Figure 10-22 depicts the activities performed in the revenue cycle by the Newton Hardware Company. Required 1
Question:
Figure 10-22 depicts the activities performed in the revenue cycle by the Newton Hardware Company.
Required 1 Identify the weaknesses in Newton Hardware’s revenue cycle. Explain the resulting threat and suggest methods to correct the weakness. Organize your answer as follows:
Weakness Threat Recommended Improvement 2 Identify ways to use IT to streamline Newton’s revenue cycle activities. Describe the control procedures required in the new system.
The accountant also mails an acknowledgment letter thanking each donor. Monthly, the accountant retrieves all deposit slips and uses them to reconcile the Family Support Center’s bank statement. At this time, the accountant also reviews the pledge files and sends a follow-up letter to those people who have not yet fulfilled their pledges.
Each employee has a computer workstation that is connected to the internal network. Employees are permitted to surf the Web during lunch hours. Each employee has full access to the charity’s accounting system, so that anyone can fill in for someone else who is sick or on vacation. Each Friday, the accountant makes a backup copy of all computer files. The backup copy is stored in the office manager’s office.
Required
a. Identify two major control weaknesses in the Family Support Center’s cash receipts procedures. For each weakness you identify, suggest a method to correct that weakness. Your solution must be specific—identify which specific employees should do what. Assume that no new employees can be hired.
b. Describe the IT control procedures that should exist in order to protect the Family Support Center from loss, alteration, or unauthorized disclosure of data.
Step by Step Answer:
