Chapter 1-1. Chapter 1-2 Accounting Information Systems, 1 st Edition Introduction to AIS.

Chapter 1-1

Chapter 1-2 Accounting Information Systems, 1st Edition

Introduction to AIS

Chapter 1-3

1. An overview of business processes

2. An overview of an accounting information system

3. The business process linkage throughout the supply chain

4. The IT enablement of business processes

5. Basic computer and IT concepts

6. Examples of IT enablement

7. The internal control structure of organizations

8. The importance of accounting information systems to accountants

9. The relation of ethics to accounting information systems

Study ObjectivesStudy ObjectivesStudy ObjectivesStudy Objectives

Chapter 1-4

An Introduction To Business An Introduction To Business ProcessesProcessesAn Introduction To Business An Introduction To Business ProcessesProcesses

SO 1 An overview of business processesSO 1 An overview of business processes

Accounting Information System must identify

Transactions to record,

Capture all details,

Properly process into correct accounts, and

Provide reports externally and internally.

Chapter 1-5



Business Process - a sequence of work steps performed in order to produce a desired result.

Examples:

Completing a sale

Purchasing raw materials

Paying employees

Paying vendors

Chapter 1-6



Four general types of business processes:

1. Revenue Processes (Chapter 8)

a. Sales

b. Sales return

c. Cash collection

Chapter 1-7




2. Expenditure Processes (Chapters 9 and 10)

a. Purchase

b. Purchase return

c. Cash disbursement

d. Payroll

e. Fixed asset

Chapter 1-8




3. Conversion Processes (Chapter 11)

a. Planning

b. Resource management

c. Logistics

Chapter 1-9




4. Administrative Processes (Chapter 12)

a. Capital

b. Investment

c. General ledger

Chapter 1-10



Internal controls are the set of procedures and policies adopted to:

1. safeguard assets,

2. check accuracy and reliability of data,

3. promote operational efficiency, and

4. encourage adherence to prescribed managerial practices.

Chapter 1-11

d. revenue process

When a customer returns goods that were purchased, the business process to accept the return would most likely be a(n)

Quick ReviewQuick Review



1. Revenue Processes

a. Sales

b. Sales return

c. Cash collection

b. conversion process

c. expenditure process

a. administrative process

Chapter 1-12

The Accounting Information SystemThe Accounting Information SystemThe Accounting Information SystemThe Accounting Information System

SO 2 An overview of an accounting information SO 2 An overview of an accounting information systemsystem

Various Business ProcessesExhibit 1-1

Chapter 1-13

d. a bar code

Which of the following is least likely to be an output of the accounting information system?


A bar code is usually an input to

the accounting information

system.

The Accounting Information SystemThe Accounting Information SystemThe Accounting Information SystemThe Accounting Information System

SO 2 An overview of an accounting information SO 2 An overview of an accounting information systemsystem

b. a report

c. an invoice

a. a check

Chapter 1-14

Supply Chain - processes and information flows that involve the movement of materials, funds, and related information through the full logistics process, from the acquisition of raw materials to the delivery of finished products to the end user.

The supply chain includes all:

Vendors

Service providers

Business Processes Throughout The Business Processes Throughout The Supply ChainSupply Chain


SO 3 The business process linkage throughout the SO 3 The business process linkage throughout the supply chainsupply chain

Customers

Intermediaries

Chapter 1-15

A simplified Supply Chain for McDonald’s

Exhibit 1-2




Chapter 1-16

b. The supply chain excludes customers.

Which of the following is not true of the supply chain?





c. The supply chain includes information flows.

a. The supply chain includes vendors.

d. The supply chain includes secondary suppliers.

Chapter 1-17

Information Technology - Computers, ancillary equipment, software, services, and related resources as applied to support business processes.

IT Enablement - Using IT systems to enhance efficiency and effectiveness of internal or supply chain processes.

IT Enablement of Processes and the IT Enablement of Processes and the AISAISIT Enablement of Processes and the IT Enablement of Processes and the AISAIS

SO 4 The IT enablement of business processesSO 4 The IT enablement of business processes

Chapter 1-18

IT usage accomplishes one or more of the following objectives:

1. Increased efficiency of business processes

2. Reduced cost of business processes

3. Increased accuracy of the data related to business processes



Business Process Reengineering (BPR) is the purposeful and organized changing of business processes to make them more efficient.

Chapter 1-19

Which of the following is not an objective of IT enablement?




c. reduced security problems

a. increased accuracy of data

b. reduced cost

d. increased efficiency

Chapter 1-20

Basic Computer Data Structures

Basic Computer and IT ConceptsBasic Computer and IT ConceptsBasic Computer and IT ConceptsBasic Computer and IT Concepts

SO 5 Basic computer and IT conceptsSO 5 Basic computer and IT concepts

Data hierarchy:

1. Bit, or binary digit

2. Byte

3. Field

4. Record

5. File

6. Database

Smallest unitValues = zero or one

One characterEight bits

One item within recordExample - last name

Set of related fieldsExample – employee #, name, pay rate, etc.

Set of related records

Entire collection of files

Chapter 1-21

c. bit, byte, field, record, file, database

The correct order of the computer data hierarchy is




a. byte, bit, record, field, file, database

b. bit, byte, record, field, file, database

d. bit, byte, field, record, database, file

Chapter 1-22



RelationalRelationalDatabaseDatabase

Master FileMaster File

Transaction Transaction FileFile

Example - relationship in data of a customer having more than one order.

Example - payroll master file maintains the relatively permanent data to process payroll transactions.

Example - transaction file is processed against the master file, and year-to-date balances are updated in the master file.

Chapter 1-23

Sequential access

Random access

Indexed Sequential Access Method (ISAM)

Batch processing

Online processing

Real-time processing

File Access and Processing ModesFile Access and Processing Modes



Chapter 1-24

Data warehouse

Operational database

Data mining

Data Warehouse and Data MiningData Warehouse and Data Mining



Chapter 1-25

c. data mining

The process of searching for identifiable patterns in data is called




a. sequential processing

b. data warehousing

d. real-time processing

Chapter 1-26

Network (two or more computers linked together)

Types important to accounting:

Local Area Network (LAN)

Internet

Extranet

Intranet

Networks and the InternetNetworks and the Internet



Chapter 1-27

E-Business

Examples of IT EnablementExamples of IT EnablementExamples of IT EnablementExamples of IT Enablement

SO 6 Examples of IT enablementSO 6 Examples of IT enablement

Encompasses all forms of:

Online electronic trading

Consumer-based e-commerce

Business-to-business electronic trading

Business-to-business process integration

Internal use of IT Examples, buying:a book at Amazon.comclothes at

Landsend.com

Chapter 1-28

Electronic Data Interchange



The intercompany, computer-to-computer transfer of business documents in a standard business format.

Example: Transmit purchase orders, invoices, and payments electronically between trading partners.

Chapter 1-29

Point of Sale System



A system of hardware and software that captures retail sales transactions by standard bar coding.

Example: Customer• checks out through the cash register, • bar codes are scanned on the items purchased, • prices are determined by access to inventory and

price list data, • sales revenue is recorded, and • inventory values are updated.

Chapter 1-30

Automated Matching



A computer system in which the software matches an invoice to its related purchase order and receiving report.

Example: Ford Motor Company described in text illustrated an automated matching system.

Chapter 1-31

Evaluated Receipt Settlement (ERS)



An invoice-less system in which computer software completes an invoice-less match that is a comparison of the purchase order with the goods received.

E-Payables and Electronic InvoicePresentment and Payment (EIPP)

Web-enabled receipt and payment of vendor invoices.

Chapter 1-32

Enterprise Resource Planning Systems (ERP)



Multi-module software system designed to manage all aspects of an enterprise.

Usually broken down into modules such as

inventory management, manufacturing, and human resources.

financials, sales, purchasing,

Chapter 1-33

c. e-payables

An IT enabled system for purchasing that is an “invoice-less” system is called a(n)


a. automated matching system

b. evaluated receipt settlement

d. point of sale system



Chapter 1-34

The Control Environment of The Control Environment of OrganizationsOrganizationsThe Control Environment of The Control Environment of OrganizationsOrganizations

SO 7 The internal control structure of organizationsSO 7 The internal control structure of organizations

Risks that impact financial standing:1. Assets will be stolen or misused

2. Errors in accounting data or information

3. Fraudulent activity

4. Risks inherent in IT systems, such as

a. Erroneous input of data

b. Erroneous processing of data

c. Computer fraud

d. Computer security breaches

e. Hardware or software failure

f. Natural disasters

Chapter 1-35

Enterprise Risk Management (ERM)

ERM is defined as. . . a process, effected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.



Chapter 1-36


Requires management set policies and procedures related to:

Internal Environment

Objective Setting

Event Identification

Risk Assessment

Risk Response

Control Activities

Information and Communication

Monitoring



Chapter 1-37


Management should ensure the following types of control structures exist:

1. Code of ethics (Chapter 3)

2. COSO accounting internal control structure (Chapter 3)

3. IT system control structure (Chapter 4)

4. Corporate governance structure (Chapter 5)

5. IT governance structure (Chapter 6)



Chapter 1-38

c. “Corporate Governance”

The COSO report written for the purpose of assisting managers in the challenge of managing risk in their organizations is entitled


a. “Internal Controls—Integrated Framework”

b. “Enterprise Risk Management—Integrated Framework”

d. “IT Governance”



Chapter 1-39

Accountants may be

users of the AIS,

part of the design or implementation team of an AIS, and/or

auditors of an AIS.

The Accountant’s Role in AISThe Accountant’s Role in AISThe Accountant’s Role in AISThe Accountant’s Role in AIS

SO 8 The importance of accounting information systems to SO 8 The importance of accounting information systems to accountantsaccountants

Chapter 1-40

c. auditor

Accountants have some form of use of the AIS in all but which role?


a. user

b. programmer

d. designer

The Accountant’s Role in AISThe Accountant’s Role in AISThe Accountant’s Role in AISThe Accountant’s Role in AIS

SO 8 The importance of accounting information systems to SO 8 The importance of accounting information systems to accountantsaccountants

Chapter 1-41

Examples of potential unethical behaviors:

Fraudulent financial reporting

Revenue inflation

Expense account fraud

Inflating hours worked for payroll purposes

Computer fraud

Hacking

Browsing confidential data

Ethics and the AISEthics and the AISEthics and the AISEthics and the AIS

SO 9 The relation of ethics to accounting information systemsSO 9 The relation of ethics to accounting information systems

Chapter 1-42

Which of the following is not true of unethical behavior?


a. The only category of unethical behavior for accountants is inflating revenue.

Ethics and the AISEthics and the AISEthics and the AISEthics and the AIS

SO 9 The relation of ethics to accounting information systemsSO 9 The relation of ethics to accounting information systems

b. Accountants are often pressured to help commit or cover up unethical behavior.

c. Hacking is an unethical behavior that accountants should be concerned about.

d. An accounting information system can be used to cover up unethical behavior.

Chapter 1-43

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Chapter 1-1. Chapter 1-2 Accounting Information Systems, 1 st Edition Introduction to AIS.

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