Accounting Systems, Internal Controls, and Ethics

Topics: Internal control, Accounting software, Accounts receivable Pages: 128 (28187 words) Published: August 25, 2012

Accounting Information Systems

ACCOUNTING SYSTEMS, INTERNAL CONTROLS, AND ETHICS

Prepared for the course team by

Vimlesh B. Narayan

Unit 1 Contents

Unit 1 Contents2
Concept Map3
Learning Outcomes4
1.1 Introduction5
1.2 Accounting System Design6
System Objectives and Design Factors6
Designing the System8
1.3 Internal Control Systems17
Objectives of Internal Control Systems17
Structure of Internal Control Systems18
Why You Should Consider the Components?21
Internal Control Principles and Limitations25
1.4 Control over Revenue and Receipts31
Internal Control Objectives and Strategies32
Combined Document Flows and Related Activities35
1.5 Control over Purchases, Inventories, and Payments41
Internal Control Objectives and Strategies41
Combined Document Flows and Activities45
1.6 Control over Payroll51
Internal Control Objectives and Strategies51
1.7 Control over Fixed Assets57
Internal Control Objectives and Strategies57
1.8 Other Controls61
Budgetary Control61
Information Systems61
1.9 Ethics, Business, and the Accounting Profession65
Defining Ethics65
Need for Ethics67
1.10 Summary79
Minute Paper80
Minute Paper80
Glossary82
Readings103
Reading 1: Selling on Credit & Receivables103
Reading 2: Control over Sales of Inventories106
Reading 3: Receipts110
Reading 4: Purchases and Inventory Control114
Reading 5: Payments122
Reading 6: Control over Payroll123
Reading 7: Control over Non-Current Assets130
References133
Further Reading134

Concept Map

This is a diagrammatic representation of what you will be learning in this unit. It shows the links between the learning objectives and key concepts.

[pic]

Figure 1: Unit Concept Map

Learning Outcomes

The following list of learning outcomes describes what you will be able to achieve after completing this unit. They are broken into three groups: Conceptual outcomes refer to concepts and other information that you are expected to know; Analytical outcomes represent those issues that you should be able to evaluate; and Procedural outcomes are those skills that you should be able to demonstrate as they relate to the actual performance of technical accounting skills.

|CAP | |Conceptual |Analytical |Procedural | |On completion of this unit you will be |On completion of this unit you will be |On completion of this unit you will be | |able to: |able to: |able to: | | | | | |Describe the link between authorisation, |Evaluate internal controls in accounting |Use the design process to design simple | |responsibility, accountability and |sub-systems by discussing their strengths |manual accounting subsystems that consider| |internal controls; |and weaknesses in relation to the |the components and principles of internal | |Describe accounting system design factors|objectives and the components of internal |control design. | |and the design process; |controls; | | |Describe the objectives of internal |Synthesise recommendations based on an | | |control; |analysis and evaluation of controls from | | |Describe the components of internal |A1 above; and...

References: FIA Council, (2000), Fiji Institute of Accountants: Code of Ethics, FIA, Suva, Fiji, pp 4–7.
Grynberg R., et.al., (2002), Crises: Collapse of the National Bank of Fiji, Crawford House Publishing, Adelaide, Australia, p95.
Gul, F.A.et.al., (1994), Theory and Practice of Australian Auditing, (3rd edition), (Chapter 14), Thomas Nelson Australia. pp 359, 360, 364–367.
McNally Q., et.al., (2001), Accounting Principles and Practice, (Chapter 5), Pearson Education, NZ.
Narayan V., (2007), AFF01 Basic Accounting A Course-Book, (Unit 3), USP, Suva.
TVNZ, AAP, Heads may roll over Ansett fiasco, (2001), Retrieved 20/11/07, from http://tvnz.co.nz/view/page/425822/36435
Further Reading
Capital Markets Development Authority: http://www.cmda.com.fj/
Adams, K., (1997), “Chapter 1,” Internal Controls and Auditing, Prentice Hall Australia Pty Ltd.
Grynberg R., et.al., (2002), Crises: Collapse of the National Bank of Fiji, Crawford House Publishing, Adelaide, Australia.
-----------------------
[1] Cushing B, Romney M., 1990, Chapter 1: Accounting Information Systems: An Overview”, Accounting Information Systems: A Comprehensive Approach, Addison – Wesley Publishing Company Inc, USA
[2] McNally Q., et.al., 2001, “Chapter 5,”Accounting Principles and Practice, Pearson Education, NZ. p194.
[3] A few of these have been sourced from McNally Q., et.al., 2001, “Chapter 5,”Accounting Principles and Practice, Pearson Education, NZ. p194-195.
[6] Gul, F.A.et.al., 1994, Theory and Practice of Australian Auditing, Thomas Nelson
Australia
[7] http://www.coso.org/publications/executive_summary_integrated_framework.htm
[8] Gul, F.A.et.al., 1994, Theory and Practice of Australian Auditing, Thomas Nelson Australia
[11] http://www.coso.org/publications/executive_summary_integrated_framework.htm
[12] Davey H., et.al., 2003, Accounting Fundamentals: an introduction for New Zealand students, Dunmore Press Ltd, New Zealand
[13] Adapted from Bazley, M., et.al., 2004, Contemporary Accounting, Thomson, Australia. p19.
[16] Much of the information is sourced from: Grynberg R., et.al, 2002, Crises: Collapse of the National Bank of Fiji, Crawford House Publishing, Adelaide, Australia.
[18] Grynberg R., et.al., 2002, Crises: Collapse of the National Bank of Fiji, Crawford House Publishing, Adelaide, Australia. p95.
[19] Marshall, D., et.al., 2005, Accounting: what the numbers mean, McGraw Hill Australia. pp 280 – 281.
[20] Marshall, D., et.al., 2005, Accounting: what the numbers mean, McGraw Hill Australia. Pp 282 – 283
[21] Latin for “something for something”; indicates a more-or-less equal exchange or substitution of goods or services
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