Accounting information systems controls and process 2nd tunnwe weickgenannt chapter 01

Prepared by Coby Harmon University of California, Santa Barbara Westmont College Chapter 1-1 Introduction to AIS Chapter 1-2 Accounting Information Systems, 2nd Edition Study Study Objectives Objectives An overview of business processes An overview of an accounting information system The business process linkage throughout the supply chain The IT enablement of business processes Basic computer and IT concepts Examples of IT enablement The internal control structure of organizations The importance of accounting information systems to accountants The relation of ethics to accounting information systems Chapter 1-3 Overview Overview of of Business Business Processes Processes Accounting Information System must identify the Chapter 1-4 ► Transactions to record, ► Capture all details, ► Properly process into correct accounts, and ► Provide reports externally and internally SO An overview of business processes Overview Overview of of Business Business Processes Processes Business Process - a sequence of work steps performed in order to produce a desired result Examples: Chapter 1-5 ► Completing a sale ► Purchasing raw materials ► Paying employees ► Paying vendors SO An overview of business processes Overview Overview of of Business Business Processes Processes Four general types of business processes: Revenue Processes (Chapters 8) a Sales b Sales return c Cash collection Chapter 1-6 SO An overview of business processes Overview Overview of of Business Business Processes Processes Four general types of business processes: Expenditure Processes (Chapters and 10) a Purchase b Purchase return c Cash disbursement d Payroll e Fixed asset Chapter 1-7 SO An overview of business processes Overview Overview of of Business Business Processes Processes Four general types of business processes: Conversion Processes (Chapter 11) a Planning b Resource management c Logistics Administrative Processes (Chapter 12) a Capital b Investment c General ledger Chapter 1-8 SO An overview of business processes Overview Overview of of Business Business Processes Processes Internal controls are the set of procedures and policies adopted to: Chapter 1-9 safeguard assets, check accuracy and reliability of data, promote operational efficiency, and encourage adherence to prescribed managerial practices SO An overview of business processes Overview Overview of of Business Business Processes Processes Review Question When a customer returns goods that were purchased, the business process to accept the return would most likely be a(n) a administrative process b conversion process c expenditure process d revenue process Chapter 1-10 Advance slide in presentation mode to reveal answer Revenue Processes a Sales b Sales return c Cash collection SO An overview of business processes Examples Examples of of IT IT Enablement Enablement Automated Matching A computer system in which the software matches an invoice to its related purchase order and receiving report Example: Ford Motor Company described in text illustrated an automated matching system Chapter 1-32 SO Examples of IT enablement Examples Examples of of IT IT Enablement Enablement Evaluated Receipt Settlement (ERS) An invoice-less system in which computer software completes an invoice-less match that is a comparison of the purchase order with the goods received E-Payables and Electronic Invoice Presentment and Payment (EIPP) Web-enabled receipt and payment of vendor invoices Chapter 1-33 SO Examples of IT enablement Examples Examples of of IT IT Enablement Enablement Enterprise Resource Planning Systems (ERP) Multi-module software system designed to manage all aspects of an enterprise Usually broken down into modules such as Chapter 1-34 ► financials, ► inventory management, ► sales, ► manufacturing, and ► purchasing, ► human resources SO Examples of IT enablement Process Process Throughout Throughout the the Supply Supply Chain Chain Review Question An IT enabled system for purchasing that is an “invoiceless” system is called a(n) Chapter 1-35 a automated matching system b evaluated receipt settlement c e-payables d point of sale system SO Examples of IT enablement Internal Internal Control Control Structure Structure of of Organizations Organizations Risks that impact financial standing: Assets will be stolen or misused Errors in accounting data or information Fraudulent activity Risks inherent in IT systems, such as Chapter 1-36 a Erroneous input of data d Erroneous input of data b Erroneous processing of e Hardwaredata or software failure c Computer fraud f Natural disasters SO The internal control structure of organizations Internal Internal Control Control Structure Structure of of Organizations Organizations Enterprise Risk Management (ERM) ERM is defined as a process, effected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives Chapter 1-37 SO The internal control structure of organizations Internal Internal Control Control Structure Structure of of Organizations Organizations Enterprise Risk Management (ERM) Requires management set policies and procedures related to: Chapter 1-38 ► Internal Environment ► Risk Response ► Objective Setting ► Control Activities ► Event Identification ► Information and Communication ► Risk Assessment ► Monitoring SO The internal control structure of organizations Internal Internal Control Control Structure Structure of of Organizations Organizations Enterprise Risk Management (ERM) Management should ensure the following types of control structures exist: Code of Ethics (Chapter 3) COSO Accounting Internal Control Structure (Chapter 3) IT Controls (Chapter 4) Corporate Governance (Chapter 5) IT Governance (Chapter 6) Chapter 1-39 SO The internal control structure of organizations Internal Internal Control Control Structure Structure of of Organizations Organizations Review Question The COSO report written for the purpose of assisting managers in the challenge of managing risk in their organizations is entitled a “Internal Controls—Integrated Framework” b “Enterprise Risk Management—Integrated Framework” c “Corporate Governance” d “IT Governance” Chapter 1-40 Advance slide in presentation mode to reveal answer SO The internal control structure of organizations The The Real Real World World On April 20, 2010, an explosion aboard the Deep Water Horizon drilling platform forced millions of gallons of oil to spill into the Gulf of Mexico, wreaking havoc on marine life and upsetting the coastal economies This event and the related problems have been disastrous for BP plc, the company most frequently blamed for this tragedy This example illustrates how critical it is for companies to manage risks Risks lie in nearly every aspect of every business, and the task of identifying and mitigating them is a daily challenge Certainly, any oil company would include an explosion, oil spill or oil leak to be among its most serious risks In the case of BP and the other responsible companies, there were evidently breakdowns in the monitoring of controls surrounding this location Although many people are familiar with the BP oil spill, most have probably never considered the accounting implications of this disaster Yet years after its occurrence, BP was still struggling to account for the damages owed for environmental clean-up and legal claims, and its audit firm was still using cautionary language in the audit opinion accompanying BP’s financial statements Chapter 1-41 Importance Importance of of AIS AIS to to Accountants Accountants Accountants may be ► Users of the AIS, ► Part of the design or implementation team of an AIS, and/or ► Auditors of an AIS Chapter 1-42 SO The importance of accounting information systems to accountants Importance Importance of of AIS AIS to to Accountants Accountants Review Question Accountants have some form of use of the AIS in all but which role? a user b programmer c auditor d designer Chapter 1-43 SO The importance of accounting information systems to accountants Relation Relation of of Ethics Ethics to to AIS AIS Examples of potential unethical behaviors: ► Fraudulent financial reporting ► Revenue inflation ► Expense account fraud ► Inflating hours worked for payroll purposes ► Computer fraud ► Hacking ► Browsing confidential data Chapter 1-44 SO The relation of ethics to accounting information systems Ethics Ethics and and the the AIS AIS Review Question Which of the following is not true of unethical behavior? Chapter 1-45 a The only category of unethical behavior for accountants is inflating revenue b Accountants are often pressured to help commit or cover up unethical behavior c Hacking is an unethical behavior that accountants should be concerned about d An accounting information system can be used to cover up unethical behavior SO The relation of ethics to accounting information systems Copyright Copyright Copyright © 2013 John Wiley & Sons, Inc All rights reserved Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc The purchaser may make back-up copies for his/her own use only and not for distribution or resale The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein Chapter 1-46 ... AIS Chapter 1-2 Accounting Information Systems, 2nd Edition Study Study Objectives Objectives An overview of business processes An overview of an accounting information system The business process. .. relation of ethics to accounting information systems Chapter 1-3 Overview Overview of of Business Business Processes Processes Accounting Information System must identify the Chapter 1-4 ► Transactions... overview of business processes The The Accounting Accounting Information Information System System Various Business Processes Exhibit 1-1 Overview of an Accounting Information System Chapter 1-11 SO