ANS: False
RATIONALE: Laggards are very conservative and highly skeptical of change.
10. Fire destroys resources at the corporate headquarters of an organization. This is an example of violation of generally accepted accounting principles.
ANS: False
RATIONALE: Fire destroying the resources of an organization is an example of inability to continue operations due to a natural disaster or accident.
ESSAY:
1. George, a physician, searches a database by symptoms, visual clues, and other patient factors to diagnose diseases and develop treatment plans. Discuss the support system used by the physician.
ANS: The physician uses a decision support system (DSS). It employs analytic models to help users gain insights into a problem situation, examine alternative solutions, and recommend an appropriate course of action. For example, VisualDx is a clinical decision support system that provides instant access to concise disease information and high-quality medical images. Its database encompasses more than 1300 medical conditions and nearly 30,000 images. Physicians can search this database by symptoms, visual clues, and other patient factors to diagnose diseases and develop treatment plans.
2. What are the benefits of interorganizational information systems?
ANS: Interorganizational information systems support the flow of data among different organizations to achieve shared goals. For example, some organizations need to share data for purchase orders, invoices, and payments along with information about common suppliers and financial institutions. Interorganizational information systems speed up the flow of material, payments, and information, while allowing companies to reduce the effort and costs of processing such transactions.
3. Discuss the Diffusion of Innovation theory. What is the difference between an innovator and a laggard?
ANS: The Diffusion of Innovation Theory was developed by E.M. Rogers to explain how a new idea or product gains acceptance and diffuses (or spreads) through a specific population or subset of an organization. A key point of this theory is that adoption of any innovation does not happen all at once for all members of the targeted population; rather, it is a drawn-out process, with some people quicker to adopt the innovation than others.
An innovator is a risk taker who is always the first to try new products and ideas, whereas a laggard is a person who is very conservative and skeptical of change.
4. Explain Section 404 of the Sarbanes-Oxley Act with an example.
ANS: Section 404 of the Sarbanes-Oxley Act requires that all reports filed with the Securities and Exchange Commission (SEC) include a statement signed by the chief executive officer (CEO) and chief financial officer (CFO) attesting that the information contained in the reports is accurate. The company also must submit to an audit to prove that it has controls in place to ensure accurate information.
For example, the SEC brought charges against the CEO and CFO of a Florida-based computer equipment company for misrepresenting to external auditors and the investing public the state of its internal controls over financial reporting. The CFO agreed to pay a $23,000 penalty and to be barred from serving as an officer and director of a publicly traded company for five years. The SEC is continuing to litigate its case against the company’s CEO.