Strategic Information Systems for Business and Enterprise - Answer to Question 1
The following are considered:
To reduce the risk of fraudulent activities in an organization the advanced technology transaction processing system helps in many ways. With the help of this transaction processing system, an organization can in various ways reduce the effect of misrepresentation. Following are some of the ways through which an organization may be benefited from this system in reducing the number of fraudulent activities:
The transaction processing system helps in the storage of documents and records which contain confidential information in such a way so that no possibility of duplication of records can happen.
This advanced technology transaction processing system has an existing system of backup and recovery. This backup and recovery system works in a framework due to which there is no fear of loss of information and for every new change happens in the framework a backup for each change is made which in turn eradicate the chances of loss of information and records.
The advanced technology transaction processing system offers a greater degree of assurance when a person tries to adjust the alike transaction or to obtain a similar transaction. This is because these systems are controlled and operated by authorized persons or customers.
As per the given flowchart, the various types of fraud which are possible in the business environment based on control weakness and associated risk are:
The company can prepare fake sales invoices to boost their sales. It can also be done by creating a fake shipping document that serves as evidence that sales occurred. It can also be done by increasing the price of goods and under-pricing the cost of service. Therefore, accelerating revenue recognition.
The company not using IT can also create business fraud. For example, if a company maintains its records physically then in case of fire all the books will damage and there will be no way to recover the records (Kim et al., 2011). Therefore, maintain digital copies can help in preventing fraud and not letting handover important documents to anyone.
Another possibility is the loss of goods. This can happen in case of theft of goods from the warehouse, false inventory, and shipping counts.
Another classic type of fraud is payroll fraud. This is usually done by false wage pay, false expense claim, or creating a separate fraud account. Another way is there no record or information on the payroll. Example- lying about work hours, asking for an advance without paying back.
By manipulating the financial statement. This is commonly done by understating the liabilities and overstating the assets and revenue.
Strategic Information Systems for Business and Enterprise - Answer to Question 2
Organization prefer using alternative 2 instead of one because it is safe for the organization to keep all customer-related data and transaction limit in the data processing department as
It helps in analyze opportunity the company has to grow further.
It backup all the data stored in it unlike alternative 1.
It is a simple process and not complex like alternative 1
The difference between purchase requisition and purchase order are:
A purchase requisition is an internal document where one department takes permission from another department before buying the goods or services whereas the purchase order is prepared after approval of purchase requisition. It simply means buying goods or services directly from external stores.
The content of the purchase requisition form is the name and department of the requester, date of request, name of the vendor, reason for purchase, purchase requisition number, item description, and quantity (Welter et al., 2011). Whereas, the purchase order form contains the name of the company, quantity, price of good per unit, delivery date, billing detail, payment term, purchase order number, and relevant stakeholder signature.
In alternative 1 only the transaction list is review whereas while dealing in alternative 2 blind copy, account pay, file copy and purchase order are reviews. When you are dealing with sensitivity is it is important to consider the size of the enterprise and type of product otherwise it is unnecessary to review all these things. Therefore, it is important that otherwise, company workflow can be disorganized with consequence ranging from minor losses to senior consequence.
By removing the receiving department will surely smooth and modernized the process as it will eliminate delays but it will also come with certain challenges and consequences. In other words, it will reduce the time taken by goods to reach the production area. The workflow will be simplified compared to the standard technology system ((Ballaro et al.,). It will be challenging for accounting but required for the company and the company should remove it if it believes in its suppliers. To eliminate the receiving function following need to be implemented:
To develop a system to pay the suppliers directly.
Pre-agreed terms of trade between buyers and sellers so that there is no complexity at the time of the trade.
One time per vendor.
Reduce the number of suppliers.
Strategic Information Systems for Business and Enterprise - Answer to Question 3
(a) The various risk involved for payroll fraud in HARDA limited payroll system are as follows:
Biasness of supervisors: As in the payroll preparation process the supervisor's personal opinion is also involved so it increases the high possibility of biases against employees by the supervisors.
Data and views manipulation: In HARDA limited the dependence on manpower is high as compared to technology dependence which in turn increases the payroll fraud gap because of not taking the help of technology and due to which the manipulation of data and views becomes very easy (Vona, 2012).
False data representation: There is a huge possibility of representation of false data about employees by the supervisors to achieve personal benefit as the supervisor don’t have to answer to anyone.
b) The controls to reduce the risk that could be implemented are as follows:
Evaluation based on technology: As for the evaluation of employees there is complete dependence on the supervisor view which increases the chances of biasness risk. To control such risk the management should also take the help of technology along with the supervisors view to determine the productivity of employees.
Supervisor must be responsible: As the supervisor is not answerable to anybody it becomes very important to make the supervisor answerable for the actions taken by him which reduce the risk of false representation of data. E.g. for any action taken by the supervisor for the employees a valid reason must be demanded from the supervisor with proof of the reason provided by him.
Board of members establishment: The performance of the employees is evaluated by the supervisors relying upon which the payroll of the employees are prepared. So to ascertain the reasonability of the supervisor decision it is important to see the board of members.
Strategic Information Systems for Business and Enterprise - Answer to Question 4
The market data and the future prospective sale should be capture and forecast respectively.
The management level should approve of it.
-For work schedule, it is used
-Requisition detail for material provided
-Sharing of detail for completion of work
-Issue of additional requisition
-Information is based on a forecast of marketing.
-On additional requisition, there is no analysis of variance
Directly sending of job card to the department of account
The updation of the file takes place based on receipt of the requisition
No observation of limitation
The updation of the ledger takes place based on the detail as provided by the other department such as job card, material consumption etc.
No observation of limitation
In the present scenario, the process depends on the department of marketing, the data input or analysis control is not in control or supervised. The information which is sent to different departments is not under any control.
Marketing Department Risk: In this Department, there is no control over the information flow which may also lead to data duplication because of which funds are blocked in inventory which is not required and underutilization of finished goods in the warehouse.
Production Department Risk: The production department should always confirm with the warehouse department before issuing the additional requirement of material without relying solely on the marketing department as it leads to unnecessary material requisition when there is the stock of finished goods in the warehouse.
Workforce Risk: The job card for the working hours should not be directly provided to the accounts department and should also be reviewed by the production department.
This concludes from above that data should be in proper control before transfer.
Strategic Information Systems for Business and Enterprise - Answer to Question 5
From: Mr ABC
Subject: Issues and risks associated with consultant
There are various issues and risks regarding a consultant and the same has been mentioned below:
An outside business consultant will be available at a higher cost than to an employee of the company. A consultant should be recruited only when he will be able to generate profits by multiple times
A consultant provides his services to many clients at the same time which means that the consultant will not be able to provide complete focus on the company and the availability will be highly restricted. A situation may occur when the consultant may not be available when needed for some urgent work.
Even if the cost factor is not considered for once, there is still a possibility that the organization may not be able to achieve its goals. In hiring a consultant, only his past work can be seen after a thorough background check which still cannot ensure certainty.
The consultants being an outside party to the organization cannot become a part of the organization structure.
Even after considering the above, we can say that a consultant will bring a new and fresh perspective to the current operations of the company.
The following steps can be typically used as a procedure for selection of a consultant in the organization:-
Terms of Reference
Authorization of the resources and procedures
Shortlisting of the potential candidates (Poór and Józsa, 2015).
Invite proposals from the shortlisted candidates
Evaluation of the proposals as received by the organization
Negotiation of the contract and terms and conditions of the contract.
Finalization of a consultant and selection of the same
Finalization of contract and signature.
Strategic Information Systems for Business and Enterprise - Answer to Question 6
Management used the TELOS concept to know whether a project will run or not. TELOS is an acronym used to define five areas of feasibility where
T stands for technical – Is the project technically possible or not?
E stands for Economical_- Is the project affordable?
L stand for Legal- Is the project legal?
O stands for operational- how the current operation support the change?
S stands for scheduling- will the project get complete on time?
Technical Feasibility– it focuses on the resources available to the organization. It looks into matters like whether the resources available will be enough to meet the requirement and the team is capable of converting the idea into a working system.
Economic Feasibility- it focuses on the cost associated with the project and the return the organization will get from it. In other words, the profit that will be earned from the project will be able to meet the company expectation. Therefore, it helps the decision-maker to determine the economic benefits to the organization that the proposed project will provide.
Legal Feasibility-It investigates whether any aspect of the proposed project involved in any legal conflict like social media law or zoning law or data protection. Thus it helps to save the time of the organization by considering all these matters beforehand so that the organization doesn't violate the law (Mukherjee and Roy, 2017).
Operational Feasibility- It helps to analyze and determine whether and how well the organization can be met the need by completing the project and how well it be able to solve the organization problem.
Scheduling Feasibility- It helps to determine at what time the project will be completed? This aspect plays a vital role otherwise the organization will fail if the proposed project is not delivered on time.
Cost Benefits Analyse Under Economic Feasibility
Cost includes development cost, purchase, installation, maintenance, construction, training, cost of running the machine etc. Whereas benefits include Salary saving, hardware saving, maintenance saving, saving from a reduced number of employees, increased revenue from the project.
Cost benefit= cost of the project/ Anticipated return
If the projected revenue is greater than the project cost then the project is positive otherwise vice versa. If the project is economically feasible then the benefit will exceed the cost within a given period. Four different ways to calculate are
Net present value
Return on investment
An accountant plays a vital role in the development cycle:
They identify the area of problem and provide with solution
The act as an auditor and ensure that the organization has all the necessary equipment and they provide a true and fair picture of the company.
They act as a pillar and a member of the development team.
They play role in:
System Design- it helps to identify the loophole in the system and eliminate them. And to also find the strength and preserve them. The conceptual system and the system professionals are responsible for the physical system.
To acquire new resources which are beneficial for the organization
Providing to existing or new employees to cope up with the changing environment
Implementing a newly designed system
Conducting follow-up studies to know whether the new system adopted providing benefits and successful or not and of course to identify the new problem associated with the new system.
References for Fraud Risk Assessment
Kim, J.B., Song, B.Y. and Zhang, L., 2011. Internal control weakness and bank loan contracting: Evidence from SOX Section 404 disclosures. The Accounting Review, 86(4), pp.1157-1188.
Welter, M., Wittmer, H., Freitag, A. and Abo-Hasna, Z., SAP SE, 2011. System and method for purchase order creation, procurement, and controlling. U.S. Patent 8,046,273.
Ballaro, C.A. and Sabino, P.J., SciQuest Inc, 2016. Method, medium, and system for purchase requisition importation. U.S. Patent 9,245,291.
Vona, L.W., 2012. Fraud risk assessment: Building a fraud audit program. John Wiley & Sons.
Poór, J. and Józsa, I., 2015. Evolution of External Consultant Involvement in Human Resource Management in Eastern Europe (1990-2007). Journal of Eastern European and Central Asian Research (JEECAR), 2(1).
Mukherjee, M. and Roy, S., 2017. Feasibility studies and important aspect of project management. International Journal of Advanced Engineering and Management, 2(4), pp.98-100.