CONFIDENTIAL

SET 1

UNIVERSITI KUALA LUMPUR

BUSINESS SCHOOL

FINAL EXAMINATION

JANUARY 2018 SEMESTER

COURSE CODE : EAB41103

COURSE NAME : ACCOUNTING INFORMATION SYSTEM 2

PROGRAMME NAME : BACHELOR OF ACCOUNTING (HONS)

TIME / DURATION : / 3 HOURS

DATE :

INSTRUCTIONS TO CANDIDATES

1. Please CAREFULLY read the instructions given in the question paper.

2. This question paper has information printed on both sides of the paper.

3. This question paper consists of FOUR (4) questions. Answer ALL questions.

4. Please write your answers on the answer booklet provided.

5. All questions must be answered in English (any other language is not allowed).

6. This question paper must not be removed from the examination hall.

THERE ARE EIGHT (8) PAGES OF QUESTIONS, INCLUDING THIS PAGE.

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(Total: 100 marks)

INSTRUCTION: Answer ALL questions.

Please use the answer booklet provided.

Question 1

Every two weeks, employees of a manufacturing firm submit their time cards to the
supervisors, who reviews and approves them. They are then submitted to the payroll
department. At the time, the human resources clerk also submits a personnel action to the
payroll clerk. The payroll clerk enters the information from these source documents into the
employee records and then adds the employee hours to a payroll register reflecting
employee pay rates, deductions, and job classification. One copy of the payroll register,
along with the time cards, is filed in the payroll department, and once copy is sent to the AP
department.

Next, the payroll clerks send the employee paychecks to the cash disbursements
department. The checks are signed and distributed to the employees by the paymaster. The
AP department prepares a cash disbursements voucher. A copy of the voucher and a copy
of the payroll register are sent to the cash disbursements department and then posted to the
general ledger. The cash disbursements clerk writes a check for the entire payroll and
deposits it in the payroll imprest cash account. A copy of the check, the disbursement
voucher, and the payroll register are sent back to the AP department, where they are filed.

Required:

(a) Prepare the REA model of the payroll process. Show the cardinalities for all the
associations.
(18 marks)

(b) Define what is an REA diagram?

(2 marks)
[Total 20 marks]

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Question 2

(a) Enterprise Resource Planning (ERP) systems are multiple module software packages
that evolved primarily from traditional Manufacturing Resource Planning (MRP II).
However, when an ERP implementation fails, who is to be blamed? Discuss FOUR
(4) risks associated with ERP implementation.
(8 marks)

(b) In term of electronic commerce, risk relates to the loss, theft, or destruction of data as
well as the use of computer programs that financially or physically harm an
organization. Briefly explain THREE (3) Internet risks of electronic commerce.

(6 marks)

(c) The internet uses three types of addresses for communications. Highlight the THREE
(3) types of addresses.

(3 marks)

(d) The balance scorecard (BSC) is a management system that enables organizations to
clarify their vision and strategy and translate them into action. It provides feedback
both from internal business processes and external outcomes to continuously
improve strategic performance. Briefly explain each component of BSC.
(8 marks)
[Total: 25 marks]

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Question 3

Robert Hamdan was hired six month ago as the controller of a small oil and gas exploration
and developement company, Blower Bhd, headquartered in Terengganu. Before working at
Blower, Hamdan was the controller of a larger petroleum company, Eureka Oil, Based in
Iskandar Johor. The joint interest billing and fixed assets accounting systems of Blower are
outdated, frequent processing problems and errors have been occuring. Hamdan
immediately recognized these problems and informed the president, Mr. Bani, that it was
crucial to install a new systems. Bani concurred and met with Hamdan and Sally Sofinas, the
information systems senior manager. Bani instructed Sofinas to make new systems a top
priority. Basically, he told Sofinas to deliver the system to meet Hamdan’s needs as soon as
possible.

Sofinas left the meeting feeling overwhelmed because the IT department is currently working
on two other very big projects, one for the production department and the other for the
geological department. The next day, Hamdan sent a memo to Sofinas indicating the name
of a systems he had 100% confidence is Amarillo Software and he also indicated that he
would very much like this system to be purchased as soon as possible even without
conducting any analysis. He stated that the system had been used with much success during
the past four years in his previous job at Eureka. When commercial software is purchased,
Sofinas typically sends out requests for proposals to at least six different vendors after
conducting a careful analysis of the needed requirements. However, due to the urgency
demonstrated in the meeting with the president and the overworked systems staff, she
decided to go along with Hamdan’s wishes and sent only one request for proposal, which
went to Amarillo Software. Amarillo promptly returned the completed questionnaire. The
purchase price of RM500,000 was within the budgeted amount. Sofinas contacted the four
references provided and was satisfied with their comments. Further, she felt comfotable
because the system was for Hamdan, and he had used the system for four years previously.

The plan was to install the system during the month of July and try it for the August
transaction cycle. Problems were encountered, however, during the installation phase. The
system processed extremely slow on Blower’s hardware platform. When Sofinas asked
Hamdan how the problem had been dealt with at Eureka, he replied that he did not
remember having such a problem. He called the systems manager from Eureka and
discovered that Eureka has a much more powerful mainframe than Blower. Further,
investigation revealed, that Blower has more applications running on its mainframe

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distributed processing platform and also the data transfer did not go smoothly. A few data
elements, being stored in the system were not available as an option in the Amarillo system.

Sofinas found that the staff at Amarillo was very friendly when she called, but they could not
always identify problem over the phone. They needed to come out to the site and investigate.
Hamdan was suprised at the delays between requesting an Amarillo consultant to come out
and the time in which he or she actually arrived. Amarillo explained that it had to fly a staff
member from Johor to Terengganu.

The system finally began to work somewhat smoothly in January, after a grueling fiscal year
end close in October. Hamdan’s staff views the project as unnecessary inconvenience. At
one point, two staff accountants threatened to quit. The extra consulting fees amounted to
RM135,000 has to be paid. Further, the system department at Blower spent 500 more hours
during the implementation process than it had expected. These additional hours caused
other projects to fall behind schedule.

Required:

(a) Discuss THREE (3) weaknesses identified from the case regarding systems
implementation project.
(6 marks)

(b) Having made the decision to purchase commercial software, the systems
development team is now faced with the task of choosing the package that best
satisfies the organization’s needs. Briefly explain the FOUR (4) procedures in
choosing a package.
(8 marks)

(c) A preliminary project feasibility study is conducted at this early stage to determine
how best to proceed with the project. Discuss in brief the component of feasibility
study.
(5 marks)

(d) Classify each of the following as problem or symptom. If it is a symptom, give an

example of a possible underlying problem. If it is a problem, give an example of a
possible symptom that may be detected.

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i. Declining profits
ii. Defective production process
iii. Low quality raw materials
iv. Shortfall in cash balance
v. Declining market share
vi. Shortage of employees in the accounts payable department
(6 marks)
[Total: 25 marks]

Question 4

(a) A global manufacturing company has over 100 subsidiaries worldwide reporting to it
each month. The reporting units prepare the basic financial statements and other key
financial data on prescribed forms, which are e-mailed or faxed to the corporate
headquarters. The financial data are then entered into the corporate database from
which consolidated statements are pepared for internal planning and decision
making.

Current reporting policy requires that the subsidiaries provide the previous month’s
reports by the tenth working day of each new month. Accounting department staff log
and enter the reports into the database. Approximately 15% of the reporting units are
delinquent in submitting their reports and three to four days are required to enter all
the data into the database. After the data are loaded into the system, data verification
programs run to check footings, cross-statement consistency, and dollar range limits.
Any errors in the data are traced and corrected,and reporting units are notified of all
errors via e-mail.

The company has decided to upgrade its computer communications network with a
new system that will support more timely receipt of data at corporate headquarters.
The IT department at corporate headquarters are responsible for the overall design
and implementation of the new system. It will use current computer communications
technology and install LANs, PCs, and servers at all reporting units.

The new system will allow clerks at the remote sites to sent financial data to the
corporate office via the Internet. The required form templates will be downloaded to
the remote sites, along with the data verification programs. The clerk will enter data

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into the forms to create a temporary file, which data verification programs will check
for errors. All corrections can thus be made before transmitting the data to
headquarters. Either the data would be transmitted to corporate headquarters
immediately, or the corporate headquarters computer would retrieve it form disk
storage at the remote site as needed. Data used at coorporate headquarters would
therefore be free from errors and ready for consolidation.

The company’s controller is pleased with the prospects of the new system, which
should shorten the reporting period by three days. He is, however, concerned about
security and data integrity during the transmissions. He has scheduled a meeting with
key personnel from the systems department to discuss these concerns.

Required:

The company could experience data security and integrity problem when transmitting
data between the reporting units and corporate headquarters.

i. Identify and explain the data security and integrity problems that could occur
in this system.
(4 marks)

ii. For each problem identified, describe a control procedure that could be
employed to minimize or eliminate the problem. Use the following format to
present your answer:

Problem Identification and Control Procedure and Explanation

Explanation

(8 marks)

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(b) Malicious acts from external hackers, disgruntled employees, disk failure, program
errors, fires, floods, and earthquakes can corrupt and destroy data. To recover from
such disasters, the organization needs to reconstruct the database to pre failure
status. This can be done only if the database was properly backed up in the first
place.

Required:

Briefly explain the FOUR (4) basic backup and recovery features in a database
management system.
(8 marks)

(c) System Development Life Cycle (SDLC) as a multiphase process by which

organizations satisfy their formal information needs. An important point at this
juncture is that specific SDLC steps will vary from firm to firm. In reviewing the
effectiveness of a particular systems development methodology, the accountant
should focus on the controllable activities that are common to all systems
development approaches.

Required:

i. List SIX (6) systems development controls.

(6 marks)

ii. List FOUR (4) systems maintenance controls.

(4 marks)
[Total: 30 marks]

END OF QUESTION PAPER

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