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Detroit Paper Products (SPP) is definitely modifying its sales office payroll sysiem to change how it computes sales commissions. Under the aged system, commissions were a fixed percentage of dollar sales. The new method is considerably more intricate,

with rates of commission yarying based on the product marketed and the total dollar volume of sales.

Jerr Scott was assigned to use audit software program to write a parallel simulation test software to estimate sales commissions and compare them with individuals generated by the

new program. Jason acquired the necessary payroll system documentation and the information on the new revenue commission plan and prepared his program. 1

Jason applied the revenue transaction data from the previous payroll period to run his pro-

gram. To his surprise, his calculations had been 95, 000 less than these produced by Sppt new system. Individual distinctions existed for about half of the organization, s salespeo-

ple. Jerrika double-checked his program code but could hardly locate any errors. He 322

I actually

selected a salesperson with a difference and worked out the commission payment by hand. The

result agreed-with his program. He examined the new commission payment policy with all the sales mana8et line by line, and concluded that he understood the new policy completely.

Jason is actually convinced that his plan is correct and that the error is placed with SPP's new system. He is at this point asking himself the following inquiries:


How do a coding error on this significance be overlooked simply by experienced programmers who carefully reviewed and tested the modern system?

installment payments on your


Are these claims an inadvertent error, or perhaps could it be a fraud?

What-qpn be done to find the error in the program?


This part focuses on auditing an accounting information program (AIS). Audiring is the systematic process of obtaining and considering evidence with regards to assertions about economic activities and occasions in order to figure out how well they will correspond with established criteria. The results ofthe audit arc in that case cammunicated to interested users. Auditing needs carctul planning and the collection, review, and documentation of audit data. In developing recommendations, the auditor uses established c teria, including the pdnciples of control referred to in previous chapte$, like a basis pertaining to evaluation.

Many organizations in america employ interior auditors to evaluate company operations. Govemments employ auditon to evaluate management performalce and conformity with legal intent. The Deparlment of Defense engages auditors to review the linancial records of companies with defense contracts. Publicly placed companies hire external auditors to provide persistent rcview of their financial claims.

This part is written from the perspective of an intemal a\ditoL Intennl auditing is usually an independent, target assurance and consulting activity designed to put value and improve company effectiveness and efficiency, including assisting in the design and implementation of an AIS. Inner auditing helps an organization complete its objectives by bdnging a systematic, disciplined approach to examine and enhance the effectiveness of risk management, cootrol, and governance processes.

There are many different types of intemal audits:

1 ) A finsncial audi, investigates the trustworthiness and integrity of financial deals, accounting information, and hnancial statements.


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2 . An information systems, or internal conlrol, audit reviews the con6ols of an VOLIGE to assess their compliance wilh inlemal control poiicies and procedures and its effectiveness in safeguarding iisets. The audits usually evaiuate system output and input; processing cortrols; backup and recoyery ideas; system: ard computer features.

3. AD operational examine is concemed with ihe

and efncient use of assets...


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