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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
is data warehouse or operational database used for day to day business
Operational database
26
what asset is most important to a company
Data because it supports decision making, difficult to recreate, constantly sought after
27
structured vs unstructured data
structured- easily fits into rows and columns (phone number) Unstructured data- does not easily fit into rows and columns (reviews)
28
what is corporate governance
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
29
What is the general ledger used for
keep track of financial transactions and to prepare financial reports
30
describe types of AIS
manual, legacy, modern
31
Manual AIS
generally used by small organizations. Paper only! documents, ledgers, journals
32
Legacy AIS
Older, contains long history
33
Modern AIS
Integrated, enterprise resource planning and enterprise systems
34
Pros/Cons of Legacy system
Pros: tailored to the company Cons: costly to maintain, obsolete hardware, not user friendly
35
What is an ERP
Enterprise Resource Planning- multi module system designed to manage all aspects of an enterprise
36
What is ES
Enterprise Systems
37
Tier 1 vs Tier 2
Tier 1 is high end ERP, Tier 1 is beginning ERP
38
Five input methods for business
source document, bar codes, point of sale, EDI, internet
39
EDI
Electronic Data Interchange- intercompany computer to computer transfer of business documents in a standard business format
40
Internet
Global network or information super highway
41
Pros and Cons of batch processing
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
42
online processing
each transaction is entered and processed one at a time
43
pros and cons of online processing
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
real time processing
transaction is processed immediately in real time
45
pros and cons of real time processing
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
Why do we need to document business processes
understand the process, audit, improve efficiency, provide information, evaluate risk
47
What is DFD? be able to identify
Data Flow Diagrams- usually system development
48
What is a process map? be able to identify
Document business processes in easy-to-follow diagrams
49
What is a flowchart? be able to identify
used to analyze how to improve business processes and document flows
50
What is a program flowchart? be able to identify
deals with computer programs
51
What is fraud
an advantage a person uses to gain an unfair advantage over another person by false misrepresentation.
52
what is the typical loss per year
5%
53
what is collusion
multiple individuals taking place in fraud
54
what is the three step fraud processs
Theft of something, conversion to cash, concealment
55
how do fraudsters conceal fraud
physical documents, altered physical documents, created electronic documents, alter electronic documents, destroy physical documents
56
according to report to the nation what are the 3 types of fraud
misappropriation of assets, misstatement of financial records, corruption
57
4 categories of accounting related fraud (exh 2-3)
management, employee, customer, vendor
58
why do managers commit fraud
increase stock price, improve financial statements, enhanced chances of promotion, increase incentive based promotion
59
how can the financial statements be manipulated
overstating revenues and assets, understating expenses and liabilities, misapplying accounting principles
60
types of management fraud
misstating financial statements, internal controls can't prevent
61
types of vendor fraud
requesting duplicate payment for one invoice, internal controls yes
62
types of customer fraud
returning stolen items for cash, internal controls can prevent
63
types of employee fraud
inflating hours worked on time card, yes internal controls.
64
what is computer fraud
any illegal act for which knowledge of computer technology is essential for its preparation investigation, or prosecution
65
what is the relationship between internal controls and employee fraud
The better the internal controls, the less chance of employee fraud
66
missing internal controls vs overrides
Missing internal controls allow for ordinary employees to commit fraud, override allows for management to commit fraud
67
which 4 departments commit the most fraud
Operations, Accounting, Executive, Sales
68
what are the red flags of fraud
living beyond means, financial difficulties, unusually close association with vendor, control issues
69
what is the best thing to prevent fraud
Internal controls
70
what is data diddling
Changing data before, during, or after it is entered into the system to delete, alter, or add system data
71
Where in the data flow can fraud take place
Beginning, middle, end
72
what is the difference between skimming and larceny
cash is stolen before it is entered into accounting records, cash is stolen after it is entered in the accounting records
73
what is the difference between general and specific authorization
guidelines that allow transactions based on established parameters, explicit approval is needed
74
what is an audit trail and how do auditors use it
verifiable information about the accuracy of accounting records, this is used to re create details of a transaction
75
Barry Minkow what did he do
Stole from the mob, credit card fraud, money laundering, tax fraud, racketeering, embezzlement
76
what is management override
management circumvention of systems or internal controls in place
77
preventative, vs detective, vs corrective controls
avoid errors and fraud, uncover errors and fraud, corrects error or problem
78
reasonable vs absolute assurance
achieve sensible balance of reducing risk when compared with the cost of control, impossible
79
AICPA Trust services criteria
security, availability, processing integrity, online privacy, confidentiality
80
according to SOX who is responsible for controls
CEO and CFO
81
how do companies used COSO internal control framework and what are the five components
Control environment, risk assessment, control activities, information and communication, monitoring activities
82
What is governance
system by which an organization is controlled, and operated and mechanism in which its people are held to account (transparency, accountability, stewardship, integrity)
83
How does IT, data, AI, and analytics governance fit in
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
what are the 4 objectives of an internal control system
safeguard assets, accuracy and integrity of data, promote operational efficiency, ensure compliance
85
what is a risk
potential for harm or neagative outcome
86
what should be separated
custody, recording, authorization
87
what is the difference between supervision and independent verification
supervision takes places when tasks are being performed, verification takes place when activities are being performed
88
What should be separated in IT (SOD in IT)
Database, development, operations, data library, users
89
what are layers of protection for physical and logical/data access
perimeter controls, building controls, identification, authentication
90
how can a computer log be used
can be examined in more detail to determine any weakness in log-in procedures.
91
what are biometrics
physical characteristics of a user
92
what is an authority table
list of valid, authorized users and the access level granted to each one.
93
what is an access control matrix
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
2 types of IT controls: general vs application
General- apply overall to the IT accounting system Application- specific to accounting control input, processing, outputs
95
what is a disaster recovery plan
Plan for the continuance of IT systems after a disaster
96
control totals: record count, batch totals, hash totals
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
AICPA Trust services Criteria
Security, availability, processing integrity, confidentiality, online privacy
98
programmed input validation routine types (9)
Field check, validity check, limit check, range check, reasonableness check, completeness check, sign check, sequence check, self checking digit.
99
What is EDI? how does it work
Electronic Data Interchange- company to company transfer of standard business documents in electronic form. ex. email
100
what did Walt Pavlo do
Used fraudulent accounting methods to mask its declining earnings by painting a false picture of financial growth.
101
what is the COSO ERM Framework
Monitoring, info and communication, control activities, risk assessment, control environment
102
what are the limitations of internal controls
breakdown, human error, inefficient segregation of duties, collusion, override
103
what is the difference between reasonable and absolute assurance
high level of confidence that risk is low, certain that there is no risk.

AIS (2 decks)

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