Accounting Assignment - Week 2 to Week 11



Accounting Assignment - Week 2 to Week 11

Week 2

Discussion 1: System Documentation Techniques

Assess the risks and unintended consequences associated with the lack of narratives, flowcharts, diagrams, and other written documentation that explains how a system works. Provide specific examples to support your response.

Process documentation is a method of concisely capturing and sharing critical project concepts, plans and information as they are developed, so that impacted parties can share this information, make informed decisions, and keep the project moving forward without having to revisit old discussions.

Narratives and process flow maps are designed to assist the analysis of processing risks and related controls. Although these documentation techniques do not test the effectiveness of controls, they should promote an agreed upon understanding of how a process is performed, who per forms specific duties (roles and responsibilities), and assertions about control activities. Key risks and controls can be mapped on the process flow diagram to indicate when, by whom, and how controls mitigate risks. Many organizations or IT companies develop excellent processes but fail to document them adequately. After an initially successful implementation of the process, many of these procedures go unused due to lack of documentation, particularly as new staff members who are unfamiliar with the process attempt to use it. Methodical process management can identify bottlenecks and inefficiencies that are invisible to the organization and it can find room for improvement even in well-refined procedures.

Give an example of a situation that would underscore the importance of using the right tools and resources for proper system documentation. Provide specific examples to support your response.

Developing an adequate understanding of any processing environment is critical to performing internal audit reviews. This document will describe these techniques; provide a process flow example and guidance on elements to be incorporated. The guide will assist teams as documentation is developed and evaluated during the audit review process. Documenting an understanding of a process, related controls, and key roles and responsibilities can be achieved through process narratives and flow charts. Both of these documentation techniques assist internal audit teams and those responsible for the processes to establish a common understanding of a process.

Once these documents are confirmed as accurate they provide a baseline for performing risk analysis, internal controls testing, and implementing process improvements as necessary. Narrative and process flow tools allow auditors to organize, describe, and graphically depict the results of:

Reviewing policy and procedure manuals;

Discussing the process with key employees through inquiry;

Performing a process walk through of sub-processes using samples, etc.

Considering key inputs and outputs to a process;

Lines of responsibility for individual employee and departmental roles

For example, an initial overview of a process is be described by a general ledger manager at a high-level. This initial description of the process may be a fair reflection of the actual policies and procedures manual. Then, per discussion with the monthly accrual accounting supervisor, additional details of the procedural inputs may confirm some of procedures pointed out by the general ledger manager and ...