A small family-run manufacturing company, Kalakaua Corporation, has approached you for external auditing services. Kalakaua has 3 accounting clerks, 6 people in the production area, as well as sales staff. There is 1 office manager who takes care of the purchasing and a shipping-receiving clerk. All goods are matched to a sales invoice before they can be shipped to a customer.

The company has always used accounting software, and has several personal computers located throughout the offices and production areas that are linked by a network. To keep costs down, the company tries to keep staff levels low, and each functional area is responsible for its own transactions; for example, only the sales staff can authorize and enter sales transactions, and only the shipping-receiving clerk can authorize and enter shipping entries. Each department is also responsible for printing and distributing reports for its area each month. Transaction data is also copied onto storage media and stored in the user departments. There is no requirement for programming, and the accounting manager is able to solve most computing operating problems that arise. Last year, the accounting manager attended a seminar on a new database program and was able to install it to the network. Everyone is able to use the new program by following simple instructions from the accounting manager. The accounting manager has not had time to prepare any documentation for the software change, but the company estimates that the new database program saves thousands of dollars each year.

Required

Your auditing experience is mainly in auditing very large clients as part of a team of auditors, so auditing a smaller client will require some adjustments, for example in your audit planning. One of the problems that you anticipate at Kalakaua is the lack of an audit trail. Indicate 4 problems that could be expected in terms of the unique computer environment at Kalakaua.

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