Question 1 (20 marks/20 minutes)

In the context of information systems, models play a critical role. When we build information systems, we have to base them on our models of the world. We      cannot base them on the real world directly because we know the real world      only through our models. When we build information systems, therefore, we      must endeavour to build good models of the real-world phenomena that interest us. Good models of the world have five (5) characteristics.

Those characteristics are listed in the table, below. Briefly explain why each characteristic is useful and desirable for information systems.

Your explanation of why each characteristic is useful and desirable is worth 4 marks for each characteristic. (20 marks)

Section B (30 marks)

All the questions in this section relate to your major project during the semester.

Question 1      (10 marks/10 minutes)

(a)  Describe the detail of the transaction being performed in the following screen.

Please note the negative amounts                                             (5 marks).

(b)  Provide the journal entry that MYOB made as a result of the transaction below.

(Note: account numbers are not required, just use account names) (5 marks)

Question 2      (10 marks/10 minutes)

(a)  Describe the detail of the transaction being performed in the following screen.

Please note the negative amount                                              (5 marks).

(b)  Provide the journal entry that MYOB made as a result of the transaction below.

(Note: account numbers are not required, just use account names) (5 marks)

Question 3      (10 marks/10 minutes)

Based on the following small extract from Polis Grocers Inc., fill in the missing activities in the table of Entities and Activities presented below. (10 marks, 1 mark per correct activity)

Section C (50 marks)

Question 1      (12 marks/15 minutes)

With  regard  to  the  Inventory  process  control  goals  of  effectiveness  of  operations, efficiency of operations, and resource security:

(a)   Give two (2) example controls for each of the three process control goals. (6 marks)

(b)    For each of the three process control goals, select one example control from your   answer to (a).  Explain how the control supports the production planning process, and the risks to the production process if such a control was not in place.

(6 marks – 2 marks for each explanation of how the production planning process is supported and the risks to the production process if the           control was not in place)

Question 2      (18 marks/23 minutes)

Thinking about your MYOB project, evaluate MYOB’s Billing/Debtors/Cash System            module in terms of each aspect listed in the following table. In your response, include an appropriate example to support your evaluation.

(6 marks for each aspect, i.e., one mark per appropriate evaluation point up to 4 marks for each aspect, and 2 marks for each relevant example supporting the evaluation points)

Question 3      (5 marks/12 minutes)

Following is a list of eight generic control goals (A-H), followed by eight descriptions of either process failures (i.e., control goals not met) or instances of successful control     plans (i.e., plans that helped to achieve controls goals).

List the numbers 1 through 8 in the table below. Each number represents one of the described situations on the page below.  In the table, next to each number, place the capital letter of the control goal that best matches the situation described.

Hint: Some letters may be used more than once in each situation.   Conversely, some letters may not be used at all.

Control goals:

A.   Ensure effectiveness of operations

B.   Ensure efficient employment of resources

C.   Ensure security of resources

D.   Ensure input validity

E.   Ensure input completeness

F.   Ensure input accuracy

G.   Ensure update completeness

H.   Ensure update accuracy

Situations:

1.   In a typical cash receipt process, one of the earliest processes is to endorse each customer’s check with the legend, for example, “for deposit only to Cost and       Effect Company.”

2.   Instead of preparing deposit slips by hand, Kaley Company has them generated by the computer. The company does so to speed up the deposit of cash (speedy deposit being an objective at Kaley).

3.   An accounts payable clerk at C&C Company enters vendor invoices into the         computer. When the invoices for the particular day were entered, the computer noted that vendor invoice 12345 appeared twice. The computer rejected the      second entry (i.e., the duplicate, the invoice with the same number).

4.   Diffusion Co. prepares customer sales order on a multipart form, one copy of which is sent to its building department, where it is placed in a temporary file pending shipping notification. Each morning, a billing clerk reviews the file of open sales orders and investigates with the shipping department any missing shipping notices for orders entered 48 hours (or more) earlier.

5.   In entering the invoices mentioned in situation 3, the data for the payment terms was missing from invoice 12349 and therefore was not keyed into the computer.

6.   At Falcon Company, the accounts receivable master data are updated at the end of each day from payment data contained on the cash receipts event data store. At the completion of the update run, the difference between total dollar value of accounts receivable before and after the update run is compared to the total       dollars of payments being processed.

7.   Levers Corporation recorded as sales some shipments of disk drives between     their warehouses. These disks drives had not been ordered by anyone and were still the property of Levers.

8.   Referring to situation 3, once a shipping notice is received in the billing                department, the first step in preparing the invoice to send to the customer is to compare the unit prices shown on the sales order with a standard price list kept in the billing department. (5 marks)

Question 4      (5 marks/10 minutes)

Complete the reasons for the importance of inventory by filling in the missing words in the table, below. (5 marks)

Question 5      (10 marks/15 minutes)

The following  is  an article from ABC  News  in  2015.  Please  read the article  and then answer the four (4) questions relating to the fraud affecting NSW Rural Fire Service.

Disaster relief funds may have ended up in pockets of NSW RFS employees, ICAC hears

By Thomas Oriti and Nick Dole

Updated 2 Jun 2015

Hundreds of thousands of dollars in government funding for disaster relief may have ended up in the pockets of New South Wales Rural Fire Service (RFS) employees, a corruption inquiry in       Sydney has been told. The Independent Commission Against Corruption (ICAC) also heard from a caterer who said he would share "skimmed" profits with an RFS contracts officer. The ICAC is investigating whether several RFS staff members accepted money as a reward for securing the  services of several companies.

The companies have been identified as D'Vine Tastes and Emergency Management Catering       Services (EMCS), both of which are operated by Scott Homsey. Between 2011 and 2015 Mr       Homsey invoiced the RFS more than $8 million for providing snack packs. Counsel assisting the commission, Ben Katekar, said the inquiry would investigate whether the RFS employees were   paid by Mr Homsey to award the contracts to his companies.

"Those funds had been made available to the New South Wales Rural Fire Service by the state and Commonwealth governments to ensure that disaster relief is supplied immediately and effectively to those who are seriously in need," Mr Katekar said.

He said the inquiry would examine how relaxed procurement procedures adopted by the RFS   between 2011 and 2015 "led to the diversion of substantial public funds into a small number of private pockets".

Mr Homsey told the inquiry he had undersupplied the RFS, but charged it the full amount, for       services ordered by RFS contracts officer Arthur John Hacking. He said he would then share the  profits with Mr Hacking. The "skimmed" profits would vary between 10 and 20 per cent of a total order. The ICAC was played a recording of a telephone call, in which the two men discuss a so-   called "deal".

It also saw a video of the two men meeting, during which Mr Homsey said he handed over         $20,000 in cash to Mr Hacking. Mr Katekar told the hearing the payments included an estimated $400,000 to Mr Hacking. Mr Hacking reported to Paul Springett, who held the title of manager  procurement, executive services at the RFS. "Mr Hacking had a delegated financial authority of zero dollars," Mr Katekar said. "Mr Springett's delegated authority was limited to $20,000." The inquiry heard Mr Hacking's brother, Darren Hacking, worked for Mr Homsey and was an RFS   volunteer. He was named as a person of interest at the inquiry.

Mr Homsey's mother, Gay Homsey, has also been called to give evidence. The hearing has been told snack packs were provided to the RFS by Corrective Services NSW until 2011. Mr Homsey was later appointed the exclusive provider because of the logistical obstacles of having snack packs delivered from within a prison during an emergency event. Mr Katekar said Mr Homsey     began to increase the number of snack packs supplied to the RFS, more than doubling the order in a single year. The increase appears to be at odds with the number of fire emergencies, with a         substantial drop in the number of declarations made by the RFS in recent years. In 2009-2010, the RFS commissioner made 50 declarations relating to major bushfires, compared to 19 declarations in 2013-2014.

The invoices were still paid, despite the fact that Mr Homsey did not deliver the number of snack packs he promised. "From about October 2012 to about June 2014, Mr Homsey undersupplied    the New South Wales Rural Fire Service by about 10 per cent," Mr Katekar told the hearing. "For each invoice of, say, 10,000 snack packs, Mr Homsey would deliver only 9,000. ” The invoices for 10,000 snack packs were nevertheless paid." Mr Katekar said the ICAC would investigate how      that was permitted to happen. The inquiry will also examine the use of mobile telephones,              electronic tablets and other computer hardware without authority.

It is expected to continue for up to a week.

Questions:

(a)       From  the  information  provided  in  the  article,  explain  how  the  fraud  actually worked. (2 marks)

(b)        Discuss what the fundamental control problem was with New South Wales Rural Fire Service (2 marks)

(c)        Suggest and describe two controls to avoid this fraudulent situation happening again.               (4 marks)

(d)        For  each  suggested  control  in  (c)  above,  indicate  whether  it  is  preventive, detective, and/or corrective in nature.                   (2 marks)