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AIS > Exam 1 > Flashcards

Exam 1 Flashcards

1
Q

What is an Accounting Information System

A

Set of interrelated processes/activities, documents, and technologies that collect, process, and report information to the right people in the right form at the right time

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2
Q

What is a business process?

A

Prescribed sequence of work steps performed in order to produce a desired result for the organization

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3
Q

What are the main processes (per TWC)

A

Revenue, Expenditure, Conversion, Administrative

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4
Q

What creates journal entries

A

Journals

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5
Q

What holds documents

A

Storage- database, data warehouse, data lakes, OLAP Cubes

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6
Q

Compare journals vs ledger

A

Journals- create journal entries
Ledgers- are balances

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7
Q

compare general journal vs special journals

A

General journal- place of original entry for any transactions that are not recorded in special journals

Special journal-Used for everyday transactions

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8
Q

compare general vs subsidiary ledgers

A

Subsidiary Ledgers- maintain detailed information regarding routine transactions with an account

General Ledger- provides detail of the entire set of accounts used in the organizations accounting systems

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9
Q

what are source and turnaround documents (remittance advices)

A

turnaround- computer output that will be used to add input to a computer

Source- proves a transaction occurred

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10
Q

Sarbanes-Oxley Act 2002 effect on internal controls and ethics

A

Organizations define their own controls to meet the regulator’s goals.

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11
Q

COSO Internal Control Frame work (five)

A

control environment, risk assessment, information/comm, monitoring activities, existing control activities

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12
Q

what are the two types of IT controls

A

General and application

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13
Q

What is SOD

A

Separation of duties

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14
Q

AIS generic Structre (4)

A

Input, Output, storage, process

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15
Q

four main business process

A

Revenue process, expenditure process, conversion process, administrative process

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16
Q

what is information literacy

A

Ability to find, use, and communicate information ethically and legally

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17
Q

Data hierarchy (bit…)

A

bit, byte (8 bits), field (one item within a record), record (set of related field for same entity), file (entire set of related records), database ( collection of data stored so that it can be accessed.

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18
Q

compare master files vs transaction files

A

Master file- relatively permanent files that maintain the detailed date for each major process

Transaction File- set of relatively temporary records that will be processed to update the master file

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19
Q

is a master file or transaction more stable

A

Master file

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20
Q

which changes with each transaction, a master file or transaction file

A

Master file- update

transaction file- record

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21
Q

Batch processing

A

Requires that all similar transactions be grouped together for a specified time

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22
Q

What kind of information is still batch processed

A

Payroll processing

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23
Q

data warehouse vs operational database

A

Data Warehouse- integrated collection of enterprise wide data that generally includes several years of dat for decision making and planning

Operational database- contains the data that is continually updated as transactions are processed. used for day to day

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24
Q

is data warehouse or operational database used for reporting

A

Data Warehouse

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25
Q

is data warehouse or operational database used for day to day business

A

Operational database

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26
Q

what asset is most important to a company

A

Data because it supports decision making, difficult to recreate, constantly sought after

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27
Q

structured vs unstructured data

A

structured- easily fits into rows and columns (phone number)

Unstructured data- does not easily fit into rows and columns (reviews)

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28
Q

what is corporate governance

A

an elaborate system of check and balances whereby a company’s leadership is held accountable for building shareholder value and creating confidence in financial reporting process

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29
Q

What is the general ledger used for

A

keep track of financial transactions and to prepare financial reports

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30
Q

describe types of AIS

A

manual, legacy, modern

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31
Q

Manual AIS

A

generally used by small organizations. Paper only! documents, ledgers, journals

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32
Q

Legacy AIS

A

Older, contains long history

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33
Q

Modern AIS

A

Integrated, enterprise resource planning and enterprise systems

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34
Q

Pros/Cons of Legacy system

A

Pros: tailored to the company

Cons: costly to maintain, obsolete hardware, not user friendly

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35
Q

What is an ERP

A

Enterprise Resource Planning- multi module system designed to manage all aspects of an enterprise

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36
Q

What is ES

A

Enterprise Systems

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37
Q

Tier 1 vs Tier 2

A

Tier 1 is high end ERP, Tier 1 is beginning ERP

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38
Q

Five input methods for business

A

source document, bar codes, point of sale, EDI, internet

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39
Q

EDI

A

Electronic Data Interchange- intercompany computer to computer transfer of business documents in a standard business format

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40
Q

Internet

A

Global network or information super highway

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41
Q

Pros and Cons of batch processing

A

Pros: efficient for large volumes, audit trail is maintained, less costly, easier to control, specialization

Cons: takes longer, adding/deleting records take alot of maintenance, duplication, transaction and master files have to be sequential

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42
Q

online processing

A

each transaction is entered and processed one at a time

43
Q

pros and cons of online processing

A

Pros: System checks for input errors, info on a timely basis, files are up to date, integrated storage

Cons: hardware and software are expensive, single database more susceptible to unauthorized use, real time systems can be difficult to audit.

44
Q

real time processing

A

transaction is processed immediately in real time

45
Q

pros and cons of real time processing

A

Pros: System checks for input errors, info on a timely basis, files are up to date, integrated storage

Cons: hardware and software are expensive, single database more susceptible to unauthorized use, real time systems can be difficult to audit.

46
Q

Why do we need to document business processes

A

understand the process, audit, improve efficiency, provide information, evaluate risk

47
Q

What is DFD? be able to identify

A

Data Flow Diagrams- usually system development

48
Q

What is a process map? be able to identify

A

Document business processes in easy-to-follow diagrams

49
Q

What is a flowchart? be able to identify

A

used to analyze how to improve business processes and document flows

50
Q

What is a program flowchart? be able to identify

A

deals with computer programs

51
Q

What is fraud

A

an advantage a person uses to gain an unfair advantage over another person by false misrepresentation.

52
Q

what is the typical loss per year

A

5%

53
Q

what is collusion

A

multiple individuals taking place in fraud

54
Q

what is the three step fraud processs

A

Theft of something, conversion to cash, concealment

55
Q

how do fraudsters conceal fraud

A

physical documents, altered physical documents, created electronic documents, alter electronic documents, destroy physical documents

56
Q

according to report to the nation what are the 3 types of fraud

A

misappropriation of assets, misstatement of financial records, corruption

57
Q

4 categories of accounting related fraud (exh 2-3)

A

management, employee, customer, vendor

58
Q

why do managers commit fraud

A

increase stock price, improve financial statements, enhanced chances of promotion, increase incentive based promotion

59
Q

how can the financial statements be manipulated

A

overstating revenues and assets, understating expenses and liabilities, misapplying accounting principles

60
Q

types of management fraud

A

misstating financial statements, internal controls can’t prevent

61
Q

types of vendor fraud

A

requesting duplicate payment for one invoice, internal controls yes

62
Q

types of customer fraud

A

returning stolen items for cash, internal controls can prevent

63
Q

types of employee fraud

A

inflating hours worked on time card, yes internal controls.

64
Q

what is computer fraud

A

any illegal act for which knowledge of computer technology is essential for its preparation investigation, or prosecution

65
Q

what is the relationship between internal controls and employee fraud

A

The better the internal controls, the less chance of employee fraud

66
Q

missing internal controls vs overrides

A

Missing internal controls allow for ordinary employees to commit fraud, override allows for management to commit fraud

67
Q

which 4 departments commit the most fraud

A

Operations, Accounting, Executive, Sales

68
Q

what are the red flags of fraud

A

living beyond means, financial difficulties, unusually close association with vendor, control issues

69
Q

what is the best thing to prevent fraud

A

Internal controls

70
Q

what is data diddling

A

Changing data before, during, or after it is entered into the system to delete, alter, or add system data

71
Q

Where in the data flow can fraud take place

A

Beginning, middle, end

72
Q

what is the difference between skimming and larceny

A

cash is stolen before it is entered into accounting records, cash is stolen after it is entered in the accounting records

73
Q

what is the difference between general and specific authorization

A

guidelines that allow transactions based on established parameters, explicit approval is needed

74
Q

what is an audit trail and how do auditors use it

A

verifiable information about the accuracy of accounting records, this is used to re create details of a transaction

75
Q

Barry Minkow what did he do

A

Stole from the mob, credit card fraud, money laundering, tax fraud, racketeering, embezzlement

76
Q

what is management override

A

management circumvention of systems or internal controls in place

77
Q

preventative, vs detective, vs corrective controls

A

avoid errors and fraud, uncover errors and fraud, corrects error or problem

78
Q

reasonable vs absolute assurance

A

achieve sensible balance of reducing risk when compared with the cost of control, impossible

79
Q

AICPA Trust services criteria

A

security, availability, processing integrity, online privacy, confidentiality

80
Q

according to SOX who is responsible for controls

A

CEO and CFO

81
Q

how do companies used COSO internal control framework and what are the five components

A

Control environment, risk assessment, control activities, information and communication, monitoring activities

82
Q

What is governance

A

system by which an organization is controlled, and operated and mechanism in which its people are held to account (transparency, accountability, stewardship, integrity)

83
Q

How does IT, data, AI, and analytics governance fit in

A

IT- provides the structures that links processes, resources, and information

Data- availability, quality, security

Analytics- analytics projects and models

AI- AI/ML tools and safe and ethical

84
Q

what are the 4 objectives of an internal control system

A

safeguard assets, accuracy and integrity of data, promote operational efficiency, ensure compliance

85
Q

what is a risk

A

potential for harm or neagative outcome

86
Q

what should be separated

A

custody, recording, authorization

87
Q

what is the difference between supervision and independent verification

A

supervision takes places when tasks are being performed, verification takes place when activities are being performed

88
Q

What should be separated in IT (SOD in IT)

A

Database, development, operations, data library, users

89
Q

what are layers of protection for physical and logical/data access

A

perimeter controls, building controls, identification, authentication

90
Q

how can a computer log be used

A

can be examined in more detail to determine any weakness in log-in procedures.

91
Q

what are biometrics

A

physical characteristics of a user

92
Q

what is an authority table

A

list of valid, authorized users and the access level granted to each one.

93
Q

what is an access control matrix

A

table in which a row represents a subject, a column an object, and each entry has a set of access rights to the two

94
Q

2 types of IT controls: general vs application

A

General- apply overall to the IT accounting system

Application- specific to accounting control input, processing, outputs

95
Q

what is a disaster recovery plan

A

Plan for the continuance of IT systems after a disaster

96
Q

control totals: record count, batch totals, hash totals

A

record count- count of number of records processed

Batch total- totals of financial data

Hash total- totals of fields that have no apparent logical reason to be added

97
Q

AICPA Trust services Criteria

A

Security, availability, processing integrity, confidentiality, online privacy

98
Q

programmed input validation routine types (9)

A

Field check, validity check, limit check, range check, reasonableness check, completeness check, sign check, sequence check, self checking digit.

99
Q

What is EDI? how does it work

A

Electronic Data Interchange- company to company transfer of standard business documents in electronic form. ex. email

100
Q

what did Walt Pavlo do

A

Used fraudulent accounting methods to mask its declining earnings by painting a false picture of financial growth.

101
Q

what is the COSO ERM Framework

A

Monitoring, info and communication, control activities, risk assessment, control environment

102
Q

what are the limitations of internal controls

A

breakdown, human error, inefficient segregation of duties, collusion, override

103
Q

what is the difference between reasonable and absolute assurance

A

high level of confidence that risk is low, certain that there is no risk.

AIS (2 decks)

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