Avatar Financials Inc., located on Madison Avenue, New York is a company that provides financial advice to
Question:
Avatar Financials Inc., located on Madison Avenue, New York is a company that provides financial advice to individuals and small to mid- sized businesses. Its primary operations are in wealth management and financial advice. Each client has an account where basic personal information is stored at a server within the main office in New York City. The company also keeps the information about the amount of investment of each client on a separate server at their data center in Bethlehem, Pennsylvania. This information includes the total value of the portfolio, type of investments made, the income structure of each client, and associated tax liabilities. Avatar decided to purchase software for asset management from specialized vendors. This soft- ware allows them to run analytics on the portfolios and run detailed simulations of market trends and is called Siman (SIMulation ANalaytics). V-Dot Solutions, another contractual company that is customizing and installing Siman has sent a team of six systems analysts to carry out this task. They anticipate additional hardware installations to run the simulation analytics on Siman. V-dot's setup requires them to train two people from Avatar who will be responsible for minor issues and basic maintenance of the system. Major problems and issues will be dealt with by special consultants from V-Dot. It takes four weeks to completely have the system operational and inte grated into Avatar's existing computer system. The testing phase of the project has been readjusted to allow the two employees of Avatar to run these tests and ensure compatibility. A year after the installation of the simulation software Siman, Avatar finds it very useful. To further upgrade the systems to the next level, they decide to another data source company for raw market data feed which is used to run the simulations. However, this requires changes to the source code of Siman. Fortunately, within its analytics department that uses Siman, Avatar has two programmers who are well versed in the pro- gramming language that Siman was written in. These programmers are able to implement the changes that will allow the new data feed to be used by Siman-11. To remain competitive, Avatar has placed the programmers under a tight time constraint. To expedite the process, the documentation process is shortened with the intention that it will be looked into once the systems are running. The program- mers also will be deployed back to the maintenance operations once the project is complete. The con- tract with original vendor of Siman, V-Dot, has expired and the company does not want to extend their maintenance services for another year. Instead it feels that these two programmers will be able to perform the same tasks for less money.
Required:
a. Discuss the major internal control issues in Avatar's system development approach.
b. Comment on the duties performed by the two programmers of Avatar. Are systems maintenance and program development extensions of the same responsibility?
c. Identify potential issues that might arise due to weak internal controls.
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