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Drivers for Change
- Advances in technology (Metcalfe's Law, Moore's Law)
- Outsourcing and Downsizing
Value of Information
- - Reduce uncertainty
- - Improve decisions
- - Improve planning
- - Improve scheduling
- - Time and Resources
- - Produce information
- - Distribute information
Accounting Information Systems Add Value...
- - Quality and reduce costs
- - Efficiency and effectiveness
- - Sharing knowledge
- - Supply chain
- - Internal control
- - Decision making
AIS Improves Decision Making
- - Identify situations that require action
- - Reduce uncertainty
- - Provide alternative choices
- - Provide feedback on previous decisions
- - Provide accurate and timely information
- - Inbound logistics
- - Operations
- - Outbound logistics
- - Marketing/Sales
- - Service
- - Firm infrastructure
- - Human resources
- - Technology
- - Purchasing
Data Processing Cycle
- Data input
- Data processing
- Data storage
- Information output
- - Summary level data (asset, liability, equity, revenue, expense)
- - Detailed data for a General Ledger (Control) Account that has individual sub-accounts (A/R, A/P)
- - Infrequent or specialised transactions
- - Repetitive transactions (sales)
- - Contains records of a business from a specific period of time
- - Permanent records
- - Updated by transaction with the transaction file
- - Set of interrelated files
Data Processing Activities
1 - Create new data records
2 - Read, relieve or view existing data records
3 - Updating existing stored data records
4 - Delete data or records
Enterprise Resource Planning (ERP)
Integrate an organisation's information into one overall AIS
- ERP Modules
- - Financial
- - Human resources and payroll
- - Order to cash
- - Purchase to pay
- - Manufacturing
- - Project management
- - Customer relationship management
- - System tools
Integration of an organisation’s data and financial information
Data is captured once
Greater management visibility, increased monitoring
Better access controls
Standardises business operating procedures
Improved customer service
More efficient manufacturing
Time-consuming to implement
Changes to an organisation’s existing business processes can be disruptive
Resistance to change
Analysis data to glean insights for improved decisions and performance.
Accounting System Aspects
Store accounting data
Analyse accounting data
Safeguard accounting data
BI Data Analytics Approaches
- Shadow Data
- - extracted from the operational database, often into spreadsheets that shadow the formal accounting system.
- BI Technologies
- - analysis tools under IT control used to extract and analyse data from operational databases and data warehouse.
Enterprise Intelligent System Components
Data extraction and transfer
ASX Corporate Governance Guidelines
Lay solid foundation for management and oversight.
Structure the board to add value.
Promote ethical and responsible decision-making.
Safeguard integrity in financial reporting.
Make timely and balanced disclosure.
Respect the rights of shareholders.
Recognise and manage risk.
Remunerate fairly and responsibly.
Enterprise Risk Management - Objective Setting
- - High-level goals aligned with corporate mission
- - Effectiveness and efficiency of operations
- - Complete and reliable
- - Improve decision making
- - Laws and regulations are followed
ERM Risk Response
- - Implement effective internal control
- - Do nothing, accept likelihood of risk
- - Buy insurance, outsource, hedge
- - Do not engage in activity that produces risk
Proper authorisation of transactions and activities (Signature or code on document to signal authority over a process)
Separation of duties.
Project development and acquisition controls.
Change management controls.
Design and use of documents and records.
Safeguarding assets, records, and data.
Independent checks on performance.
- Preventative (deter)
- - Training
- - User access controls
- - Physical access controls
- - Network access controls
- - Device and software hardening controls
- Detective (discover)
- - Log analysis
- - Intrusion detection
- - Managerial reports
- - Security testing
- Corrective (correct)
- - Computer Incident Response Team (Recognise, contain, recovery, follow-up)
- - Chief Information Security Officer (CISO)
- - Patch Management
Committee Of Sponsoring Organisations (COSO) Components
Trust Services Framework
Threats to AIS
Natural disasters and terrorist threats
Software errors and/or equipment malfunction
Unintentional acts (human error)
Intentional acts (computer crimes)
Reasons for Fraud
Deceive investors or creditors
Increase a company’s stock price
Meet cash flow needs
Hide company losses or other problems.
Pressure (employee, financial)
Opportunity (commit, conceal, convert to personal gain)
Rationalisation (justification, attitude, lack of personal integrity)
Input (alteration, falsifying)
Processor (unauthorised system use)
Computer instructions (modifying software, illegal copying)
Data (illegally using, copying, browsing, searching, or harming company data)
Output (stealing, copying or misusing computer printouts or displayed information)
Prevent and Detect Fraud
Make fraud less likely to occur.
Increase the difficulty of committing fraud.
Improve detection methods.
Reduce fraud losses.
Data Entry Controls (Checks)
Field (characters, date, integer)
Sign (proper arithmetic sign)
Limit (input checked against fixed value)
Range (value in low-high range)
Size (input within field)
Completeness (all required data entered)
Validity (input compared with master data to confirm existence)
Reasonableness (logical comparisons)
Digit Verification (computed from input value to catch typo errors)
Prompting (input requested by system)
Close-loop Verification (uses input data to retrieve and display related data)
Batch Input Controls
- Batch processing (Input multiple source documents at once in a group)
- Batch totals (compare input totals to output totals)
- - Financial
- - Hash
- - Record count
Batch total recalculation
Cross-footing and zero balance tests
- Data Transmission Controls
- - Check sums
- - Parity checking
Data Centre location
Business Continuity Plan (BCP)
Effects of virtualisation and cloud computing
Disaster Recovery Plan (DRP)
Second Data Centre
- Set of exchange transaction contracts between firm and customer associated with
- - providing goods and services to customers
- - collecting their cash payments
- Primary objective
- - provide the right product in the right place at the right time for the right price
Revenue Cycle Business Activities
Sales order entry
Billing and accounts receivable
- Set of exchange transaction contracts between firm and suppliers
- - Ordering goods from suppliers
- - Receiving and storing goods
- - Paying suppliers
- Primary objective
- - Acquire and maintain inventory, supplies and service at the lowest cost.
Expenditure Cycle Business Activities
Ordering goods and services
Receiving and storing goods and services
- - Each approved invoice is posted to individual supplier records in the accounts payable file and is then stored in an open-invoice file.
- - When a cheque is written to pay for an invoice, the voucher package is removed from the open-invoice file, the invoice is marked paid, and then the voucher package is stored in the paid-invoice file.
- - Payment voucher is also created when a supplier invoice is approved for payment.
Voucher System Advantages
Reduce the number of cheques
Utilise pre-sequential-numbered voucher control
Allows separation of invoice approval from invoice payment
General Ledger and Reporting Cycle (GLARC) Activities
Update general ledger
Post adjusting entries
Prepare financial statements
Produce managerial reports
eXtensible Business Reporting Language (XBRL)
Report that provides a multidimensional perspective of organisational performance
- Reflects four perspectives of the organisation
- - Financial
- - Customer
- - Internal operations
- - Innovation and learning
- Shows goals and measures
- - Targets
- - Actual
- Off the Shelf (OTS) Canned
- - System capabilities for users with similar requirements
- Turnkey System
- - Hardware and software sold as a package
- Application Service Provider (ASP)
- - Software is provided to user via the internet
In-House System Development
Provides a significant competitive advantage
- - Significant amounts of time required.
- - Complexity of the system.
- - Poor requirements defined.
- - Insufficient planning.
- - Inadequate communication and cooperation.
- - Lack of qualified staff.
- - Poor top management support.
End-User Computing (EUC)
- - User creation, control and implementation
- - Systems meet user needs
- - Timeliness
- - Freeing up systems resources
- - Versatility and ease of use
- - Logic and development errors
- - Inadequately tested applications
- - Inefficient systems
- - Poorly controlled systems
- - Poorly documented systems
- - Incompatible systems
- - Redundant data
- - Wasted resources
- - Increased costs
Outsourcing the System
- - A business solution
- - Asset utilisation
- - Access to greater expertise and better technology.
- - Lower costs by standardising user applications, buying hardware at bulk prices, splitting development and maintenance costs between projects, and operating at higher volumes.
- - Less development time.
- - Elimination of peaks-and-valleys.
- - Facilitates downsizing.
- - Inflexibility
- - Loss of control
- - Reduced competitive advantage
- - Locked-in system
- - Unfulfilled goals
- - Poor service
- - Increased risk
Methods to Develop AIS
Business Process Management (BPM)
Computer-Aided Software Engineering (CASE) Tools
Business Process Management Systems (BPMS) Componenets
A process engine to model and execute applications including business rules.
Business analytics to help identify and react to business issues, trends and opportunities.
Collaboration tools to remove communication barriers.
A content manager to store and secure electronic documents, images and other files.
Project Development Plan
Planning Techniques - SDLC
Program Evaluation and Review Technique (PERT)
Types of Resistance - SDLC
Development (system description, layouts, flowcharts, test results)
Operations (operating schedules, files/databases accessed, equipment/security requirements)
User (teaches users how to operate, procedures manual, training materials)
Types of System Testing - SDLC
Processing test data
Types of Conversions - SDLC
Database Management System (DBMS)
Interface between software applications and the data in files
Contains both detailed and summarised data for a number of years
Used for analysis rather than transaction processing
Advantages of Database Systems
Minimising Data Redundancy and Data Inconsistency
Schemas (Logical Structure of Database)
- Conceptual Level
- - Organisation wide view of the data
- External Level
- - Individual users view of the data
- - Each view is a subschema
- Internal Level
- - Describes how data are stored and accessed (records, definitions, addresses, indexes)
Relational data model represents the conceptual and external level schemas as if data are stored in tables
Semantic Data Modelling