COMPREHENSIVE PAPER 2 SEMINAR NOTES

ACCOUNTING INFORMATION SYSTEM

Q1a. An Accounting Information System (AIS) is a structure that a business uses to collect, store, manage,
retrieve, and reports its financial data so that it can be used by accountants, consultants, business
analysts, managers, chief finance officers (CFOs), auditors, and regulatory, and tax agencies. Explain the
words in boldface in relation to AIS and clearly highlight the importance of each in the operating
effectiveness of an institution.
Ans:
Collect: Accounting Information System collects all financial data pertaining to the organization’s business
practices. Such data may be differed depending on the nature of the organization’s business practices. The
importance of this function is to collect all financial data that have a direct relationship with the operation
of the organization’s business activities. It may consist of the following:
 sales orders
 customer billing statements
 sales analysis reports
 purchase requirement
 vendor invoices
 check registers
Store:
The data collected by an AIS can be stored in the system for future use by the organization. To store
information, an AIS must have a database structure such as Structured Query Language (SQL), a computer
language commonly used for databases. The importance of this function is to store a large amount of data
collected by the organization and to prevent loss in data.
Manage:
These data stored in an AIS are handled and controlled by professionals such as Accountants, consultants,
business analysts, managers, chief finance officers (CFOs), auditors, and regulatory, and tax agencies.
Retrieve:
An AIS system can also fetch the stored data when needed by the management for decision-making
purposes.
Report:
An AIS produces reports in different formats such as summary reports, exception reports, periodic reports,
on-demand reports, event-initiated reports. The importance of this function is that it helps management
to give a breakdown of the overall business activities and to proffer immediate solutions where necessary.
Q1b. Elucidate by pinpointing the concept of reasonable assurance.
Ans:
The concept of reasonable assurance implies a high degree of assurance, constrained by the costs and
benefits derived and also recognizes evaluation of these factors requires estimates and judgment by
management.
Internal control only provides satisfactory assurance regarding the achievement of objectives in the
following categories:
• Effectiveness and efficiency of operations
• Reliability of financial reporting
• Compliance with applicable laws and regulations

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Q1c. Information Technology Infrastructure:
Information technology infrastructure refers to the hardware components used to operate the accounting
information system. Most of these hardware items are things a business would need to have anyway -
they include personal computers, servers, printers, surge protectors, routers, storage media, and possibly
a backup power supply.

Q2a. Internal controls, no matter how well designed and operated, can only provide reasonable
assurance regarding the achievement of the overall objectives of an organization. State and clearly
discuss five drawbacks which may thwart the effectiveness of Internal Controls.
Ans:
• Resource constraints: such as the people, the information technology infrastructure, and software.
Internal control can only be effective when these resources are sufficiently available.
• Inadequate skill, knowledge, or ability: The information technology infrastructure and software
used as an internal control system can only be operated with someone with the requisite skills,
knowledge, or ability.
• Degree of motivation by management and employees: Most times an internal control system can
be circumvented as a result of low motivation by the management of the organization.
• Internal controls can be circumvented by collusion of two or more people. Even more important to
recognize, management has the ability to override the internal control system.
• Unintentional errors: An internal control can be circumvented also as a result of unplanned errors
that may occur either by the individual designated for the task or by the information technology
infrastructure and software. These errors cannot be prevented from happening.
Q2b. Discuss what is meant by Internal Controls?
The internal controls of an AIS are the security measures it contains to protect sensitive data. These can be
as simple as passwords or as complex as biometric identification. An AIS must have internal controls to
protect against unauthorized computer access and to limit access to authorized users which includes some
users inside the company. It must also prevent unauthorized file access by individuals who are allowed to
access only select parts of the system.
Q2c. What security measures would you practice/ institute to safeguard sensitive data?
The internal controls of an AIS are the security measures it contains to protect sensitive data.

Q3a. For an organization to succeed, crucial activities have to be designed and instituted for the
achievement of the Overall Objectives of the Organization. State and explain five of these activities and
give an insight as to how these activities are interrelated with each other.
Ans:
Key Internal Control Activities
Segregation of Duties
Duties are divided, or segregated, among different people to reduce the risk of error or inappropriate
actions. For example, responsibilities for receiving cash or cheques, preparing the deposit to the Cashier's
Office, and reconciling the deposit to the cashier's receipt and Balances should be separated.
Structure
Organizational structure - lines of authority and responsibility - should be clearly defined so that
employees know where to go to report performance of duties, problems and questions related to
position and the organization as a whole. An organization chart is a good means of defining this structure
as long as it is kept up to date. Part of the structure is also the rules that employees must abide by.

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Written policies and procedures provide guidance to employees in carrying out their duties, provide for
clear rules on allowable and expected activity, as well as provide means for enforcement. The
department's lines of authority and policies and procedures should be reviewed periodically to ensure
they are in agreement with the organization's strategic mission.
Authorization and Approval
Transactions should be authorized and approved to help ensure the activity is consistent with
departmental or institutional goals and objectives. For example, a department may have a policy that all
purchase requisitions and invoice vouchers must be approved by the director. The important thing is that
the person who approves transactions must have the authority to do so and the necessary knowledge to
make informed decisions.
Reconciliation and Review
Performance reviews of specific functions or activities may focus on compliance, financial or operational
issues. Reconciliation involves comparing transactions or activity recorded to other sources to help ensure
that the information reported is accurate. For example, revenue and expense activity recorded on
accounting reports should be reconciled or compared to supporting documents to ensure that the
transactions are recorded timely, in the correct account, and for the right amount.
Security
Security may be physical or electronic (information system controls) or both. Equipment, inventories,
cash, checks and other assets should be secured physically, and periodically counted and compared with
amounts shown on control records. For example, the periodic physical confirmation of equipment by
individual departments is a physical security control. Virus detection software should be current and
updated regularly to help protect integrity of systems. Hardware and access controls (passwords) should
be changed periodically and rigorously safeguarded to protect from unauthorized access to database,
computer systems, etc. Special physical and software controls (such as encryption software) should be
developed for systems containing sensitive and/or confidential information.

Q3b. Explain the following terminologies:

 Modularization
 Coupling
 Cohesion
 Internal controls
Modularization: Modularization is a technique to divide a software system into multiple discrete and
independent modules, which are expected to be capable of carrying out task(s) independently. These
modules may work as basic constructs for the entire software.
Coupling: Coupling is a measure that defines the level of inter-dependability among modules of a
program. It tells at what level the modules interfere and interact with each other. The lower the coupling,
the better the program.
Cohesion: cohesion is a measure that defines the degree of intra-dependability within elements of a
module. The greater the cohesion, the better is the program design.
Internal controls: The internal controls of an AIS are the security measures it contains to protect sensitive
data. These can be as simple as passwords or as complex as biometric identification. An AIS must have
internal controls to protect against unauthorized computer access and to limit access to authorized users
which includes some users inside the company. It must also prevent unauthorized file access by
individuals who are allowed to access only select parts of the system.

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 Q3c. State and clearly explain five phase-oriented and development of an accounting information
System?
The phase-oriented Operation and Development of an AIS system
o Requirements engineering:
o Software design:
o Modularization
o Coupling
o Cohesion

Requirements engineering:
The elicitation (mining), analysis, specification, and validation of requirements for software.
Software design:
The process of defining the architecture, components, interfaces, and other characteristics of a system or
component. It is also defined as the result of that process. Software design is a process to transform user
requirements into some suitable form, which helps the programmer in software coding and
implementation.
Modularization:
Modularization is a technique to divide a software system into multiple discrete and independent
modules, which are expected to be capable of carrying out task(s) independently.
These modules may work as basic constructs for the entire software.
Coupling:
Coupling is a measure that defines the level of inter-dependability among modules of a program. It tells at
what level the modules interfere and interact with each other. The lower the coupling, the better the
program.
Cohesion:
cohesion is a measure that defines the degree of intra-dependability within elements of a module. The
greater the cohesion, the better is the program design.

FINANCIAL ACCOUNTING SEMINAR

ACCOUNTING CONCEPTS AND CONVENTIONS
Accounting concepts:
Business Entity Concept: This concept assumes that for accounting purposes, the business enterprise and
its Owner are two Separate Entities. Thus, the business and personal transactions of its owner are
separate.
Money Measurement Concept: This concept assumes that all business transactions must be in terms of
Money. That is, in a currency of a country.
Dual Aspect Concept: This concept assumes that every transaction has a dual effect. That is it affects two
accounts in their respective opposite sides. Therefore, the transaction should be recorded at two places
(A=C+L).
Accounting Period Concept: This concept assumes that all transactions are recorded in the book of
account on the assumption that profits on these transactions are to be ascertained for a specific period.
Cost Concept: This concept states that all the assets are recorded in the books of accounts at the purchase
price, which includes the cost of acquisition, transportation, and installation, and not at its market price.

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Matching concept: This concept states that the income made by the business during a period can be
measured only when the revenue earned during a period is compared with the expenditure incurred for
earning that revenue
Accruals concept: It is generally accepted in accounting that the basis of reporting income is accrual.
Accrual makes a distinction between the receipt of cash and the right to receive it, and the payment of
cash and the obligation to pay it.
Realization concept: This concept states that the revenue from any business transaction should be
included in the accounting records only when it is realized. The term realization means creation of the
legal right to receive money. Realization is technically understood as the process of converting non-cash
resources into money.
Prudence concept: This concept states that profits are not recognized until sale has been completed. That
is, one should not anticipate profits, but only recognized them in form of cash.
Going Concern Concept: This concept states that a business firm will carry on its activities for an indefinite
period of time or the foreseeable future. Simply stated, it means that every business entity has continuity
of life. Thus, it will not be dissolved in the near future.
Accounting Conventions
Convention of Materiality: This concept states that items of small significance need not to be given strict
theoretically correct treatment. In fact, there are many businesses which are significant in nature. The cost
of recording and showing in financial statements such events may not be well justified by the utility
derived from that information.

Convention of Conservatism: This convention requires that the accountant must follow the policy of
“playing safe” while recording business transactions and events. That is why, the accountant follows the
rule anticipate no profit but provide for all possible losses, while recording the business events. This rule
means that an accountant should record lowest possible value for assets and revenues, and the highest
possible value for liabilities and expenses.
Convention of Consistency: The convention of consistency requires that ones a firm decided on certain
accounting policy and methods and has used this for some time, it should continue to follow the same
method or procedure for all subsequent similar event and transactions unless it has a sound reason to do
otherwise.
International Accounting Standards
IAS 1 - Presentation of financial statements
IAS 2 – Inventories
IAS 7 – Cash flow statements
IAS 10 – Events after the balance sheets
IAS 19 – Employee benefits
IAS 1 - Presentation of financial statements
IAS 1 changes the tittle of financial statements as they will be used IFRSs:
• Balance Sheets will become statements of financial position
• Income statements will become statements of comprehensive income
• Cash flow statements will become statements of cash flow
IAS 2 – Inventories
The term inventory refers to the stock of goods which a business holds in a variety of forms:
• Raw materials for use in the subsequent manufacturing process
• Work-in-progress partly manufactured goods

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 • Finished goods completed goods ready for sale to customers.
• Finished goods which the business has bought for resale to customers The principle
inventory valuation set out in IAS 2 is:
Inventory should be valued at the lower of cost and net realisable value.
IAS 7 – Cash flow statements
This statement is required to be prepared as part of the company’s financial statement. The statement
provides guidelines for the formats of cash flow statements. The statement is divided into three
categories:
• Operating activities: The main revenue-generating activities of the business, together with the
payment of interest and tax.
• Investing activities: The acquisition and disposal of long-term assets and other investing activities.
• Financing activities: Receipts from the issue of new shares, payments for the redemption of shares,
and changes in long-term borrowings.
At the end of the statement, the net increase in cash and cash equivalent is shown, both at the start and
end of the period under review.
Types of financial statement
Statement of Financial Position: the statement of financial position is prepared to ascertained the
financial position of the business. That is to determine the amount of asset owned by the business and its
obligations (Liability) owed.
Cash flow statement: it is prepared to ascertain the cash that comes in and goes out of the business.
Statement of Comprehensive Income (SOCI): it is prepared to ascertain the financial performance of an
entity. That is whether the business is making profits or Loss.
Statement of change in Equity: is a business financial statement that measures the changes in owner
equity throughout a specific accounting period.

Users of accounting information

Users Purpose
Management For day-to-day decision making and performance evaluation
Proprietor/Shareholders To analyze performance, profitability and financial position
Lenders – Bank & To determine the financial position and strength of the company,
Financial Institutions debt service coverage etc.
Suppliers To determine the credit worthiness of the company.

Customers To know general business viability before entering into long-term

contracts and arrangements.
Employees To know the stability, continuity and growth of the enterprise,
and its ability to pay remuneration, retirement & other benefits,
and to enhance career opportunities.
Government To ensure prompt collection of direct and indirect tax revenues.
To evaluate performance and contribution to social objectives.
Research scholars For study, research and analysis purposes.

Public at large To see whether the enterprise is making a

reasonable/substantial contribution to the local economy. E.g.,
employment opportunities, patronage of local supplies.

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Bank Reconciliation Statements: It is a statement showing the items of differences between the cash
book balance and the pass book balance, prepare on any day for reconciling the two balances. • Items in
the cash book but not in the bank statement balance
Un-presented cheques: These are cheques issued by the business to its trade payables and credited in the
cash book but have not been taken to the bank for payments.
Un-credited cheques: These are cheques received by the business, debited into the cash book and then
lodged into the bank account but not credited by the bank.
• Items in the bank statement but not in the cash book balance
Standing Order: Standing Order is an instruction to the bank to make regular payments to another party
of a specific amount and on a specific date on a recurring basis on behalf of the business.
Dishonored cheques: These are cheques issued out by the business to its trade payable, but have been
rejected by the bank for payments.
Bank charges: These are amounts taken from the business bank account to cover the costs of running the
account and rendering of services.
Dividend: These are money received by the bank from an investment made by the business or company.
Credit transfer/ Direct credit: This is a direct transfer of money from another person’s or business’s bank
account directly into the business’s bank account.
Direct Debit/ Debit transfer: This is a direct payment out of the company’s bank account to a person or
other company that has been authorized by the company to draw money from the account.
Reasons why a cheque maybe dishonored
• Insufficient funds in the drawer’s account
• No signature on the cheque or the signature does not match the record at the bank
• The cheque is not dated
• Amount in words differ from the amount in figure
• The cheque is a stale cheque
• The cheque is a post-dated cheque

INTRODUCTION TO MARKETING SEMINAR

QUESTIONS AND ANSWERS
Q1. The marketing mix includes the basic tools used by marketing managers to sell goods and services
to target customers. List and explain the elements of the marketing mix?
Marketing Mix is a mixture of several ideas and plans followed by a marketing representative to promote a
particular product or brand. The elements of marketing mix are:
• Product
• Price
• Place
• Promotion
1. Product
Goods manufactured by organizations for the end-users are called products.
Products can be of two types - Tangible Product and Intangible Product (Services) An individual can see,
touch and feel tangible products as compared to intangible products.
A product in a market place is something which a seller sells to the buyers in exchange of money.

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 2. Price
The money which a buyer pays for a product is called as price of the product. The price of a product is
indirectly proportional to its availability in the market. Lesser its availability, more would be its price and
vice a versa.
Retail stores which stock unique products (not available at any other store) quote a higher price from the
buyers.
3. Place
Place refers to the location where the products are available and can be sold or purchased. Buyers can
purchase products either from physical markets or from virtual markets. In a physical market, buyers and
sellers can physically meet and interact with each other whereas in a virtual market buyers and sellers
meet through internet.
4. Promotion
Promotion refers to the various strategies and ideas implemented by the marketers to make the end -users
aware of their brand. Promotion includes various techniques employed to promote and make a brand
popular amongst the masses.

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