Chapter 1 Flashcards
business process
a prescribed sequence of work steps performed in order to produce a desired result for the organization. It is initiated by a particular kind of event, has a well defined beginning and end
four types of business processes
revenue processes, expenditure processes, conversion processes, administrative processes
Internal controls
set of procedures and policies adopted within an organization to safeguard its assets, check the accuracy and reliability of its data, promote operational efficiency, and encourage adherence to prescribed managerial practices
accounting information system
comprises the processes, procedures, and systems that capture accounting data from business processes; record the accounting data in the appropriate records; process the detailed accounting data by classifying, summarizing, and consolidating; and report the summarized accounting data to internal and external users
Steps in an accounting information system
- Work steps within a business process intended to capture accounting data as that business process occurs
- The manual or computer based records to record the accounting data from business processes
- Work steps that are internal controls within the business process to safeguard assets and to ensure accuracy and completeness of the data.
- work steps to process, classify, summarize, and consolidate the raw accounting data.
- Work steps that generate both internal and external reports.
vendor
provides materials or operating supplies to an organization.
supply chain
the entities, processes, and information flows that involve the movement of materials, fund, and related information through the full logistics process, from the acquisition of raw materials to the delivery of finished products to the end user
supply chain management
the management and control of all materials, funds, and related information in the logistics process, from the acquisition of raw materials to the delivery of finished products to the end user
IT enablement
using IT to enhance efficiency and effectiveness of internal or supply chain processes
information technology
defined as the computer, ancillary equipment, software, services, and related resources as applied to support business processes, it has three objectives
- Increased efficiency of business processes
- Reduced cost of business processes
- Increased accuracy of the data related to business processes
business process reegineering
the purposeful and organized changing of business processes to make them more efficient
data hierarchy
bit byte field record file database
bit
smallest unit of info in a computer system
byte
a unit of storage that represents on character
made up of eight bits
field
one item within a record
record
a set of related fields for the same entity
file
set of related records
database
a collection of data stored on the computer in a form that allows the data to be easily accessed, retrieved, manipulated, and stored
relational database
stores data in several small two dimensional tables that can be joined together in many varying ways to represent many different kinds of relationships among the data
master files
the relatively permanent files that maintain the detailed data fro each major process
transaction file
set of relatively temporary records that will be processed to update the master file
sequential access
files store records in sequence with one record stored immediately after another
random access files
are not written or read in sequential order
indexed sequential access method
files are stored sequentially, but can also be accessed randomly because an index allows random access to specific records
batch processing
requires that all similar transactions are grouped together for a specified time, and then this group of transactions is processed as a batch
online processing
each transaction is entered and processed one at a time
real time processing
the transaction is processed immediately
data warehouse
an integrated collection of enterprise wide data that includes five to ten fiscal years of nonvolatile date used to support management in decision making and planning
operational database
contains the data that are continually updated as transactions are processed
data mining
the process of searching data within the data warehouse for identifiable patterns that can be used to predict future behavior
network
two or more computers linked together to share info and resources
local area network LAN
computer network that spans a relatively small area
internet
the global computer network
intranet
a company’s private network accessible only to the employees of that company
extranet
offers access to selected outsiders, such as buyers, suppliers, distributors, and wholesalers in the supply chain
e business
the use of electronic means to enhance business processes
electronic data interchange
the inter-company, computer to computer transfer of business documents in a standard business format
point of sale systems
a system of hardware and software that captures retail sales transactions by standard bar coding
Automated matching
a computer hardware and software system in which the software matches an invoice to its related purchase order and receiving report
evaluated receipt settlement
an invoice less system in which computer hardware and software complete an invoice less match that is a comparison of the purchase order with the goods received
E-payables and electronic invoice presentment and payment
web enabled receipt and payment of vendor invoices
Enterprise resource planning
multi module software system designed to manage all aspects of an enterprise
controls
steps to lessen the risk or reduce the impact of the risk
control structures
- Enterprise risk management
- Code of ethics
- COSO accounting internal control structure
- IT system control structure
- Corporate governance structure
- IT governance Structure
Enterprise risk management policies
Internal Environment Objective Setting Event Identification Risk Assessment Risk Response Control Activities Information and Communication Monitoring
Internal Environment
tone of an organization and how they view ethics and risk
Objective Setting
Objectives must exist before management can identify potential events affecting their achievement. ERM ensures that management has in place a process to set objectives that are in line with the company’s risk appetite.
Event Identification
Internal and external events affecting achievement of an entity’s objectives must be identified, with distinction made between risks and opportunities
Risk assessment
risks are analyzed by likelihood and impact
Risk Response
developing a set of actions to align risks with the entity’s risk tolerances and risk appetite
Control Activities
policies and procedures are established and implemented to help ensure that the risk responses are effectively carried out
Information and Communication
Relevant Information is identified, captured, and communicated in a form and a time frame that enable people to carry out their responsibilities
monitoring
the entirety of enterprise risk management is monitored and modified as necessary.
IT Controls(General Controls)
apply overall to the IT accounting system
IT Controls(Application Controls)
are used specifically in accounting applications to control inputs, processing, and output
corporate governance
an elaborate system of checks and balances whereby a company’s leadership is held accountable for building shareholder value and creating confidence in the financial reporting processes
IT governance
proper management, control, and use of IT systems are known as IT governance
