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PDF Accounting Information Systems The Processes and Controls Turner 2Nd Edition Solutions Manual Online Ebook Full Chapter
PDF Accounting Information Systems The Processes and Controls Turner 2Nd Edition Solutions Manual Online Ebook Full Chapter
PDF Accounting Information Systems The Processes and Controls Turner 2Nd Edition Solutions Manual Online Ebook Full Chapter
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Accounting Information Systems The Processes and
Controls Turner 2nd Edition Solutions Manual
Concept Check
1. b
2. c
3. d
4. d
5. a
6. c
7. d
8. d
9. c
10. c
11. b
12. d
Discussion Questions
13. (SO 1) Why is tone at the top so important to corporate governance?
Tone at the top is so important because it is the set of values and
behaviors in place for corporate leaders. As the term suggests, it sets
the tone, or pattern, for the entire organization. Thus a “bad” tone at
the top is likely to filter down and affect all levels of the enterprise.
14. (SO 1) Why do you think companies that practice good corporate
governance tend to be successful in business? Good corporate
governance means that the company leadership is held accountable
for building shareholder value and creating confidence in financial
reporting processes. This accountability means that corporate leaders
are more likely to do the right thing: that is, they operate efficiently,
effectively, and ethically. Such companies tend to be more successful.
5-1
18. (SO 2) How can internal auditors maintain independence, since they
are employees of the company? Internal auditors should not have any
reporting relationship or conflicting roles that impact their objectivity on
the job. For example, internal auditors often report to the audit
committee so that they are not reporting to a manager who would lead
to a conflict of interest. If internal auditors report to the CEO or CFO,
those parties are more likely to have an interest in hiding any
fraudulent or unacceptable behavior.
19. (SO 3) Identify the four functions of the corporate governance process.
The four functions of the corporate governance process are:
management oversight, internal controls and compliance, financial
stewardship, and ethical conduct.
20. (SO 3) Describe the key connection between tone at the top and
management oversight. Management oversight is the set of policies
and practices in place to lead the directorship of the company. This
set of policies and practices, if consistently demonstrated by
management, should set a good tone at the top.
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Chapter 5 Solutions Corporate Governance and
the Sarbanes-Oxley Act
21. (SO 3) Explain the connection between fiduciary duty and financial
stewardship. Fiduciary duty means that management has been
entrusted the power to manage assets of the corporation, which are in
turn owned by the shareholders. Financial stewardship is the
obligation of the fiduciary to treat these assets with discipline, respect,
and accountability.
23. (SO 4) What is the primary difference between the Securities Act of
1933 and the Securities Exchange Act of 1934? The Securities Act of
1933 requires full financial disclosure before securities can be sold,
while the Securities Exchange Act of 1934 requires ongoing disclosure
for registered companies.
24. (SO 5, 6) Why did the SEC establish the PCAOB? The PCAOB was
established to govern the work of auditors of public companies. The
PCAOB provides standards for audits, and has investigative and
disciplinary authority over public accounting firms.
25. (SO 5) Why can auditors no longer be involved in helping their audit
clients establish accounting information systems? Around the period
of discussion on the upcoming Sarbanes-Oxley act, there was a
general perception in public that this type of consulting engagement
impaired the independence of auditors. There was concern that a firm
that helped design an accounting system could not be independent in
assessing the effectiveness and reliability of that accounting system.
To enhance independence, the Sarbanes-Oxley Act prohibited such
consulting engagements.
26. (SO 5) Under what conditions are auditors permitted to perform non-
audit services for their audit clients? Non-audit services are permitted
only if the auditor has obtained prior approval from the client’s audit
committee.
5-3
Chapter 5 Solutions Corporate Governance and
the Sarbanes-Oxley Act
27. (SO 5, 6) How has the Sarbanes-Oxley Act increased the importance
of audit committees in the corporate governance process? The SOX
Act places much more responsibility on the audit committee. On
financial matters, the audit committee is to supervise the board of
directors, which in turn supervises corporate management. The audit
committee must be independent and it is responsible for hiring, firing,
and overseeing the external auditors. The external auditors report to
the audit committee on all audit related matters. Some companies
may have followed these practices prior to 2002, but SOX now
requires the use of these practices.
28. (SO 5) Identify the six financial matters that must be certified by a
company’s top officers under the requirements of Section 302 of the
Sarbanes-Oxley Act. The following matters must be certified by a
company’s top officers: (1) the signing officers have reviewed the
report in detail; (2) based on the signing officer’s knowledge, the report
does not misstate any facts; (3) based on the signing officer’s
knowledge, the financial statements and related disclosures are fairly
presented; (4) the signing officers are responsible for the
establishment, maintenance, and effectiveness of internal controls; (5)
the signing officers have disclosed to the auditors and audit committee
any instances of fraud or internal control deficiencies; (6) the signing
officers indicate whether or not any significant changes in internal
controls have occurred since the date of their most recent evaluation.
29. (SO 5) Explain the relationship between Section 401 of the Sarbanes-
Oxley Act and the concept of transparency. Transparency in financial
reporting implies that nothing is hidden from the view of readers of
financial statements. Section 401 requires new disclosure information
on the financial statements for off-balance-sheet transactions. This
ensures that off-balance-sheet transactions are not hidden from
readers.
5-4
Chapter 5 Solutions Corporate Governance and
the Sarbanes-Oxley Act
external auditor must review the internal controls and attest to the
effectiveness of the internal controls.
31. (SO 5) Explain why Section 409 of the Sarbanes-Oxley Act has placed
more pressure on members of IT departments within public
companies. Section 409 of the SOX Act requires real-time disclosures
of important corporate events such as bankruptcy, new contracts,
acquisitions and disposals, and changes in control. This real-time
reporting requires that the company’s accounting systems track such
events in real-time. Therefore, IT departments must help establish and
maintain IT systems capable of achieving these reporting
requirements.
33. (SO 6) Why do corporate leaders see their jobs as more risky since the
Sarbanes-Oxley Act became effective? There are several “sign-offs”
that corporate leaders must do. If a corporate officer signs-off without
due care or fraudulently, he or she can be subject to penalties.
34. (SO 6) Which governing body holds the top position of management
oversight? The corporate board of directors holds the top
management oversight position
.
35. (SO 6) Identify two ways that companies are making efforts to improve
the financial stewardship of their managers. In order to improve the
financial stewardship of their managers, some companies are offering
training programs to assist managers in understanding their
stewardship responsibilities and some have made adjustments to
management incentive compensation packages to reduce the
temptation to manage earnings.
5-5
Chapter 5 Solutions Corporate Governance and
the Sarbanes-Oxley Act
Brief Exercises
38. (SO 2) Why are shareholders sometimes considered internal
stakeholders and sometimes considered external stakeholders?
Shareholders are owners of the company and could therefore be
considered internal stakeholders. However, in many large
corporations, most shareholders own such a small percentage of
outstanding shares that they have little to no influence on the
corporation. Thus, they could be considered external stakeholders.
5-6
Chapter 5 Solutions Corporate Governance and
the Sarbanes-Oxley Act
41. (SO 4) Describe how the characteristics of the financial markets in the
1980s eventually led to the creation of the Sarbanes-Oxley Act of
2002. In the 1980s, there was intense pressure for companies to met
or beat their earnings targets. As a result, creative accounting
practices became more common. Even in the following decade, these
irregularities became so severe that a series of high-profile corporate
accounting scandals erupted. The losses suffered as a result of these
corporate scandals were so significant that many investors demanded
that new legislation be introduced in order to prevent repeat instances
of these problems. The SOX Act was the result.
5-7
Chapter 5 Solutions Corporate Governance and
the Sarbanes-Oxley Act
43. (SO 6, 7) Describe at least three ways that the Sarbanes-Oxley Act
and the increased attention to corporate governance have put more
emphasis on the role of those responsible for the company’s
accounting information systems. IT departments are expected to help
management achieve compliance with new legislation by leveraging
technology so that financial processes can be relied upon to provide
accurate information. Secondly, many corporate managers are
demanding more electronic recordkeeping to provide timely
information, but that requires an IT infrastructure that supports the
company’s strategies and goals. Finally, since most corporate
managers do not have time to collect data, they need to have
information that is readily accessible.
Problems
45. (SO 3) List the six steps for establishing internal controls and describe
how this process leads to stronger overall corporate governance. The
six-step process for internal controls includes the following:
1. Define the key activities and resources involved in each business
activity.
2. Define the objectives of each activity.
3. Obtain input from experienced users and advisors on the effective
design of controls.
4. Formally and thoroughly document the details of the controls.
5. Test the effectiveness of controls to make sure they are operating
as designed.
6. Engage in continuous improvement to fix problems and upgrade
controls.
These steps help to establish a thorough understanding of
processes as the foundation for an effective system. It also provides
5-8
Chapter 5 Solutions Corporate Governance and
the Sarbanes-Oxley Act
47. (SO 6) Identify the costs and benefits of complying with the Sarbanes-
Oxley Act of 2002. Do you think the costs are justified? The costs of
complying with SOX are high, and have ranged from some companies’
complete overhaul of operations to other companies’ mere revisions in
reporting and documentation. In addition, most companies have also
seen increases in their audit costs, as auditors also have increased
responsibilities as a result of SOX. On the other hand, some
companies have realized benefits from the requirements of SOX,
including enhanced performance as a result of improved internal
controls.
5-9
Chapter 5 Solutions Corporate Governance and
the Sarbanes-Oxley Act
49. (SO 3, 8) Using an Internet search engine, search for the terms “guilty
as charged” + “California Micro Devices” in order to find an article
about the company, California Micro Devices. Identify the related
corporate governance issues. Two top-ranking executives at California
Micro Devices were convicted of accounting fraud, including securities
fraud and insider trading. As top executives, they were in a position of
trust. The federal prosecutors in their case indicated that it was
important to send a message about the seriousness of their crimes, the
importance of their roles within the company, and the need for severe
punishment for the abusive accounting schemes that were carried out.
5-10
Chapter 5 Solutions Corporate Governance and
the Sarbanes-Oxley Act
Cases
51. Do you think the tone at the top of organizations like Enron and
WorldCom led to their demise? In support of your answer, identify
specific actions of top managers at each of these companies. In order
to answer this question, you may wish perform research on the
conditions that brought these companies down. Student responses will
vary, but there is likely to be consensus on the issue of poor tone at
the top leading to a company’s demise. At Enron, there are multiple
5-11
Accounting Information Systems The Processes and Controls Turner 2nd Edition Solutions Manua
52. Through online research, locate a code of conduct for the top
management of a real world company. Discuss the importance of
each component of this code in terms of ethics and its relation to the
concept of corporate governance. Student responses will vary
significantly, as there are numerous examples that may be found
online of company’s ethics codes. Each component of a code of ethics
should address one or more of the functions of corporate governance,
including management oversight, internal controls and compliance,
and financial stewardship. Although these functions are interrelated,
integrity and ethical behavior should be pervasive. As such, ethical
conduct is often regarded as the most important part of corporate
governance.
5-12
—Nou wa!.… bromde de andere rooier, ik seg moar dá’ die ouë
rakkert van ’n Hassel main al drie keer ’n graof noà’ main harses
mept hep!.… toe’k ’n kwetiertje te loat maffe hep!.… en sain naif.…
uit de polder.… ranselt puur s’n rooiers mi de staikvork in d’r pinse.…
aas se effe wá’ segge.… onder hoarlie.… werrik!—
Bij elk woord, rukten z’n dof-groene klauwen den grond in, kluiterden
aardbonken voor ’m uit, sprak ie afgehakt en hijgend.
—Nou, die ken veur main, sain buik verliese.… giftte Hesse, z’n
zandhand in den mond uitzuigend, waar de nagel onder ’t vleesch
losgescheurd was.
—Jesis.… wá’ jai main ’n roer-menietje bin!.… lolde de ander.…
f’rleje joar he’k main duim afhakt.… hier kaik.. mi de moker.… op de
schee.… scheeringpoaltjes.… ik hep sain d’r soo moar anplak.…
hep effe moar bloed.…
Weer was ie opgesprongen naar z’n kruik, die blinkte bij nog niet
gerooid bed-end, slobberde gretig z’n lauwe slappe koffie.—
Zweetvet drupte ’m langs z’n rooiige gezicht, den bronzigen hals in.
Willem Hassel had geloerd, maar durfde toch niets zeggen, nou ie
zag dat de kerel ’m wel wat mans leek.—
Kees was van z’n boonen aan ’t wortelen wieden gezet. Zweetzwaar
en paf-heet ploeterde ie hurkend, met stekende lendepijn [302]van
ongewoonte. Driftiger grabbelde z’n hand tusschen ’t gewas, en
telkens brandde ie zich aan netels. Boordevol werkdrift zat ie. En
giftig, heftig, was ie op z’n neef Willem, nou ie gehoord had, hoe
bazig ie ’n stakker, die daar te druipen stond van zweet, had
afgebluft om ’n slok drinken in de hitte. Wat ’n branie! Nou dat ze’r ’n
beetje bovenop gekomme binne! Eerst toch net zoo arme skooiers
aa’s sai.… en mi gelukkies en gapperaie bai de bolle.… en
bloedsuigerwerk!.. nou leeke ’t heere.… Je sou se ’n skoffel op d’r
test sloàn.… ’n mestvork in d’r pins steke!.… die skarre!.…
—Seg, sou je je aige nie rais afprottetaire.… je stoan net soo mooi te
kaike hier.… Hee! foader!.… hai staikt t’ met gain poot uit!.…
Kees groeide van lol. Hij had Jaap wel de hand willen drukken, al
sprak ie uit gewoonte, ook al jaren niet met ’m.
—Lá’ sain s’n gangetje, zei norsch oom Hassel, wien bestig ’t
stramme van Willem beviel.
’n Paar dagen later kwam ouë Gerrit op ’t land, achter zijn huis.
—Nog ’n vent? en Kees dan!.… d’r blaift t’met niks of’r.… An Peters
van de Baanwaik hé’k femurge twee hoek oarbeie f’kocht.… en drie
hoek an De Gauw.… veur Duitsloànd!.… sloffies, mi en sonder
doppies.… half raip an de pluk!.…
—Gaif main ’n bonk uit je koartesak, riep Piet naar Dirk, die juist ’n
stuk brood, dat ie te veel had, weer in z’n vuilen stukkenzak wou
wegduwen.
Kees, in wije kakensperring, hapte door, gretig. Ant had weer wat op
den reutel gekregen, nou ze zagen, dat Kees aan ’t werk was.
Goedig en rustig zat de kerel, lekker zichvoelend in de
zonkoestering, blij dat ie wat kon meenemen voor Wimpie. Zelf wist
ie niet goed waarom, maar hij voelde zich zóó bestig en tevree, nu ie
zwaar-ploeteren kon en wat verdiende, dat ie den Ouë wel wat wou
zeggen, al loerde die nog zoo stug-angstig naar ’m op.
—F’rdroaid aa’s t’met ’t gewas opskiete wil.… d’r waa’s te veul kou..
tussche.… nog gain oarbaie.… t’met half Juni!
Vrouw Hassel zat op de punt van ’n stoel voor potdicht raampje, met
’r neus achter ’n groote blompot geranium, die vuurde tegen ’r
grauwe kop, en vochtige aardlucht uitwasemde. Geel-grauw stond ’r
rimpelig gezicht. Ze had zich weer driemaal [306]bevuild. Nou was ’t
uit. Guurt wou niet langer blijven, als de Ouë er niet Dokter Troost
bijhaalde. Nou, in ’n half jaar was ’t zóó verergerd, dat ze de heele
boel bedierf.
Dat zou ie nou moar erais doen … Nou moar weer es op stap noar
dokter. Dat die vervloekte kerel sain niet in ’t ziekefonds wou
naime.… kostte sain zoo de hoaren van z’n hoofd. En noar een aer
loopen kon ie ook niet. Want de notoaris waa’s dokters zwager, die
sain veurskoten had.… En van ’t winter most ie miskien weer bai
sain ankloppe veur mest!.… mi vaif persint? Neenet! hai sou moar
stiekum morge er op afstappe.… ’t waif vroage gaf tug niks!.…
—U.… ung.… a.. a.. aci.. aci.. ci.… Bor.. Bor.. Bori.. ci!..
—’t Skoap hep sekers koors.… se kwailt puur van d’r pain in d’r
saitje.…
Assistentje stond ernstiger van z’n stamper naar ’t kind te kijken, dat
met blond krullebolletje net even boven apotheekbank uitkeek, ’t
klein bang gezichtje sip òploerend naar de glanskopering en ’t rood
vonkwerk van al kleinere stampertjes, die voor d’r neusje uitgestald
stonden, naast weegschaal.—Wasem van kruiden en
benauwingslucht van warme smerige lijven, zoog door ’t winkeltje. ’n
Jongetje achter de toonbank, op ’n trapje, verrinkelde tusschen
medicijnfleschjes ’n licht schoonmaakspel. Zoete valeriaan en
jodiumstank drong benauwend door, uit den kelder.… Stil, versuft en
beangstigd van eerbied, stond ’t fondsvolkje, glanspotjes, fleschjes
en schaaltjes te bestaren, luisterend in ontzag, naar de woord-
afhakkende stem van assistentje.
Wijd lapte dikke vrouw ’r tong uit den mond, waarop wijs-
geheimzinnig, grijs assistentje staarde, zich telkens den bril
kwaadaardigjes op den neus vaststootend.
Niet goed wist ie wat anders te vragen, dan juist, dàt, wat ie dokter
zoo dikwijls had hooren zeggen. Dikke vrouw stond weer klaar, met
gretigen uitleg:
—Moar.… main kindere.… dan kaa’k nie weg.… twai legge d’r
siek.…
—Heb je geen oore, schreeuwde ie, bleekig van drift, dat de dikke
vrouw bedremmeld wegbukte door de achterstaanders, de deur
uitschonkerde.
—De klaine hoest d’r aige deur twaie.… hai leg te rille aa’s ’n oal.…
en aile datie doen.… aile!!
’n Donker behaarde kerel was ’t, hoog boven wijs brilgestaar van
assistentje uitkijkend.
—Joa … klonk dreig-zwaar z’n stem, ik.… ikke kom veur main waif..
an ’t end van Duinkaik.…
—Nou.… seg.. wacht erais effetjes!.. hep jai d’r puur effe geduld
mee.… loa me rais denke.… kaike?.… wá’ hep se tog weer said.. ’t
waif?.. je ken ’t moar nie in je kop skraive!.… Ojoà! se hep puur al.…
vaif nachte pain hier.… doar.… bai d’r bui-j’k.… se hep ’n
deureloop.… saa’k moàr klesseneere hee? en uitskaie ken se nie.…
vat je?.…
—Dá’ ken nie.… Dokter is t’r nie.… Of ze mot maar zelf hier
komme.…
—Dá’ ka’ je begraipe! Se ken puur gain kippestap doen.. nee Ouë.…
se haigt in malkoar van swakkighait.… Neenet.. ik mo dokter
hebbe.…
—Soo.. soo.. nou als je d’r op staat, zal dokter late wete wanneer ie
komme kan.…
—Daa’s net.… moar.. moar gaif jai d’r nou vast ’n drankie mee.…
hée smakwammes!.… daa’s aêr krek of ’k nie weust bin.… Sai.… sai
ken kwoalik stappe.… enne.… sai loopt puur laig.… soo slap aa’s ’n
tieme is ’t waif.
—Wa’ mot ie van main tong!.… aa’s skoap thuis te krepaire lait.…
soo sout hé’k nooit-nie.…
—Nou aa’s ’n lairelap.… mehair.… ’t slaim stoan d’r ’n duim dik op.
Achter Gerrit was ’n slank blond meisje, dochter van ’n notabele uit
stedeke ingestapt, luchtig. Luid-lachend groette ze vriendinnetje op
straat, die ’r gebracht had.
—Soo.. soo!.. dus je wil nie probeere met ’t kind? Strak drukte ie z’n
bril in neusgleufje, montuur tegen z’n ooren.
—Soo.… Soo!
—Soo, nou vrouw, jij bent lang van stof hoor! Maar ik heb je vooruit
gewaarschuwd.—
—Soo.… soo!.… maar ik zeg dat ’t nou genoeg is, barstte uit, z’n
nijdige stem; woede-doorschokt dreigde z’n gezicht.… Kort en
goed.… of ’t wel of nie in ’t reglement staat.… daar heb jij niks mee
noodig.… Wou je mij hier de wette [314]stelle?.… Al die buite
Wiereland woont, betaalt.. Dat weet je, dat wil dokter zoo. Dan wou
jij zeker, dat als jij naar Lemmer ging wone, dat dokter dan ook maar
van omstreke sprak hee?.… kort, en goed, ik heb je ’t gezegd.… En
nou marsch!.…
—Is ’t nou uit, donderde ie giftig, als jij nie dokke ken, kom jij met je
kind hier.… kort en goed!.…
—Vort wijf! daar is ’t gat van de deur, ben jij belatafeld! En jij Hassel?
—
Gerrit had verlegen staan luisteren, bang al, dat ie straks dokter
Troost zou zien.
—Nou Weimer, daa’s nie best mi’t waif.… mi de doàg ergert sai.…
dâ laikt puur toof’rai.… hoho!.… hoho!.. wá’ da’ mins skeelt.… hoho..
hoho.. ik wou juustemint dokter effe spreke.…
Stijfjes en onrustig was ouë Gerrit, met z’n pet in de hand, onnoodig
afslaand z’n kleeren, en lacherig-verlegen, duf-klein wachtkamertje
ingestapt. Stijf, in een hoekje bleef ie staan, strak op den
prachtmoestuin van dokter uitkijkend. ’n Paar meiden, wit-geschort,
stonden daar warm-blank, tusschen het goudgroen boomgewas te
lachen.—
Niks op z’n gemak voelde ie zich, beverig, bang dat dokter iets aan
’m zien zou van eigen gedachten aan z’n spullen en steelgenot.—Na
vijf minuutjes strak tuin-ingekijk, rinkelde ’n schelletje langs den
wand, kwam grijs hoofd van assistentje deuropening in, dat ’m
wenkte te volgen.
Ouë Gerrit was door vriendschaptoon van dokter altijd overstuur. Hij
wist nooit goed, wat ie met hem voor had, en hoe ie z’n antwoord
moest aanleggen. Was ie vriendelijk terug, dan keek dokter norsch.
Bleef ie stijf, dan lachte dokter ’m uit. En nou, zoo heelemaal diep in
dat prachtige huis. Van verlegenheid trok ie zich aan de baard,
haakte ie z’n handen door z’n zilveren lokken.
—Ikke hep soo.… bai main aige docht.… aa’s da’.… hoho.… aa’s
dá’ ’t waif miskien bestiges in ’n gesticht sel konne.… sai bevuilt d’r
aige.… Guurt,.… Guurt.… hoho.…