B4: Information Systems and Communications Flashcards
Information Technology
general term that encompasses many different computer-related components
- one of the most basic IT components of any business is the set of software “business information system”
- business info systems can be divided into categories of: transaction processing system, enterprise resource planning systems, decision support systems (aka business intelligence), and executive information systems
- these categories are not mutually exclusive, many business info systems perform multiple functions
Components of IT
- Hardware
- actual physical computer or peripheral device - Software
- processes data and turns that data into info
- can be used for general use or specialized purposes - Network
- communication media that allows multiple computers to share data and info - People
- job titles vary but functions are somewhat standard
- functions may be outsourced - Data/Information
a) Data: raw facts
- production data: results from production processing and stored in production systems
- test data: results from test processing and stored in test systems
- production and test data should be separately stored and accessed
b) Information: data that has been processed and organized
- useful for decision making, whereas data are facts that are stored
Roles of Business Info Systems
4 Primary Roles in Business Operations
- to process detailed data (such as transaction data)
- to provide info used for daily decisions
- to provide info used for developing business strategies
- to take orders from customers
Hierarchy of Roles
- enterprise information system should be able to capture detailed transactional data as well as higher level aggregated data for mgmt
- integrated system for less redundancy, all users can use single system or network for lower level and higher level
Functional Perspective
- sales and marketing systems
- mfg and production systems
- finance and accounting systems and
- HR systems
Data Capture
first step in processing business transactions is to capture data for each transactions
Data Capture Techniques
- Manual Entries
- physically input by individuals
- data entry screen often retains same name and layout as paper source document it replaced - Source Data Automation
- capture transaction data in machine-readable form at time and place of origin
Data Accuracy
- Well-Designed Input Screen
- data entry screens should request all required data and guide the data entry person in entering correct data
- validation rules and clear messages for errors help - Auto-Entry Fields
- auto-numbering can ensure that all transactions have been recorded and that none of the documents have been misplaced
- other auto-entry can be used similarly
Processing
once data has been collected and entered, it must be processed
5 functions performed on data*
- Collect
- Process
- Store
- Transform
- Distribute
Normal Series of Events in a Business Info System
- after a business info system is set up and configured by hardware techs, network admins, and software developers, the system is considered functional
- once functional, a person inputs data which is collected, stored, processed, and outputted/shared and it’s then working!
more on future flashcards
Accounting Information Systems (AIS) overview
Processing
type of management info system; it may also be partly a transaction processing system and partly a knowledge system
- aka transaction processing system
- business info system that is most important to an accounting is AIS
- there may be separate systems (modules) for each accounting function or one integrated system that performs all accounting functions
- a well-designed AIS created an audit trail for accounting transactions
- the audit trail allows a user to trace a transaction from a source document to the ledger and from the ledger back to the source documents
Objectives of an AIS
Accounting Information Systems (AIS)
Processing
- record valid transactions
- properly classify transactions
- record transactions at proper value
- record transactions in proper period
- properly present transactions and info in FSs
Transaction Cycles
Accounting Information Systems (AIS)
Processing
w/i an individual cycle, transactions are numerous but gr similar and processed almost identically
- Revenue Cycle: transactions associated w sales of goods or services that produce cash or other assets
- customer orders
- AR
- cash receipts - Expenditure Cycle: transactions associated w purchase of goods or services that use cash or produce debt
- purchasing
- inventory control (WIP)
- AP
- cash disbursements - Production Cycle: conversion of resources into products or services
- product design and production planning
- product manufacturing
- inventory control (finished goods) - HR/Payroll Cycle: employee administration
- HR
- time and attendance
- payroll disbursements
- payroll tax reporting - Financing Cycle: transactions associated w equity and debt financing including issuance of stock or debt, payment of dividends or debt service payments, etc
Data Processing Cycle
Processing
transaction processes are gr divided into 4 functional areas that make up the data processing cycle
- Data Input
- Data Storage
- Data Processing
- Information Output
- Data Input
Data Processing Cycle
Processing
transactions must be captured or gathered and entered into a system
Basic Issues
- all transactions of interest are accounted for
- all transactions accounted for in correct accounts
- all people originating transactions are identified
Input Verification
- tracing the data to appropriate supporting evidence contributes to validation of accuracy
- Source Documents: may be manual or computer generated
- Turnaround Documents: preprint data in machine-readable form, sent to customer w invoice/statement, when customer remits payment the doc. is included and ensures correct account is credited w payment
- Data Storage
Data Processing Cycle
Processing
different methods for keeping data available for retrieval
- Journals and Ledgers
- data is entered into AIS first to journals and summarized into ledgers
- audit trails allow for summary ledger data to be traced to journals and then to specific transactions and source documents - Coding
a) Sequence Codes
- list of transactions should include neither duplicates nor gaps in number sequence
- to ensure all transactions/documents are accounted for
b) Block Codes
- blocks of numbers to group similar items
- e.g. chart of accounts
c) Group Codes
- different groups of numbers have meaning
- e.g. phone number - Chart of Accounts
- form of coding that summarizes accounting data by ledger classifications
- allows business to customize classification of data in ways that best meet info requirements of a business
Computer Storage of data should follow a logical sequence
- entity: subject of stored information
- attributes: specific items of interest for each entity
- field: single piece of info (attribute) of the entity
- record: all attributes of an entity, multiple fields
- data value: contents of the field
- file: records that are grouped
- master file: similar to a ledger, stores cumulative info and relatively permanent
- transaction file: similar to a journal, stores individual transactions
- database: files that are interrelated and coordinated
- Data Processing
Data Processing Cycle
Processing
processed to keep info current
Functions- what is done to the database
- Addition: adding new records to database
- Updating: revisions to master file
- Deletion: removal of records from database
Methods- how is it done
- Batch Processing: master files are only updated periodically (e.g. daily)
- Online Real-Time Processing: master files are immediately updated in real time
- Information Output
Data Processing Cycle
Processing
Form
- Documents: outputs such as checks, purchase orders, receipts, etc
- Reports: internal (sales analysis) or external (FSs)
- common reports: budgets, production and delivery schedules, and performance reports - Query: request for specific data
1/2 Batch Processing
Processing Methodology
Processing
- input documents/transactions are collected and grouped by type of transaction (into batches)
- batches are processed periodically
- may use either sequential storage device or random access storage device
a) Always a Time Delay
- b/w time transaction is initiated and time it is fully processed
b) Steps in Batch Processing
1. Create a Transaction File (batch)
- enter data, edit for completeness/accuracy (edit process or data validation)
2. Update Master File
- by processing the batch and updating relevant records in master file
c) Compare Manual and Computer Generated Batch Control Totals
- a batch total is manually calculated then compared to a computer-generated batch control total
- batch total: $s
- hash total: other #
d) Often Used in Traditional Systems
- batch processing is most often found where the data in the system does not need to be current at all times
- more efficient in processing large volumes bc records are sorted in a master file to facilitate more efficient processing
2/2 Online Real-Time (OLRT) Processing
Processing Methodology
Processing
master files updated as transactions are entered
- requires random access storage devices
a) Immediate Processing
- always current and error detection is immediate
- OLRT systems used when it is critical to have current info or when individual accounts need to be accessed in a random order
b) OLRT Often Used in Networked Systems
- bc transactions are processed as they occur, OLRT gr require use of computer network to permit data entered at many locations to update a common set of master files
~ lecturer skipped the rest of these
c) POS System
- scanners to capture data encoded on bar codes and transmitted to a central database
d) Online Analytical Processing
- allows end users to retrieve data from a system and perform analysis using statistical and graphical tools
e) Scanners
- data can be collected in real time
f) Importing and Exporting Data
- b/w programs
Centralized vs Decentralized (Distributed) Processing
Processing
not one or the other, often a matter of degree
Centralized Processing
- maintain all data and perform all data processing at a central location
- e.g. mainframe and large server computing applications
Decentralized (Distributed) Processing
- computing power, applications, and work are spread out over many locations
- each remote computer performs a portion of the processing, thus reducing processing burden on the central computer
Advantages of Centralized
- enhanced data security: only protect one instead of multiple
- consistent processing: decentralized systems may result in inconsistent processing at various locations
Disadvantages of Centralized
- possible high cost: cost of transmitting large #s of detailed transactions, but costs are falling
- need for processing power and data storage
- reduction in local accountability
- bottlenecks: can occur at high traffic times
- delay in response time
- increased vulnerability: bc everything in one place, if something happens there goes everything
End User Computing
Processing
hands-on use of computers by end users
- functional end users do their own info processing activities w hardware, software, and professional resources provided by the org
- common EUC is info retrieval from org’s database using query language feature of database mgmt systems (DBMS)
- data can be extracted then manipulated by end user w spreadsheet software or other analytical tools
Periodic Scheduled Reports
1/6 types of MIS reports
Reporting
made available on a regular basis to end users of the system
- traditional reports that display info in a predefined format
Exception Reports
2/6 types of MIS reports
Reporting
produced when a specific condition or exception occurs
Demand Reports
3/6 types of MIS reports
Reporting
available on demand
- aka response report or pull report
Ad Hoc Reports
4/6 types of MIS reports
Reporting
does not currently exist but can be created on demand, without having to get a software developer or programmer involved
- aka user report writer
- one of the most attractive features of a well-designed MIS (mgmt info system)
Query
- set of criteria that end user can send to system to extract all transactions that meet the criteria
Push Reports
5/6 types of MIS reports
Reporting
if a report window displays up-to-date reports every time an end user logs into a computer network
- an end user creates a template or profile specifying info desired
Dashboard Reports
6/6 types of MIS reports
Reporting
present summary info necessary for mgmt action
- quick visual references
XBRL
Reporting
extensible business reporting language, derived from XML
- XBLR tags define data
- tags could indicate taxonomy used (GAAP or IFRS), the currency, the time period, as well as definition of the element
- an open, royalty free, internet based information standard for business reporting of financial data
- macros are created to automate analysis of the data tags, producing comparable ratios!
Role of Information Technology in Business Strategy
technology should be an input to the strategy process, helping define innovations and seeking to increase revenue, rather than merely an after-the-fact tool
Common Principles of Technology-Driven Strategy Development
- technology is a core input to the development of strategy
- strategy development must be a continual process
- innovation emerging business opportunities must be managed separately and differently than core business
- power to change long-held assumptions
- managed from 2 perspectives: 1. ability to create innovation in existing businesses and 2. ability of emerging tech to create new markets/products
- focus on customer priorities as well as internal efficiencies
Role of Technology in Information and Communications
- selection of specific tech to support ERM for an org typically is a reflection of
- entity’s approach to ERM and degree of sophistication
- types of events affecting the entity
- entity’s overall information technology architecture
- degree of centralization of supporting technology - ERM includes key components that enable an org to identify, assess, and respond to risks
- B4-19 lazyyy
Categories of Business Information Systems
Business Process Design
- Transaction Processing Systems (TPS)
- process and record the routine daily transactions necessary to conduct business
- functions are normally predefined and highly structured - Management Information Systems (MIS)
- predefined reports that support effective business decisions
- more tactical - Decision Support Systems (DSS)
- an extension of MIS that provides interactive tools to support decision making
- aka expert system - Executive Information Systems (EIS)
- provide senior executives w immediate and EASY access to internal and external info to assist in strategic decision making
Systems Development Life Cycle (SDLC)
Business Process Design
provides a framework for planning and controlling the detailed activities associated w system development
- waterfall approach is most popular: sequential steps of analysis, planning, design, and implementation which flow in a single downward direction like a waterfall
- prototying model is an alternative: approximates a final system that is built, tested, and reworked until acceptable then a complete system is developed from the prototype
“A DITTO”
- System Analysis
- define the nature and scope of the project
- in-depth study to determine its technological and economic feasibility
- identify the needs of system users and managers
- document previous step
- prepare a report summarizing work done during system analysis and submit to mgmt - Conceptual Design
- decides how to meet user needs
- identify and evaluate appropriate design alternatives
- buy software, develop software in house, or outsource systems development (can mix!) - Physical Design
- begin design process w identifying outputs
- B4-21 - Implementation and Conversion
- building and implementing - Training
- train the people - Testing
- Operations and Maintenance
- system should be periodically reviewed
- if major modification or system replacement is necessary, the SDLC begins again
Participants in Business Process Design
Business Process Design
- Management
- send clear signal from top mgmt that user involvement is important
- providing support and encouragement
- ensure team members are given adequate time and support to work on the project - Accountants
- information needs and system requirements
- help manage system development
- active role in designing system controls and periodically monitoring and testing the system - Info Systems Steering Committee
- plan and oversee the info systems function and address the complexities created by functional and divisional boundaries
- gr high level mgmt - Project Development Team
- responsible for successful design and implementation of the business system - External Parties
~B4-23
IT Control Objectives (COBIT)
Control Objectives for Information and Related Technology (COBIT) framework provides a set of measures, indicators, and processes and best practices to maximize the benefit of IT
- created by Information Systems Audit and Control Association (ISACA) and the IT Governance Institute (ITGI) in 1992
- has been updated several times, w most recent COBIT 5 in 2012
Business Objectives
COBIT
might include (but not limited to)
- effective decision support
- efficient transaction processing
- compliance
Governance Objectives* 5 focus areas of COBIT
COBIT
5 focus areas
- Strategic Alignment: linkage b/w business and IT plans
- Value Delivery: provision of IT of promised benefits while satisfying its customers and optimizing costs (cost-benefit)
- Resource Management: optimization of knowledge and infrastructure
- Risk Management: risk awareness by senior mgmt, characterized by understanding risk appetite and risk mgmt responsibilities
- begins w identification of risk followed by determining how a comp will respond to the risk
- comp can: avoid, mitigate, share, or ignore the risk - Performance Measurement
- tracking and monitoring strategy implementation, project completion, resource usage, etc.
Information Criteria
COBIT
“ICE RACE”
- Integrity: info is accurate, complete, and valid
- Confidentiality: protection of sensitive information
- Efficiency: low cost w/o compromising effectiveness
- Reliability: information represents what it purports to represent
- Availability: provides current and future info as required
- Compliance: comply w policies, laws, regulations, and contractual arrangements
- Effectiveness: relevant or pertinent to a business process, and delivered in a timely, correct, consistent, and useful manner
