Lecture 3: Intro to business processes and controls

Question 1

Describe the changing role of accounting function in business

Answer 1

Rapid changes in the global marketplace has substantially affected the accounting profession.

Traditionally, accountants are viewed as a record keeper and the focus is on information for accounting reports. They are preparers and stewards for decision making, and are seen as value reporters.

However, modern perspective sees accountants as members of the leadership group playing an active role in decision making. There is a much broader focus on business activity and meeting both financial and non-financial performance goals. Thus, accountants are value creators

Question 2

Tutorial 4 Q2:
Will a computer ultimately completely take over the job of the accountant? Explain how the role of accountants in information systems continues to evolve

Answer 2

No, disagree.
Accountants have a role as a business analyst. That is, they gather info to solve business problems or address business opportunities. They determine what info is relevant in solving business problems, then create or extra that info, and finally, analyse the info to solve problem.
While a computer is very good at reliably collecting, processing and producing info, the role of the accountant when serving as a business analyst will continue to be able to assess the problems the business is facing and work to provide info that will address it.

Question 3

Tutorial 4 Q3:
How did supply chain management software implementation allow company to reduce inventory on hand? How did this allow company to save money and which income statement accounts would this affect?

Answer 3

• The supply chain mgmt. software allowed the business to use data from their three plants and 25 deals to prepare detailed forecasts of inventory requirements taking into account seasonal demand factors and the requirements of individual dealers. This allowed company to reduce level of inventory held and improve inventory to sales ratio.
• Reduction in inventory level helped business saved millions of dollars it had to finance with either liabilities or equities. To the extent it reduced its debt, this would reduce interest expense.
• The reduction in inventory also lowered the warehouse costs associated with storing inventory—potentially decrease SG&A (selling, general and admin) expenses

Question 4

What are business processes? Why model business processes?

Answer 4

• A defined sequence of business activities that use resources to transform specific inputs into specific outputs to achieve a business goal.
• Business analysis is the process of defining business process requirements and evaluating potential improvements. It involves ascertaining, documenting and communicating info about current and future business processes using modelling and related tools.
• Thus we model business process to:
  • Better understand organisation
  • Identify potential problems within the processes
  • Recognise where internal controls can be implemented
  • Assess possible problems with intended outcome of quality information.

** Benefits of activity models/process maps—shows relationships, shows sequential flow between events and activities; focus on the ‘processes’

Question 5

2016 S1 Exam Q1 a)
A process map combines both the functional and process perspectives into one document. In what way does a process map combine the functional and process perspectives?

Answer 5

• A process map is a visual representation of the activities that makes up a process.
• A detailed process map can show the allocation of activities within the overall organisational functions Thus the functional perspective can be shown via the display of the activities in swim lanes.