Ajax Bhd
a. Identify each weakness in the internal controls in the new computerized system and each weakness or inefficiency in the procedures for processing and controlling delivery orders and sales invoices.
Weaknesses in Internal Controls
The first weakness in internal controls is related to the computerized function which included shipping, billing and accounts receivable are permanently assigned to a specific computer operator. Such arrangement showed the poor data center and network operations controls. As there is only one specific computer operator is assigned for a lot of major functions, he or she may potentially involved in personal error or mistakes. Besides, the computer operator is responsible for making program changes, running the program, and reconciling the computer log. Hence, there will be lack of monitoring due to self review by the computer operator.
Second weakness in internal controls is in which each computer programmer allowed access to the computer room by using magnetic card and a digital code that is different for each card. Eventually, such access would hinder the access security controls due to the fact that computer programmer can make unauthorized modifications to system and application programs and engage in fictitious transactions.
Other than that, the responsibility for custody and control of magnetic tapes and system documentation randomly rotated among computer operators would be another weakness for internal controls. Random rotation among computer operators could obstruct physical controls, access security controls and monitoring as each computer operator could obtain opportunity to control those documentation. Therefore, it would be potentially result in loss of data and information through theft or unauthorized used, fire and water damage, electrical problems and sabotage.
According to the case, the new computerized system is lacking the policies and procedures related to planning, acquisition and implementation of a new
Weaknesses in Internal Controls
The first weakness in internal controls is related to the computerized function which included shipping, billing and accounts receivable are permanently assigned to a specific computer operator. Such arrangement showed the poor data center and network operations controls. As there is only one specific computer operator is assigned for a lot of major functions, he or she may potentially involved in personal error or mistakes. Besides, the computer operator is responsible for making program changes, running the program, and reconciling the computer log. Hence, there will be lack of monitoring due to self review by the computer operator.
Second weakness in internal controls is in which each computer programmer allowed access to the computer room by using magnetic card and a digital code that is different for each card. Eventually, such access would hinder the access security controls due to the fact that computer programmer can make unauthorized modifications to system and application programs and engage in fictitious transactions.
Other than that, the responsibility for custody and control of magnetic tapes and system documentation randomly rotated among computer operators would be another weakness for internal controls. Random rotation among computer operators could obstruct physical controls, access security controls and monitoring as each computer operator could obtain opportunity to control those documentation. Therefore, it would be potentially result in loss of data and information through theft or unauthorized used, fire and water damage, electrical problems and sabotage.
According to the case, the new computerized system is lacking the policies and procedures related to planning, acquisition and implementation of a new