Relevance: Serves a purpose

Timeliness: no older than the time period of the action it supports

Accuracy: Free from amterial errors

Completeness: all information essential to a decision or task is present

Summarization: Aggregated in accordance with the user's needs

Database management tasks

The stewarship function of management: external users evaluate managers' responsibility in properly manage the firm's resources.

management decision making: budgeting

day-to-day operations: operating personal's effort to collet A/R outstanding

What is centralized data processing model

lower hard ware requirement

improved cost control responsibility

improve user satisfaction since control is closer to the user level

back up of data can be improved through the user of multiple data storage sites

Disadvantages of distributed IT functions

Loss of controls at the top

Hardware software incompatability

redundant tasks and data

difficulty attracting qualified personnel

information system users,

system designers,

system auditors

Converts economic events into financial transactions,

records financial transactions in the accounting records,

distributes financial information to operating personnel to support daily business operations

produces financial statements and reports,

handles less frequent events such as stock issuances and mergers.

the expenditure cycle: business activities begin with the acquisition of materials, property, and labor

the conversion cycle: manufacturing firms convert raw materials into finished products. This cycle is not observable in service and retailing industries.

the revenue cycle: firms sell finished goods to customers

Purchase system: acquisition of raw materials and inventory

Cash disbursement system: cash payments

Payroll System: acquisition of labor and paying salaries

Fixed Asset System: acquisition of long-term plant and equipment and (long-term) payments

The production system: planning, scheduling, and control of the physical product through the manufacturing process

The cost accting system: the monitors the flow of cost information related to production

physical component: Sales order processing system

financial component: cash reciepts system

source documents: are used to capture and formalize transaction data.

Journal: a record of a chronological entry. When all relevant facts about the transcation are known, the event is recorded in a journal

register: this term is often used to denote certain types of special journals

general ledger: shows chronological activities for each acct listed on the chart of accounts

subsidiary ledger: provides more detailed information about individual accounts than a general ledger.

Master file: generally contains account data 

Transaction file: a temporary file containing transactions since the last update

Reference file: contains relatively constant information used in processing

Archive file: contains past transactions for backup or reference purposes (old files)

Old:

The signing officers have reviewed the report,

The report does not contain any material untrue statements or material ommission or be considered misleading,

The financial statements and related information fairly present the financial condition and the results in all material respects

New

The signing officers are responsible for internal controls and have evaluated these internal controls within the previous ninety days and have reported on their findings,

A list of all deficiencies in the internal controls and info on any fraud that involves employees who are involved with internal acttivities,

Any significant change in internal controls or related factors that could have a negative impact on the internal controls

Companies are required to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting, also assess the effectiveness of such internal controls and procedures.

attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting.

Context diagram - one process and external entities

lowered-level DFD - describes the flow of data within the main process of the system

Document flowchart

System flowchart

Program flowchart

circle - process

square - external entity

arrow - data flow

one process and external entity

internal agents ignored

specific procedures ignored physical goods ignored

external is a relative concept

file for storing documents and reports:

N=numerically

A=alphabetically

D=by date

terminal showing source or destination of documents and reports;

flow line;

one page collector

committed by non-management personnel;

usually consists of: an employee taking cash or other assets for personal gain by circumventing a company's system of internal controls

perpetrated at levels of management above the one to which internal control structure relates;

frequently involves using financial statements to create an illussion that an entity is more healthy and prosperous than it actually is;

Involves misappropriation of assets, it frequently is shrouded in a maze of complex business transactions.

destruction of an asset

theft of an asset

corruption of information

disruption of the information system

skimming;

cash larceny;

check tempering;

billing scheme;

payroll fraud;

expense reimbursement;

control environment;

risk assessment;

information and communication;

monitoring;

control activities

Integriy and ethics of management;

organizational structure;

role of the board of directors and the audit committee;

management's policies and philosophy;

delegation of responsibility and authority;

performance evaluation measures;

external influences;

policies and practices managing human resources

Transaction Authorization;

Segregation of Duties;

Supervision;

Accounting Records;

Access Control;

Independent Verification

Reviewing and reconciling subsidiary accounts with control acct.

Reconciling accting records and external statements

comparing physical assets accounting record

Sales clerk;

customer order - a document indicates the type and quantity of merchandised desired.

the sales clerk captures the essential details on a sales order form

a copy of sales order form is placed in the customer open order file for future reference

new customer undergoes a full financial inverstigation to establish a line of credit.

subsequent sales may be limited to ensure that the customer has a good history and current sale is below pre-established limits

to billing

to warehouse (stock release or picking ticket)

to shipping (packing slip)

Stock release authorizes releasing inventory items.

If insufficient inventory, adjust the stock release form and fill in back order record

Adjust stock records- not formal accounting documents.

before the arrival of goods, shipping clerk receives packing slip, which goes to customer.

after arrivals of goods, shipping clerk reconciles the physical items with the stock release and the packing slip(independent verification).

This is the last opportunity to detect shipping errors.

prepare a bill of lading, a formal contrat between the seller and the shipping company.

prepare shipping notice and forwards shipping notice and stock release to billing