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16.1 Although XBRL facilitates the electronic exchange of financial information, some external users do not think it goes far enough. They would like access to the entire general ledger, not just to XBRL-tagged financial reports that summarize general ledger accounts. Should companies provide external users with such access? Why or why not?

16.2 How can responsibility accounting and flexible budgets improve morale?

16.3 Why is the audit trail an important control?

16.4 The balanced scorecard measures organizational performance along four dimensions. Is it possible that measures on the customer, internal operations, and innovation and learning dimensions could be improving without any positive change in the financial dimension? If so, what are the implications of such a pattern?

16.5 Do you think that mandatory standards should be developed for the design of graphs of financial data that are included in annual reports and other periodic communications to investors? Why or why not?

16.1 Match the term in the left column with its appropriate definition from the right column:

16.2 Which control procedure would be most effective in addressing the following problems?

a. When entering a journal entry to record issuance of new debt, the treasurer inadvertently transposes two digits in the debit amount.

b. The spreadsheet used to calculate accruals had an error in a formula. As a result, the controller's adjusting entry was for the wrong amount.

c. The controller forgot to make an adjusting entry to record depreciation.

d. A sales manager tipped off friends that the company's financial results, to be released tomorrow, were unexpectedly good.

e. The general ledger master file is stored on disk. For some reason, the disk is no longer readable. It takes the accounting department a week to reenter the past month's transactions from source documents in order to create a new general ledger master file.

f. The controller sent a spreadsheet containing a preliminary draft of the income statement to the CFO by e-mail. An investor intercepted the e-mail and used the information to sell his stock in the company before news of the disappointing results became public.

g. A company's XBRL business report was incorrect because the controller selected the wrong element from the taxonomy.

h. Instead of a zero, the letter o was entered when typing in data values in an XBRL instance document.

16.3 Explain the components of an audit trail for verifying changes to accounts payable. Your answer should specify how those components can be used to verify the accuracy, completeness, and validity of all purchases, purchase returns, purchase discounts, debit memos, and cash disbursements.
16.4 As manager of a local pizza parlor, you want to develop a balanced scorecard so you can more effectively monitor the restaurant's performance.

a. Propose at least two goals for each dimension, and explain why those goals are important to the overall success of the pizza parlor. One goal should be purely performance-oriented and the other should be risk-related.
b. Suggest specific measures for each goal developed in part a.

c. Explain how to gather the data needed for each measure developed in part b.

16.5 Use Table 16-1 to create a questionnaire checklist that can be used to evaluate controls in the general ledger and reporting cycle.
a. For each control issue, write a Yes/No question such that a "No" answer represents a control weakness. For example, one question might be "Is access to the general ledger restricted?"

b. For each Yes/No question, write a brief explanation of why a "No" answer represents a control weakness.
16.6 Visit the SEC website (www.sec.gov) and explore what is available in terms of interactive data (the SEC's term for XBRL reports). Use the SEC's viewer software and examine the annual reports for two companies.

16.7 Obtain the annual report of a company assigned by your professor. Read the management discussion and analysis section, and develop a balanced scorecard that reflects that company's vision, mission, and strategy. Create both performance-oriented and risk-based goals and measures for each section of the balanced scorecard.

16.8 Excel Problem Objective: Practice graph design principles.

Use the data in Table 16-3 to create the following graphs:

a. Sales

b. Sales and Gross Margin

c. Earnings per share

d. Which principles of graph design, if any, did you have to manually implement to over-ride the default graphs created by Excel?

16.9 Excel Problem Objective: Create pivot tables for what-if analysis
.
Read the article "Make Excel an Instant Know-It-All" by Roberta Ann Jones in the March 2004 issue of the Journal of Accountancy. (Available at www.aicpa.org)
).
a. Follow the instructions in the article to create a spreadsheet with pivot tables.

b. Print out a report that shows sales by month for each salesperson.
16.10 Excel Problem Objective: How to do what-if analysis with graphs.

a. Read the article "Tweaking the Numbers," by Theo Callahan in the June 2001 issue of the Journal of Accountancy (either the print edition, likely available at your school's library, or access the Journal of Accountancy archives at www.aicpa.org). Follow the instructions in the article to create a spreadsheet with graphs that do what-if analysis.

b. create a spreadsheet to do graphical what-if analysis for the "cash gap." Cash gap represents the number of days between when a company has to pay its suppliers and when it gets paid by its customers. Thus, Cash gap = Inventory days on hand + Receivables collection period - Accounts payable period.

The purpose of your spreadsheet is to display visually what happens to cash gap when you "tweak" policies concerning inventory, receivables, and payables. Thus, you will create a spreadsheet that looks like Figure 16-11.

b. Set the three spin buttons to have the following values:

Spin button for Inventory
Spin button for Receivables
Spin button for Payables
Linked cell
C2
C3
C4
Maximum
120
120
90
Minimum
0
30
20
Value
30
60
20
Small change
10
10
10

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