Question

Q1/ Describe the types of IT control which may be implemented for an AIS( Accounting Information System). Give your answers with appropriate examples?

Q2/ Briefly Discuss the impact of loT to accounting practices in organizations. As fas as possible, give an example for each of your answers?

Answer 1

Solution: 1

Internal Control in Accounting Information System has become inevitable when it comes to large business. Internal Control provides a systematic approach in the way business uses software to collect, store, manage, process, retrieve and report the financial data. The inputs given by an experienced accountant is taken into consideration while implementing AIS. This to ensure accuracy in processing financial transaction, record keeping, making the financial data interpreted for analysing, and accessing who can legitimately use the financial data.

Following are the types of internal control implemented in the Accounting Information System.

Control Environment: Control Environment is crucial and plays an important effect the Internal control system. Management needs to take right decision to design the internal control so that the control environment cannot be bypassed.

Monitoring: Monitoring plays an important role in the internal control. Monitoring is done periodically to understand whether the Control Environment designed by the Management is valid in accordance with changes and updates that has happened to the business environment.

Risk Assessment: Management analysis the risks that effects the business objectives. An effective internal control is designed to map all the risks that will affect the business, so that no risks are missed. The success of the business depends on how best the internal control is designed so that no risks are missed when mapped to the internal control.

Control Activities: It is the outcome of the internal control designed by the management keeping in mind all the risks that will affect the business objective. Example access to financial reports is given to persons such as CFO and CEO of the company.

Solution: 2

With the advancement of technology and implementation of loT, it will bring accounting closer to IT (Information Technology). It creates a mechanism that helps in the exchange of data. Impact Lot will make lot changes in the accounting practices. For example, the CPA will get all the information in the digital form. The traditional method taking the information from the book keeper to understand the client will never be followed. It also gives real time access to all the financial transaction that takes place in the business. The CPA can understand the internal control by analysing the financial transaction that takes place in the business. Real time access helps in real time management. The CPA with real time access to the controls and exposures in the Internal control system helps them to evaluate the internal control system and make necessary changes to the audit process. The CPA can implement continuous auditing procedures, if it believes that the internal control system is week and is prone to risk.

Management will also have real time access to the transaction with loT. With real time access to the management, the management will be in a position to rectify the errors in the business and take important decisions.