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2nd semester MAC > Accounting and Information Systems > Flashcards

Accounting and Information Systems Flashcards

1
Q

Explain the difference between data and information

A

Data is facts collected, recorded, and stored in a system - numbers, date, name etc.

Information is adding context to the data (numbers) - invoice date: 1/1/2022, invoice #: 100

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2
Q

When is information knowledge?

A

When having human interpretation

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3
Q

What makes information useful?

A

Relevant, reliable, complete, timely, understandable

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4
Q

What are business processes?

A

A set of related, coordinated, and structured activities and tasks performed by people and/or machines to achieve a specific organizational goal.

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5
Q

What are the 5 business processes?

A

Revenue, expenditure, production, payroll, financing

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6
Q

What value is an AIS adding?

A

improving quality and reducing costs, improving efficiency, sharing knowledge, improving efficiency and effectiveness of supply chain, improving internal control structure and improving decision making.

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7
Q

What factors are influencing AIS?

A

Corporate strategy, organizational culture, information technology
–> need alignment between all

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8
Q

Data differ from information in which way?

A

Data is input and information is output

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9
Q

Which of the following is a function of an AIS?

  • Reducing the need to identify a strategy
  • Transforming data into useful information
  • Allocating organizational resources
  • Automating all decision making
A

Transforming data into useful information

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10
Q

What are the elements in the data processing cycle?

A

Data input, data storage, data processing, and information output

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11
Q

Explain the “data input” element of the data processing cycle

A

1) capture the transaction data triggered by and event
2) make sure that the captured data is accurate and complete
3) ensure company policies are followed

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12
Q

Explain the “data storage” element of the data processing cycle

A

There are different kinds of data:
1) Master files are permanent and exist across fiscal periods, which includes resource and people data

2) transaction files contain data from one of the transaction cycles and are not permanent

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13
Q

What are the different types of data processing?

A
  • Creating new records (could be adding a customer)
  • Reading existing data
  • Updating previous record or data
  • Deleting data
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14
Q

What are the advantages of a ERP system?

A
  • Integrated enterprise-wide single view of the organization’s data which streamlines the flow of information
  • Data captured once – no need for sales to enter data about a customer and then accounting needs to enter the same customer data for invoicing
  • Improve access of control
  • Standardization of procedures and report
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15
Q

What are the disadvantages of a ERP system=

A

costly and complex

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16
Q

Which of the following would be identified as a record?

  • A collection of information on a customer
  • The information on all customers
  • a characteristic of a customer
  • A particular information on a customer
A
  • A collection of information on a customer
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17
Q

What are the different documentation tools?

A

1) business process diagram
2) Flowchart
3) data flow chart

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18
Q

What is the business process diagram

A

A visual way to present the activities in a business process so that all users understand it.

Swim lanes with different employees, and then the flow of the activities back and forth

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19
Q

What is the flowchart?

A

To describe an information showing the inputs and outputs, information activities, data storage, data flows and decision steps.

Storage to and back process which has both input and output

Different types:

  1. Document flowcharts (flow of document and data for a process)
  2. Internal control flowchart (to evaluate internal controls)
  3. System flowcharts (relationship among input, processing, storage and output)
  4. Program flowchart
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20
Q

What is the data flow diagram?

A

A graphical description that focuses on the data flow for sources and destinations of the data, the process, and data storage

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21
Q

A DFD is a representation of which?

  • Computer hardware configuration
  • Decision rules in a SW program
  • Flow of data in an organization
  • Logical operations performed by SW
A
  • Flow of data in an organization
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22
Q

How are data sources represented in a DFD?

  • As a curved arrow
  • As a square
  • As a circle
  • None
A
  • As a square
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23
Q

Which flowcharts show the relationship among input, processing, and output?

  • System flowchart
  • Document flowchart
  • Program flowchart
A
  • System flowchart
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24
Q

What is a file, record and a field?

A
  • File: a related group of records
  • Record: a related group of fields
  • Field: a specific attribute of interest for the record
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25
Q

What is the difference between the database approach and the file approach?

A

Database approach: data is an organization resource that is used by the entire organization, not just one department.

File approach: having files and programs for each new information that occurs. Difficult to integrate and update data to get an organizational-wide view of data, and data were inconsistent across files, e.g., customer address could be updated in one file but not in the other.

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26
Q

What are the advantages of having databases?

A
  • Data is integrated and easy to share
  • Data is independent of the programs that use the data
  • Minimize data redundancy and inconsistencies
  • Data is easily accessed
  • Access can be restricted to certain users
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27
Q

What is database management systems?

A

Database management (DBMS) links the way data are physically stored with each user’s logical view of the data. The DBMS allows users to access, query, or update the database without reference to how or where data are physically stored. A database management system (DBMS) is the program that manages and controls the data and the interfaces between the data and the application programs that use the data stored in the database.

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28
Q

What are schemas?

A

A schema is a description of the data elements in a database, the relationships among them, and the logical model used to organize and describe the data.
There are three levels of schema:
1. External level: individual user’s view
2. Conceptual level: organizational wide view of the entire database
3. Internal level: low level view (describe how data are stored)

29
Q

What are primary and foreign keys?

A

Primary key: is the database attribute, or combination of attributes, that uniquely identifies a
specific row in a table.
Foreign key: is an attribute in a table that is also a primary key in another table and is used
to link the two tables.

30
Q

What are the criteria for a good question?

A 
Specific
Measurable
Acheivable
Relevant
Timely
31
Q

According to EY, an analytical mindset is the ability to…?

A
  1. Ask the right questions
  2. Extract, transform, and load relevant data
  3. Apply appropriate data analytic techniques
  4. Interpret and share the results with stakeholders
32
Q

What is a data mart?

A

hold structured data, can be by function, geographic etc.

33
Q

What is data structuring?

A

Data structuring is the process of changing the organization and relationships among data fields to prepare the data for analysis.
Extracted data often needs to be structured to enable analysis, this can entail:
- Aggregating the data
- Joining the data
- Pivoting the data

34
Q

What is data standardization

A

Data standardization is the process of standardizing the structure and meaning of each data element so it can be analyzed and used in decision making. Important when merging data from several sources.

35
Q

What is data cleaning?

A

Data cleaning is the process of updating data to be consistent, accurate, and complete

36
Q

What are the different processes for data validation?

A
  1. visual inspection
  2. basic statistical test
  3. audit a sample
  4. advanced testing techniques
37
Q

What is descriptive analytics?

A

“What happened?”

Uses exploratory data analysis, and approach that explores data without testing formal models or hypothesis – can be qualitative data put into numbers

38
Q

What is diagnostic analytics?

A

“Why did this happen?”

Both informal and formal analysis: informal builds on descriptive analytics, where formal employ confirmatory data analysis

39
Q

What is predictive analytics?

A

“What is likely to happen in the future?”

Uses historical data to find patterns likely to happen in the future

40
Q

What is prescriptive analytics?

A

“What should be done?”

Either be recommendations or programmed actions based on predictive analytics results

41
Q

What are the threats to AIS?

A
  1. Natural and political disasters
  2. Software errors and equipment malfunctions
  3. Unintentional errors
  4. Intentional acts - fraud
42
Q

What are the two types of fraud?

A
  1. Theft of company assets (physical or digital)

2. Fraudulent financial reporting

43
Q

What are the conditions for fraud?

A

Three conditions must be present for fraud to occur:

  1. Pressure (from the employee herself or from financial statement)
  2. Opportunity to commit
  3. Rationalize behavior
44
Q

How can one prevent and detect fraud?

A
  1. Make fraud less likely to occur (culture of integrity, security policies)
  2. Make it difficult to commit (restricting access, having strong internal control)
  3. Improve detection (auditors, fraud hotline, monitor systems)
  4. Reduce fraud losses (insurance, backup of programs)
45
Q

What are the different types of computer fraud attacks?

A
  1. Hacking - Unauthorized access
  2. Social engineering - Techniques or tricks on people to gain physical or logical access to confidential information
    - Could be: identify theft, URL hijacking, phishing
  3. Malware
    - Software used to harm
    - Types: spyware, virus, trap door etc.
46
Q

What is the COBT framework?

A

“Control Objective for Information and Related Technology Standards”Framework for control of enterprise IT.

Based on five principles:

  1. Meeting stakeholder needs (create value for stakeholders)
  2. Covering the enterprise end-to-end (not only IT functions)
  3. Applying a single integrated framework (aligns with other governance frameworks)
  4. Enabling a holistic approach
  5. Separating governance from management
47
Q

What is the COSO framework?

A

“Committee of sponsoring organizations”, is an internal control incorporated into policies, rules and regulations used to control business activities.

48
Q

What is the COSO ERM?

A

COSO’s Enterprise risk management is a second control framework to set strategy, identify events that may affect the company, assess and manage the risks, and provide assurance that the company will achieve its objectives and goals:

  1. Objective setting
  2. Event identification (identifying external and internal incidents that could affect the achievement of the organization’s objectives)
  3. Risk assessment (assess the likelihood and impact of the incident)
  4. Risk response (reduce, accept, share, avoid the incident)
  5. Control activities
  6. Information and communication
  7. Monitoring
49
Q

What is the trust service framework?

A

The portions of COBIT that relates to IT-controls. Organizes these controls into five principles that jointly contribute to systems reliability. For good system reliability you need a good foundation of security. The four pillars focus on maintaining good system reliability.

Security = foundation
Confidentiality, privacy, processing integrity, and system availability = four pillars
–> systems reliability

50
Q

Explain the security part of the framework?

A

Access to the system and data is controlled and restricted to legitimate users.

Security is a management issue, and management must choose response: 1) reduce risk, 2) accept risk, 3) share risk, or 4) avoid risk. Management must reassess risk and repones. (COSO-ERM).

Actions to mitigate risk of attacks:

1) protection controls
2) detective controls
3) response to attaks - CISO

51
Q

What is confidentiality?

A

Sensitive organizational data/intellectual property is protected (strategic plans, trade secrets, cost information, legal documents etc.)

52
Q

What is privacy?

A

Protecting personal information about trading partners, investors, and employees are protected

53
Q

How to protect confidentiality and privacy?

A
  1. Identify and classify information
    a. Where should the information be located and who has access?
    b. Classify the value of the information to the organization
  2. Encryption
    a. Only way to protect information in transit over the internet
    b. Necessary part of defense-in-depth to protect information stored on websites or in public cloud
  3. Access controls
    a. Authentication and authorization are not sufficient for protecting confidentiality
    b. A life cycle view is needed including distribution and disposal, regardless of it being physical or digital storage
  4. Training
    a. Most important control for ensuring confidentiality – employees need to be taught how to protect confidential data
54
Q

What are the different types of encryption?

A
  1. Symmetric
    a. Uses one key to encrypt and decrypt
    b. Both parties need to know the key and need to securely communicate the shared key and cannot share the key with multiple parties
    - -> fast
  2. Asymmetric
    a. Uses two keys
    b. One is public where everyone has access, and the other is private only known by you
    - -> slow
55
Q

What is processing integrity?

A

Data are processed accurately, completely, in a timely manner, and only with proper authorization –> input-processing-output controls

Input controls: only authorized personal to prepare source documents, have data entry controls

Processing controls: data matching, file labels, zero-balance test

Output controls: users review, data transmission controls

56
Q

What is system availability?

A

Having systems and information available

Main objective:
- Minimize the risk of system downtime
o Preventive maintenance (cleaning disk drives)
o Training employees to make less mistakes
o Data center location and design (raised floor to prevent flooding, fire detection etc.)
- Quickly recover and resume normal operations
o Full back up of the database – use multiple backups both onsite and offsite

Have a business continuity plan (BCP), and disaster recovery plan (DRP)

57
Q

Explain the revenue cycle

A

the revenue cycle is a transaction cycle from which the organization conducts business with its customers - 4 key activities:

  1. sales order entry - get inquiry, check goods available, respons to inquiry, get order –> make sure customer sale is legitimate and accurate
  2. shipping - ship goods –> make sure to ship the correct products
  3. billing - send invoices –> make sure that customer is invoiced for the items
  4. cash collections - get payment
58
Q

explain the expenditure cycle

A

Recurring set of business activities and related information processing operations associated with the purchase of and payment for goods and services.

there is primarily external exchange of information with suppliers – but within the organization, information about the need to purchase goods flow to the expenditure cycle from the revenue and production cycle, inventory control etc.

Primary objective –> keep down costs

Key decisions are optimal level of inventory, selected of suppliers who has the lowest cost, and how to take advantages of cash discounts.

4 activities:

  1. Order materials, supplies and services
  2. receive it
  3. approve invoice
  4. cash disbursement
59
Q

explain the production cycle

A

Recurring set of business activities and related information processing operations associated with the manufacture of products.

This cycle uses information from other departments - e.g., forecast, raw materials, personel

Has 4 processes:

  1. Product design – creates source documents of bill of materials and operations list
  2. Planning and scheduling – create source documents of master production schedule and order
  3. Production operations
  4. Cost accounting systems – can provide information for planning, controlling and accurate cost data
60
Q

How does an AIS play a vital role in the production cycle?

A

A company’s AIS plays a vital role in the production cycle, as accurate and timely cost accounting information is essential input to decisions about:

  • Product mix
  • Product pricing
  • Resource allocation and planning
  • Cost management
61
Q

What are the basic processes of the payroll cycle?

A
  1. Update payroll master data
  2. Validate time and attendance data
  3. Prepare payroll
  4. Disburse payroll
  5. Disburse payroll taxes and deductions
62
Q

What are the primary function of a general ledger?

A

Primary function is to collect and organize data from 1) the four cycles which provides information about regular transactions, 2) the treasurer with information about financing and investing activities, 3) the budget responsible, and 4) the controller

63
Q

What are the basic processes/activities in the general ledger?

A
  1. Update general ledger
  2. Post adjusting entries (accruals, deferrals, estimates, corrections)
  3. Prepare financial statements
  4. Produce managerial reports
    a. To evaluate performance, responsibility accounting, flexible budgets, BSC, and graphs can be used
64
Q

Why would a company change its AIS?

A

Changes to an information system can be due to a full replacement or an upgrade to the system, due to technology changes, need to become more effective and efficient, competitive advantages etc.

65
Q

Explain the five stages of the system development life cycle

A

How to design and implement a new system – 5 stages/steps

  1. Systems analysis – initial investigation, define scope of project
    a. Find the problem the IS must solve
  2. Conceptual design – determine how to meet user needs, develop design specifications
    a. Evaluate design alternatives
    b. Prepare design specifications
  3. Physical design – translate broad conceptual design into the specific code and build database
  4. Implementation and conversion – install and test new hardware/software and train employee
  5. Operations and maintenance – ongoing review of the system
66
Q

Who is involved in making a new AIS?

A

Management, users, system analysts, development team, programmers

67
Q

Explain the ongoing activities during the project

A
  1. Planning
    - two plans are needed: project development plan and master plan
    - different planning techniques are petra evaluation and review and Gantt
  2. Managing behavioral reactions to change
    - The system will fail without support of the people it serves.
    - People can resist change because of fear, lack of support, poor communication, biases etc.
    - One can cope with these problems by having management support, performance evaluation, involvement of users etc.
  3. feasbility
    - economic feasibility
    - technical feasibility
    - legal feasibility
    - scheduling feasibility
    - operational feasibility
68
Q

How can a firm obtain a AIS?

A
  1. Purchase
  2. Develop in-house – gives a significant competitive advantage but requires time
    a. Either by own developers
    b. Or external developers
    c. Or end-user computing
  3. Outsource – allows companies to concentrate on core competencies, but is inflexible and loss of control
69
Q

What is the elements of the security life cycle?

A
  1. Assess threats and select response
  2. Develop and communicspe policy
  3. Acquire and implement resources
  4. Monitor performance

2nd semester MAC (2 decks)

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