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Solutions for Accounting Information System 12e by Marshall B. Romney Paul J. Steinbart
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CHAPTER 22
SYSTEMS DESIGN,
IMPLEMENTATION, AND OPERATION
22.1 Prism Glass is converting to a new information system. To
expedite and speed up implementation, the CEO asked your consulting team to
postpone establishing standards and controls until after the system is fully
operational. How should you respond to the CEO’s request?
22.2 When a company converts from one system to another, many areas
within the organization are affected. Explain how conversion to a new
system will affect the following groups, both individually and collectively.
22.3 The following notice was posted in the employee cafeteria on
Monday morning:</para><opening>
<para><emphasis>To: </emphasis>All
Accounting and Clerical Employees</para>
<para><emphasis>From: </emphasis>I.M.
Krewel, President</para>
<para><emphasis>Subject: </emphasis>Termination
of Employee Positions</para></opening>
<extract><para>Effective this Friday, all
accounting and clerical employees not otherwise contacted will be
terminated. Our new computer system eliminates the need for most of these
jobs. We’re grateful for the loyal service you’ve rendered as employees
and wish you success. You may wish to pick up your final checks on Friday
before you go.</para></extract>
<para>Discuss the president’s approach to human resource
management.
</para></question><question id="ch20ques14"
label="2
What are the possible repercussions of this episode?
Assuming that job termination is the best alternative available,
how should management approach the situation?
22.4 In which phase of
the systems development life cycle would each of the following positions be
most actively involved? Justify your answers.
22.5 During which of the
five SDLC stages is each task, labeled (a) through (m), performed? More than
one answer may apply for each activity.
22.1 You were hired to manage the accounting and
control functions at the Glass Jewelry Company. During your introductory
meeting, the president asked you to design and implement a new AIS within six
months. Company sales for the past year were $10 million, and they are expected
to double in the next 18 months.
Outline the
procedures you would follow to complete the assigned project.
a.
Include a description of the following:</para>
1. Sources
of Information
2. Methods
of Recording Information
3. Methods
of Verifying the System Description
b. The accounts payable system will contain a number of programs,
including Enter Invoices and Print Payable Checks. For each program,
describe its purpose and outline application control considerations.
22.2 Wang Lab’s tremendous growth left the company with a serious
problem. Customers would often wait months for Wang to fill orders and process
invoices. Repeated attempts by Wang’s understaffed IS department to solve these
problems met with failure. Finally, Wang hired a consulting firm to solve its
revenue tracking problems and expedite prompt receipt of payments. The 18-month
project turned into a doubly long nightmare. After three years and $10 million,
the consultants were dismissed from the unfinished project.
The project failed for many reasons. The systems development process was so
dynamic that the failure to complete the project quickly became self-defeating
as modifications took over the original design. Second, management did not have
a clear vision of the new AIS and lacked a strong support staff. As a result, a
number of incompatible tracking systems sprang from the company’s distributed
computer system. Third, the project was too large and complex for the
consulting firm, who had little experience with the complex database at the
heart of the new system. Finally, the project had too many applications.
Interdependencies among subprograms left consultants with few completed programs.
Every program was linked to several subprograms, which in turn were linked to
several other programs. Programmers eventually found themselves lost in a
morass of subroutines with no completed program.
The IS department finally developed a system to solve the problem, but their
revenue tracking system suffered quality problems for years.<para>
Wang Labs asked you, a member of the IS staff, to write a memo explaining the
failure of the systems development project.</para>
a. Why did the development project fail?
What role did the consultants play in the failure?
b.
Identify the organizational issues that management must address in the future.
c. Recommend steps the company could take
to guarantee consulting service quality.
22.3 Tiny Toddlers, a manufacturer of children’s toys and furniture, is
designing and implementing a distributed system to assist its sales force. Each
of the 10 sales offices in Canada and 20 in the United States maintains its own
customers and is responsible for granting credit and collecting receivables.
Reports used by each sales office to maintain the customer master file and to
enter the daily sales orders are shown in Figures 22-4 and 22-5.
<para>Evaluate the reports shown in <link
linkend="ch20fig04" preference="0">Figures 22-4<xref
linkend="ch20fig04" label="20-4"/></link>
and<link linkend="ch20fig05" preference="0">
22-5<xref linkend="ch20fig05"
label="20-5"/></link> using the following format:
Weakness</para></entry>
<entry
valign="top"><para>Explanation</para></entry>
<entry valign="top"><para>Recommendation(s)</para><link
linkend="informaltable0" preference="1"
role="generated"/>
22.4 Mickie Louderman is the new assistant controller of Pickens
Publishers. She was the controller of a company in a similar industry, where
she was in charge of accounting and had considerable influence over computer
center operations. Pickens wants to revamp its information system, placing
increased emphasis on decentralized data access and online systems. John
Richards, the controller, is near retirement. He has put Mickie in charge of
developing a new system that integrates the company’s accounting-related
functions. Her promotion to controller will depend on the success of the new
AIS.
Mickie uses the same design characteristics and reporting format she used at
her former company. She sends details of the new AIS to the departments that
interface with accounting, including inventory control, purchasing, human
resources, production control, and marketing. If they do not respond with
suggestions by a prescribed date, she will continue the development process.
Mickie and John have established a new schedule for many of the reports,
changing the frequency from weekly to monthly. After a meeting with the
director of IS, Mickie selects a programmer to help her with the details of the
new reporting formats.
Most control features of the old system are maintained to decrease the
installation time, with a few new ones added for unusual situations. The
procedures for maintaining the controls are substantially changed. Mickie makes
all the AIS control change and program-testing decisions, including screening
the control features related to payroll, inventory control, accounts
receivable, cash deposits, and accounts payable.
As each module is completed, Mickie has the corresponding department implement
the change immediately to take advantage of the labor savings. Incomplete
instructions accompany these changes, and specific implementation
responsibility is not assigned to departmental personnel. Mickie believes
operations people should learn as they go, reporting errors as they
occur.
Accounts payable and inventory control are implemented first, and several
problems arise. The semimonthly payroll runs, which had been weekly under the
old system, have abundant errors, requiring numerous manual paychecks. Payroll
run control totals take hours to reconcile with the computer printout. To
expedite matters, Mickie authorizes the payroll clerk to prepare payroll
journal entries.
The new inventory control system fails to improve the carrying level of many
stock items. This causes critical stock outs of raw material that result in
expensive rush orders. The new system’s primary control procedure is the
availability of ordering and user information. The information is available to
both inventory control and purchasing personnel so that both departments can
issue timely purchase orders. Because the inventory levels are updated daily,
Mickie discontinues the previous weekly report.
Because of these problems, system documentation is behind schedule, and proper
backup procedures have not been implemented. Mickie has requested budget
approval to hire two systems analysts, an accountant, and an administrative
assistant to help her implement the new system. John is disturbed by her
request because her predecessor had only one part-time assistant.
a. List the steps Mickie should have taken during while designing the
AIS to ensure that end-user needs were satisfied.
b. Identify and describe three ways Mickie violated internal control
principles during the AIS implementation.
c. Identify and describe the
weaknesses in Mickie’s approach to implementing the new AIS. How could
you improve the development process for the remaining parts of the AIS?
</para></listitem></orderedlist></listitem></orderedlist>
22.5 Ryon Pulsipher, manager of Columbia’s property accounting division, has had difficulty responding to the following departmental requests for information about fixed assets.
1. 1. The
controller has requested individual fixed assets schedules to support the
general ledger balance. Although Ryon has furnished the
information, it is late. The way the records are organized
makes it difficult to obtain information easily.
2. 2. The
maintenance manager wants to verify the existence of a punch press that
he thinks was repaired twice. He has asked Ryon to confirm
the asset number and the location of the press.
3. 3. The
insurance department wants data on the cost and book values of assets to
include in its review of current insurance coverage.
4. 4. The
tax department has requested data to determine whether Columbia should
switch depreciation methods for tax purposes.
5. 5. The
internal auditors have spent significant time in the property accounting
division to confirm the annual depreciation expense.
Ryon’s property account records, kept in an Excel spreadsheet, show the asset
acquisition date, its account number, the dollar amount capitalized, and its
estimated useful life for depreciation purposes. After many frustrations, Ryon
realizes his records are inadequate and that he cannot supply data easily when
requested. He discusses his problems with the controller, Gig Griffith.
RYON: Gig, something has to give. My people are working overtime and can’t keep
up. You worked in property accounting before you became controller. You know I
can’t tell the tax, insurance, and maintenance people everything they need to
know from my records. Internal auditing is living in my area, and that slows
down the work. The requests of these people are reasonable, and we should be
able to answer their questions and provide the needed data. I think we need an
automated property accounting system. I want to talk with the AIS people to see
if they can help me.
GIG: I think that’s a great idea. Just be sure you are personally involved in
the design of any system so you get all the info you need. Keep me posted on
the project’s progress.
1. a. Identify
and justify four major objectives Columbia’s automated property accounting
system should possess to respond to departmental requests for information.
2. b. Identify
the data that should be included in the database for each asset.
22.6 A credit union is developing a new AIS. The internal auditors
suggest planning the systems development process in accordance with the SDLC
concept. The following nine items are identified as major systems development
activities that will have to be completed.
1. 1. System
test
2. 2. User
specifications
3. 3. Conversion
4. 4. Systems
survey
5. 5. Technical
specifications
6. 6. Post-implementation
planning
7. 7. Implementation
planning
8. 8. User
procedures and training
9. 9. Programming
1. a. Arrange
the nine items in the sequence in which they should logically occur.
2. b. One
major activity is converting data files from the old system to the new
one. List three types of file conversion documentation that would be of
particular interest to an
auditor.</para></listitem></orderedlist>
22.7 MetLife, an insurance company, spent $11 billion to acquire
Travelers Life and Annuity from Citicorp in one of the largest insurance
company acquisitions of all time. The Metlife CIO estimated it would take three
years to integrate the two systems. Because the integration project was
especially critical, he figured he could accomplish the integration in 18
months if he pulled out all the stops. The MetLife CEO gave him nine months to
complete the task. To pull off the integration in nine months, he had to:
§ Integrate over 600 IS
applications, all with their own infrastructure and business processes. The new
systems had to comply with “One MetLife,” a company policy that all information
systems had to have a common look and feel companywide and be able to function
seamlessly with other MetLife systems.
§ Work with over 4,000
employees located in 88 offices scattered all over the globe.
§ Supervise an oversight team
and 50 integration teams in seven project management offices.
§ Work with hostile,
uncooperative Travelers employees for the six months it took to get regulatory
approval and close the deal. The systems had to be integrated three months
after the deal closed.
§ Identify integration
deliverables (144 in total) and manage the process to deliver them.
§ Negotiate with Citicorp for
hundreds of transition services that would not be immediately converted to
MetLife’s systems.
a. What tasks do you think MetLife would have to
perform to successfully integrate the Traveler systems into MetLife’s?
b. Search the Internet
for articles that describe the integration process. Write a two-page
summary of the problems and successes that MetLife experienced while
integrating the two
systems</para></listitem></orderedlist></problem>.
22.8 During final testing, just before launching a new payroll system,
the project manager at Reutzel Legal Services found that the purchased payroll
system was doing the following:
§ Writing checks for negative
amounts
§ Printing checks with names
and employee numbers that did not match
§ Making errors; for example,
$8 per hour became $800 per hour if a decimal point was not entered
§ Writing checks for amounts
greater than a full year’s salary
Fortunately, payroll was still installed on time, and only 1.5% of the checks
had to be manually reissued every payday until the problem was solved.
Other problems were that no one had made sure the new system was compatible
with the existing payroll database, and there appeared to be no formal
transition between the development of the project and the implementation of the
project. The system was never run in parallel.
Although the programming manager lost his job, the payroll problems helped
raise awareness of the company’s growing dependence on IT. Lacking a major
problem, there was a perception that the information system did not affect
operations.
a. What does “the system was
never run in parallel” mean?</para></listitem>
b. If the company had
run the system in parallel, what should have occurred?
1. c. What
other testing methodologies could have been used by the firm?
1. d.
What other types of problems are evident from reading the case?
22.9 A new program at Jones and Carter
Corporation (JCC) was supposed to track customer calls. Unfortunately, the
program took 20 minutes to load on a PC, and it crashed frequently. The project
did not have a traditional reporting structure, and it appeared that no one was
actually in charge. The lead project manager quit halfway through the project,
the in-house programmers were reassigned to other projects or let go, and two
layers of management loosely supervised the systems analyst.
Management hired consultants to fix the application, but after three months and
$200,000, the project was discontinued. JCC did not check the references of the
consulting firm it hired to create the new system. The consultants, who were
located two states away, made many programming errors. Although the systems
analyst caught some of the consultant’s mistakes, they grew increasingly
distant and difficult to work with. They would not even furnish the source code
to the project managers, most likely because they were afraid of revealing
their incompetence.
a. Identify potential
causes for the system implementation failure.
b. What steps should JCC
have taken to successfully design and implement the call tracking system?
22.1 Citizen’s Gas Company (CGC) provides natural gas service to
200,000 customers. The customer base is divided into the following three
revenue classes:
|
Class
|
Customers
|
Sales in Cubic Feet
|
Revenues
|
|
Residential
|
160,000
|
80 billion
|
$160 million
|
|
Commercial
|
38,000
|
15 billion
|
$ 25 million
|
|
Industrial
|
2,000
|
50 billion
|
$ 65 million
|
|
Totals
|
|
145 billion
|
$250 million
|
Residential customer gas usage is highly correlated with the weather.
Commercial customer usage is partially weather dependent. Industrial customer
usage is governed almost entirely by business factors.
The company buys natural gas from 10 pipeline companies in the amounts
specified in contracts that run for 5 to 15 years. For some contracts, the supply
is in equal monthly increments; for other contracts, the supply varies
according to the heating season. Supply over the contract amounts is not
available, and some contracts contain take-or-pay clauses. That is, the company
must pay for the gas volume specified in the contract, regardless of the amount
used.
To match customer demand with supply, gas is pumped into a storage field when
supply exceeds customer demand. Gas is withdrawn when demand exceeds supply.
There are no restrictions on the gas storage field except that the field must
be full at the beginning of each gas year (September 1). Consequently, when the
contractual supply for the remain- der of the gas year is less than that
required to satisfy projected demand and fill the storage field, CGC curtails
service to industrial customers (except for heating quantities). The
curtailments must be carefully controlled to prevent either an oversupply at
year-end or a curtailing of commercial or residential customers so the storage
field can be filled at year-end.
In recent years, CGC’s planning efforts have not been able to control the
supply during the gas year or provide the information needed to establish
long-term contracts. Customer demand has been projected only as a function of
the total number of customers. Commercial and industrial customers’ demand for
gas has been curtailed. This has resulted in lost sales and caused an excess of
supply at the end of the gas year.
To correct the problems, CGC has hired a director of corporate planning. She is
presented with a conceptual design for an information system that will help
analyze gas supply and demand. The system will provide a monthly gas plan for
the next five years, with particular emphasis on the first year. The plan will
provide detailed reports that assist in the decision- making process. The
system will use actual data during the year to project demand for the year. The
president has indicated that she will base her decisions on the effect alternative
plans have on operating
income.
1. Discuss the criteria to consider in
specifying the structure and features of CGC’s new system.
2.
Identify the data that should be incorporated into CGC’s new system to provide adequate
planning capability. Explain why each data item it is important and the
level of detail needed for the data to be useful.
Complete Solutions for Accounting
Information System 12e by Marshall B. Romney
Paul J. Steinbart
Paul J. Steinbart
All 22 Chapter's End Questions Solved - Verified from Solution
Manual
All Solution are in .doc format.
ACC 564 Complete Class
ACC/564 Full Class – Problems Solved
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