Equivocal Savings and Loans

Essay text:

The last section of this paper will present a memo showing a brief analysis of the aforesaid organizational charts. III ? Memo to the Audit Manager July 4, 2007 To: The Audit Manager Subject: ES & L Assignment of Responsibility for Control and Organizational Structure of the EDP department We have carefully analyzed and studied the assignment of responsibility for control and the organizational structure of the EDP department of Equivocal Savings and Loan Association and have come up with or identified several strengths and weaknesses. The different commendable areas with regard to the assignment of responsibility for control include: ? The establishment of an Audit Committee in the board of directors which ensures that adequate controls are built into the system ? The presence of a control group in the accounting department which monitor the accuracy and completeness of data processing ? Reports from the internal auditors on controls built into the new systems which are submitted to and reviewed by the Audit Committee ? The active participation of the chairman of the board regarding audit and internal control matters through constant communication with his subordinates ? The presence of a Vice President for Finance who practically performs the function of a corporate financial manager Included among the flaws in assigning responsibility for control are the following: ? Non-participation of senior corporate management in the overall approval of EDP systems design ? The performance of incompatible functions by the EDP specialist in the internal audit department ? Non establishment of an outside control group which could have act as an independent check on the functioning of the EDP department Regarding the organizational structure of the EDP department, the following strong points are noted: ? Assignment of job title for each person in the department ? Systems analysis and systems programming are separated from operations ? The documentation director basically performs the function of a librarian ? The function of a network administrator is performed by the communications analyst However, the structure of the EDP department also contains several weaknesses such as: ? Non-establishment of a control group which would have been important in monitoring the accuracy of transaction processing and ensuring that no data are lost or mishandled within the EDP department ? Failure to have a security officer and a quality control manager which would have been vital in a large company like ES & L In summary, the company currently has done a fairly effective job in assigning responsibility for control and structuring its EDP department...