Big Marker was started in 2010 by Mr. Zho-Song Mei. Zhu was inspired to start the com- pany by the need to communicate with his mother during a period of illness. The company was initially financed by a group of angel investors and Zha-Song: over time, it has attracted additional investors. Big Marker is organized as a limited liability company, and has II employees. Its organizational structure is fairly "flat," as shown in the organizational chart below: Justin Brown coo Support & Marketing Team Zhu Song Mai CEO Bill Gloff CTO Development Team Zhu-Song handles the financial recordkeeping using Quickbooks, and McGladrey (www. megladey.com) does an annual "compilation and review for Big Marker. Big Marker uses the standard service company chart of accounts built into Quickbooks for its transac- tion processing. (The chart of accounts is block coded.) Big Marker is organized into a collection of "communities, which are based on com- mon interests/goals. Each community has at least one organizer, for example, my com- munity is called "Bob Hurt Education Community." Additionally, one organizer can participate in/create multiple communities. Communities host meetings and webinars at the organizer's discretion, meetings are designed for collaboration, while webinars are typically structured as interactive presentations. As of early 2014, Big Marker had between 5,000 and 10,000 communities, and hosted 1,000-2,000 meetings/webinars monthly. Internal Controls Big Marker employs several internal controls to safeguard its assets, ensure reliable finan- cial reporting, promote operating efficiency and encourage compliance with management directives. Here are some controls Big Marker employs, presented in alphabetic order: 1. Asset tracking. If a Big Marker employee wants to remove an asset from the office temporarily, one of the C-suite officers must authorize it. Additionally, approved assets must be signed out with the building's security staff. (Big Marker is one office in a large office building.) Finally, all assets are logged in both QuickBooks and a locally maintained spreadsheet. 2. Cash handling Big Marker employs several internal controls to help safeguard its cash. For example, the office handles no actual cash; everything, from cash collections to payroll, is handled electronically. Big Marker maintains two separate cash accounts: one for the payroll at Chase (www.chase.com) and one for the operating expenses at Bank of America (www.hankofamerica.com). 3. Employee expense reimbursements. Zhu-Song personally reviews all requests for employee expense reimbursements; common requests include office supplies, party supplies, laptop accessories, and travel and entertainment costs. Approved reimburse- ments are processed as part of the payroll with ADP; employees log into the system and enter the data. (See "payroll processing" later in this list for details.) 4. Employee manual. All new hires get an employee manual. The manual lays out a few "common sense, minimal policies," but the overall atmosphere at Big Marker is very friendly and casual. Employees are very passionate about the work they and the company do. 5. Information technology. Big Marker uses state of the art computer servers for its oper- ations. It uses both colocation and cloud computing for its servers. 6. Payroll processing. In addition to maintaining the dedicated payroll account at Chase, Big Marker promotes strong internal control over the payroll process by outsourcing it to ADP (www.adp.com). Individual employees log into ADP's system to submit their hours and other information; ADP processes the payroll on a monthly basis, and all Big Marker employees are required to have checks direct deposited in their bank accounts. No paper checks change hands for payroll. The company offers a standard benefits package, including health insurance. 7. Staff meetings. Big Marker holds weekly staff meetings to discuss issues and priorities facing the company. You'll find additional elements of internal control in Big Marker's terms of use at https:// www.bigmarker.com/terms. Business Processes In addition to the payroll process described above, common business processes at Big Marker include purchasing servers, starting communities, monitoring communities, and paying company bills (such as advertising and rent). When Big Marker wants to purchase a new server, employees first develop their require- ment specifications (e.g., processing speed, available memory). They use those specifica- tions to choose a server from a vendor such as Dell (www.dell.com). Big Marker orders the server online, and accepts delivery when the server is ready. When an organizer starts a new community, Big Marker sends an automatically gener- ated email with details about how to host events and related matters. Each community is assigned a "community hero"-a Big Marker employee available to answer questions and guide the organizer in relevant tasks. All new communities receive a free 14-day trial of Big Marker, after which their credit card (submitted during the community creation pro- cess) is billed for a nominal monthly fee of $20. Big Marker then attempts to charge the credit card each month for the fee. If billing fails, Big Marker sends another automatically generated email stating that they will try to bill the credit card every three days for 15 days; if billing still fails, the community is suspended. Community organizers have the option of selling tickets to their events; if they do, Big Marker retains 10% of the total ticket revenue. Similarly, community organizers may charge community dues to members; Big Marker also retains 10% of that revenue. Big Marker also will attempt to find corporate sponsors" for communities; a corporate sponsor would contribute funds to maintain and help run the community, and all those funds go directly to the community itself. Big Marker also monitors each community's activity. If a community hosts no events for two months, the organizer(s) receive an email offering assistance. Big Marker queries its database to determine which communities fall into that category. The "average" mem- ber of Big Marker belongs to three or four communities; communities have no upper limit as to membership. Similarly, each member may join as many communities as he/she wishes. Although each community has just one "community hero," the same community hero may serve in that capacity for multiple communities. All bill-paying activity at Big Marker happens electronically in one of the three ways: via the company's credit card, via automatic debit from the Bank of America operating account, or via electronic check from the Bank of America operating account. 1. Accounting information systems have five generic parts. Based on the preceding nar- rative, information on the Big Marker Web site and your own critical thinking, provide two examples of each of the five generic parts. 2. Big Marker uses the standard chart of accounts in QuickBooks to maintain its finan- cial records. a. Suggest specific account titles and account numbers for at least three accounts in each of the following categories: current assets, plant assets, current liabilities, long-term liabilities. equity, revenue, and expense. b. Use the account titles and account numbers from (a) to suggest at least 10 transactions Big Marker would commonly process. Indicate, using the account names and numbers, how Big Marker would record each transaction you suggest. 3. Consider the list of internal controls presented in the narrative. For each one, discuss: a. Whether it is primarily preventive/detective/corrective in nature. b. Which of the four purposes of internal control it is designed to achieve. 4. Use the relevant COSO frameworks to develop internal control and enterprise risk management plans for Big Marker. For both plans, suggest control activities that are not mentioned in the narrative. 5. Create a risk/control matrix for Big Marker using some combination of the internal controls discussed in the narrative and any you created in the previous question. 6. How would you describe Big Marker's business processes using the Capability Maturity Model? Explain your classification.