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66 Cards in this Set
- Front
- Back
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Business Processing Reengineering (BPR) |
purposeful and organized changing of BP to be more efficient.
align BP's with IT systems to record processed and make them more effective and efficient |
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BPR leads to 2 kinds of efficiency improvement |
1. underlying process is reengineered to be conducted more efficiently
2. improves efficiency of underlying process |
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IT and BPR have mutually enhancing relationship |
BPR should leverage the IT process to improve the efficiency of the process |
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Data organization |
organized in a hierarchy
bit byte field record file datebase |
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bit (binary digit) |
smallest unit of info having 1 or 2 values: 0 & 1 |
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Byte |
unit of storage that represents one character made of 8 bits |
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field |
1 item within a record |
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record |
set of related fields for the same entity |
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file |
entire set of related records |
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database |
entire collection of files/data stored on a computer to be easily accessed, retrieved, manipulated, and stored |
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relational database |
stored data in several small 2-D tables that can be joined together in many ways to represent relationships among the data
ex: single customer having multiple orders |
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master files |
relatively permanent files that maintain detailed data for major purposes.
ex: payroll master filed has records of employees information to process payroll |
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transaction file |
set of relatively temporary records that is processed to update master file
ex: payroll transaction file contains hours worked by employees for pay period. processed against master file and employee year-to-date balances are updated in master file |
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sequential access files |
records stored in sequence with one record stored after another
faster when records are accessed and used in this order |
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random access files (direct access) |
1. not written or read in sequential order 2. stored in random order 3. more efficient 4. formula or hashing scheme assigned to an address to each record for computer to find a record 5. formula can be recalculated to find address of requested record |
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indexed sequential access method (ISAM) |
1. stored sequentially but can be accessed randomly 2. allows random access 3. when both access methods are necessary |
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two modes of processing transactions |
1. batch processing 2. online processing |
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batch processing |
similar transactions grouped together for specific time then processed
best suited for apps with large volumes of similar trans processed at regular intervals to sequential access files
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example of batch processing |
payroll - time cards grouped together for 2 week pay period and payroll processing takes place on entire set of cards |
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online processing |
opposite of batch processing
transactions are processed and entered one at a time
real-time processing system
best suited for apps with large record volumes to random access files |
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real-time processing system |
processed immediately in real-time so output is available immediately |
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data warehouse |
integrated collection of enterprise-wide data
includes 5-10 fiscal years of nonvolatile data used to support mgment making decisions/planning |
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operational database |
contains data thats continually updated as transactions are processed
includes data for current fiscal year & supports day-to-day operations and record keeping |
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example of operational database |
recording a sale means sales inventory and receivable balances must be updated
doesn't occur in data warehouse |
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data in data warehouse |
data is nonvolatile
it doesn't change as rapidly as in the operational database |
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data mining |
process of searching data within thdata warehouse for identifiable patterns that can be used to predict future behavior
predict customer buying behaviors to plan appropriately to produce, distribute, & sell the right products |
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networks |
two or more computers linked together to share infor and/or resources
LAN Internet Intranet Extranet |
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LAN (local area network) |
most important topic of AIS
computer network tha spans a small area
confined to a single or group of buildings intended to connect computers within organization |
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WAN (Wide Area Network) |
system of LANs connected over a distance of other network connections |
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Internet |
global computer network
WWW - world wide web |
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Intranet |
company's private network accessible only to employees
uses common standard and protocols of internet
only accessible from work computers
purpose is to distribute data/info to employees to make shared data/files available & manage projects |
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Extranet |
similar to intranet except offers access to selected outsiders buyers, distributers, suppliers, wholesalers
allow business partners to exchange info |
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E-business |
example of IT enablement
use of electronic means to enhance BPs
encompasses all forms of trading
servicing customers & vendors, swapping info with them & electronic recording & control of internal processes |
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Electronic data interchange (EDI) |
intercompany computer-to-computer transfer of business docs in standard business format
characteristics: intercompany, comp-to-comp, standard business format
used to transmit POs, invoices, and payments electronically between partners |
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intercompany |
one of three important characteristics of EDI
2 or more companies conducting business electronically |
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computer-to-computer |
one of three important characteristics of EDI
indicates each company's computers are connected via a network |
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standard business format |
one of three important characteristics of EDI
necessary so companies, vendors, and sellers can interact and trade electronically by EDI software |
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Point of sale (POS) system |
hard/software system that captures sales thru barcoding
occurs in real-time
enhances CSAT by enabling faster & accurate sales |
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Automated matching |
hard/software system which software matches an invoice to related PO and receiving report
files must be online and ready for processing; PO and receiving files must be in database/online |
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Automated matching process |
invoice received from vendor, employee enters details with PO, verifies items, quantities, and price.
ensures correct billing |
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Evaluated receipt settlement (ERS) |
invoiceless system - computer hard/software complete invoiceless matching comparing PO with goods received
if matched payment is made to vendor
reduces time and cost of processing payments |
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E-payables and electronic invoice presentment and payment (EIPP) |
web-enables receipt and payment of vendor invoices
enables vendor to send invoice via internet |
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Enterprise resource planning (ERP) |
multi-module software system designed to manage all aspects of an enterprise
broken into modules: financials, sales, purchasing, inventory mgt, manufacturing, & HR
work seamlessly with system and provided user interface between modules |
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Reductions of risk |
1. assets will be stolen or misused 2. errors in accounting data or info 3. fraudulent activity by employees, managers, customers, or vendors 4. risk inherent in IT systems |
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Risks in IT systems |
1. erroneous input of data 2. erroneous processing of data 3. computer fraud 4. computer security breaches 5. hardware or software failure 6. natural disasters that can interrupt computer system operations |
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Enterprise risk management (ERM) |
is the responsibility of mgt is an ongoing process - continuous assessment of risks, determination of acceptable levels of risks, and mgt of risks to acceptable level must involve personnel across the enterprise and mgt |
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ERM requires mgt to |
set procedures and policies related to 1. internal environment 2. objective setting 3. event identification 4. risk assessment 5. risk repsonse 6. control activities 7. info and communication 8. monitoring |
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internal environment & ERM |
encompasses the tone of an organization sets the basis for how risk is viewed and addressed by an entity's people |
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objective setting & ERM |
must exist before mgt can identify potential events affecting achievement
ERMs ensure mgt has a process to set obj and that they align with the mission and are consistent with its risk appetite. |
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event identification & ERM |
internal and external events affecting achievement of entity's objs must be identified with risks and opportunities
opportunities are channeled back to mgts strategy or objective-setting process |
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risk assessment & ERM |
analyzed by likelihood & impact as a basis for determining how they should be managed
assessed on inherent and residual basis; the likelihood of errors is considered both before and after the application controls |
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risk response & ERM |
management selects avoiding, accepting, reducing, or sharing risk by developing a set of actions to align risks with the entity's risk tolerances and appetite. |
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control activities & ERM |
policies and procedures established and implemented to help ensure that the risk responses are effectively carried out |
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information and communication & ERM |
relevant info is identified, captured, and communicated una form and time frame that enable people to carry out their responsibilities.
effective communication also occurs in a broader sense, flowing down, across, and up the entity |
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monitoring &ERM |
entirety of ERM is monitored and modified if necessary
accomplished through ongoing management activities (internal auditing), separate evaluations (such as those performed by external auditors), or both |
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Code of Ethics |
reduce opportunities for managers or employees to conduct fraud
top mgt must emphasize code of ethics and discipline or discharge those who violate it
managers must emphasize and model ethical behavior to encourage ethical behavior in their employees |
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Internal Controls - Intergrated Framework |
definition and description of internal controls |
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five interrealted components of internal control |
1. control environment 2. risk assessment 3. control activities 4. information and communication 5. monitoring |
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General controls |
apply to the overall IT system
not restricted to a particular accounting application |
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Example of general controls |
ise of passwords to allow only authorized users to log into an IT-based accounting system
without regard to processing data in any specific application passwords should be employed in the IT system |
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Application controls |
used in accounting applications to control inputs, processing, and output.
intended to ensure that inputs & processing are accurate and complete, and outputs are properly distributed, controlled, and disposed of. |
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Corporate governance |
elaborate system of checks and balances whereby a company's leadership is held accountable for building shareholder value and creating confidence in the financial reporting processes |
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IT governance |
proper management, control, and use of IT systems
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Management focus to fulfill obligations in IT governance |
1. aligning IT strategy with the business strategy 2. cascading strategy and goals down into the enterprise 3. providing organizational structures that facilitate the implementation of strategies and goals 4. insisting that an IT control g framework be adopted and implemented |
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importance of AIS to accountants |
users of AIS accomplish the functions of accounting, generate accounting reports, and use accounting reports
design or implementation team - decide which software to purchse, how to design software/systems, and implementation of software/systems
auditor of AIS cannot make informed decisions to complete audit without understanding AIS |
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unethical accounting behaviors |
fraudulent financial reporting revenue inflation expense account fraud inflating hours worked for payroll purpose computer fraud hacking browsing confidential data |
