Deck 13: Bussiness Process Mamagement

Question 1

The controller of MTP Corporation suggested to its president that financial statements could be produced more quickly if the process were analyzed and revised using business process management. Which of the following responses from the president violates the basic principles of BPM? (i) "You can try that project if you'd like, but don't expect much support from me. I'm happy with the way things are." (ii) "That's a good idea. How do we produce financial statements now?"

A) I only
B) II only
C) Both I and II
D) Neither I nor II

Answer 1

A

Question 2

In the generalized model of business process management, which of the following steps occurs first?

A) Collect process-related data
B) Identify and prioritize potential process improvements
C) Observe, document and map the process steps and flow
C) Optimize the process

Answer 2

C

Question 3

The text discusses a business process management case in a large Midwestern hospital. The first step in that case was:

A) Surveying customers.
B) Establishing a cross-functional team.
C) Defining process boundaries.
D) Identifying eight fundamental processes.

Answer 3

A

Question 4

The city of Tyler, Texas developed a ___ as part of a business process management effort.

A) Web portal
B) Document flowchart for city forms
C) Way to break down barriers between departments
D) Tourism portal

Question 5

All of the following are tools frequently used in business process management except:

A) Information technology
B) Systems documentation
C) Activity-based management
D) COSO frameworks

Question 6

Which of the following is the best definition of business process management?

A) Using technology to achieve strategic goals
B) Employing the systems development life cycle
C) Responding to stakeholders' needs for efficiency and effectiveness
D) Moving from a manual AIS to a computerized system

Question 7

Which of the following would be most useful in the second step of the generalized model of business process management?

A) A flowchart
B) A cost variance analysis
C) A set of general purpose financial statements
D) A sales invoice

Question 8

In the generalized model of business process management, which step immediately follows "Identify and prioritize potential process improvements?"

A) Analyze process-related data.
B) Define process boundaries.
C) Monitor process improvements.
D) None of the above

Question 9

Which of the following statements is most true?

A) Only external customers can define "value added."
B) Only internal customers can define "value added."
C) Binary classifications (value-added or non-value added) are adequate for most organizations.
D) Non-value added activities should be reduced or eliminated.

Question 10

Activity-based management:

A) Is a way to allocate overhead costs.
B) Was the basis for activity-based costing.
C) Can only be used by managers involved in business process management.
D) Tries to differentiate activities based on their value.

Question 11

According to Eppele, business process management is fundamentally about:

A) Accounting.
B) Communication.
C) People.
C) Technology.

Question 12

Business process management should focus on the needs of: (i) customers, (ii) competitors, (iii) employees.

A) I and II only
B) I and III only
C) II and III only
D) I, II and III

Question 13

When using external consultants for business process management, deliverables should be: (i) specific, (ii) defined by the company, (iii) related to strategy.

A) I and II only
B) I and III only
C) II and III only
D) I, II and III

Question 14

MTP Corporation is redesigning its order-taking process using the principles of business process management. As part of the ___ step from the generalized model of BPM presented in the text, managers will determine the average time to take an order.

A) First
B) Third
C) Fourth
D) Last

Question 15

As a basic principle of business process management, top management should be able to ___ current processes before starting a project.

A) Optimize
B) Describe
B) Document
C) Support

Question 16

In the generalized model of business process management, "implement and monitor process improvements" is the ___ step.

A) First
B) Third
C) Fifth
D) Last

Question 17

In the business process management cases discussed in the text, which organization type focused on processing special orders?

A) A city
B) A hospital
C) A bank
D) An ERP company

Question 18

All of the following are definitions of business process management except:

A) a business improvement strategy based on documenting, analyzing, and redesigning processes for greater performance.
B) a method of efficiently aligning an organization with the wants and needs of clients.
C) a systematic approach to analyzing, redesigning, improving and managing a specific process.
D) a systematic business improvement strategy that uses information technology to reduce costs.

Question 19

As a tool for business process management, flowcharts are an example of:

A) Systems documentation.
B) Information technology.
C) A value-added activity.
D) A non-value added activity.

Question 20

Which of the following is a fundamental principle of business process management?

A) Process improvements must be monitored.
B) Companies should never use external consultants.
C) Deal with objections as soon as they arise.
C) If you don't know where you're going, any road will take you there.

Question 21

Understanding the relationship between business processes and strategy is an important basic principle of business process management. Which of the following is an example of a strategy: (i) using general ledger software in the accounting information system, (ii) keeping prices low by controlling costs, (iii) providing goods and services that customers see as unique.

A) I and II only
B) I and III only
C) II and III only
D) I, II and III

Question 22

MTP Corporation has performed a value-added analysis of costs for three business processes. The costs were classified on a three-point scale, where Level One represented activities with the greatest value added. The results are shown below: $$\begin{array} { c r r r } & \text { Process A } & \text { Process B } & \text { Process C } \\\% \text { of costs at Level 1 } & 51 \% & 46 \% & 36 \% \\\% \text { of costs at Level 2 } & 23 \% & 16 \% & 17 \% \\\% \text { of costs at Level 3 } & 26 \% & 38 \% & 47 \% \\ \text { Total }& 100 \% & 100 \% & 100 \% \\\end{array}$$

-Based on the value-added analysis alone, which process should MTP work on first?

A) Process A
B) Process B
C) Process C
D) Whichever process the CEO considers most important

Question 23

As part of business process management, organizations should prioritize potential process improvements. Tools to accomplish that goal include:

A) Cost / benefit analysis
B) Flowcharts
C) Brown's risk taxonomy
D) Enterprise resource planning software

Question 24

MTP Corporation plans to hire a consultant for a business process management project. Which of the following is most true?

A) MTP should not hire an external consultant.
B) MTP should direct the consultant to prepare a flowchart of the relevant business process and present it within thirty days.
C) The consultant should come from MTP's internal audit department.
D) The consultant should have a solid understanding of MTP's competitive strategy.

Question 25

Which of the following statements about activity-based management is most true?

A) It can be a valuable tool for business process management.
B) All non-value added activities should be eliminated as quickly as possible.
C) It should always focus more on people than on technology.
D) Flowcharts are unrelated to business process management.

Question 26

MTP Corporation plans to use activity-based management in revising its sales / collection process. Activity-based management would be helpful in which steps of the generalized model of business process management: (i) selecting a business process, (ii) analyzing process-related data, (iii) prioritizing process improvements.

A) I and II only
B) I and III only
C) II and III only
D) I, II and III

Question 27

Based on the basic principles of business process management discussed in the text, which of the following is the best defined deliverable for an external consultant?

A) All process documentation should be completed by the end of the month.
B) List and discuss the seven steps of business process management.
C) Please arrange a conference call at least once a week.
D) Provide a written progress report when you are halfway through the project.

Question 28

To complete the third step of the generalized model of business process management, managers could use: (i) interviews, (ii) information technology.

A) I only
B) II only
C) Both I and II
D) Neither I nor II

Question 29

Business process management can involve information technology, such as: (i) flowcharting software, (ii) relational database software, (iii) spreadsheets.

A) I and II only
B) II and III only
C) I and III only
D) I, II and III

Question 30

Which type of flowchart is least likely to be used in business process management?

A) Document
B) Program
C) Systems
D) Hardware

Question 31

One basic idea of business process management is understanding how processes interact with organizational strategy. Which of the following best demonstrates that idea?

A) Changing business processes to match the strengths of a new production manager
B) Hiring a CPA who can prepare our tax returns more quickly
C) Varying the forms of advertising our company uses
D) Redesigning the factory to reduce inventory movement

Question 32

Which of the following practices most clearly violates one of the basic principles of business process management?

A) Responding to negative feedback at the end of the project
B) Hiring an external consultant with BPM experience
C) Letting a department manager direct the project
D) Analyzing past practice before thinking about new processes

Question 33

The first step in business process management is selecting a process and defining its boundaries. Which of the following has the best defined boundary?

A) Acquiring capital
B) Developing internal controls
C) Designing new forms
D) Calculating cost variances

Question 34

Which of the following is least likely to be a value-added activity?

A) Training production staff
B) Complying with the Sarbanes-Oxley Act
C) Negotiating volume discounts for freight
D) Preparing a flowchart of the billing process

Question 35

NTN Corporation has been maintaining its sales records in a spreadsheet. As part of a business process management initiative, NTN wants to develop a relational database instead. The relational database should include separate tables for: (i) customers, (ii) inventory, (iii) journal entries.

A) I and II only
B) I and III only
C) II and III only
D) I, II and III

Question 36

The managers of SBT Corporation are following the generalized model for a business process management project. Which of the following would be most useful in the fourth step?

A) Sales invoices
B) Cross-functional teams
C) Flowcharts and data flow diagrams
D) COSO enterprise risk management framework

Question 37

MTP Corporation has performed a value-added analysis of costs for three business processes. The costs were classified on a three-point scale, where Level One represented activities with the greatest value added. The results are shown below: $$\begin{array} { c r r r } & \text { Process A } & \text { Process B } & \text { Process C } \\\% \text { of costs at Level 1 } & 51 \% & 46 \% & 36 \% \\\% \text { of costs at Level 2 } & 23 \% & 16 \% & 17 \% \\\% \text { of costs at Level 3 } & 26 \% & 38 \% & 47 \% \\ \text { Total }& 100 \% & 100 \% & 100 \% \\\end{array}$$

-Based on the value-added analysis, which of the following statements is / are true: (i) Process A does not need any changes since more than half its costs are value-added, (ii) Process C should be abandoned since almost half its costs are non-value added.

A) I only
B) II only
C) Both I and II
D) Neither I nor II

Question 38

Rose and Stacy were talking about redesigning training processes for newly-hired auditors at their CPA firm. Which of the following most clearly violates one of the basic principles of business process management?

A) Above all, the new process should focus on teaching new auditors how to help clients.
B) I love demonstrating our general ledger software, so we should definitely keep that as part of the training.
C) Let's hire a training and development consultant to assist us.
D) After we talk today, let's present our ideas to the managing partner for feedback.

Question 39

Carlos and Gabrielle are forming a team to look at better ways for collecting data on employee performance at DHW Corporation. In keeping with the basic principles of business process management, the team should definitely include:

A) An external consultant
B) The CEO of DHW
C) A member of the sales staff
D) All of the above

Question 40

DEH Corporation recently conducted a value-added analysis as part of a business process management project. Results showed that each unit of product absorbed the following costs: assembly, $5.00; quality checking, $2.00; machine depreciation, $3.00. What percentage of those costs is non-value added?

A) 20%
B) 30%
C) 50%
D) some other amount

Question 41

Fernando is forming a business process management team whose task is to develop a better way to control inventory. In keeping with the basic principles of business process management, which of the following employees would be the best choice to become part of the team?

A) Sebastian, a recently hired information systems manager with a business degree
B) Raquel, an inventory clerk who has worked for the company for several years
C) Thierry, the corporate communications manager
D) Renee, the company's external auditor

Question 42

All of the following are elements of business process management definitions except:

A) Separating processes into their component parts
B) Getting the best outputs with the least amount of inputs
C) Sparing no expense to please clients and employees
D) Linking business processes with a company's ability to compete

Question 43

Suggest at least two specific actions Marco can take to make his department more efficient and / or more effective. Explain your suggestions.

Question 44

Determine whether each of the following statements about business process management is: (a) always true, (b) sometimes true or (c) never true. You do not need to provide explanations for those that are sometimes true
1. An auditor's opinion is evidence that business processes are effective and efficient.
2. Anonymous surveys of employees are a good way to determine if a process is value-added.
3. Both old and new processes should be documented as part of BPM.
4. BPM projects arise from doubts about the accounting information system's ability to provide relevant, reliable information.
5. BPM projects can influence product quality.
6. BPM projects should always focus on providing whatever customers and employees want and need.
7. Managers should always follow the seven-step generalized model for business process management.
8. Non-value added activities are more costly than value-added activities.
9. One way to prioritize potential process improvements is based on cost.
10. The most effective BPM project teams include both internal employees and external consultants.

Question 45

Based on the definitions in the text, which of the following are examples of business process management? Place an "X" in the space provided for those that are.
Adopting a lockbox system for cash receipts
Bringing customer service in-house after outsourcing for several months
Changing an office layout based on an activity-based management analysis
Closing accounts at one bank and opening them at a new bank
Implementing activity-based costing
Instituting a formalized budgeting process
Making parts instead of buying them
Preparing journal entries using Peachtree
Switching from paper-based documents to electronic documents
Using SmartDraw to prepare flowcharts

Question 46

The following scenario applies to Questions:
Steve, the vice president of information systems for Alpha Flight Company, was dissatisfied with the company's current method of providing IT help to its internal customers. Having read an article about information systems outsourcing, he decided to develop a new business process in which most IT help would be provided externally. By doing so, he reasoned, he would save the company money and make his job easier. Steve decided to start the project by drawing two flowcharts: one of the current process and another of the new process. He would then hire a consultant to do a cost / benefit analysis and recommend a company for outsourcing; when the project was complete, Steve planned to inform his employees individually, as some of them would have to look for other employment.
Which step in the generalized model of business process management is Steve ignoring?

A) Select the process and define its boundaries.
B) Document the process steps and flow.
C) Work with internal employees.
D) Collect process-related data.

Question 47

The following scenario applies to Questions:
Steve, the vice president of information systems for Alpha Flight Company, was dissatisfied with the company's current method of providing IT help to its internal customers. Having read an article about information systems outsourcing, he decided to develop a new business process in which most IT help would be provided externally. By doing so, he reasoned, he would save the company money and make his job easier. Steve decided to start the project by drawing two flowcharts: one of the current process and another of the new process. He would then hire a consultant to do a cost / benefit analysis and recommend a company for outsourcing; when the project was complete, Steve planned to inform his employees individually, as some of them would have to look for other employment.
The final step in the generalized model of business process management includes monitoring process improvements. Steve could monitor process improvements by: (i) comparing the number of calls under the old and new systems, (ii) creating a relational database with answers to common questions, (iii) calculating the change in cost from outsourcing.

A) I and II only
B) II and III only
C) I and III only
D) I, II and III

Question 48

Natasha, Jillian and Joseph were preparing to attend a conference on business process management. Various statements from their conversation are shown below. Respond to each statement to reflect a more accurate view of the basic principles of BPM discussed in the chapter. Do not quote the principles. The first item is done for you as an example.
Statement
Response
I'm surprised they're sending us to this conference; I thought external consultants directed most business process management projects.
External consultants might be involved, but our own employees need to be part of things, too.
We'll probably have to spend more money on computers to implement what we learn.
This conference is a waste of time and money. It's not going to help us compete in our current markets.
Maybe we'll finally figure out a way to reduce the number of documents in our accounting information system; I think that's what business process management is about.
I'm looking forward to spending two days without our bosses at this conference. I'm sure the things we'll be learning would be too detailed for them.
I like the old way of doing things in our company; I don't see any reason to change processes now.

Question 49

A group of accountants was discussing various business process management projects they had completed. Some of the actions associated with those projects are listed below. For each item, indicate which step (1 through 7) of the generalized model of BPM is best exemplified.
____ a. Calculate the monthly cost of running the purchasing department before BPM.
____ b. Create a data flow diagram of the fixed asset disposal process.
____ c. Determine the cost per customer served at an ATM.
____ d. Develop a schedule for internal audits of new business processes.
____ e. Examine a previously constructed flowchart to look for inefficiencies and internal control weaknesses in cash receipts processing.
____ f. Follow the production process from materials requisition to finished goods.
____ g. Meet with department heads to determine which processes need the most attention.
____ h. Perform a variance analysis of the shipping and receiving department.
____ i. Rank proposals for improving the capital budgeting process.
____ j. Redesign the company's web site based on feedback from employees and clients.

Question 50

Funland is an amusement park in southern California. Due to competition from other amusement parks in the area, Funland changed some of its business processes; descriptions of the old and new processes follow.
Old process. Guests drove to the park and paid a flat fee of $20 per car for parking. After walking to the front gate, guests purchased park tickets ($50 each). They passed through a turnstile where a Funland employee punched a hole in the ticket to indicate it had been used, after which they were free to enjoy the park until closing.
New process. Guests must purchase parking passes online or at a Funland retail store; they are not sold at the park. They may purchase tickets online, but those are also sold at the park for a higher price. Guests arrive at the park where they scan their parking passes, causing an automated gate arm to lift and allow them to enter. A Funland employee monitors the parking entrance via a remote camera. After taking a tram to the park's front gate, guests with pre-purchased tickets go directly to a turnstile, where a Funland employee scans the ticket. Guests who purchase tickets at the park must have the ticket punched, as in the old process.
Based on the descriptions, determine which of the following statements are true. Place an "X" in the space provided for true statements.
____ a. A well-designed systems flowchart of the new process should include at least one decision symbol.
____ b. Attendance at the park will increase because of the new process.
____ c. Funland should change its organizational strategy based on the new process.
____ d. Funland will need fewer employees for the processes described (parking and ticket sales).
____ e. Internal control is stronger in the new process than in the old process.
____ f. Reported profits will increase because of the new process.
____ g. The new process is more efficient than the old process.

Question 51

Rank the processes mentioned in the narrative as to their value added; use a three-point scale where "3" stands for activities that definitely add value. Justify your rankings.

Question 52

Common steps associated with business process management are listed below. Number them according to the order in which they would usually occur.
___ Analyze the collected data.
___ Collect process-related data.
___ Identify and prioritize potential process improvements.
___ Implement and monitor process improvements.
___ Observe, document and map the process steps and flow.
___ Optimize the process.
___ Select the process and define its boundaries.

Question 53

Can Marco revise his business processes without using information technology? Defend your response.

Question 54

The following scenario applies to Questions:
Steve, the vice president of information systems for Alpha Flight Company, was dissatisfied with the company's current method of providing IT help to its internal customers. Having read an article about information systems outsourcing, he decided to develop a new business process in which most IT help would be provided externally. By doing so, he reasoned, he would save the company money and make his job easier. Steve decided to start the project by drawing two flowcharts: one of the current process and another of the new process. He would then hire a consultant to do a cost / benefit analysis and recommend a company for outsourcing; when the project was complete, Steve planned to inform his employees individually, as some of them would have to look for other employment.
Steve is most clearly violating which basic principle of business process management?

A) Understand how business processes interact with organizational strategy.
B) Be open to alternatives.
C) Make sure tasks for consultants are well defined.
D) Steve is not violating any basic principle of business process management.

Question 55

Juanita conducted a value-added analysis of costs incurred in her company's internal auditing department; results of her analysis are shown below. Group the activities based on a three-point scale, where "3" stands for activities with very high value and "1" stands for activities with very low value. Then, compute the percentage of costs in each category, recording your answers in the space provided. Percent of costs ranked "3" ______
Percent of costs ranked "2" ______
Percent of costs ranked "1" ______

Question 56

List, in order, the seven steps Marco should follow in his business process management efforts.

Question 57

DEH Corporation recently conducted a value-added analysis as part of a business process management project. Results showed that each unit of product absorbed the following costs: assembly, $5.00; quality checking, $2.00; machine depreciation, $3.00. By eliminating any non-value added activity, DEH could reduce its unit cost from $10.00 to:

A) $2.00
B) $7.00
C) $8.00
D) some other amount