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Assignment Question(s): (Marks 5)
1. Expenditure cycle case analysis
Karim Books Inc. is one the fastest growing book distributors in KSA. Karim Books was originally a side project of founder and current president Khan Walker, who at that time was employed by a local law firm. Because reading was much more that just o hobby of his, he decided to use some of his savings to build a neighborhood bookstore.
As the years passed, Khan Walker quit the law firm and began concentrating fully on his bookstore. More sales were attained each year that passed. Walker has rapidly become on the largest book distributors in the country. Walker was faced with two problems: many large, upscale bookstores were being built in the area, and the use of internet for findings and ordering books was becoming cheaper and more popular for current customers.
Some of his customers, however, are now experiencing problems with Walker Books that threaten their business relationship. Such problems as booking being ordered but net sent, poor inventory management by Walker causing stock outs, and the inability of Walker to provide legitimate document of transactions have become common.
Question: Gives some solutions to the problems faced Walker. [2.5 marks]
2. What are the threats that may face production operations and what could be the possible controls for those threats? [1 mark]
3. What internal control procedure(s) would be most effective in preventing the following errors or fraudulent acts?
- A programmer obtained the payroll master file and increased his salary. [0.5 mark]
- Some time cards were lost during payroll preparation; consequently, when paychecks were distributed, several employees complained about not being paid. [0.5 mark]
A large portion of the payroll master file was destroyed when the disk pack containing the file was used as a scratch file for another application.
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