ACC 624 PROJECT II

ACC 624 SUMMER 2013

PROJECT II (15 POINTS TOWARDS THE FINAL GRADE)

Assume that the following flow chart was prepared by a team member in your audit assignment for an ERP system.  As you would notice the figure represents the purchasing and payment activities in a computerized environment.  The internal departments that take part in these activities are listed at the top of the document (i.e. End-User, Purchasing Department, Receiving Department, Computer denoted by ERP, Accounts Payable and Treasury Department).  Though there is no column header,  “Vendor” and “Our-Bank”  occupy the first column on the left.

Assume that you are at a brain storm session to discuss the internal control system and risk factors for this organization with other audit team members. 

Required:

1. Describe the purchasing and payment activities as shown in this diagram (you may describe the process with bullets),
2. List some of the risk factors in this environment. What are internal control processes you would like to see in this computerized system to minimize those risk factors?,
3. You have noticed that the purchasing agent knows the password for the receiving department. What are possible consequences of this finding?  What are some of the fraudulent activities that could take place based on this finding?