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49 Cards in this Set
- Front
- Back
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Accounting Information Systems (AIS)
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a system that records, processes, and reports on transactions to provide financial and nonfinancial information to make decisions and have appropriate levels of internal controls for those transactions.
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Relevance
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1. Predictive value (helps with forecasting)
2. Feedback value (corrects past predictions) 3. Timeliness (available in time for decisions) |
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Reliability
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1. Verifiable (can be confirmed by independent party)
2. Representational Faithfulness (reports what actually happened) 3. Neutrality (information is not biased) |
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Data
Information |
- Raw facts that describe the characteristics of an event, have little meaning.
- Data organized in a meaningful way to be useful to the user. |
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Information Value Chain
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Overall transformation from a business need and business event to the collection of data and information to an ultimate decision.
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Discretionary Information
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Generally produced for internal purposes and not required by law to be provided to management.
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Mandatory Information
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Produced for external information for investors, banks etc, usually at lowest possible cost to comply with regulator laws.
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Specific Accounting Roles
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1. User
2. Manager 3. Designer 4. Evaluator |
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Business Value
Value Chain |
- Items, events, and interactions that determine the financial health/well-being of the firm.
- Chain of business processes for a firm. |
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Value Chain
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1. Firm Infrastructure - all activities needed to support the firm. (CEO, finance, accounting, etc)
2. HR Management - recruiting, hiring, training, & compensating employees. 3. Technology - all technologies necessary to the company (R&D). 4. Procurement - activities involving purchasing inputs (raw materials, supplies, & equipment.) |
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Enterprise Resource Planning (ERP or ES)
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Centralized database that collects data from throughout the firm. (Data from orders, sales, inventory, customers, employees, etc).
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Supply Chain
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Flow of materials, information, payments, and services from raw materials suppliers, through factories and warehouses, all the way to customer.
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Customer Relations Software (CRM)
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software used to manage and nurture a firm's interactions with its current and potential clients.
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Business Process
Business Analysis |
- Business activities that use resources to transform inputs into outputs to achieve a business goal.
- Defining business process requirements and evaluating potential improvements. |
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Business Model
- Roles |
Simple, abstract representation of one or more business processes.
1. Manage Complexity 2. Elicit Requirements 3. Reconcile viewpoints 4. Specify Requirements |
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Activity Model
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Describes sequence of workflow in a business process.
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Business Process Modeling Notation (BPMN) |
Standard for the description of activity models. |
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Event - important occurances that affect flow of activities (start & end events). Activities - specific steps in business process. Sequence Flow - solid arrows that signify direction of process flow. Gateways - a decision in the process. Annotations - additional description. |
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Message Flows Documentation |
- Shows exchanges between two participants (pools) in the same process in a BPMN. - An information transmission and communication tool that explains how business processes and business systems work. |
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Systems Development Life Cycle (SDLC) Process Management |
- Process of creating/modifying information systems to meet the needs of its users. - Process of carrying out the systems development life cycle to achieve and intended outcome. |
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Phases of SDLC |
1. Planning 2. Analysis 3. Design 4. Implementation 5. Maintenance |
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1. Planning Phase 2. Analysis Phase |
1. summarizes the business needs with a high-level view of the intended project. 2. Involves a complete, detailed analysis of the systems needs of the end user, as well as a proposed solution. |
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3. Design Phase 4. Implementation Phase 5. Maintenance Phase |
3. Describing in detail the desired features of the system that were uncovered in the analysis phase. 4. Involves development, testing, and implementation of the new system. 5. Making changes, corrections, upgrades to the system to continue to meet requirements. |
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Scope Creep Triple Constraint |
- The change in a project's scope after the project work has started. - 3 factors that constrain IT and other projects: 1. Cost 2. Scope 3. Time |
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Project Manager Project Sponsor |
- Lead member of the project team who is responsible for the project. - Generally Sr. Exec who takes responsibility for the success of the project. |
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Grantt Chart |
Graphical representation of the project schedule that maps the tasks to a project calendar.
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Quote Sales Order Sale |
- Description of product/service to be provided to customer. - Event documenting commitments by customers to purchase products. - Events documenting the transfer of goods to customer & and proper revenue recognition. |
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Collaboration Choreography Orchestration |
- Shows 2 participant pools & the interaction between them within a process using BPMN. - The message flow (interaction) between 2 participant pools of a process using BPMN. - Sequence of activities within one pool. |
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Access Controls Application Controls |
- Limit who can use and change records in a system. - Ensure data integrity and an audit trail. |
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Sarbanes-Oxley Act
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Response to business scandals that requires public companies register with the SEC and their auditors to annually assess and report over the effectiveness of their financial reporting. |
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Public Company Accounting Oversight Board (PCAOB) |
Established by SOX to provide independent oversight of public accounting firms.
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Corporate Governance |
A set of processes and policies in managing an organization with sound ethics to safeguard interests of its stakeholders. |
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Application Controls |
Specific to an application to ensure the validity, completeness, and accuracy of a transaction. |
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Detective Controls |
Find problems when they arise. |
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Preventive Controls |
Deter problems before they arise. |
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Corrective Controls |
Fix problems that have been identified. |
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General Controls |
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Committee of Sponsoring Organizations (COSO)
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Several organizations that studies the casual factors that lead to fraudulent financial reporting and educational institutions to improve the quality of financial reporting through internal control and corporate governance.
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Control Objectives for Information and Related Technology (COBIT)
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An internationally accepted set of best IT security and control practices for IT management released by the ITGI
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Enterprise Risk Management (ERM)
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A process affected by the entity's board of directors, management, and others, designed identify potential events that may affect the entity, and manage risk to be within the risk appetite, and to provide reasonable assurance regarding achievements. |
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Risk Assessment
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Process of identifying and analyzing risks systematically to determin the firm's risk response and control activities.
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Inherent Risk |
The risk related to the nature of the business activity itself.
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Control Risk |
The threat of errors or irregularities in the underlying transaction will not be prevented, detected, and corrected by the internal control system. |
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Residual Risk |
The product of inherent risk and control risk.
= Inherent Risk x Control Risk (risk that remains after management responds to risk and after controls have been put in place) |
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Physical Controls |
Mainly manual but could involve the use of computer technology.
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IT Controls |
Involve processes that provide assurance for information and help to mitigate risks associated with technology.
- IT controls - Access controls - Computer operation controls |
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Input Controls |
Ensure the authorization, entry, and verification of data entering the system. - Validity checks - Field, size, & range checks - Completeness check |
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Processing Controls |
Ensure the data and transactions are processed accurately. - Prenumbered documents - Sequence checks - Batch totals |
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Output Controls |
Provide output to authorized people and ensure the output is used properly.
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