Chamberlain College of Nursing - ACCT 562 Final Exam Rated A

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ACCT 562 Final Exam Final Exam Review for ACCT562 (TCO A) The three "E's" of operational auditing – Be ready to discuss and give examples. (TCO B) The planning phase and the critical problem ... areas – A thorough discussion of these in relation to administrative and operational controls. (TCO C) The work program development, procedural steps, and their purpose. You will be given a particular area to relate these to actual practice. (TCO D) The Fieldwork stage – Be ready to discuss attributes of evidence, elements of workpapers, and factors to consider in reaching conclusions including examples of each. (TCO E) Attributes of a review finding. Identify and analyze their inclusion in a report, giving clear examples. (TCO F) Be prepared to discuss corruption, cash larceny schemes including internal controls to deter and detect these types of fraud schemes. You will also be presented with a short case study to analyze; you will be asked specific questions regarding the case in a similar fashion as the Threaded Discussion (issues, controls, prevention, red flags, etc.). You will be able to find some parts of these questions in your text for specific requirements, but you will have to be very comfortable with the text(s) materials, the Threaded Discussions, and our case studies from the course to be able to express your perspective on the complete answer to these questions. Examples from your own experiences and relating some of the theories from the course will validate your answers. Good luck to each of you! 1. (TCO A) Identify the three "E's" of operational auditing, and note three examples of each. Illustrate how these fit into the specific objectives of the operational audit. (25) The three "E's" of operational auditing are economy, efficiency, and effectiveness. Economy refers to the cost of operations. It talks about whether the organization carrying out its responsibilities in the most economical manner. It consider following aspects: 1) Following sound purchasing practices; 2) Overstaffed as related to performing necessary functions; 3) Allowing excess materials to be on hand; 4) Using equipment that is more expensive than necessary; 5) Avoiding the waste of resources. (Reider 12) An textbook example about following sound purchasing practices is reviewing the Purchasing Department’s methods and procedures that vendors could be allowed to ship the ordered quality plus or minus 10 percent. Efficiency refers to methods of operations. It talks about whether the organization carrying out its responsibilities with the minimum expenditure of effort. It consider following aspects: 1) Improper use of manual and computerized procedures; 2) Inefficient paperwork flow; 3) Inefficient operating systems and procedures; 4) Cumbersome organizational hierarchy and/or communication patterns: 5) Duplication of effort; 6) Unnecessary work steps. (Reider 12) Effectiveness refers to results of operations. It talks about whether the organization achieving results or benefits based on stated goals and objectives or some other measurable criteria. It consider following aspects: 1) Appraisal of the organizational planning system as to its development of realistic goals, objectives, and detail plans; 2) Assessment of the adequacy of management's system for measuring effectiveness; 3) Determination of the extent to which results are achieved; 4) Identification of factors inhibiting satisfactory performance of results. (Reider 12-13) Reider, Rob. Operational Review Workbook: Case Studies, Forms, and Exercises. John Wiley & Sons P&T, 2002-08-23. VitalBook file. 2. (TCO B) One of the most important arrears of the planning phase is to identify the critical problem areas. A good place to start in determining critical operational areas is to analyze the organization’s financial data and statements. Identify and explain the four analytical tools that can be used to effectively analyze financial statements. Four analytical tools are in widespread use in analyzing financial statements: 1) Horizontal analysis: is an analysis of the year-to year change in each financial statement item. 2) Trend analysis: is a comparison of three or more years’ data. 3) Vertical analysis: concentrates on the relationships between various financial items on a financial statement. 4) Ratio analysis: is a form of financial statement analysis that is used to obtain a quick indication of a firm's financial performance, such as its efficiency, liquidity, profitability and solvency. file:///Users/macbookpro/Downloads/analyzing_financial_statements.pdf 3. (TCO C) There are four procedural steps in the work program development, identify these procedural steps and their purpose, then list no less than five work steps to help the reviewer meet the objectives during a review of purchasing department operations, as outlined in your notes. The four procedural steps in the work program development: 1. Identification of the critical operational areas and their related control and risk areas. These risk areas usually relate to the inability to achieve the operational areas’ goal and objectives. 2. Development of the key questions and work steps to validate and quantifythe perceived risk areas. 3. Identification of the work steps needed to provide answers to the perceived risk areas and key questions. 4. Development of review work plans for each area to be reviewed; including personal assignments, time schedules, and review budgets. And the five of six work steps that could help the reviewer meet the objective: 1. Selecting a number of operating departments or units where the reviewers would interview and review with department management and operations personnel the way their purchase requisitions are controlled and processed; 2.Identifying the need for selected materials, equipment, or services for approved purposes, plans, or programs; 3.Determining authority for purchase requisition approvals, including purpose and budgetary requirements within the operating department; 4.Analyzing the establishment of purchase lead times and their integration with departmental plans and activities; 5.Reviewing and analyzing purchase specification and quality control procedures to ensure that the right items are being ordered at the most economical prices. Reider, Rob. Operational Review: Maximum Results at Efficient Costs. John Wiley & Sons P&T, 2002. GoogleBook. 4. (TCO D) Describe four factors that a reviewer must consider in reaching conclusions during the field work phase, explain why a reviewer should consider these factors. Then identify four specific field work techniques used to identify weaknesses in management and operational systems. The operational reviewer should be most aware of these four techniques, which include: interviewing; systems flowchart; layout flowchart and ratio, change, and trend analysis. An interview could be not planned. It can help a reviewer get some valuable information. The systems flowchart can help a reviewer analyze the process step, which showing the processes of a functional area. The layout flowchart can help a reviewer analyze the possible function or activity, which showing the physical layout of a work area and its related work flow. (Reider 137-161) Reider, Rob. Operational Review Workbook: Case Studies, Forms, and Exercises. John Wiley & Sons P&T, 2002-08-23. VitalBook file. 5. (TCO E) Criteria is one of the attributes of review findings. Identify no less than four of the six criteria standards and analyze their inclusion in your report. (20) Operational review criteria standards include: • Organizational policy statements • Legislation, laws, and regulations • Contractual arrangements • Funding arrangements • Organizational and departmental plans: goals and objectives • Budgets, schedules, and detail plans (Reider 202) Reider, Rob. Operational Review Workbook: Case Studies, Forms, and Exercises. John Wiley & Sons P&T, 2002-08-23. VitalBook file. 6. (TCO F) Identify and describe the four categories of corruption? What do they have in common? How do they differ? (20) Here’s the four categories of corruption: bribery, illegal gratuities, economic extortion, and conflicts of interest. Bribery means giving or receiving valuables which enough to impact an official act. Illegal gratuities are very similar to bribery, but valuables are given to an employee to reward a decision rather than influence it. In other words, it happened after making a decision. Economic extortion is the “pay up or else” corruption schemes. It always comes with harmful result. A conflict of interest occurs when an employee, manager, or executive has an undisclosed economic or personal interest in a transaction that adversely affects the organization. Bribery, illegal gratuities, and economic extortion cases are really similar, because all of these cases influence making a decision and getting reward for a decision. However, conflicts of interest cases are different with those three corruption schemes. “Conflict schemes involve the exertion of an employee’s influence to the detriment of his employer. But whereas in bribery schemes a fraudster is paid to exercise his influence on behalf of a third party, in a conflict of interest scheme the perpetrator engages in self –dealing” (Wells 242). Wells. Principles of Fraud, 3rd Edition. Wiley. VitalBook file. [Show More]

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