Strategic Information System

Strategic Information System

[Date of Submission]

Introduction4

Discussion4

Part A: Question/Answers4

Effect of SOX on the Provision of Attest and Advisory Services4

Advantages and Disadvantages of Sequential, Block, Group, Alphabetic and Mnemonic Codes5

The Block Codes6

The Group Codes7

The Alphabetic Codes7

Non Accounting Services That External Auditors Are No Longer Permitted To Render To Audit Clients under SOX Legislation8

Six Classes of Physical Controls Employed In the Expenditure Cycle9

Part B: Case Studies10

The Situation of Bern and the Potential Internal Control Exposures and Issues10

The Analysis of the Physical Internal Control Weaknesses in the System11

The Description of IT Controls12

Conclusion12

Strategic Information System

Introduction

A system of processing, storing and collecting of accounting and financial data which is used by decision makers, is known as, an accounting information system. With information technology resources, the accounting activity in conjunction is tracked by the computer-based methods, which generally is an accounting system. Other interested parties, like, tax authorities, creditors, investors and internal management can use the resulting statistical reports (Hall, 2013). A vital role is played by the transaction processing in the support of day-to-day operation, internal management reporting, and as an information provider for financial reporting.

Transactions of similar types are grouped together into transaction cycles by the business organizations, in order to deal efficiently with large volumes of financial transactions. This research paper will address the impact on advisory and attest services by the SOX, the disadvantages and advantages of mnemonic, alphabetic, group, block and sequential codes. The non-accounting services under SOX legislation that are not permitted by the external auditors to audit clients and six classes of physical controls will be identified. Furthermore, this paper will discuss the case studies of the Bern Fly Rod Company and the Spice is Right Imports.

Discussion

Part A: Question/Answers

Effect of SOX on the Provision of Attest and Advisory Services

Before the rules and regulations (passage) of SOX, the accounting companies could offer advisory services along with the audits (attest function) clients. However, the legislations of SOX highly limit the types of non-audit services that are renders by auditors to their clients. After the legislation of SOX, now it is illegal for a registered public accounting company, which currently provides attest services to their clients, to offer the certain services including bookkeeping or other services that are associated with the financial disclosures or accounting records of the auditing clients, design and adoption of financial information systems, valuation or appraisal services, opinions on fairness, or reports for contribution-in-kind, services for outsourcing internal auditing, actuarial services, services of dealer as well as broker, adviser for investment, or services for investment banking, functions of human resource or management, expert services or legal service not related to the audit, or some other services that the Board decides, by regulation, is not permitted.

Hence, the SOX passage deals with the independence of auditor by developing more segregation among the attestation and non-auditing activities of the firm (Caplan, Janvrin, & Kurtenbach, 2007, p.4-5). The SOX has impacted on the attest and advisory services by prohibiting the above nine functions (specific categories) of services that they provide previously to ...