Question

• The hours worked field in a payroll transaction record contained the value 400 instead of 40. As a result, the employee received a paycheque for $6,257.24 instead of $654.32.

• A salesperson mistakenly entered an online order for 50 laser printers instead of 50 laser printer toner cartridges.

• A 20-minute power brownout caused a mission-critical database server to crash, shutting down operations temporarily.

• A fire destroyed the data center, including all backup copies of the accounts receivable files.

• A customer order for an important part did not include the customer’s address. Consequently, the

  order was not shipped on time and the customer called to complain.

  In the table below:

  (a) Identify five (5) risks present in the previously listed activities.
  (b) Recommend a control for each of the risks you identified.
  (c) Classify each of the control activities as preventive, detective, or corrective.

Answer 1

Control Activity recommended Installing swipe card/ biometric devices to record proper entry and exit of employees Activity Risks for each SI. Type of Control The hours worked field in a payroll transaction record contained the value 400 instead of 40. As a result, the employee received a Higher pay out to employees Preventive Control A paycheque for $6,257.24 instead of $654.32. A salesperson mistakenly entered an online order for 50 laser Authorization of transactions at Error in recording Detective Control printers instead of 50 laser printer toner cartridges multi-levels A 20-minute power brownout caused a mission-critical database Shut down of Business Preventive control Insurance coverage C server to crash, shutting down operations temporarily. A fire destroyed the data center, including all backup copies of the accounts receivable files. Having adequate back up procedures Loss of Data Corrective Control A customer order for an important part did not include the Capture of customer information customer's address. Consequently, the order was not shipped on time and the customer called to complain. Corrective Control Loss of Goodwill