Autechre Incorporated uses a computerized data processing system for maintenance of all of the corporation's records. The system currently in use was developed and implemented in stages over a five-year period, and has been fully operational for the last two years.

As it was being designed, the system was informed by the needs of department heads, who were asked what type of information and reports they would need for planning and controlling operations. The systems team tried to design the system to provide reports to meet these needs as requested, plus additional reports specified by company management. During the five years of system development and implementation, there have been several changes in the department head positions due to attrition and promotion. The new department heads made requests for additional reports according to their specifications. The systems team complied with all these requests. Reports were only discontinued on request by a department head and then only if it was not a standard report required by top management.

As a result, few reports were discontinued. Consequently, the information processing subsystem was generating a large quantity of reports each reporting period. Company management became concerned about the quantity of report information that was being produced by the system. The internal audit department was asked to evaluate the effectiveness of the reports generated by the system. The audit staff determined early in the study that more information was being generated by the information processing subsystem than could be used effectively. They noted the following reactions to this information overload:

Many department heads would not act on certain reports during periods of peak activity. The department heads would let these reports accumulate with the hope of catching up during subsequent lulls.

Some department heads had so many reports that they ignored the information or made incorrect decisions because of misuse of the information.

Frequently, actions required by the nature of the report data were not taken until the department heads were reminded by others who needed the decisions. These department heads did not appear to have developed a priority system for acting on the information produced by the information processing subsystem.

Department heads often would develop the information they needed form alternative, independent sources, rather than use the reports generated by the information processing subsystem. This was often easier than trying to search among the reports for the needed data.

Assume that you are this client's independent auditor. Identify control weaknesses in the operating effectiveness of Autechre Incorporated with respect to reports as elaborated upon below. In addition, recommend alternative controls and procedures Autechre Incorporated could employ to eliminate any negative contributions to operating and data processing effectiveness.

Part One: Identify control weaknesses.

Part Two: Recommend alternative controls.