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Accounting Information Systems

CONTROLS AND PROCESSES

Third Edition

Leslie Turner

Andrea Weickgenannt

Mary Kay Copeland

DIRECTOR Michael McDonald
AQUISITION EDITOR Emily McGee
PROJECT MANAGER Gladys Soto
PROJECT SPECIALIST Nichole Urban
CONTENT MANAGEMENT DIRECTOR Lisa Wojcik
SENIOR CONTENT SPECIALIST Nicole Repasky
PRODUCTION EDITOR Linda Christina E
PHOTO RESEARCHER Billy Ray
COVER PHOTO CREDIT © Zayne C/Shutterstock

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ISBN: 9781119329565 (PBK)

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Library of congress Cataloging‐in‐Publication Data

Names: Turner, Leslie, author. | Weickgenannt, Andrea, author. | Copeland, Mary Kay, author.
Title: Accounting information systems : controls and processes / Leslie
Turner, Andrea Weickgenannt, Mary Kay Copeland.
Description: Third edition. | Hoboken, NJ : John Wiley & Sons Inc., [2017] |
Includes bibliographical references and index.
Identifiers: LCCN 2016036148 | ISBN 9781119329565 (pbk. : alk. paper)
Subjects: LCSH: Accounting—Data processing.
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 Leslie Turner
To my parents and the many students who have inspired and motivated my work.
Andrea Weickgenannt
To my sons, Karl and Erik, for their encouragement, wit, and tolerance.
Mary Kay Copeland
To Bob and Barb Schiesser (my parents), Steve (my husband)
and Tim and Chris (my sons) for their continued support.
 ABOU T TH E AU TH O R S

Leslie D. Turner is Dean and a professor of accounting at Palm Beach Atlantic University.
He previously taught at Northern Kentucky University and the University of North
Carolina at Greensboro. He earned a DBA in accounting from the University of Kentucky,
an MBA from Wheeling Jesuit University, and a BBA in accounting from Ohio University.
Dr. Turner is a Certified Management Accountant (CMA) and a Certified Financial
Manager (CFM).
Professor Turner’s research interests are in internal controls and Sarbanes–Oxley com-
pliance, educational pedagogy, and ethics. His research has been published in The
Accounting Educators’ Journal Management Accounting Quarterly, Accounting Horizons, Journal
of Accounting and Public Policy, Journal of Internet Commerce, Journal of Information Systems,
Management Accounting, The Review of Accounting Information Systems, The Journal of
Management Accounting Research, Strategic Finance, The CPCU Journal, National Accounting
Journal, The Oil and Gas Tax Quarterly, Accounting Systems Journal, and The Journal of
Accounting Case Research.
Professor Turner is a member of the American Accounting Association, the Institute of
Management Accountants, and the Information Systems Audit and Control Association.

Andrea B. Weickgenannt is an assistant professor in the Department of Accountancy at

Xavier University. She is a DBA candidate at Kennesaw State University, and also holds an
MBA from the University of Maryland and a BBA from the University of Cincinnati. She
is a Certified Public Accountant (CPA) and has over 13 years of experience with Ernst &
Young LLP (Cincinnati and Baltimore).
Professor Weickgenannt’s research interests are in the areas of accounting informa-
tion systems, financial accounting, auditing, and corporate governance. Her research
has been published in The Journal of Business Cases and Applications, Issues in Accounting
Education, Advances in Accounting Education, The National Accounting Journal, Journal of
Accounting Case Research, Critical Perspectives on Accounting, and The Journal of College
Teaching & Learning.
Professor Weickgenannt is a member of the American Accounting Association, the
American Institute of Certified Public Accountants, the Institute of Internal Auditors,
the Institute of Management Accountants, and the Ohio Society of Certified Public
Accountants.

Mary Kay Copeland, PhD, MBA, CPA

Mary Kay Copeland is an assistant professor, teaching accounting and accounting infor-
mation systems at St. John Fisher College in Rochester, NY. She previously taught at the
University of Buffalo and Bowling Green State University. She earned a BS/MBA in
Accounting from the University of Buffalo and a PhD from Regent University.
Dr. Copeland is a Certified Public Accountant and has over 30 years of professional expe-
rience including 5 years with KPMG and 20 years in consulting and CFO positions.

v
vi  About the Authors

Professor Copeland’s research interests include accounting information systems,

financial and managerial accounting, ethics, and values‐based leadership. Her research
has been published in The CPA Journal, Research on Professional Responsibility and Ethics
in Accounting, International Journal of Leadership Studies and Business Education Forum.
Dr. Copeland also has had numerous conference proceeding publications with the
American Accounting Association. Dr. Copeland has also co‐published a Microsoft
Dynamics GP® text with Armond Dalton Publishers and authored hands on Microsoft
Dynamics coursework for Microsoft Dynamics AX and Microsoft Dynamics GP
ERP systems.
Professor Copeland is a member of the American Accounting Association, the
American Institute of Certified Public Accountants, and the Microsoft Dynamics
National Academic Advisory Board.
 PREFAC E

Instructor
Overview Each of us who teaches Accounting Information Systems (AIS) faces the
problem of providing students a comprehensive, but interesting knowledge base of AIS.
However, we all know that it is difficult to find the right balance of coverage of technical
concepts and student comprehension. When addressing this issue of balance, we began
to see clearly that a better, more comprehensible approach was needed. With this book,
we have achieved a good balance of covering technical concepts while still making the
text easy to read and understand. Our textbook also reinforces AIS concepts with rele-
vant, real‐world examples and reasonable end‐of‐chapter materials.
This text incorporates the important content found in a typical AIS course, but has five
distinguishing characteristics. Five characteristics we focus on throughout the text are
simplicity and understandability of the writing, business processes, accounting and IT
controls, examples from Microsoft Dynamics GP (an ERP/AIS system), and ethics as it
relates to accounting systems.
We place extra emphasis on the students’ understanding. We explain AIS in the con-
text of business processes and incorporate many real‐world examples. The richness of
these examples improves the text, the discussion questions, and end‐of‐chapter exercises
and cases. We explain IT controls by employing the framework in the AICPA Trust Services
Principles. This is an encompassing, but easy to understand, framework of IT controls.
We provide examples in the text of an AIS/ERP system, Microsoft Dynamics GP. Instructors
are able to add a hands‐on learning of Microsoft Dynamics GP that complements the
theoretical concepts in the text. Finally, we believe that ethics continues to increase in
importance as a topic to be included in accounting texts. We have included an ethics sec-
tion in each chapter.
We think that including all these characteristics in a single text has resulted in an
extremely user‐friendly product: one that will help your students achieve a better founda-
tion in AIS.

Features
The book is designed to enhance student learning with a focus on ease of use, business
processes and the related controls, and ethics and corporate governance as they relate to
accounting information systems (AIS).

Ease of Use This AIS textbook will allow students to easily read and comprehend the
material, understand the charts and graphs, and successfully answer questions and cases
at the end of the chapters. To attain ease of use, we included several features, including
the following:
• An approach to technical topics with a writing style that is easy to understand.

vii
viii  Preface

• Process maps and document flowcharts that provide a picture of business processes
and that are easy to understand. While there are several approaches to charts that
depict systems, we have used the types of charts that illustrate business processes in
the simplest, yet complete manner. Especially in the chapters focused on business
processes, we use matched process maps, document flowcharts, and data flow dia-
grams to illustrate the processes that occur, and the related flow of information and
documents. These charts are easy to follow and they will enhance the understanding
of the business processes.
• AICPA Trust Services Principles framework for IT controls. Controls within
Information Technology can be a very difficult subject to comprehend because of
the underlying complexity of the technology. While COBIT is the most comprehen-
sive source of IT control information, it is not typically easy for students to under-
stand. This is especially true for students who have not had the opportunity to gain
work experience with IT systems and business processes. We use the simplest
­framework available for the explanation of IT controls: the AICPA Trust Services
Principles. The Trust Services Principles categorize IT Controls into five areas: secu-
rity, availability, processing integrity, online privacy, and confidentiality.
• Control and risk tables that summarize internal controls and the related risks.
Internal controls are easier to understand when students can see the corresponding
types of risks that the controls are intended to lessen. We use control/risk exhibits to
present risks that are reduced when controls are used.
• Real‐world examples to illustrate important concepts. Concepts are often easier to
comprehend when presented in a real‐world scenario. Each chapter includes exam-
ples of issues faced by actual business organizations that help illustrate the nature
and importance of concepts in the chapter. Real‐world discussions are boxed in a
feature titled “The Real World.”
• Microsoft Dynamics GP screen shots to present topics in the context of a real com-
puter system. New concepts are often easier for students to understand while pre-
sented within a real‐life application. We use screen shots from Microsoft Dynamics
GP software to show how various aspects of business processes would appear in this
computer system. In addition, in this version, we have added the ability for instruc-
tors to add hands‐on learning of Microsoft Dynamics GP to the coursework. See the
textbook website for details. This add‐on tool provides access to a cloud‐based ver-
sion of Microsoft Dynamics minimizing the involvement of a university’s IT staff.
• The IT technology that underlies AIS continually evolves and allows enhancements
to those systems. Several chapters integrate the concept of cloud computing and the
increasing use of cloud computing. The effects of cloud computing on the risk
­benefits and auditing in AIS are also described.
• End‐of‐chapter questions, problems, and cases that match well with the chapter con-
tent. It is important to provide material at the end of each chapter that helps stu-
dents reinforce the topics presented. It is equally important that this material be
relevant and understandable. We have devoted our attention to providing a variety
of end‐of‐chapter activities that are meaningful and manageable, including a con-
cept check, discussion questions, brief exercises, Web exercises, problems, cases, and
a continuing case. In addition, most chapters include activities adapted from profes-
sional (CPA, CMA, and CIA) examinations.

Business Processes, Accounting Controls, and IT Controls Business transac-

tions are portrayed within the text in terms of business processes, which are widely recog-
nized throughout the accounting profession. These business processes are described in a
manner that is applicable to many different business environments.
 Preface   ix

We incorporate the COSO framework and integrate discussions of risks and controls
in all business process chapters. These discussions are also carried out in as many of the
other chapters as possible. The COSO framework, especially the control procedure com-
ponent, is used as a framework to describe accounting controls. This continued use of the
framework across several chapters is intended to increase student understanding and
retention of risk and control concepts.
In addition, we place a strong emphasis on IT controls. We accomplish this by using
the guidance provided by the AICPA in the revised (2009) Trust Services Principles for
WebTrust® and SysTrust® assurance engagements. The Trust Services Principles are the
AICPA’s guidance that is closely related to COBIT.
The Trust Services Principles risk and control procedures are incorporated into the
chapters covering business processes and controls. These controls are also discussed
in chapters on databases, ERP systems, auditing IT systems, and the system development
life cycle.

Ethics and Corporate Governance It is indisputable within the business world that
honest, consistent reporting and management of information has never been more
important. Considering the increased responsibility on corporate managers for the over-
all financial reporting of the company, the study and use of accounting information sys-
tems is critical. Accordingly, business ethics and corporate governance continue to
increase in focus and we made them a focus of this textbook. An ethics discussion is
also found at the end of each chapter and an ethics icon highlights applicable end‐of‐­
chapter material.
In order to place emphasis on business ethics in many chapters, it is important to estab-
lish a foundation of ethics to build upon. Chapter 3 includes a significant section on eth-
ics in the current environment and the relation of ethical problems to the need for
internal controls and ethics codes. We establish Chapter 3 as the foundation for the
­chapters that follow. The ethics and control concepts in Chapter 3 are reinforced as
themes throughout the text. We also include ethics‐related questions or cases in the
end‐of‐­chapter materials.
In addition to business ethics, corporate governance is a related topic that has received
much attention in the business world without a corresponding increase in focus by AIS
texts. In addition, each process chapter in Module 3 discusses corporate governance in its
application to the various business processes. Sarbanes–Oxley discussions are highlighted
in the textbook margins with the letters “SOX.”

Supplements
A solutions manual, test bank, computerized test bank, instructor outlines, and PowerPoint
presentations accompany this textbook. They are available on the instructor companion
site available with this textbook. The third edition of the text also provides instructors the
option of adding hands‐on learning of an ERP/AIS system, Microsoft Dynamics GP, to
their coursework. This additional supplement provides instructional materials and cloud
access to Microsoft Dynamics GP at a nominal cost. Details are provided in the textbook
website. The authors would like to thank Patricia Fedje, Minot State University; Yvonne
Phang, Borough of Manhattan Community College; and Coby Harmon, University of
California–Santa Barbara for their help in developing the test bank and PowerPoint
presentations.
 ACKN OWL E DGM E N T S

We would like to thank every instructor whose feedback helped us in all stages of the
­writing, editing, and production of this textbook. In particular, we thank Amelia Baldwin,
University of Alabama; Somnath Bhattacharya, Florida Atlantic University; Pascal A.
Bizzaro, University of Mississippi; Richard Dull, Clemson University; John Butler, Ohio
State University; Stephanie Farewell, University of Arkansas–Little Rock; Lawrence Grasso,
Central Connecticut State University; Neal Hannon, University of Hartford; Michael
Harkness, University of Michigan–Dearborn; Kenneth Henry, Florida International
University; Frank Ilett, Boise State University; Jack Kissinger, Saint Louis University; David
Knight, Borough of Manhattan Community College; Antoinette Lynch, Miami University;
Dorothy McMullen, Rider University; Johna Murray, University of Missouri–St. Louis;
Michael Palley, Baruch College; Karen Otto, University of Arizona; Tom Oxner, University
of Central Arkansas; Jeffery Payne, University of Kentucky; Georgia Smedley, University of
Nevada–Las Vegas; George Schmelzle, Indiana University–Purdue University Fort Wayne;
Wallace Wood, University of Cincinnati; Curt Westbook, California State University–San
Bernadino; and Yan Xiong, California State University–Sacramento.

xi
 TO T H E STU DE N TS

Businesses, and the products and services they provide, are unquestionably a critically
important part of our society. We would not have food, shelter, cars, computers, iPhones,
or the other things we need and use daily without smoothly functioning businesses to
provide those goods and services. Likewise, individual businesses could not operate at a
level to sustain our society without accounting information. Accounting information is
the lifeblood of business. Without the regular flow of accurate accounting information to
managers and investors, businesses would collapse. Operating a business or investing in
businesses without accounting information would be as difficult as driving with a covered
windshield. You would have no feedback information about where you are going and
what corrections you must make to get there. Just as your view through the windshield
tells you when to make steering, braking, and accelerating corrections, accounting infor-
mation allows managers and investors to determine how to make corrections that will
allow them to achieve business objectives.
Accountants generate, evaluate, summarize, report, and confirm the information that
managers and investors need to make good choices in their operations or objectives. The
system that allows accountants to accomplish this is the accounting information system.
The study of AIS provides a very important set of concepts to prepare you for an
accounting and business career. We hope the features of this book make your study of AIS
a little more pleasant, interesting, and understandable. Now, go forward and learn more
about AIS and its role in providing critical information to managers and investors!

xiii
 A LI S T OF R E A L - WO R L D E X A M P L E S
I N T H IS TE X TBOOK

Chapter Company Example Subject

1 McDonald’s remote order taking at drive‐throughs Business processes
1 McDonald’s and a dedicated supplier of buns, East Balt Supply chain
1 Ford and its reengineered vendor payment system Business processes
reengineering
1 American Institute of CPAS Top Technology IT priorities
Initiatives survey
1 BP and Deep Water Horizon oil spill Risks
1 Anonymous company that inflated revenues Ethics
2 Au Bon Pain and South Gate Restaurant updated Business processes
ordering systems
2 Bowen implementing a new system Legacy systems
2 Thomas Kemper Soda Company’s updated systems Cloud computing
2 Cole Haan, a subsidiary of Nike and system integration Legacy systems
2 Hawaii Commercial Real Estate, LLC’s data sharing Business processes
3 Phar‐Mor fraud Top management ethics
3 Johnson & Johnson fraud Top management ethics
3 Association of Certified Fraud Examiners and fraud Fraud
statistics
3 Enron and its demise Fraud
3 Xerox GAAP violations Fraud
3 Koss Corporation embezzlement scheme Fraud
3 Dow Chemical’s warning signs of fraud Fraud
3 Data Processors International and access to its database Hackers
3 Denial of service attacks at Yahoo, eBay, Amazon.com Hackers
3 Survey results: Ethical conduct in corporations Financial pressures
4 Network break‐ins at Stratfor and Target computers Hackers
4 2003 North American power blackout Disaster recovery
4 Internet company SurveyMonky Business continuity
4 Microsoft Windows operating system Hackers
4 Boeing’s automated shop floor Wireless networking
4 Availability risks at SalesForce.com and Coghead Cloud computing
4 Public and private cloud applications at Starbucks Cloud computing
4 Pornography on Federal computers at SEC Fraud
5 Information and technology strategy committee at UPS IT governance

xv
xvi  A List of Real-World Examples in This Textbook

Chapter Company Example Subject

5 Prioritizing IT projects at Allstate IT governance
5 Anheuser‐Busch’s use of IT to improve beer sales IT governance
6 Advantages of an ERP system at Agri‐Beef Company ERP
6 Advantages of an ERP system at Viper ERP
Motorcycle Company
6 SkullCandy’s growth and ERP system Cloud computing
6 Data security and availability at Microsoft Cloud computing
6 Failed ERP implementation at the city of Tacoma, ERP implementation
Washington and in Marin County, California
6 Successful ERP implementation at Marathon ERP implementation
7 JCPenney’s vendor audit of Aurafin IT audit benefits
7 Ford Motor Company’s focus on financial processes Internal audit
and controls
7 Use of CAATs at EY IT audit
7 Audit mistakes at Phar‐Mor Auditor independence
7 Koss Corporation’s lack of controls Audit failure
7 Crazy Eddie’s fraud Auditor independence
7 Enron, WorldCom, and Xerox and the need to Substantive testing
test balances
8 Sales processes performance measures at Staples Sales processes
8 Internet sales processes at Staples Sales processes
8 Internet EDI at Nortel Internet EDI
8 Advantages of a POS system at Pizza Hut POS systems
8 Fraud at MiniScribe Fraud
8 Sales misstatements at Coca‐Cola and McAfee Ethics
8 Sales misstatements at HealthSouth Fraud
9 General Electric’s electronic invoice presentment system IT enablement of purchasing
9 City Harvest doubles deliveries without increasing costs Purchasing and
procurement process
9 Frymaster’s automated invoice matching system IT enablement of purchasing
9 Federal government of the United States as strong IT enablement of
advocate of e‐invoicing purchasing
9 Evaluated receipt settlement system at an IT enablement of
anonymous company purchasing
9 General Electric’s procurement card use Business process
reengineering
9 Special checking account used at Phar‐Mor Fraud
9 Multiple instances of fraud by Paul Pigeon Fraud
9 Walmart’s ethics guidelines for employees in purchasing Ethics
10 Prince George’s County and Los Angeles county school Payroll processes
districts payroll problems with ERP
10 Amtrak ERP systems Payroll processes
10 Automated payroll system at Scott Paper Company IT enablement of payroll
 A List of Real-World Examples in This Textbook   xvii

Chapter Company Example Subject

10 Technology enhancements to property accounting at IT enablement of
Tempel Steel and Pepsi‐Cola fixed assets
10 Misclassification of fixed asset at WorldCom, Krispy Fraud
Kreme, and Sunbeam
10 Adelphia’s poor corporate governance related to Corporate governance
fixed assets
11 Nissan’s robotic plant IT enablement of
manufacturing
11 CAD/CAM at Jean Larrivée Guitars IT enablement of
manufacturing
11 CAD/CAM at Wild West Motorcycle Company IT enablement of
manufacturing
11 Walmart’s sophisticated database IT enablement of logistics
11 Fraud in conversion processes at F&C Flavors Fraud
12 Typical timing of month‐end closing processes Administrative processes
12 Fast closing process at Alcoa Administrative processes
12 Fraud in administrative processes at echapman.com Fraud
12 Automated authorization at Walmart Administrative processes
12 Interconnected systems at Walmart and Administrative processes
Procter & Gamble
12 Automatic triggering in ERP systems Administrative processes
12 Misleading data for investors at Krispy Kreme Ethics
13 Large database at Walmart Databases
13 High‐impact processes at Anheuser‐Busch and High‐impact processes
Hewlett Packard
13 Failed ERP and IT projects Data mining
13 Data mining at Anheuser‐Busch Data mining
13 Procter & Gamble (P&G) as a multinational consumer Cloud computing
products manufacturer
13 Data mining activities in Walmart Data mining
13 Control breakdown at Netflix Ethics
13 Distributed databases at McDonald’s Distributed data
13 Theft of data at Bloodstock Ethics
14 Walmart’s change to Internet EDI Internet EDI
14 E‐business at General Electric E‐business
14 E‐business at General Motors E‐business
14 E‐business at Komatsu E‐business
14 E‐business at Kenworth Truck Company E‐business
14 E‐business at Staples E‐business
14 Extranet use at Staples Extranet
14 Abuse of private information at Gateway Learning Ethics
Corporation
 CON TE N TS

About the Authors v

Prefacevii
Acknowledgmentsxi
To the Students xiii
A List of Real-World Examples in This Textbook xv

MODULE 1 INTRODUCTION Defines business processes, AIS,

and all foundational concepts. This module provides the
knowledge building blocks to support the
remaining chapters.

1 Introduction to AIS 1
Overview of Business Processes (Study Objective 1), 1
Overview of an Accounting Information System (Study Objective 2), 4
Business Process Linkage Throughout the Supply Chain (Study
Objective 3),5
IT Enablement of Business Processes (Study Objective 4), 7
Basic Computer and IT Concepts (Study Objective 5), 10
Basic Computer Data Structures, 10
File Access and Processing Modes, 11
Data Warehouse and Data Mining, 12
Structured, Unstructured, and Big Data, 13
Networks and the Internet, 14
Examples of IT Enablement (Study Objective 6), 15
E‐Business,15
Electronic Data Interchange, 15
Point of Sale System, 16
Automated Matching, 16
Evaluated Receipt Settlement, 16
E‐Payables and Electronic Invoice Presentment and Payment, 16
Enterprise Resource Planning Systems, 17
The Internal Control Structure of Organizations (Study Objective 7), 17
Enterprise Risk Management, 18

xix
xx  Contents

A Code of Ethics, 20
Coso Accounting Internal Control Structure, 20
IT Controls, 20
Corporate Governance, 20
IT Governance, 21
The Importance of Accounting Information Systems to
Accountants (Study Objective 8), 22
Users of the AIS, 22
Design or Implementation Team, 22
Auditors of the AIS, 22
The Relation of Ethics to Accounting Information Systems (Study
Objective 9),22
Summary of Study Objectives, 24
Key Terms, 25
End of Chapter Material, 26
■ Concept Check, 26
■ Discussion Questions, 26
■ Brief Exercises, 27
■ Problems, 27
■ Cases, 29
Solutions to Concept Check, 29

2 Foundational Concepts of the AIS 31

Interrelationships of Business Processes
and the AIS (Study Objective 1), 32
Types of Accounting Information Systems (Study Objective 2), 34
Manual Systems, 35
Legacy Systems, 36
Modern, Integrated Systems, 38
Client‐Server Computing (Study Objective 3), 38
Cloud Computing (Study Objective 4), 39
Accounting Software Market Segments (Study Objective 5), 43
Input Methods Used in Business Processes (Study Objective 6), 46
Source Documents and Keying, 46
Bar Codes, 47
Point of Sale Systems, 47
Electronic Data Interchange, 48
E‐Business and E‐Commerce, 48
Processing Accounting Data (Study Objective 7), 48
Batch Processing, 48
Online and Real‐Time Processing, 50
Outputs From the AIS Related to Business Processes
(Study Objective 8), 50
Documenting Processes and Systems (Study Objective 9), 51
Process Maps, 51
 Contents  xxi

System Flowcharts, 52
Document Flowcharts, 53
Data Flow Diagrams, 55
Entity Relationship Diagrams, 55
Ethical Considerations at the Foundation of
Accounting Information Systems(Study Objective 10), 59
Summary of Study Objectives, 60
Key Terms, 61
End of Chapter Material, 62
■ Concept Check, 62
■ Discussion Questions, 63
■ Brief Exercises, 63
■ Problems, 64
■ Cases, 65
Solutions to Concept Check, 66

MODULE 2 
CONTROL ENVIRONMENT Describes the proper
control environment to oversee and control processes.

3 Fraud, Ethics, and Internal Control 67

Introduction to the Need for a Code of Ethics and Internal
Controls (Study Objective 1), 67
Accounting‐Related Fraud (Study Objective 2), 70
Categories of Accounting‐Related Fraud, 72
The Nature of Management Fraud (Study Objective 3), 72
The Nature of Employee Fraud (Study Objective 4), 74
The Nature of Customer Fraud (Study Objective 5), 75
The Nature of Vendor Fraud (Study Objective 6), 76
The Nature of Computer Fraud (Study Objective 7), 76
Internal Sources of Computer Fraud, 76
External Sources of Computer Fraud, 77
Policies to Assist in the Avoidance of Fraud
and Errors (Study Objective 8), 79
Maintenance of a Code of Ethics (Study Objective 9), 79
Maintenance of Accounting Internal Controls (Study Objective 10), 80
The Details of the COSO Report, 82
Reasonable Assurance of Internal Controls, 90
Maintenance of Information Technology Controls
(Study Objective 11), 91
The Sarbanes–Oxley Act of 2002 (Study Objective 12), 93
Section 404—Management Assessment of Internal Controls, 93
Section 406—Code of Ethics for Senior Financial Officers,94
Summary of Study Objectives, 94
Key Terms, 96
xxii  Contents

End of Chapter Material, 96

■ Concept Check, 96
■ Discussion Questions, 97
■ Brief Exercises, 98
■ Problems, 98
■ Cases, 100
Solutions to Concept Check, 102

4 Internal Controls and Risks in IT Systems 103

An Overview of Internal Controls for IT Systems (Study Objective 1), 103
General Controls for IT Systems (Study Objective 2), 105
Authentication of Users and Limiting Unauthorized Users, 106
Hacking and Other Network Break‐Ins, 109
Organizational Structure, 112
Physical Environment and Security, 113
Business Continuity, 114
General Controls from an AICPA Trust Services Principles
Perspective (Study Objective 3), 115
Risks in not Limiting Unauthorized Users, 116
Risks from Hacking or Other Network Break‐Ins, 119
Risks from Environmental Factors, 119
Physical Access Risks, 120
Business Continuity Risks, 120
Hardware and Software Exposures in IT Systems (Study Objective 4), 120
The Operating System, 122
The Database, 123
The Database Management System, 124
LANs and WANs, 125
Wireless Networks, 125
The Internet and World Wide Web, 126
Telecommuting Workers and Mobile Workers, 127
Electronic Data Interchange, 127
Cloud Computing, 128
Application Software and Application Controls (Study Objective 5), 130
Input Controls, 131
Processing Controls, 137
Output Controls, 137
Ethical Issues in IT Systems (Study Objective 6), 138
Summary of Study Objectives, 139
Key Terms, 140
End of Chapter Material, 141
■ Concept Check, 141
■ Discussion Questions, 142
 Contents  xxiii

■ Brief Exercises, 143

■ Problems, 143
■ Cases, 144
Solutions to Concept Check, 145

5 IT Governance 148
Introduction to IT Governance (Study Objective 1), 148
An Overview of the SDLC (Study Objective 2), 152
The Phases of the SDLC, 155
Elements of the Systems Planning Phase of the SDLC
(Study Objective 3), 155
The Match of IT Systems to Strategic Objectives, 156
Feasibility Study, 156
Planning and Oversight of the Proposed Changes, 158
Elements of the Systems Analysis Phase of the SDLC
(Study Objective 4), 158
Preliminary Investigation, 158
System Survey: The Study of the Current System, 158
Determination of User Requirements, 160
Analysis of the System Survey, 161
Systems Analysis Report, 161
Elements of the Systems Design Phase of the SDLC
(Study Objective 5), 162
The Purchase of Software, 163
In‐House Design, 164
Conceptual Design, 164
Evaluation and Selection, 165
Cloud Computing as a Conceptual Design, 167
Detailed Design, 167
Elements of the Systems Implementation Phase
of the SDLC (Study Objective 6), 169
Software Programming, 170
Training Employees, 170
Software Testing, 171
Documenting the System, 171
Data Conversion, 171
System Conversion, 171
User Acceptance, 172
Post‐Implementation Review, 172
Elements of the Operation and Maintenance Phase of the SDLC
(Study Objective 7),172
The Critical Importance of IT Governance in an Organization
(Study Objective 8), 173
SDLC as Part of Strategic Management, 173
SDLC as an Internal Control, 173
xxiv  Contents

Ethical Considerations Related to IT Governance (Study  175

Objective 9),
Ethical Considerations for Management,  175
Ethical Considerations for Employees, 175
Ethical Considerations for Consultants, 176
Summary of Study Objectives, 177
Key Terms, 178
End of Chapter Material, 179
■ Concept Check, 179
■ Discussion Questions, 179
■ Brief Exercises, 180
■ Problems, 180
■ Cases, 181
Solutions to Concept Check, 182

6 Enterprise Resource Planning (ERP) Systems 183

Overview of ERP Systems (Study Objective 1), 183
History of ERP Systems (Study Objective 2), 186
Current ERP System Characteristics (Study Objective 3), 188
ERP Modules (Study Objective 4), 190
Financials,190
Human Resources, 191
Procurement and Logistics, 191
Product Development and Manufacturing, 191
Sales and Services, 191
Analytics,191
Supply Chain Management (SCM), 191
Customer Relationship Management (CRM), 192
Market Segments of ERP Systems (Study Objective 5), 192
Tier One Software, 192
Tier Two Software, 193
Cloud‐Based ERP, 194
Implementation of ERP Systems (Study Objective 6), 195
Hiring a Consulting Firm, 195
The Best‐Fit ERP System, 195
Which Modules to Implement, 196
Best of Breed Versus ERP Modules, 196
Business Process Reengineering, 196
Customization of the ERP System, 197
The Costs of Hardware and Software, 197
Testing of the ERP System, 198
Data Conversion, 198
Training of Employees, 198
The Methods of Conversion to the ERP System, 198
 Contents  xxv

Benefits and Risks of ERP Systems (Study Objective 7), 201

Benefits of ERP Systems, 201
Risks of ERP Systems, 202
ERP Systems and the Sarbanes–Oxley Act (Study Objective 8), 204
Summary of Study Objectives, 206
Key Terms, 207
End of Chapter Material, 208
■ Concept Check, 208
■ Discussion Questions, 209
■ Brief Exercises, 209
■ Problems, 210
■ Cases, 210
Solutions to Concept Check, 211

7 Auditing Information Technology-Based Processes 212

Introduction to Auditing IT Processes (Study Objective 1), 212
Types of Audits and Auditors (Study Objective 2), 213
Information Risk and IT‐Enhanced Internal Control
(Study Objective 3), 215
Authoritative Literature Used in Auditing (Study Objective 4), 216
Management Assertions and Audit
Objectives (Study Objective 5), 218
Phases of an IT Audit (Study Objective 6), 219
Audit Planning, 220
Use of Computers in Audits (Study Objective 7), 223
Tests of Controls (Study Objective 8), 224
General Controls, 224
Application Controls, 227
Tests of Transactions and Tests of Balances (Study Objective 9), 231
Audit Completion/Reporting (Study Objective 10), 233
Other Audit Considerations (Study Objective 11), 235
Different IT Environments, 235
Changes in a Client’s IT Environment, 237
Sampling Versus Population Testing, 238
Ethical Issues Related to Auditing (Study Objective 12), 239
Summary of Study Objectives, 242
Key Terms, 243
End of Chapter Material, 244
■ Concept Check, 244
■ Discussion Questions, 246
■ Brief Exercises, 247
■ Problems, 247
■ Cases, 248
Solutions To Concept Check, 248
xxvi  Contents

MODULE 3 
BUSINESS PROCESSES The sets of business
processes and the internal controls in organizations.
With process maps, document flowcharts, and data flow
diagrams, the core business processes are described and
the necessary controls to manage risk are discussed.

8 Revenue and Cash Collection Processes and Controls 250

Introduction to Revenue Processes (Study Objective 1), 250
Sales Processes (Study Objective 2), 255
Risks and Controls in Sales Processes (Study Objective 2,
Continued),262
Authorization of Transactions, 262
Segregation of Duties, 262
Adequate Records and Documents, 263
Security of Assets and Documents, 263
Independent Checks and Reconciliation, 264
Cost–Benefit Considerations, 264
Sales Return Processes (Study Objective 3), 266
Risks and Controls in the Sales Return Processes
(Study Objective 3, Continued), 266
Authorization of Transactions, 266
Segregation of Duties, 269
Adequate Records and Documents, 269
Security of Assets and Documents, 270
Independent Checks and Reconciliation, 270
Cost–Benefit Considerations, 270
Cash Collection Processes (Study Objective 4), 271
Risks and Controls in the Cash Collection Processes
(Study Objective 4, Continued), 272
Authorization of Transactions, 272
Segregation of Duties, 272
Adequate Records and Documents, 276
Security of Assets and Documents, 276
Independent Checks and Reconciliation, 277
Cost–Benefit Considerations, 277
IT‐Enabled Systems of Revenue and Cash Collection Processes
(Study Objective 5), 279
E‐Business Systems and the Related Risks and Controls
(Study Objective 6), 281
Security and Confidentiality Risks, 283
Processing Integrity Risks, 283
Availability Risks, 284
Electronic Data Interchange (EDI) Systems and the Risks
and Controls (Study Objective 7), 284
Point Of Sale (POS) Systems and the Related Risks
and Controls (Study Objective 8), 288
 Contents  xxvii

Ethical Issues Related to Revenue Processes (Study Objective 9), 289

Corporate Governance in Revenue Processes (Study Objective 10), 292
Summary of Study Objectives, 292
Key Terms, 294
End of Chapter Material, 294
■ Concept Check, 294
■ Discussion Questions, 296
■ Brief Exercises, 296
■ Problems, 297
■ Cases, 302
Solutions to Concept Check, 306

9 Expenditures Processes and Controls—Purchases 309

Introduction to Expenditures Processes (Study Objective 1), 309
Purchasing Processes (Study Objective 2), 312
Risks and Controls in the Purchasing Process
(Study Objective 2, continued), 322
Authorization of Transactions, 322
Segregation of Duties, 322
Adequate Records and Documents, 323
Security of Assets and Documents, 324
Independent Checks and Reconciliation, 324
Cost–Benefit Considerations, 324
Purchase Return Process (Study Objective 3), 326
Risks and Controls in the Purchase Return Processes
(Study Objective 3, continued), 330
Authorization of Transactions, 330
Segregation of Duties, 330
Adequate Records and Documents, 330
Security of Assets and Documents, 331
Independent Checks and Reconciliation, 331
Cost–Benefit Considerations, 331
Cash Disbursement Processes (Study Objective 4), 332
Risks and Controls in the Cash Disbursement Processes
(Study Objective 4, continued), 338
Authorization of Transactions, 338
Segregation of Duties, 339
Adequate Records and Documents, 339
Security of Assets and Documents, 339
Independent Checks and Reconciliation, 339
Cost–Benefit Considerations, 340
IT Systems of Expenditures and Cash Disbursement Processes
(Study Objective 5),341
Computer‐Based Matching (Study Objective 6), 343
Risks and Controls in Computer‐Based Matching
(Study Objective 6, continued), 344
Another random document with
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 CHAPTER XIV
LETIZIA THE FIRST
“Mrs. Fuller has been so excited ever since the letter came to say
that you would pay a visit to Lebanon House,” the nurse stopped to
tell Nancy at the head of the stairs, before showing the way along
the landing to the old lady’s room.
“Are we going to see more aunts, muvver?” Letizia anxiously
inquired.
“No, darling, you’re going to see dear father’s grannie whom he
loved very much; and he would like you to love her very much too.”
“Well, I will love her,” Letizia promised.
“You must remember that your name is Letizia and that her name
is Letizia. You were christened Letizia because father loved his
grannie. And remember she is very old and that’s why you’ll find her
in bed.”
“Will she be like Red Riding Hood’s grannie?” Letizia asked.
“Perhaps she will be a little.”
“But a naughty wolf won’t come and eat her?” Letizia pressed on a
note of faint apprehension.
“Oh, no,” her mother assured her. “There are no wolves in this
house.”
Was it a trick of the gathering dusk, or did the bright-eyed young
woman raise her eyebrows and smile to herself at this confident
reply?
Nancy had never been so much surprised in her life as she was by
the aspect of old Mrs. Fuller’s room. The old lady, wrapped in a bed-
jacket of orange and yellow brocade and supported by quantities of
bright vermilion cushions, was sitting up in a gilded four-post bed,
the curtains and valance of damasked maroon silk and the canopy
sustained by four rouged Venetian amorini with golden wings. Over
the mantelpiece was a copy of Giorgione’s “Pastorale.” Mirrors in
frames of blown glass decorated with wreaths of pink glass rosebuds
and blue glass forget-me-nots hung here and there on the white
walls, the lighted candles in which gave the windowpanes such a
bloom in the March dusk as is breathed upon ripe damsons.
Bookcases on either side of the fireplace were filled with the sulphur
backs of numerous French novels. On a mahogany table at the foot
of the bed stood a green cornucopia of brilliantly tinted wax fruits that
was being regarded with slant-eyed indifference by two antelopes of
gilded wood, seated on either side.
Of course, Nancy had known that old Mrs. Fuller was different
from the rest of the family; but this flaunting rococo bedroom made a
sharper impression of that immense difference than could all the
letters to her grandson. It was strange, too, that Bram should never
have commented on this amazing room, set as it was in the heart of
the house against which his boyhood had so bitterly revolted. In her
astonishment at her surroundings she did not for the moment take in
the aspect of the old lady herself; and then suddenly she saw the
dark eyes of Bram staring at her from the middle of those vermilion
cushions, the bright eyes of Bram flashing from a death’s head
wrapped in parchment. She put her hand to her heart, and stopped
short on her way across the room to salute the old lady.
“What’s the matter?” snapped a high incisive voice.
“Oh, you’re so like Bram,” cried Nancy, tears gushing like an
uncontrollable spring from her inmost being, like blood from a
wound, and yet without any awareness of grief, so that her voice was
calm, her kiss of salutation not tremulous.
“Might I lift my little girl on Mrs. Fuller’s bed, nurse?” she asked.
“Don’t call her nurse,” the old lady rapped out. “This ain’t a
hospital. It’s only that sanctimonious ghoul Caleb who calls her
nurse. She’s my companion, Miss Emily Young. And why should the
wretched child be lifted up to see an old bogey like myself?”
 “I think she’d like to kiss you, if she may,” said Nancy.
“Yes, I would like to kiss you,” said Letizia.
The old woman’s eyes melted to an enchanting tenderness, and,
oh, how often Nancy had seen Bram’s eyes melt so for her.
“Lift her up, Emily, lift her up,” said Mrs. Fuller.
Miss Young put Letizia beside her and the old woman encircled
the child with her left arm. The other hung motionless beside her.
“I’m not going to maul you about. I expect your aunts have
slobbered over you enough downstairs. Just give me one kiss, if you
want to. But if you don’t want to, now that you’re so close to my
skinny old face, why, say so, and I shan’t mind.”
But Letizia put both arms round her great-grandmother’s neck and
kissed her fervidly.
“And now sit down and tell me how you like Lebanon House,” she
commanded.
“Is this Lebbon House?”
The old woman nodded.
“I like it here, but I don’t like it where those aunts are. Have you
seen those aunts, grannie?”
“I made them.”
“Why did you make them, grannie? I don’t fink they was very
nicely made, do you? I don’t fink their dresses was sewed on very
nicely, do you?”
“You’re an observant young woman, that’s what you are.”
“What is azervant?”
“Why, you have eyes in your head and see with them.”
“I see those gold stags,” said Letizia, pointing to the antelopes.
“Ah-ha, you see them, do you?”
 “Did Santy Claus give them to you? He gived me a lamb and a
monkey and lots and lots of fings, so I aspeck he did.”
“I expect he did too. But they’re antelopes, not stags.”
“Auntylopes?” Letizia repeated dubiously. “Will Santy Claus put
gold aunts in your stocking at Christmas?”
“Mon dieu, I hope not,” the old lady exclaimed. “So you like
antelopes better than aunts?”
“Yes, I do. And I like puss-cats better. And I like all fings better
than I like aunts.”
“Well, then I’ll tell you something. When Santa Claus brought me
those antelopes, he said I was to give them to you.”
Letizia clapped her hands.
“Fancy! I fought he did, grannie.”
“So, if you’ll take them into the next room with Miss Young, she’ll
wrap them up for you while I’m talking to your mother.”
“How kind of you to give them to her,” said Nancy, from whose
eyes the silent tears had at last ceased to flow.
“Letizia darling, say ‘thank you’ to your kind grannie.”
“Senza complimenti, senza complimenti,” the old woman muttered,
“The pleasure in her eyes was all the thanks I wanted.”
“I aspeck they won’t feel very hungry wivout the apples and the
pears,” Letizia suggested anxiously.
“Of course they won’t, darling,” her mother interrupted quickly.
“You’d better wrap up some of the fruit as well, Emily,” said the old
lady with a chuckle.
“No, please ...” Nancy began.
“Hoity-toity, I suppose I can do what I like with my own fruit?” said
the old lady sharply. “Draw the curtains before you go, Emily.”
When Letizia had retired with Miss Young, and the gilded
antelopes and a generous handful of the wax fruit, the old lady bade
Nancy draw up one of the great Venetian chairs. When her
grandson’s wife was seated beside the bed, she asked her why she
had come to Brigham.
Nancy gave her an account of her struggles for an engagement
and told her about Bram’s death and that unuttered wish.
“He may have worried about your future,” said the old lady. “But it
was never his wish that Letizia should be brought up here. Never! I
know what that wish was.”
“You do?”
“He was wishing that he had become a Catholic. He used to write
to me about it, and I’m afraid I was discouraging. It didn’t seem to me
that there was any point in interrupting his career as a clown by
turning religious somersaults as well. I’m sorry that it worried his
peace at the last, but by now he is either at rest in an eternal
dreamless enviable sleep or he has discovered that there really is a
God and that He is neither a homicidal lunatic, nor a justice of the
peace, nor even a disagreeable and moody old gentleman. I used to
long to believe in Hell for the pleasure of one day seeing my late
husband on the next gridiron to my own; but now I merely hope that,
if there is another world, it will be large enough for me to avoid
meeting him, and that, if he has wings, an all-merciful God will clip
them and put him to play his harp where I shan’t ever hear the tune.
But mostly I pray that I shall sleep, sleep, sleep for evermore. And so
young Caleb objected to bring up my namesake? By the way, I’m
glad you’ve not shrouded her in black.”
“I knew Bram wouldn’t like it,” Nancy explained.
“I loved that boy,” said the old lady gently. “You made him happy.
And I can do nothing more useful than present his daughter with a
pair of gilded antelopes.” Her sharp voice died away to a sigh of
profound and tragic regret.
Nancy sat silent waiting for the old lady to continue.
“Of course, I could have written and warned you not to ask young
Caleb for anything,” she suddenly began again in her high incisive
voice. “But I wanted to see you. I wanted to see Letizia the second. I
must die soon. So I didn’t attempt to stop your coming. And, as a
matter of fact, you’ve arrived before I could have written to you. No,
don’t hand your child over to young Caleb, girl. Just on sixty-six
years ago my mother handed me over to old Caleb. I suppose she
thought that she was doing the best thing for me. Or it may have
been a kind of jealousy of my young life, who knows? Anyway she
has been dead too long to bother about the reason for what she did.
And at least I owe her French and Italian, so that with books I have
been able to lead a life of my own. Letizia would hear no French or
Italian in this house except from me. And even if I could count on a
few more years of existence, what could I teach that child? Nothing,
but my own cynicism, and that would be worse than nothing. No, you
mustn’t hand her over to young Caleb. That would be in a way as
wrong as what my mother did. Your duty is to educate her. Yes, you
must educate her, girl, you must be sure that she is taught well. She
seems to have personality. Educate her. She must not be stifled by
young Caleb and those two poor crones I brought into this world. It
would be a tragedy. I had another daughter, and I was not strong
enough in those days to secure her happiness. Perhaps I was still
hoping for my own. Perhaps in trying to shake myself free from my
husband I did not fight hard enough for her. She ran away. She went
utterly to the bad. She died of drink in a Paris asylum. Caterina
Fuller! You may read of her in raffish memoirs of the Second Empire
as one of the famous cocottes of the period. If my mother had not
married me to Caleb, I daresay I should have gone to the bad
myself. Or what the world calls bad. But how much worse my own
respectable degradation! It was only after Caterina’s death that I
ceased to lament my prison. It was as if the sentient, active part of
me died with her. Thence onward I lived within myself. I amused
myself by collecting bit by bit over many years the gewgaws by
which you see me surrounded. They represent years of sharp
practice in housekeeping. The only thing for which I may thank God
sincerely is that I wasn’t married to young Caleb. I should never have
succeeded in cheating him out of a penny on the household bills. I
should never have managed to buy a solitary novel, had he been my
accountant. I should have remained for ever what I was when I
married, raw, noisy, impudent, scatterbrained, until I died as a bird
dies, beating its wings against the cage. Educate Letizia, educate
her. I wish I had a little money. I have no means of getting any now. I
had some, but I spent it on myself, every penny of it. Don’t despair
because you’ve not had an engagement since Christmas. It’s only
early March. Mon dieu, I haven’t even a ring that you could pawn.
But I don’t worry about you. I’m convinced you will be all right. Easy
to say, yes. But I say it with belief, and that isn’t so easy. I shall live
on for a few weeks yet, and I know that I shall have good news from
you before I die.”
All the while the old lady had been talking, her face had been
losing its expression of cynicism, and by the time she had finished it
was glowing with the enthusiasm of a girl. It was as if she had beheld
reincarnate in little Letizia her own youth and as if now with the
wisdom of eighty-three years she were redirecting her own future
from the beginning. Presently, after a short silence, she told Nancy to
search in the bottom drawer of a painted cabinet for a parcel
wrapped up in brown paper, and bring it to her. With this she fumbled
for a while with her left hand and at last held up a tunic made
apparently of thick sackcloth and some fragments of stuff that looked
like a handful of cobwebs.
“The silk has faded and perished,” she murmured. “This was once
a pair of blue silk tights. I wore them when I made my descent down
that long rope from the firework platform. It was a very successful
descent, but my life has perished like this costume—all that part of it
which was not fireproof like this asbestos tunic: Take this miserable
heap of material and never let your daughter make such a descent,
however brightly you might plan the fireworks should burn, however
loudly you might hope that the mob would applaud the daring of her
performance, however rich and splendid you might think the costume
chosen for her. Yes, this wretched bundle of what seemed once such
finery represents my life. Wrap it up again and take it out of my sight
for ever, but do you, girl, gaze at it sometimes and remember what
the old woman who once wore it told you a few weeks before she
died.”
There was a tap at the door, and the elderly parlourmaid came in
to say that the fly for which Mr. Fuller had telephoned was waiting at
the door.
“Do you mean to say that Mr. Fuller hasn’t ordered the brougham
to take Mrs. Fuller to the station?” the old lady demanded angrily.
“I think that the horse was tired, ma’am,” said the elderly maid,
retreating as quickly as she could.
“I wish I had my legs. I wish I had both arms,” the old lady
exclaimed, snatching at the small handbell that stood on the table at
the left of the bed, and ringing it impatiently.
Miss Young brought Letizia back.
“Emily, will you drive down with my visitors to the station? I shan’t
need anything for the next hour.”
It was useless for Nancy to protest that she did not want to give all
this trouble. The old lady insisted. And really Nancy was very grateful
for Miss Young’s company, because it would have been dreary on
this cold March night to fade out of Brigham with such a humiliating
lack of importance.
“Good-bye, little Letizia,” said her great-grandmother.
“Good-bye, grannie. I’ve told my auntylopes about my lamb and
about my dog and about all my fings, and they wagged their tails and
would like to meet them very much they saided.”
On the way to the station Miss Young talked about nothing else
except Mrs. Fuller’s wonderful charm and personality.
“Really, I can hardly express what she’s done for me. I first came
to her when she was no longer able to read to herself. I happened to
know a little French, and since I’ve been with her I’ve learnt Italian.
She has been so kind and patient, teaching me. I used to come in
every afternoon at first, but for the last two years I’ve stayed with her
all the time. I’m afraid Mr. Fuller resents my presence. He always
tries to make out that I’m her nurse, which annoys the old lady
dreadfully. She’s been so kind to my little brother too. He comes in
two or three times a week, and sometimes he brings a friend. She
declares she likes the company of schoolboys better than any. She
has talked to me a lot about your husband, Mrs. Fuller. I thought that
she would die herself when she heard he had been killed like that.
And the terrible thing was that she heard the news from Mr. Fuller,
whom, you know, she doesn’t really like at all. He very seldom
comes up to her room, but I happened to be out getting her
something she wanted in Brigham, and I came in just as he had told
her and she was sitting up in bed, shaking her left fist at him, and
cursing him for being alive himself to tell her the news. She was
calling him a miser and a hypocrite and a liar, and I really don’t know
what she didn’t call him. She is a most extraordinary woman. There
doesn’t seem to be anything she does not know. And yet she has
often told me that she taught herself everything. It’s wonderful, isn’t
it? And her room! Of course, it’s very unusual, but, do you know, I
like it tremendously now. It seems to me to be a live room. Every
other room I go into now seems to me quite dead.”
And that was what Nancy was thinking when the dismal train
steamed out of Brigham to take Letizia and herself back to London,
that melancholy March night.
 CHAPTER XV
THE TUNNEL
The only other occupant of the railway-carriage was a nun who sat
in the farther corner reading her breviary or some pious book. Letizia
soon fell fast asleep, her head pillowed on her mother’s lap, while
Nancy, watching the flaring chimneys in the darkness without, was
thinking of that old lady who had flared like them in the murk of
Lebanon House. After two hours of monotonous progress Letizia
woke up.
“Muvver,” she said, “I fink I’ve got a funny feeling in my tummy.”
“I expect you’re hungry, pet. You didn’t eat a very good tea.”
“It was such a crumby cake; and when I blowed some of the
crumbs out of my mouf, one of those aunts made a noise like you
make to a gee-gee, and I said, ‘Yes, but I’m not a gee-gee,’ and then
the plate what I was eating went out of the room on a tray.”
“Well, I’ve got a sponge cake for you here.”
Letizia worked her way laboriously through half the cake, and then
gave it up with a sigh.
“Oh, dear, everyfing seems to be all crumbs to-day.”
“Try some of the lemonade. Be careful, darling, not to choke,
because it’s very bubbly.”
Letizia made a wry face over the lemonade.
“It tastes like pins, muvver.”
The nun who overheard this criticism put down her book and said,
with a pleasant smile, that she had a flask of milk which would be
much better for a little girl than lemonade. She had, too, a small
collapsible tumbler, from which it would be easier to drink than from
a bottle.
 “Is that a glass, muvver?” Letizia exclaimed. “I was finking it was a
neckalace.”
“Thank Sister very nicely.”
“Is that a sister?” Letizia asked incredulously.
The various relationships to which she had been introduced this
day were too much for Letizia, and this new one seemed to her even
more extraordinary than the collapsible metal tumbler. Nancy
explained to the nun that they had been making a family visit to
hitherto unknown relations in Brigham, to which the nun responded
by saying that she, too, had been making a kind of family visit
inasmuch as she had been staying in Lancashire at the mother
house of the Sisters of the Holy Infancy.
“Right out on the moors. Such a lovely position, though of course
it’s just a little bleak at this time of year.”
She had laid aside her pious book and was evidently glad to talk
for a while to combat the depression that nocturnal journeys
inevitably cast upon travellers in those days before corridors were at
all usual in trains. In those days a railway compartment seemed such
an inadequate shelter from the night that roared past in torrents of
darkness on either side of it. The footwarmers, glad though one was
of them, only made the chilly frost that suffused the upper portion of
the carriage more blighting to the spirit. The dim gaslit stations
through which the train passed, the clangour of the tunnels, the
vertical handle of the door which at any moment, it seemed, might
become horizontal and let it swing open for the night to rush through
and sweep one away into the black annihilation from which the train
was panting to escape, the saga of prohibitions inscribed above the
windows and beneath the rack which gradually assumed a
portentous and quasi-Mosaic significance—all these menacing,
ineluctable impressions were abolished by the introduction of the
corridor with its assurance of life’s continuity.
Nancy told the nun that she was a Catholic, and they talked for a
time on conventional lines about the difficulty of keeping up with
one’s religious duties on tour.
 “But I do hope that you will go on trying, my dear,” said the nun.
The young actress felt a little hypocritical in allowing her
companion to presume that until this date she had never
relinquished the struggle. Yet she was not anxious to extend the
conversation into any intimacy of discussion, nor did she want the
nun to feel bound by her profession to remonstrate with her for past
neglect. So instead of saying anything either about the past or the
future, she smiled an assent.
“You mustn’t let me be too inquisitive a travelling companion,” said
the nun, “but I notice that you’re in deep mourning. Have you lost
some one who was very dear to you?”
“My husband.”
The nun leaned over and with an exquisite tenderness laid her
white and delicate hand on Nancy’s knee.
“And you have only this little bright thing left?” she murmured.
Letizia had been regarding the nun’s action with wide-eyed
solemnity. Presently she stood up on the seat and putting her arms
round her mother’s neck, whispered in her ear:
“I fink the lady tied up with a handkie is nice.”
“You have conquered Letizia’s heart,” said Nancy, smiling through
the tears in her eyes.
“I’m very proud to hear it. I should guess that she wasn’t always an
easy conquest.”
“Indeed, no!”
“Letizia?” the nun repeated. “What a nice name to own! Gladness!”
“You know Italian? My husband’s grandmother was Italian. I often
wish that I could speak Italian and teach my small daughter.”
“What is Italian, muvver?” Letizia asked.
“Italian, Letizia,” said the nun, “is the way all the people talk in the
dearest and most beautiful country in the world. Such blue seas, my
dear, such skies of velvet, such oranges and lemons growing on the
trees, such flowers everywhere, such radiant dancing airs, such
warmth and sweetness and light. I lived in Italy long ago, when I was
young.”
Nancy looked up in amazement as the nun stopped speaking, for
her voice sounded fresh and crystalline as a girl’s, her cheeks were
flushed with youth, her eyes were deep and warm and lucent as if
the Southern moon swam face to face with her in the cold March
night roaring past the smoky windows of the carriage. Yet when
Nancy looked again she saw the fine lines in the porcelain-frail face,
and the puckered eyelids, and middle-age in those grave blue eyes.
In Italy, then, was written the history of her youth, and in Italy the
history of her love, for only remembered love could thus have
transformed her for a fleeting instant to what she once was. At that
moment the train entered a tunnel and went clanging on through
such a din of titanic anvils that it was impossible to talk, for which
Nancy was grateful because she did not want Letizia to shatter the
nun’s rapture by asking questions that would show she had not
understood a great deal about Italy or Italian. Presently the noise of
the anvils ceased, and the train began to slow down until at last it
came to a stop in a profound silence which pulsed upon the inner ear
as insistently as a second or two back had clanged those anvils. The
talk of people in the next compartment began to trickle through the
partition, and one knew that such talk was trickling all the length of
the train, and that, though one could not hear the words through all
the length of the train, people were saying to one another that the
signals must be against them. One felt, too, a genuine gratitude to
those active and vigilant signals which were warning the train not to
rush on through that din of anvils to its doom.
And then abruptly the lights went out in every single compartment.
The blackness was absolute. People put up windows and looked out
into the viewless tunnel, until the vapours drove them back within.
Now down the line were heard hoarse shouts and echoes, and the
bobbing light of the guard’s lamp illuminated the sweating roof of the
tunnel as he passed along to interview the engine driver. In a few
minutes he came back, calling out, “Don’t be frightened, ladies and
gentlemen, there’s no danger.” Heads peered out once more into the
mephitic blackness, and the word went along that there had been a
breakdown on the line ahead and that their lighting had by an
unfortunate coincidence broken down as well. Everybody hoped that
the signals behind were as vigilant as those in front and that the red
lamps were burning bright to show that there was danger on the line.
“I aspeck the poor train wanted a rest, muvver,” said Letizia. “I
aspeck it was sleepy because it was out so late.”
“I know somebody else who’s sleepy.”
“P’r’aps a little bit,” Letizia admitted.
“Dear me, she must be tired,” her mother said across the darkness
to the nun. “Well, then, put your head on my lap, old lady, and go
right off to sleep as soon as ever you can.”
For some time the two grown-ups in the compartment sat in
silence while the little girl went to sleep. It was the nun who spoke
first.
“I wonder whether it will disturb her if we talk quietly? But this utter
blackness and silence is really rather dispiriting.”
“Oh, no, Sister, we shan’t disturb her. She’s sound asleep by now.”
“Does she always travel with you when you’re on tour?” the nun
asked.
“Until now she has. You see, my husband only died at Christmas
and we were always together with her. I am a little worried about the
future, because I can’t afford to travel with a nurse and landladies
vary and of course she has to be left in charge of somebody.”
“Yes, I can understand that it must be a great anxiety to you.”
Nancy thought how beautiful the nun’s voice sounded in this
darkness. While the train was moving, she had not realised its
quality, but in the stillness now it stole upon her ears as magically as
running water or as wind in pine-tree tops or as any tranquil and
pervasive sound of nature. In her mind’s eye she was picturing the
nun’s face as it had appeared when she was speaking of Italy, and
she was filled with a desire to confide in her.
 “That is really the reason I’ve been to Brigham,” Nancy said. “I
thought that I ought to give my husband’s relations the opportunity of
looking after Letizia. Not because I want to shirk the responsibility,”
she added quickly. “Indeed I would hate to lose her, but I did feel that
she ought to have the chance of being brought up quietly. My own
mother died when I was very young, and my father who is on the
stage allowed me to act a great deal as a child, so that really I didn’t
go to school till I was over twelve, and it wasn’t a very good school,
because I was living in Dublin with an aunt who hadn’t much money.
Indeed I never really learnt anything, and when I was sixteen I went
back to the stage for good. I’m only twenty-four now. I look much
older, I think.”
“I shouldn’t have said that you were more than that,” the nun
replied. “But how terribly sad for you, my dear, to have lost your
husband so young. Many years ago before I became a nun I was
engaged to be married to a young Italian, and he died. That was in
Italy, and that is why I still always think of Italy as the loveliest
country and of Italian as the most beautiful language. But you were
telling me about your relations in Brigham.”
Nancy gave an account of her visit, and particularly of the
interview with Letizia’s great-grandmother.
“I think the old lady was quite right. I cannot imagine that bright
little sleeping creature was intended to be brought up in such
surroundings. Besides, I don’t think it is right to expose a Catholic
child to Protestant influences. Far better that you should keep her
with you.”
“Yes, but suppose I cannot get an engagement? As a matter of
fact, I have only a pound or two left, and the prospect is terrifying
me. I feel that I ought to have gone on acting at Greenwich. But to
act on the very stage on which my husband had died in my arms! I
couldn’t. I simply couldn’t have done it.”
“My dear, nobody would ever dream of thinking that you could. It’s
cruel enough that you should have to act on any stage at such a
time. However, I feel sure that you will soon get an engagement.
Almighty God tries us in so many ways—ways that we often cannot
understand, so that sometimes we are tempted to question His love.
Be sure that He has some mysterious purpose in thus trying you
even more hardly. Nobody is worth anything who cannot rise above
suffering to greatness of heart and mind and soul. Do not think to
yourself that a foolish old nun is just trying to soothe you with the
commonplaces of religious consolation. To be sure, they are
commonplaces that she is uttering, but subtleties avail nothing until
the truth of the great commonplaces has been revealed to the
human soul. Our holy religion is built up on the great commonplaces.
That is why it is so infinitely superior to the subtleties of proud and
eccentric individuals as encouraged by Protestantism. What a long
time we are waiting in this darkness! Yet we know that however long
we have to wait we shall sometime or other get out of this tunnel.”
“Yes, but if we wait much longer,” said Nancy, “I will have another
problem to face when we get to London, for I will never dare arrive
back at my present landlady’s too late.”
“I can solve that problem for you, at any rate,” said the nun. “I shall
be met at Euston by a vehicle, and I know that our guest-room is free
to-night. So don’t let your night’s lodging worry you.”
After this they sat silent in the darkness for a long time. The
presence of the nun filled Nancy with a sense of warm security and
peace of mind. Gradually it seemed to her that this wait in the tunnel
was a perfect expression of the dark pause in her life, which,
beginning with the death of Bram, had ended in her visit to Brigham.
A conviction was born in her brain, a conviction which with every
minute of this immersion in absolute blackness became stronger,
that somehow the presence of the nun was a comforting fact, the
importance of which was not to be measured by her importance
within the little space of the railway-carriage, but that the existence of
this nun was going to influence the whole of her life, which must
soon begin again when the train emerged from the tunnel. The
curtain would rise once more upon the pantomime, and, whatever
the vicissitudes that she as the heroine of it might have to endure,
there would always be a Fairy Queen waiting in the wings to enter
and shake her silver wand against the powers of Evil. It was very
childish and sentimental to be sitting here in the dark dreaming like
this, Nancy kept telling herself; but then once more the mystery of
the tunnel would enfold her as one is enfolded by those strange half-
sleepy clarities of the imagination that flash through the midway of
the night when one lies in bed and hopes that the sense of
illumination that is granted between a sleep and a sleep will return
with daylight to illuminate the active life of the morning. Her thoughts
about the nun reassumed their first portentousness; the comparison
of her own life to a pantomime appeared once more with the
superlative reality of a symbol that might enshrine the whole
meaning of life. Then suddenly the lights went up, and after a few
more minutes the train was on its way again.
Nancy was glad indeed on arriving at Euston toward two o’clock of
a frore and foggy night to drive away with Sister Catherine in the
queer conventual vehicle like a covered-in wagonette with four small
grilled windows. To have argued with Miss Fewkes about her right to
enter the tall thin house in Blackboy Passage at whatever hour she
chose would have been the climax to the Brigham experience.
The Sisters of the Holy Infancy were a small community which was
founded by one of several co-heiresses to a thirteenth-century
barony by writ, dormant for many centuries. Instead of spending her
money on establishing her right to an ancient title Miss Tiphaine de
Cauntelo Edwardson preferred to endow this small community and
be known as Mother Mary Ethelreda. The headquarters of the
community were at Beaumanoir where Sister Catherine, the right-
hand of the now aged foundress, had been visiting her. This was a
Lancashire property which had formerly been held by Miss
Edwardson’s ancestors and repurchased by her when she decided
to enter the religious life. In London the house of the community was
situated in St. John’s Wood where the Sisters were occupied in the
management of an extremely good school. There was a third house
in Eastbourne which was used chiefly as a home for impoverished
maiden ladies.
Sister Catherine was head-mistress of St. Joseph’s School, and it
was there that she took Nancy and Letizia from Euston. The
porteress was overjoyed to see her, having been working herself up
for the last two hours into a panic over the thought of a railway
accident. The white guest-room was very welcome to Nancy after
the fatigue of this long day, so long a day that she could not believe
that it had only been fifteen hours ago that she set out from Euston
to Brigham. She seemed to have lived many lives in the course of it
—Bram’s life as a boy with his brother, old Mrs. Fuller’s eighty years
of existence, Sister Catherine’s bright youth in Italy, and most
wearingly of all, Letizia’s future even to ultimate old age and death.
And when she did fall asleep she was travelling, travelling all the
time through endless unremembered dreams.
In the morning Letizia greatly diverted some of the nuns by her
observations on the image of the Holy Child over the altar, which
was a copy of the famous image of Prague.
“Muvver, who is that little black boy with a crown on His head?”
“That is the baby Jesus, darling.”
“Why is He dressed like that? Is He going out to have tea with one
of His little friends?”
Nancy really did not know how to explain why He was dressed like
that, but hazarded that it was because He was the King of Heaven.
“What has He got in His hand, muvver? What toy has He got?”
“That’s a sceptre, and a thing that kings hold in their hands.”
“Are you quite sure that He is the baby Jesus, muvver?” Letizia
pressed.
“Quite sure, darling.”
“Well, I don’t fink he is. I fink he’s just a little friend of the baby
Jesus, who He likes very much and lets him come into His house
and play with His toys, but I don’t fink that little black boy is the baby
Jesus. No, no, no, no, no!” she decided, with vigorous and repeated
shakes of the head.
Nancy was sorry when they had to leave St. Joseph’s School and
return to Blackboy Passage.
“I fink here’s where the little friend lives,” Letizia announced.
 “Oh, darling, you really mustn’t be so terribly ingenious. You quite
frighten me. And what am I going to do about you next week when
the dear Kinos will be gone?”
 CHAPTER XVI
BLACKBOY PASSAGE
As Nancy had anticipated, Miss Fewkes was more than doubtful
about her ability to keep an eye on Letizia while her mother was
haunting the offices of theatrical agents.
“I’m not really at all used to children,” she sniffed angrily.
“Supposing if she was to take it into her silly little head to go and
jump out of the window? There’s no knowing what some children
won’t do next. Then of course you’d blame me. I’ve always been
very nervous of children. I could have been married half-a-dozen
times if I hadn’t have dreaded the idea of having children of my own,
knowing how nervous they’d be sure to make me.”
“I wondered if perhaps Louisa might be glad to keep an eye on
her, that is, of course, if you’d let me give her a little present. It
probably won’t be for more than a week.” It certainly wouldn’t, Nancy
thought, at the rate her money was going, for she could not imagine
herself owing a halfpenny to Miss Fewkes. And even that little
present to Louisa, the maid-of-all-work, would necessitate a first visit
to the nearest pawnbroker.
“Louisa has quite enough to do to keep her busy without looking
after the children of my lodgers,” the landlady snapped.
Poor Louisa certainly had, Nancy admitted to herself guiltily, at the
mental vision of the overworked maid toiling up and downstairs all
day at Miss Fewkes’s behest.
“I don’t see why you don’t take her out with you,” said the landlady
acidly.
“Oh, Miss Fewkes, surely you know something of theatrical
agents!” Nancy exclaimed. “How could I possibly drag Letizia round
with me? No, I’ll just leave her in my room. She’ll be perfectly good,