ACCT12-111/71-111 Accounting Information Systems
Accounting Information Systems
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ACCT12-111/71-111 Accounting Information Systems
Potential Exam Type Questions to Review
1. What is the role or reconciliation in accounting processes? What tools can help automate this
process? Give specific examples. Hint: Ref to Lab 1
2. What is an ERP system? What are the advantage and disadvantages of an ERP? What is the role of
database in ERP systems? Hint: Week 1 and across the first 5-6 topics.
3. What are the most popular accounting packages used in the Australian market? What are the
strengths an weakness of the packages MYOB, QuickBooks and Xero.
4. Imagine you have graduated and run into an old friend who is starting a new business. They know
you finished your accounting major and want some advice on the following:
a) What features of Xero did you find easy to learn and what aspect did you find difficult -
discuss why in each case?
b) What management reporting is available within Xero and/or via add-in products to help your
friend run their business?
c) What sort of businesses would you recommend adopt Xero for their accounting system and
why? (refer to specific features and benefits you see for users).
5. What is the role of a relational database in modern AIS systems? Explain the core principles and
give examples to demonstrate the core principles. Hint: Week 2
6. What is a REA diagram and what is its role in database design? Evaluate the following REA diagram
of an online sales process. What issue do you see in trying to turn this diagram into a database?
How would you modify the diagram – use either Visio or Shape in Word or PowerPoint to amend
this REA ready for implementation as a database in MSAccess. Explain the changes you make and
why? Hint: See labs 2 and 3
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7. When you design a revenue system for an organisation what are the key objectives of the revenue
cycles of an AIS? What are the core operating, reporting and compliance objectives for the revenue
cycle?
8. Auditors need to consider managements revenue assertions in the auditing of the accounts
(ASA315: A127 and A128). Specifically, A127 states:
A127. In representing that the financial report is in accordance with the applicable
financial reporting framework, and other statutory reporting requirements,
management or where appropriate those charged with governance implicitly or
explicitly makes assertions regarding the recognition, measurement and
presentation of classes of transactions and events, account balances and
disclosures.
What are the six assertions that auditors must consider in relation to revenue and how are
these related to the role of the AIS and accounting? What features in the design of an AIS help
ensure auditors that the assertions are met? Hint: See A128
9. Consider the following scenario: You have a friend, Alex, who has started an online face mask
business to replace lost employment during the Covid crisis. Alex has a basic web site that markets
the masks and puts fliers in neighbourhood letter boxes. The get orders sent via email which Alex’s
mum writes down from her screen and hands to Alex’s friend from Uni, Kevin, who takes the orders
to his place. Kevin’s place if closer to the post office and can walk there to post the orders which
he packages in his garage. Alex does not have internet so is using the Mum’s connection. Alex has
a bunch of other friends who sew the masks and Kevin collects them as he has a car. Customers
are asked to send the payment to Kevin’s post box once they get their order and Kevin deposits
the money into Alex’s Post Office Savings account. Alex tells you this is a super-efficient design
because Kevin is at the post office sending masks regularly. Alex has made thousands of masks and
thinks the business is going well but can’t understand why there is not much money in her account
to buy new materials. Kevin says the problem is that lots of the masks have been faulty and he has
had to throw them away. He asks Alex to get the sewing pool to do a better job.
Required: Advise Alex from an AIS perspective on the design of the mask business systems. What
are the risks to Alex’s revenue cycle and how might the system be improved to address the risks?
Discuss considering all the elements of a good revenue system and recommend appropriate
controls and processes. In your discussion identify “gold standard” desirable features as well as
SME practical features that Alex could implement. Why might you not recommend everything you
read in your AIS text? Can all risks be eliminated – why/why not? Hint see lab 3
10. Dave – your best mate from uni – has a business that sells sports clothing including jumpers, T-
shirts, and singlets online. He imports the items in boxes from a whole bunch of suppliers in China
and stores them in the back of Zac’s warehouse in Sydney. Dave met Zac at the pub and Zac offered
to look after Dave’s inventory while he is at uni in Queensland. Zac orders replacement stock, finds
new suppliers, pays invoices, arranges freight, receives new supplies, and stores the inventory
around his warehouse. Zac’s own business is booming, and he has complained to Dave that he is
struggling to keep up with Dave’s business, and that he is broke. So, Zac wants to hire his
unemployed younger brother, whose friends are all sports junkies, to look after Dave’s inventory.
Dave is concerned he can’t’ afford not to hire Zac’s brother because he seems to be buying much
more inventory than he is selling and is worried there is something not quite right with his systems.
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Zac says not to worry because he will keep paying the invoices from Dave’s bank account so Dave
can focus on uni studies.
Required: Dave asks you as an AIS ‘expert’ in expenditure cycles to advise Dave what he can do to
improve the supply side of his business. What are the potential risks in Dave’s current operation?
What are the resources, events and agents that make up Dave’s current ‘system’ and outline how
a Purchasing Database might help Dave manage the purchasing side of the business? What threat
would your simple Purchasing Database address and what controls could be implemented to
address those threats? What additional threats might there be and how might they be addressed
(think about the next steps in the system for payment)? Hint: See lab 4
11. Underpayment of employees is a very topical issue now and many significant firms, including
Westpac on 3 July, and many others are affected as listed below:
Why is payroll such a contentious issue for firms? What makes the payroll cycle and related design
and controls critical for management to get right? What are the major risks and will outsourcing
payroll solve these risks? Cloud computing packages like Xero have built-in payroll modules – will
these remove the payroll risk – if not explain why not?
12. Depicted below is the payroll cycle in Xero.
Required:
a) What potential threats does the design and functioning of the Payroll Module in
Xero address (or attempt to address) and how? (i.e. what controls?)
b) What threats remain and what controls would need to be implemented in the
business processes around the Xero Payroll Module?
c) To deal with award complexity are you able to import award entitlements into Xero?
If so how? Explain why this part of the cycle is important?
d) If a firm is in the service industry (e.g. construction, contracting, or hospitality) how
would you set up the AIS to deal with the time sheet data input shown in the Xero
module above?
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e) What is STP and what are the implications of the ATOs STP initiative?
13. Your friend Dave is considering shifting his sports apparel manufacturing back to Australia from
China. He has a factory contracted and all the necessary equipment, tools, supplies and staff. The
factory will manufacture for Dave’s online sales as well as contract manufacture for other retailers
and special ‘team’ orders. The business will design, manufacture, test, market and sell the sports
apparel. Dave has asked you to advise him of about his production cycle AIS. Specifically, he would
like to know:
a) What are the key business risks associated with designing a production AIS?
b) What operation objectives for the AIS?
c) What production cycle threats should he be aware of what control should he consider
building into the systems – explain the function of each control.
d) What are the cost accounting and reporting system options that Dave could consider
and what approach do you recommend and why? Hint: see week 5
14. Arguably the end ‘output’ of the accounting system is a set of financial statements and
management reports. What are the major risks associated with financial statements and
management reports? How does the COSO framework address these risks in terms of the
objectives of the framework?
15. Adjusting journal entries are part of the GL reporting process in systems such as Xero.
Required:
a) Why are adjusting journals necessary and how do they typically impact the Statement of
financial position, statement of financial performance and cash flow statement – give
examples (refer to Lab week 6)?
b) What potential threats does the adjustment process in Xero address (or attempt to
address) and how? (i.e. what controls?)
c) What threats remain and what controls would need to be implemented in the business
processes around the adjustment process?
Enter/on
board new
employee
Set/revise
award
conditions
Set/revise
SG & other
deductions
Enter time
sheet data
Compute
pay details
Run pay
run on due
date
File/submit
reports
Payroll Module
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16. Can firms in Australia report and file their financial statements with ASIC using XBRL? If so, what is
XBRL and how does it enhance financial reporting? What is our role as accountants in implementing
XBRL, in particular, what is the role of extensions (explain)? How does XBRL and databases like
EDGAR relate to the objective of financial reporting?
17. What are the most important objectives of management reporting and how can the AIS help
achieve these objectives? How does and ERP assist with management reporting?
18. Discuss four issues to consider when designing managerial reports to assess performance – hint
see week 6? Give examples of each issue.
19. In the context of designing management reports and dashboards using cloud computing discuss
the following:
a) What design principles you would want to build into any management reporting
module if you were responsible for designing the system/reports/dashboards?
b) In order of priority, what would you add to the Xero dashboard if you were setting
this up to use as your AIS for an online retailing business?
c) State the information item & why want it added as a business owner/user?
20. Reflecting on the Billion Dollar Bubble case video address the following questions:
a) How was it possible to perpetuate this fraud and what role did computers play? In
answering this question relate the case points to the Fraud Triangle of opportunity,
pressure, and rationalisation?
b) Where were the internal controls? Would internal controls have prevented this fraud?
c) Consider the governance mosaic – how did this fraud not get detected by the auditors
– was there an issue with their level of scepticism? Give examples of practices that
made it harder for the auditors to uncover this fraud. What other governance issues
contributed to the fraud?
d) Could this happen again? Can you stop fraud? Why/why not and give examples.
e) What organisational and systems could a company like Equity Funding (or Enron or
Worldcom etc) implement to prevent, detect and or minimise the impact of fraud?
21. Consider each of the cases in week 8’s lab discussion. For each case:
a) Identify which of the COSO framework 17 objectives are not being met by the
organisation’s AIS and state why the objectives are relevant?
b) What specific controls would you recommend to ensure the organisation meets the
COSO objectives you identified in part (a) above.
c) How would the four levers of control (see week 8) address the issues in each case –
would these levers be as effective as the COSO framework?
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22. Every decade the size of the largest firm to fail rises exponentially as depicted below:
a) What are the three common root issues with these large corporate failures?
b) How have regulators responded to these failures and what are the implications for
the role of internal controls? Consider the role of management and auditors with
respect to internal controls.
c) What do the COSO frameworks focus on and how might they help organisations
reduce the incidence of fraud and corporate failure? Is discussing these frameworks
consider that role accountants, auditors, computer-based audits and the AIS play in
implementing these frameworks?
23. It has been claimed that:
“Big data offers the finance professional the possibility of moving into a
more strategic, proactive role in business”
Required:
a) Explain what this statement means and what are the implications for you as an
accountant?
b) Based on the presenter in week 9, the example dashboards she provided (see links
in slides) what are the key issues in dashboarding for businesses?
c) What is ‘story telling through data’ an important aspect of data analytics and
visualisation?
24. You are hired by U Insurances Ltd (UI) to fill the role of “Strategy & Reporting Manager” similar
to the role of the in-class speaker from week 9. You were hired based on your AIS project
dashboard and you are expected to use that dashboard to help your new employer redesign
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its management reporting. UI provides insurance services and when you arrive you are
presented with the current management dashboard shown below:
Required:
a) How, according to IFAC, are data analytic and visualisation skills the “Future of
Accounting” and how are professional bodies addressing the need for these skills?
What are the implications for your career?
b) While the current dashboard is typical of management reports, based on your
dashboarding experience (in your work with MIC) what are the key design flaws in
the current report and what are the strengths, if any, of the report?
c) What additional analysis would you undertake for UI and why? Explain using your
experience with MIC insurances as examples.
d) What are the core design principles would you seek to guide developing a new
dashboard and why are these principles important?
e) How would you redesign the dashboard, give specific examples based on your prior
project, and why would you design the dashboard the way you propose?
f) What additional insight will your redesign provide management and why are these
insights important?