Accounting Information Systems Simulation Summary

An Internal Control System is a process, affected by an organization's board of directors, management, and other personnel. It is designed to provide reasonable assurance regarding the achievement of objectives in the following categories: effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. Within the simulation you need to help Ramos International set up its internal control system, implement control procedures for specific internal control problems and manage the internal control system as Ramos International grows with time.

The first step in the simulation is separating of duties in purchasing, cash receipts and payroll processes of Ramos International. Separation of duties is the concept of having more then one person required to complete a task. The simulation made the user choose who would be taking care of each step within these processes. In the purchasing process I decided to let the purchasing manager be in charge of issue requisition, the accounting clerk being in charge of approving the invoice, letting the merchandise buyer being in charge of updating the AIS and having the storekeeper being in charge of receiving goods. In the cash receipts process I chose to have the head cashier is in charge of making the daily deposit, having the accounting manager be responsible for Updating AIS and allowing the accounting clerk is responsible for managing the bank account. In the payroll process I had the payroll clerk in charge of employee's time report, having the chief financial officer be in charge of approving data changes, the accounting clerk be in charge of updating the AIS and having the payroll manager be in charge of authorizing payroll. This implementation of separation of duties was effective. Allocating each process to a different person helps minimize the risk for the process because not one person had the opportunity to influence two steps of the process. The risk of fraud increases if one person has the opportunity to control more then one step of the process. Though having one person do multiple tasks within a process may be less time consuming the risks out way the benefits.

The second step in the simulation is helping Ramos International concern with their current payroll processing. Currently the company uses time sheets that can result in errors as high as twenty percent. Within this step of the simulation I chose to implement access cards. Though the biometric terminals would have provided the greatest reduction in data errors and administration effort, it would have cost Ramos International significantly higher then access cards. Access cards provide reduction in productivity loss and the most cost effective.

The Final step in the simulation is deciding the priority in which the assets should be secured and the appropriate control to safeguard each asset. Within this step I decided to secure cash

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