You are performing an audit of the EDP function of a chemical company with about \(\$ 150\) million in annual sales. Your preliminary review discloses the following points:

1. The EDP manager reports to the director of accounting, who, in turn, reports to the controller. The controller reports to the treasurer, who is one of several vice presidents in the company. The EDP manager has made several unsuccessful requests to the director of accounting for another printer.

2. There is no written charter for the EDP function, but the EDP manager tells you that the primary objective is to get the accounting reports out on time.

3. Transaction tapes are used daily to update the master file and are then retired to the scratch tape area.

4. A third generation computer with large disk capacity was installed three years ago. The EDP activity previously used a second generation computer, and many of the programs written for that computer are used on the present equipment by means of an emulator.

5. You observe that the output from the computer runs is written on tape for printing at a later time. Some output tapes from several days' runs are waiting to be printed.

6. The EDP manager states that the CPU could handle at least twice the work currently being processed.

Required:

a. Identify the defect inherent in each of the six conditions shown above.

b. Briefly describe the probable effect if the condition continues.

Note: On your answer sheet, show the defect, followed immediately by the probable effect, for each condition.