Control Accounting Info Systems

Control and Accounting Information Systems (Chapter 7) – Week 5 Summary:

Fact – Research has indicated that over 60% of firms and organizations have experienced a severe failure in controlling the security and integrity of their computer systems.

There are several reasons as to why organizations forgo adequate data system protection:

* The threat of crucial information loss is downplayed and viewed as an unlikely event.

* Lack of knowledge of full implications of switching data from computer centralized to net-based systems.

* The value of data is not recognised. Organizations fail to view data as a strategic resource, under estimating the impact of its loss or control.

* Tight budgets often lead management to forgo the time consuming control measures, in favour of productivity.

Internal Controls:

These are the implemented processes which aim to provide assurance that the listed objectives are achieved.

* Law and regulation compliance.

* Promotion and improvement of operational efficiency.

* Safeguard of assets.

* Preparation of financial reports in accordance with established criteria.

* Maintenance of records in sufficient detail to ensure company assets are reported accurately and fairly.

* Ensure the accuracy and reliability of provided information.

* Encourage adherence to prescribed managerial policy.

Internal controls are set place to perform three vital functions:

1. Preventive Controls: A proactive measure to deter issues and threats before they arise. E.g. The segregation of employee duties to guarantee that no single employee has too much power.

2. Detective Controls: Set in place to discover problems that have not been prevented. E.g. Bank reconciliations or monthly overviews of calculations.

3. Corrective Controls: If a problem has occurred, it must be identified and corrected. This also describes the recovery from the possible fallout or impact the threat created. E.g....