Accounting Information System Audit: Revenue Cycle & Weakness

This assignment solution covers key aspects of accounting information systems, including auditing objectives, concurrent audit techniques, and weaknesses in the revenue cycle of O'Brien Corporation. It addresses issues such as order tracing, warehouse management, and inventory log maintenance, proposing improvements for each. The document also discusses the expenditure cycle's relationship to the revenue cycle, general threat elements, and controls. Furthermore, it delves into product design aims, threats, and the role of Product Lifecycle Management (PLM) software in product development. The solution provides a comprehensive overview of these topics with relevant references and is available on Desklib, a platform offering study tools and resources for students.

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By student name
Professor
University
Date: 30 November 2017.
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Contents
Question 1………………….....……………………….………....……..……………………………………….3
Question 2…………….…………..………………....……..………………………………………………..…..4
Question 3……………….…..………………....……..……………………………………………………….…4
Question 4……………….…..………………....……..……………………………………………………….….5
References………..…….…………..………………....……..…………………………………………………….6
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1) a) Audit of accounting information system consists of the following objectives-
• To check what are the system that the company is using and whether they are installed
following the specific accounting standards and procedures.
• To verify and validate the use of accounting information system by the company.
b) Concurrent audit techniques for monitoring the accounting information system while live data
is being transmitted are-
• To check the access point of data transmission and regulate the flow of the same in
relation to the total amount of control that has been installed there in the organization in relation
to the same.
• To access the security that the organization has employed for the accounting information
system and check whether there are any risks exposed to the organization (Visinescu, et al.,
2017).
2) Three weakness in the O’Brien Corporation revenue cycle are-
• The customer places an order on the website of the company by fax or telephone,
therefore there is no proper trace of the orders that the client has placed.
• Same warehouse is used for sending the items and receiving the same, therefore at rush
hours when there are too many items then that causes error.
• The inventory log book is updated once a month and not regularly, therefore that may
lead to certain discrepancies in the record.
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b)
• There may be errors in tracing the orders that the clients have placed and certain orders
might go unrecorded.
• Sharing the same warehouse can affect the business very badly, as orders get misplaced
and there might be loss of money also.
• If the inventory log book is not updated regularly then there might be certain differences
in the records (Drew, 2017).
c)
• It is important that there must be a proper method that must allow the customers to place
the order other than fax or call. In this way, there will be a proper record maintenance.
• There must be a separate warehouse for receiving the supplies and delivering the order
accordingly. That will help in removing the errors that might crop up because of the same.
• It is important that the inventory log book is updated continuously that will help in
avoiding the errors.
3) The expenditure cycle is known as the mirror of the revenue cycle, because most of the
transaction in case of an expenditure cycle is extract opposite of the revenue cycle. For example,
the goods order activity may serve as input for the suppliers. The suppliers shipping function is
handles by the receive goods activity. Also, if there are advances in the expenditure cycle it will
lead to advances in the revenue cycle accordingly.
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General threat elements in case of expenditure cycle are-
• Stock outs are common threats and they can be controlled by using perpetual inventory
methods, maintaining supplier reports, periodic count of inventory must be there.
• Requesting good that are not required, and they can be controlled by maintaining
approved purchase requisition, maintaining access control (Bromwich & Scapens, 2016).
4) a) The main aim of the product design is to develop such products that meets the
requirements of the customer and minimizes the overall cost. The major threats faced may be
overallocation of cost or not meeting the customer requirement. The same can be controlled by
doing proper research before product designing (Alexander, 2016).
b) The PLM software that provides all round solution for a product development from the initial
launch to getting it into the market. It consists of four stages that cover the initial launch,
scalability, maturity and costing.
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References
Alexander, F., 2016. The Changing Face of Accountability. The Journal of Higher Education, 71(4), pp.
411-431.
Bromwich, M. & Scapens, R., 2016. Management Accounting Research: 25 years on. Management
Accounting Research, Volume 31, pp. 1-9.
Drew, J., 2017. IASB proposes changes around accounting policies and estimates. Journal Of
Accountancy.
Visinescu, L., Jones, M. & Sidorova, A., 2017. Improving Decision Quality: The Role of Business
Intelligence. Journal of Computer Information Systems, 57(1), pp. 58-66.
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