BEC IT Flashcards
Checkpoint auto leasing is a small company with six employees. The best action that it can take to increase its internal control effectiveness is
Engage the owner in direct participation in the activities, including financial record-keeping, of the business.
Which of the following characteristics distinguishes computer processing from manual processing?
Computer processing virtually eliminates the occurrence of computational error normally associated with manual processing.
AIS Files (4)
- Source documents
- Data accumulation records (journals)
- Subsidary ledgers (registers)
- General ledger and financial statement records
Comparisons of manual vs. automated systems:
- Segregation of duties- more things combined in automated system
- Disappearing audit trail- can be built into computerized system
- Uniform transaction processing- higher in automated system but increases systematic errors such as inaccurate programming logic
- Computer-initiated transactions- not possible with manual system but should be regularly reviewed
- Increased errors and irregularities- remote access to data, concentration of information, decreased opportunity for review because of decreased human involvement
- Potential for increased management review- can mitigate above risks
One important purpose of COBIT is to
Guide managers, users, and auditors to adopt best practices related to the management of information technology.
Control Objectives for Information and Related Technology (COBIT) provides a framework for
IT governance and management of enterprise IT.
COBIT Framework domains:
- Planning and organization- Strategic vision for IT, tactics to plan, communicate and realize vision.
- Acquisition and implementation
- Delivery and support- Operations, security and training
- Monitoring- how to periodically assess IT quality and compliance with control requirements
Information criteria:
Effective, efficient, confidential, integrity, available, compliance, reliability
IT resources
People, applications, technology, facilities, data
An enterprise resource planning (ERP) system has which of the following advantages over multiple independent functional systems?
Increased responsiveness and flexibility while aiding in the decision-making process.
What is an example of the use of the cloud to create software and programs?
PaaS (Platform as a service)
What is an example of the use of the cloud to access software and programs?
Saas (Software as a service)
Enterprise resource planning systems (ERPs)
Provide transaction processing, management support and decision-making support in a single, integrated and organization-wide package. Leads to cost reduction, EE empowerment and best practices. Outsourcing this service provides economies of scale to decrease costs. Also provides scalability and fast deployment.
Components of ERP system:
- Online transaction processing (OLTP)- collect the operational data for the organization
- Online analytical processing (OLAP)- incorporates data warehouse and data mining capabilities
Cloud service delivery model:
- IaaS (infrastructure as a service)- cloud to access a virtual data center of resources (network, computers, storage)
- PaaS- development, creating cloud-based software and programs
- SaaS- remote access software
In a large multinational organization, which of the following job responsibilities should be assigned to the network (system) administrator?
Managing remote access
The position responsible for managing the flow of documents and reports in and out of the computer operations department is the
Data control clerk
Three main functional areas in IT departments that must remain segregated!
- Applications development
- Systems administration and programming
- Computer operations
Positions in applications development:
- System analyst- analyze and design computer systems
2. Application programmers-write code under direction of system analyst
Positions in systems administration and programming:
- System administrators- grant access, manage systems
- System programmers- maintain operating systems and hardware, updating system, can have access to live system (computer operations)
- Network managers
- Security managements- ensure that all components of system are secure from internal or external threats
- Web administrators
- Help desk personnel
Positions in computer operations:
- Data control clerk- controls flow of documents into and out of computer operations, quality assurance
- Data entry clerk- manual data entry (rare)
- Computer operators- should not enter data, just load program and run program to produce output
- File librarian- maintaining control over files not online
Governance is primarily the responsibility of:
The board of directors
Selling digitized products can…
Decrease cost, improve quality
Governance
Process to determine what to do, what is important and hot to do it with the two key elements being strategy and oversight.
Strategy- sequence of procedures to determine long-term goals and identify how to achieve those goals
Oversight- managing and monitoring operations
Digitization
Movement of data to electronic form
Globalization
Integration of cultures and economies due to digitization
Cost leadership
Advanced technologies reduce cost by improving efficiency of production and internet allows for intense price competition.
Problems with IT strategy and governance:
- Lack of strategic focus- IT investments are often bottom-up projects
- Lack of strategic investment
- Inadequate scope and agility
This system is most likely to include external data.
ESS (Executive support system)
The system that most resembles a managerial accounting, budgeting system is:
MIS (management information system)
Which of the following is an example of a non-financial transaction?
Sending a purchase order to a vendor to purchase items for re-sale. Because it does not require an accounting entry.
Which of the following types of systems would you use to record the number of hours worked during the current pay period for each of your employees?
A transaction processing system (TPS).
IT Operational Systems
Support day-to-day activities, often called transaction processing systems (TPS), process nonfinancial and financial transactions, generate debit and credit entries for financial accounts.
Management Information Systems (MIS)
Support routine management based on data from TPS. Periodic management reports, includes Accounting information systems (AISs) that product financial statements and controls reports.
Decision support systems (DSS)
Provide information to mid and upper level managers to assist in managing non-routine problems and long-range planning. Frequently use external data.
Data-driven DSS- process large amts of data to look for patterns
Model-driven DSS- feed data into model to predict outcomes
Executive support systems (ESSs)- forcasting for long-range, strategic decisions, use external data
Group support system (GSS)- facilitate group collaboration (calendars, scheduling, etc.)
Knowledge work systems
Facilitate work activities of professional level employees. Includes Office automation systems (OASs) that provide support for clerical employees (word processing, etc.)
Which of the following is true in regard to data warehouses?
I. The bulk of the data found in a data warehouse comprises historical operational data.
II. Pattern recognition is one of the principal functionalities offered by data mining software.
Which of the following is a critical success factor in data mining a large data store?
Pattern recognition
A specialized version of a data warehouse that contains data that is pre-configured to meet the needs of specific departments is known as
Data mart
Three types of main IT systems:
- Flat file system
- Data base system
- Knowledge management (KM)
Flat file system
Independent programs and data sets with high degrees of data redundancy, difficult to achieve cross-functional reporting. Considered “bad” for CPA exam.
Database systems
DBMS, higher level of integration, lower data redundancy, easier to get cross-functional reporting
Knowledge management systems (KM)
Attempts to ensure that right information is available at the right time to the right user.
Knowledge base- special database designed for knowledge retrieval
Expert systems- contains subject-specific knowledge from experts
Data warehouse- archives an organization’s operational transactions over a period of years
Data mart- specialized version of data warehouse
Data mining- process of performing analysis to identify patterns and relationships
Drill down
Ability to move from summary information to more granular view
Slice and dice
Ability to view a single data item in multiple dimensions (ex. by region or product)
Which of the following components of a database is responsible for maintaining the referential integrity of the data in the system?
Database management system (DBMS)
Database management software is considered:
Middleware program that interacts with database application and operating system and software.
Data structure in accounting systems
Bit>Byte>Field>Record>File>Database
Field can be one or multiple characters, record is a group of related fields, file is a collection of records and sometimes called a table
Computer software categories:
- Systems software- operating system, DBMS, utility programs that perform maintenance, data communications software
- Programming languages- set of instructions and syntax of how to put things together
- Applications software- end-user programs
Database management system
System for creating and managing a well-structured database. Defines database, enters transactions, extracts information.
3 languages used in DBMS:
- Data definition language (DDL)- definition of tables and fields and relationships among tables
- Data manipulation language (DML)- allows user to add, delete and update records
- Data query language (DQL)- allows user to extract information
Database control issues:
- Concurrent access issues management
- Access controls
- Data definition standards-ensure data quality, what is required to be entered
- Backup and recovery procedures
- Update privileges- defines who can update data
- Data elements and relationships controls- data accuracy, completeness and consistency
Simone works as an airline reservations agent. She mostly likely interacts with which system:
OLRT system
Which of the following is true about master files?
Master files are the computerized counterpart of ledgers found in manual systems.
Which of the following is NOT true of online/real-time transaction processing systems?
Network access is not usually required to implement online/real-time systems.
In a computer-based system, the equivalent of a subsidiary ledger is a
Master file
During the annual audit, it was learned from an interview with the controller that the accounting system was programmed to use a batch processing method and a detailed posting type. This would mean that individual transactions were
Assigned to groups before posting, and each transaction had its own line entry in the appropriate ledger.
Computerized processing of accounting information:
- Data entry/capture- data is recorded in transaction file, equivalent to journals in manual environment, temporary files that are purged on regular basis
- Master file update- data from transaction files used to update account balances in master files, equivalent to ledgers, permanent files
- System output- general ledger master file used to products reports/financial statements
Processing methods:
The way system captures and updates data. Two primary ways:
- Batch processing
- Online, real-time processing (OLRT)
Batch processing
Periodic transaction processing method where input documents are collected and grouped by transaction (batches) and processed periodically, accounting records are not always current due to time lags, detection of errors is delayed. Sequential processing method. Appropriate when transactions are independent and a large amount of master file will be updated.
OLRT
Online real-time processing, continuous, immediate transaction processing method in which transactions are processed individually as they occur, requires random access storage devices and networked computer system. More expensive, good when it is critical to have current information, transactions are continuous and interdependent and are infrequent in number.
Point of sale systems
POS, most common, combine OLRT with automated data capture technology, networked computers integrated with electronic cash register and scanners. Good for JIT inventory management, cash-flow management and retail.
Vindaloo Corporation wants data storage for a large volume of data that is unlikely to change often. They should consider using
CD-ROM
Rootin’ Roberta of Sharpie Shooters Range Corp. is charged with replacing the computer used in the accounting system. She wants a quick boot time and fast access to storage. She doesn’t need a lot of storage, but she wants maximum security in storage. She should consider purchasing
Computers that primarily rely on SSD storage
Computer hardware classifications:
- CPU- control center
- Secondary storage devices- provide permanent storage and can be online (immediate access) or offline (data stored where it is not immediately accessible by CPU)
- Peripherals- Input devices (keyboard, mouse) and output devices (monitor, printer)
Central process unit components (3):
- Control unit- interprets program instructions
- Arithmetic logic unit (ALU)- performs arithmetic calculations
- Primary storage (main memory)- RAM (temporary) and ROM (semi-permanent, stores instructions for hardware)
Secondary storage devices:
Magnetic disks- HDD (hard disk), info can be retrieved in any order
Magnetic tape- sequential access device, mostly used in data archives
Optical disks- burn data onto a disk (CD, DVD)
Solid-state drives (SSD) that use microchips to store data, are more expensive than disks and more limited capacity, USB and thumb drive are examples
Cloud-based storage- SaaS, not secure as SSD
Common types of computers:
- Supercomputers- leading edge of processing capacity, process complex data
- Mainframe computers- input/output intensive, support many users
- Servers- serve many users on client/server computer network, slower and cost less than mainframe
- Personal computers
- Thin client computers- minimal capabilities, used to access resources on a network
- Laptop, tablet and mobile devices
Emerging technologies:
- Payment processing systems
- Internet of Things (IoT)- widespread connection of electronic devices on the internet, real-time data stream that allows monitoring and controls of any device that is electronic
- Automated IT security: authentication (biometrics, advanced analytics to identify system use patterns)
- Head-mounted displays (HMDs)- less intrusive, greater flexibility
What Is bitcoin?
Bitcoin is an intangible asset—An intangible asset is an object that has value but not a physical form. Intangible assets include patents, trademarks, copyrights, goodwill (in some cases) and bitcoins. The intangible asset designation is the view of the IRS (i.e., that bitcoins are taxed as “property” not as currency). Because bitcoin is taxed as property, gains or losses are capital gains or losses. Decentralized currency that is not under the control of a government, centralized authority, or financial institution
Why Use Bitcoins?
Bitcoins are independent of any government or central authority, favorite of criminals and terrorist. Low transaction costs and anonymous.
What Is Blockchain?
Simply stated, blockchain is an independent, secure, non-modifiable audit trail of transactions, collected into an open ledger database. It is also an encryption-secured, distributed database of transactions. For BEC TBS and written communication questions, remember that blockchain is a powerful example of COSO’s advocacy of continuous monitoring. Blockchain is an excellent example of a new technology that enables continuous monitoring of the accounting system.
The ledger that tracks bitcoins is a(n) ____________ ledger while the network that accounts for bitcoins is a(n) ___________________ network.
Blockchain; peer-to-peer
At Mega-Construction, secured payments are sent to suppliers as soon materials are received and scanned. Many attributes of the received goods are also scanned and recorded immediately on receipt (e.g., time received, quality indicators, item location through GPS functionality). This information is shared through a distributed ledger. Mega-Construction is likely using _______________.
Blockchain
Which of the following is an important outcome of the use of blockchain?
Reduced auditing and compliance costs
Business transformation through blockchain is likely to occur __________________ and requires ___________ adoption.
Eventually; widespread
Which of the following is least likely to be a benefit of a big data initiative?
IT cost savings
Big data initiatives should:
Have a strong governance structure.
Each of the following is an enabler of big data except:
Data warehousing. Big data results in expanding existing data warehouses but they don’t enable big data.
Which of the following is least likely to be an example of big data?
Sales data. This is a traditional accounting data source. Therefore, while these data will find their way into a big data pool (eventually), this is the least likely to be an example of big data, from the offered alternative because it is the smallest data set.
What Is Big Data? AKA Smart Data
The creation, analysis, storage, and dissemination of extremely large data sets. Such data sets have recently become feasible due to advances in computer storage technologies (e.g., the cloud), advanced data analytics, and massive computing power.
Ubiquitous computing (i.e., smartphones and wearables, e.g., the Fitbit), the Internet of Things, and advances in biometrics (i.e., automated human recognition) are all sources for big data.
Governance—Organizations must establish a clear governance structure for big data projects.
Big data sources
Large data sets, dark data (metadata), operational and social media data
Risks of big data?
Privacy, legal issues, where and how will it be stored and protected.
What Is Artificial Intelligence (AI)?
Most AI systems harvest and use big data. Example: Machine learning systems are of little value without massive data sets to learn from. AI systems demand fast computers.
RPA = robotic process automation—this is the replacement of humans with AI and robotics technology
AI Benefits
Speed, accuracy, and cost. Ability to scale up and speed up applications and to reduce costs. Ability to obtain, clean, and analyze large (all available?) data in real time.
Risks of Implementing AI
Short term—AI systems often include the biases of their developers. Hence, AI systems must be monitored, reviewed, and validated to identify and correct such biases such as data, prediction and learning biases.
Medium and long term: lost jobs, legal and ethical issues of who is responsible if AI messes up?
Categories of AI:
- Machine learning (analysis)—Systems that use big data to learn rules and categories to enable prediction and classification.
- Robotics (activity)—For example: machine-directed welding
- Intelligent agents (engagement)-Computer “agents” that perform tasks—e.g., data harvesting and cleaning. Can also analyze market trends—e.g., in finding and purchasing airline tickets. Such systems interact with humans (e.g., Siri® on the Apple® iPhone®) and have natural language processing ability.
- Expert systems (analysis and activity)—Build and apply expertise in a domain.
AI depends heavily on __________ and _________.
Fast computers, big data
Which of the following is least likely to be an example of accounting work in the AI era?
Preparing financial statements for a client. Preparing financial statements is a standardized task that is likely to be mostly automated into an AI system, so accounting work would not be involved.
In COBIT, the process of identifying automated solutions falls within the ________ control process domain.
Acquire and implement.
In COBIT, the process of ensuring security and continuous service falls within the _______ control process domain.
Deliver and support.
In business information systems, the term “stakeholder” refers to which of the following parties?
Anyone in the organization who has a role in creating or using the documents and data stored on the computers or networks.
What is the role of the systems analyst in an IT environment?
Designing systems, prepares specifications for programmers, and serves as intermediary between users and programmers.
Which of the following items would be most critical to include in a systems specification document for a financial report?
Data elements needed
Which of the following structures refers to the collection of data for all vendors in a relational data base?
File
Which of the following sets of characteristics is most closely associated with online real-time processing?
Single transaction, random processing technology, immediate update.
What is an example of the use of the cloud to create software and programs?
PaaS, the word CREATE is key here
