Hello I need help the attach assignments, Case 13.1 (page 411) – Research Project: Impact of Information

Technology on Expenditure Cycle Activities, Threats, and Controls: In two to three pages, answer questions a and b at the end of the case.

thanks

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CASE 13-1 Research Project: Impact of InformationTechnology on Expenditure Cycle Activities, Threats,and Controls Search popular business and technologymagazines (Business Week, Forbes, Fortune, CIO, etc.)to ±nd an article about an innovative use of IT that canbe used to improve one or more activities in theexpenditure cycle. Write a report that:a. Explains how IT can be used to change expenditurecycle activities.b. Discusses the control implications. Refer to Table 13-2, and explain how the new procedure changes thethreats and appropriate control procedures formitigating those threats.Table 13-2 shows that one way (control 1.1) to mitigate the threat ofinaccurate or invalid master data is to employ the data processingintegrity controls described in Chapter 10. It is also important torestrict access to expenditure cycle master data and con±gure thesystem so that only authorized employees can make changes tomaster data (control 1.2). This requires changing the defaultcon±gurations of employee roles in ERP systems to appropriatelysegregate incompatible duties. For example, consider the situationwhere an accounts payable clerk enters the name of a supplier whois not currently on the list of approved suppliers. The defaultcon±guration of many ERP systems would result in a prompt queryas to whether the clerk wants to create a new supplier record. Thisviolates proper segregation of duties by permitting the personresponsible for recording payments to suppliers to also authorize thecreation of new accounts. Similarly, the default con±gurations ofmany ERP systems permit accounts payable sta² not only to readthe prices of various products and the current balances owed tosuppliers but also to change the values of those data items. Theseexamples are just some of the many con±guration settings thatneed to be reviewed to ensure proper segregation of duties.

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Here is Project 2:

Company: The production department hasbeen investigating possible ways to trim total production costs. Onepossibility currently being examined is to make the cans instead of purchasingthem. The equipment needed would cost $1,000,000, with a disposal value of $200,000,and would be able to produce 27,500,000 cans over the life of the machinery.The production department estimates that approximately 5,500,000 cans would beneeded for each of the next 5 years.

The company would hire six newemployees. These six individuals would be full-time employees working 2,000hours per year and earning $15.00 per hour. They would also receive the samebenefits as other production employees, 15% of wages in addition to $2,000 ofhealth benefits.

It is estimated that the raw materialswill cost 30¢ per can and that other variable costs would be 10¢ per can. Becausethere is currently unused space in the factory, no additional fixed costs wouldbe incurred if this proposal is accepted.

It is expected that cans would cost 50¢each if purchased from the current supplier. The company’s minimum rate ofreturn (hurdle rate) has been determined to be 11% for all new projects, andthe current tax rate of 35% is anticipated to remain unchanged. The pricing forthe company’s products as well as number of units sold will not be affected bythis decision. The unit-of-production depreciation method would be used if thenew equipment is purchased.

Required:

1. Based on the above information andusing Excel, calculate thefollowing items for this proposed equipment purchase.

• • Annual cash flows over the expected life of the equipment
  • Payback period
  • Simple rate of return
  • Net present value
  • Internal rate of return

The check figure for the total annualafter-tax cash flows is $271,150.

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