Wright Company

13-22. Wright Company (Analyzing System Reports)Wright Company employs a computer-based data processing system for maintaining all company records. The current system was developed in stages over the past 5 years and has been fully operational for the last 24 months.When the system was being designed, all department heads were asked to specify the types of information and reports they would need for planning and controlling operations. The systems department attempted to meet the specifications of each department head. Company management specified that certain other reports be prepared for department heads. During the 5 years of systems development and operation, there have been several changes in the department head positions because of attrition and promotions. The new department heads often made requests for additional reports according to their specifications. The systems department complied with all of these requests. Reports were discontinued only on request by a department head, and then only if it was not a standard report required by top management.As a result, few reports were discontinued and the information processing subsystem continued to generate a large quantity of reports each reporting period. Company management became concerned about the quantity of report information produced by the system, and therefore asked the internal audit department to evaluate their effectiveness. The audit staff determined early in the study that more information was being generated by the information processing subsystem than could be used effectively. They noted the following reactions to this information overload:• Many department heads would not act on certain reports during periods of peak activity. The department heads would let these reports accumulate with the hope of catching up during subsequent lulls.• Some department heads had so many reports that they did not act at all on the information, or they made incorrect decisions because of misuse of the information.• Frequently, actions required by the nature of the report data were not taken until the department heads were reminded by others who needed the decisions. These department heads did not appear to have developed a priority system for acting on the information produced by the information processing subsystem.• Department heads often would develop the information they needed from alternative, independent sources, rather than use the reports generated by the information processing subsystem. This was often easier than trying to search among the reports for the needed data.Requirements1. Indicatewhethereachoftheforegoingfourreactionscontributespositivelyornegatively to the Wright Company’s operating effectiveness. Explain your answer for every one of the four reactions.2. For each reaction that you indicated as negative, recommend alternative procedures the Wright Company could employ to eliminate this negative contribution to operating effectiveness.” (Simkin 441-442)Simkin, Mark G.. Core Concepts of Accounting Information Systems, 12th Edition. John Wiley & Sons, 11/2011. <vbk:9781118297414#page(441)>.

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