommend a BlackLine Accounting Process Automation as an approach to system automation. This solution improves the speed, the reliability as well as the accuracy of the accounting information that has been presented. This is enabled through automation of the routine as well as the high-volume transactions through configurable certifications and analysis models.
Assess the risks that are inherent in automating manual accounting systems to an IT environment, giving consideration to the factors that influence supervision, the firm's obligation to maintain adequate accounting records, and transaction integrity. Recommend a strategy to minimize the risk. Provide support for your recommendation.
Some of the risks inherent to automating a manual accounting system is that in case of lack of backing up the system, there are high chances that all the accounting information shall be lost as a result. This is opposed to a manual accounting system where the data and information are usually contained in the hard copy form for purposes of reference. Supervising an automated accounting system might seem a heel of work because an accountant simply keys in the information when they are not being supervised and could even generate reports that have been falsified. There is the probability of the firm not having the right and accurate accounting records especially in instances where there are no physical records of invoices to be documented as evidence for transaction. This leads to a pitfall in the transaction integrity.
A strategy to minimize these risks is to ensure that almost all the transactions are backed up with a physical evidence despite the computerization of the processes. This will help boost the integrity of the accounting records and data as well as act as evidence in the event that the information systems of the organization have been compromised.