a337 file design computerized and manual systems 3/27/08
TRANSCRIPT
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A337
File DesignComputerized and Manual
Systems3/27/08
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Topics for next five weeks:
• Basic discussion of how accounting information systems have evolved from manual to computerized systems
• Normalization of data - structure of databases - taking the data as “given”
• Discussion of Microsoft Access and other DBMS systems
• REA analysis (REAL) another tool for designing the structure of databases - but not taking the data as given.
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Topics
• How do accounting systems work in a manual world– SUA
• First extension– Same basic structure, but automating the updating
process
• Second extension– Transaction entry from screen documents– ACCPAC, PeachTree, Great Plains
• Third extension– Integrated
accounting/management/finance/marketing software
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Let’s look at the SUA
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Let’s look at the SUA
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Let’s look at the SUA
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Let’s look at the SUA
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First Extension
• Automating data entry– Ledgers should not be modified directly
• (only through data entry)
– There should be a “log” of all data entry– Access to data entry should be controlled
• Example - project 2b
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First Extension
• This extension essentially just took the manual system and put it on computer
• There were no REAL changes in the structure.
• The journal/ledger structure might be affected.
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Where would we go next?
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Second Extension
• Focus is still on Accounting, but the transaction data that is captured and stored is expanded.
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Traditional Accounting SystemJournals (where data is recorded)
SALES JOURNAL DECEMBER
Inv. or Subs. Subs. CreditCr. Memo Acct. Post Acct. Rec. Sales Returns Sales
Date Customer Number No. G/L 10200 G/L 30200 G/L 30100Dec. 4 Bertram Appliance 726 406 P 13,500.00 13,500.00Dec. 5 Hanover Hardware 727 408 P 6,700.00 6,700.00Dec. 11 Bertram Appliance 728 406 P 9,850.00 9,850.00Dec. 13 Hanover Hardware 729 408 P 1,716.00 1,716.00
Debit
What information is recorded??
PURCHASES JOURNAL DECEMBER
Vendor Debit CreditInvoice Purchases Other G/L A/P - G/L 20100 Purch. Ret.
Date Vendor No. G/L 30500 Acc# Amount Post Subs. A/C# Amount Post G/L 30600Dec. 11 Chicago Office Supply 2179 10800 8,268.00 253 8,268.00 PDec. 22 Super Electric Co. 18719 19,795.00 252 19,795.00 P
etcetera
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Traditional Accounting System
• No information can be in the ledgers that was not recorded in the journals – the ledgers are a direct transcription
(posting) of the journals
• The accounting system ONLY contains transaction information (an exchange has occurred)
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Traditional Accounting System
• Each customer, vendor, or other party that we engage in transactions with will probably have a file that details our interactions
• Once we engage in a transaction, the data is, of course recorded in a journal. Sometimes, even with traditional systems, we maintain additional information - but typically in a different place and there is no necessary reconciliation of the two sources of information.
How and where is the data stored
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Traditional Accounting SystemWho has ownership/access to the data
• With a traditional system, data entry of accounting information is maintained by the bookkeeper or accountant.
• Sales data is maintained in the sales department
• Accounts receivable information is maintained in Accounts receivable perhaps.
• There are varying degrees of DBMS approaches
• One transaction cycle might involve interaction with all business cells, while others may not.
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Event-driven database approach• Many events lead up to what ultimately becomes a
transaction– Example - sale
• Receipt of Purchase Order• Preparation of Sales Order Header• Accepting credit / approving transaction• Shipping the goods• Preparation of the invoice
– Information is added at each event. If we record events we have a more complete tracing of the transaction
How are databases different from traditional storage for accounting information?
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• Event-driven system– Typically all of the document information is included
in the database (otherwise why would you have it on the document?)
• Who, What, When, Where from a document is recorded– Example from the SUA
How are databases different from traditional storage for accounting information?
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Where
Who
What
When
How are databases different from traditional storage for accounting information?
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Third Extension
• Enterprise - Resource - Planning (ERP) systems
• Sold/provided by large software vendors
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ERPsEnterprise Resource Planning
software• What it is:
– Integrative Software Tool that incorporates:• Production• Accounting• Marketing• Human Resources• Financial Management
– Modules• Programs on top of a database structure• Frequently Oracle databases are used
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Providers
• SAP – they were the leader
• Oracle – since they were the database leader they already
had the infrastructure
• JDEdwards• PeopleSoft
– started as a Human Resource Mgt company and then expanded from there.
• OTHERS...
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Approaches
• In house– Large data requirements and personnel
commitment– Better control over features– Faster application
• Web driven– Lower cost– Security issues?
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Advantages of ERPs
• Coordination and business process improvement– If everyone else in your industry has better
business processes than your company, what does that mean to you?…..
• Better information– You are more aware of how efficiently you
are operating.
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Disadvantages of ERPs
• Cost– ERPs (especially In House) are quite expensive to
implement. There is also a LONG startup period (two to three years)
• People– Many people may not buy into it - and it doesn’t work
unless everyone (or most everyone) does.– Personnel to run the system are expensive and hard
to keep for In House systems
• It can overwhelm your business
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What does it mean to auditors
• Should be viewed as both an opportunity and a threat to assurance services– Opportunity - consulting and implementation
services can provide additional revenues– Threat - data security is a big question mark
for ERPs
• Auditors cannot afford to be behind the technological curve here