P1.F.1 Information Systems Flashcards
Accounting Information Systems (AIS) Definition & Purpose
P1.E.2 Systems Controls & Security Measures
AIS is owned and used as part of firms infrastructure activities, a set of support activities which include accounting, finance, legal and general admin.
Should be carefully planned out and tailored to each business’s unique needs to work effectively.
- Capture transactional data
- Process data into useful information
- Make information available for reporting
General Ledger and Reporting System
P1.E.2 Systems Controls & Security Measures
- Brains of the AIS
- Database of all financial transactions
- Categorizes each transaction into A, L, E, I or E.
Chart of Accounts
P1.E.2 Systems Controls & Security Measures
Master List
- Flat: list of accounts with no relationship or hierarchy among them.
- Hierarchical: a ‘child’ account that rolls up under a ‘parent’ account
- Matrix: like a flat with no hierarchy but can be separated into locations, cost centers, etc.
Revenue Cycle
P1.E.2 Systems Controls & Security Measures
Goods and services exchanged for cash or accounts receivable.
Processes
- Sales order entry
- Shipping process: relies on production cycle module
- Billing process
- Cash collection
Expenditure Cycle
P1.E.2 Systems Controls & Security Measures
Inventory and materials are exchanged for cash or accounts payable.
Processes
1. Ordering materials/services.
GL posting: inventory receivable & unapproved payables
2. Receiving process: check goods for quality and accuracy against purchase order
GL posting: inventory receivables to inventory
3. Approving supplier invoices
GL posting: unapproved payables to accounts payable
4. Cash disbursements
Production Cycle
P1.E.2 Systems Controls & Security Measures
Goods and services are created from inputs.
Processes
- Product design: bill of materials & operations list
- Planning & scheduling
- Production operations: operations list executed and dashboard shows status of process
- Cost accounting: planning and reporting of cost information
Human Resources/Payroll Cycle
P1.E.2 Systems Controls & Security Measures
Employees are hired, trained, deployed, paid, evaluated, redeployed and terminated.
Employees & skills are more important than tangible assets, they contribute to corporate value and long-term competitive advantage.
Processes
- Input preparation
- Payroll processing
- Cash disbursement
- Recording
Financial Cycle
P1.E.2 Systems Controls & Security Measures
Cash injected into the business in exchange for equity or liabilities.
Processes
- Analysis
- Funding: IPO
- Service: dividends
- Retirement: treasury stock
PP&E Cycle
P1.E.2 Systems Controls & Security Measures
Capital assets acquired, used or disposed in exchange for cash, accounts payable or long-term debt liabilities.
Processes
- Analysis: Total cost of ownership (TOC) initial and ongoing costs
- Request for proposal (RFP)
- Asset life cycle
- Disposal
Enterprise Resource Planning (ERP)
P1.E.2 Systems Controls & Security Measures
Platform that maps all business processes onto a single integrated system.
Benefits
- Links non-financial business activities to financial results.
- Less costly
- Info can be accessed in near-real-time without having to manually piece together reports.
Challenges between Financial and Non-Financial Systems
P1.E.2 Systems Controls & Security Measures
Financial: AIS and payroll system
Non-financial: everything else
- Doesn’t reconcile: different time periods
- Duplication in data entry (data risk)
- Support and training burden: employees having to be trained on multiple systems
- Manual labor for reporting
Database Management System
P1.E.2 Systems Controls & Security Measures
Is an online transaction-processing system (OLTP). Its a software tool that works with data entry and collection systems to organize data for optimal storage and retrieval (columns & rows).
- Validates and stores data efficiently
- Verifies and implements data integrity over time
- Integrates data from multiple sources
- Control authorization of access to data.
Characteristics of Database Management System
P1.E.2 Systems Controls & Security Measures
- Latency: or time delay between data being created and its availability for access
- Consistency: or speed with newly updates data being returned for queries
- Ability to handle volatility: or volume of data updates the system can handle
- Queries response time: or time it takes for a query to return results
- Query predictability, or flexibility to handle a variety of queries beyond standardization
Data Warehouse
P1.E.2 Systems Controls & Security Measures
Helps integrate legacy systems to operate like an ERP. It allows for easier reporting and analysis on demand.
It doesn’t provide increased protection from errors in the data, hackers, or data loss.
Enterprise Performance Management (EPM)
P1.E.2 Systems Controls & Security Measures
Single platform to interconnect many of the organization’s resources to increase performance by integrating planning, execution and reporting; improving the link between strategy and execution.
Management processes.
