AIS Final Summary Notes PDF
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Summary
These notes summarize threats and controls in different business cycles of a company. They cover the revenue cycle, including sales order entry, shipping, billing, and cash collection, as well as the expenditure cycle, including purchasing and receiving. The notes outline general threats to each process, along with corresponding controls to mitigate these risks.
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Threats Controls 1. Unauthorised disclosure of sensitive information - Access Controls - Encryption 2. Loss or destruction of data Backup and Disaster recovery procedures 3. Poor performance Managerial Reports [General Threats and Controls to Revenue Cycle, Expenditure Cycle, Product...
Threats Controls 1. Unauthorised disclosure of sensitive information - Access Controls - Encryption 2. Loss or destruction of data Backup and Disaster recovery procedures 3. Poor performance Managerial Reports [General Threats and Controls to Revenue Cycle, Expenditure Cycle, Production Cycle ] **[Chap 14 Revenue Cycle]** **[Sales Order Entry Process]** Take customer order **\*Sales Order** -\> Approve customer credit -\> Check inventory availability -\> Respond to customer inquiries +-----------------------------------+-----------------------------------+ | Threats | Controls | +===================================+===================================+ | 1. Incomplete or inaccurate | - Data entry edit controls | | orders | | | | - Restrict access to master | | | data to maintain accuracy | +-----------------------------------+-----------------------------------+ | 2. Invalid orders | Signature to authorize sale | +-----------------------------------+-----------------------------------+ **[Shipping Process]** Pick and pack the order **\*Picking Ticket** -\> Ship the order **\*Packing slip, Bill of Lading** +-----------------------------------+-----------------------------------+ | Threats | Controls | +===================================+===================================+ | 1. Picking the wrong item or | - Reconcile picking list to | | quantity to ship | sales order | | | | | | - Bar code technology, RFID | +-----------------------------------+-----------------------------------+ | 2. Shipping errors | - Reconcile shipping documents | | | to sales orders, picking | | | lists and packing slips | | | | | | - Data entry edit controls | +-----------------------------------+-----------------------------------+ | 3. Theft of inventory | - Restrict physical access to | | | inventory | | | | | | - Document inventory transfers | +-----------------------------------+-----------------------------------+ **[Billing Process]** Invoicing the customer **\*Sales Invoice** -\> Update accounts receivable **\*Credit memo, Monthly Statements** +-----------------------------------+-----------------------------------+ | Threats | Controls | +===================================+===================================+ | 1. Billing Errors | - Configure the system to enter | | | price data automatically | | | | | | - Reconcile shipping documents | | | to sales orders | | | | | | - Data entry edit controls | +-----------------------------------+-----------------------------------+ **[Cash Collection Process]** Process customer payment -\> Update account balance **\*Remittance** -\> Deposit payments to bank +-----------------------------------+-----------------------------------+ | Threats | Controls | +===================================+===================================+ | 1. Theft of cash | - Use lockbox | | | | | | - Use cash registers | +-----------------------------------+-----------------------------------+ | 2. Cashflow problems | - Use lockbox | | | | | | - Discounts for early payment | +-----------------------------------+-----------------------------------+ **[Chap 15 Expenditure Cycle ]** **[Order Goods or Services (from suppliers) Process]** Identify what, when, and how much to buy \***Purchase Requisition** -\> Choose a supplier \***Purchase Order** +-----------------------------------+-----------------------------------+ | Threats | Controls | +===================================+===================================+ | 1. Stockouts and excess | - Perpetual inventory system | | inventory | | | | - Bar code Technology, RFID | | | | | | - Periodic physical counts | +-----------------------------------+-----------------------------------+ | 2. Purchasing items not needed | - Perpetual inventory system | | | | | | - Review and approval of | | | purchase requisitions | +-----------------------------------+-----------------------------------+ | 3. Unreliable suppliers | - Monitor supplier performance | +-----------------------------------+-----------------------------------+ **[Receiving Process]** Goods arrive -\> verify goods against the purchase order **\*Receiving report** +-----------------------------------+-----------------------------------+ | Threats | Controls | +===================================+===================================+ | 1. Mistakes in counting | - Bar code technology, RFID | | | | | | - Receiving employees sign | | | receiving report | +-----------------------------------+-----------------------------------+ | 2. Theft of inventory | - Restrict physical access to | | | inventory | | | | | | - Document inventory transfers | +-----------------------------------+-----------------------------------+ **[Approve Supplier Invoice]** Match supplier invoice to purchase order and receive report -\> Approve supplier invoice for payment +-----------------------------------+-----------------------------------+ | Threats | Controls | +===================================+===================================+ | 1. Mistakes in posting to | - Reconcile detailed accounts | | accounts payable | payable recorders to the | | | general ledger accounts | | | payable account | | | | | | - Data entry edit controls | +-----------------------------------+-----------------------------------+ **[Cash Disbursements ]** **\*Disbursement voucher** -\> pay vendor +-----------------------------------+-----------------------------------+ | Threats | Controls | +===================================+===================================+ | 1. Failure to take discounts | File invoices by the due date to | | | take advantage of discounts | +-----------------------------------+-----------------------------------+ | 2. Cash flow problems | Cash flow budget | +-----------------------------------+-----------------------------------+ **[Chap 16 Production Cycle ]** **[Product Design ]** Design product **\*Bill of Materials, Operations List** **[Planning and Scheduling]** **\*Production order, material requisition** +-----------------------------------+-----------------------------------+ | Threats | Controls | +===================================+===================================+ | 1. Poor product design resulting | - Analysis of cost arising from | | in excess costs | product design choice | | | | | | - Analysis of warranty and | | | maintenance | +-----------------------------------+-----------------------------------+ | 2. Over or under production | - Production planning systems | | | | | | - Review and approve production | | | orders and schedules | +-----------------------------------+-----------------------------------+ **[Production Operations]** +-----------------------------------+-----------------------------------+ | Threats | Controls | +===================================+===================================+ | 1. Theft of inventory | - Restrict physical access to | | | inventory | | | | | | - Document inventory transfers | +-----------------------------------+-----------------------------------+ | 2. Theft of fixed assets | - Restrict access to fixed | | | assets | +-----------------------------------+-----------------------------------+ | 3. Loss of inventory or fixed | Insurance and physical safeguards | | assets due to fire or | | | disasters | | +-----------------------------------+-----------------------------------+ | 4. Disruption of operations | Backup and disaster recovery | | | procedures | +-----------------------------------+-----------------------------------+ **[Cost Accounting Systems]** +-----------------------------------+-----------------------------------+ | Threats | Controls | +===================================+===================================+ | 1. Inaccurate cost data | - Source data automation | | | | | | - Data processing integrity | | | controls | +-----------------------------------+-----------------------------------+ | 2. Misleading reports | | +-----------------------------------+-----------------------------------+
