Part Ⅰ Conceptual of Accounting Systems 1
CHAPTER 1 Accounting Information Systems:An Overview 2
Infroduction 4
Systems,Data,and Information 4
What Is an AIS? 6
Why Study Accounting Information Systems? 7
Study of the AIS Is Fundamental to Accounting 7
AIS Skills Are Important to Your Career Success 8
The AIS Course Complements Other Systems Courses 8
AIS Topics Are Tested on the New CPA Exam 9
The Impact of the AIS on Corporate Strategy and Culture 9
The Role of the AIS in the Value Chain 10
How an AIS Can Add Value to an Organization 12
Providing Information for Decision Making 12
Decision Structure 13
Decision Scope 13
The AIS and Corporate Strategy 14
Strategies and Strategic Positions 14
Information Technology and Business Strategy 15
AIS IN ACTION:Chapter Quiz 16
Discussion Questions 17
CHAPTER 2 Overview of Business Processes 19
Introduction 21
Information Needs and Business Activities 22
Information Needs 22
Interaction with External and Internal Parties 23
Business Cycles 23
Transaction Processing:The Data Processing Cycle 25
Data Input 27
Data Storage 28
Data Processing 35
Information Output 36
Role of the AIS 40
AIS IN ACTION:Chapter Quiz 41
Discussion Questions 42
CHAPTER 3 Systems Development and Documentation Techniques 44
Introduction 46
Data Flow Diagrams 47
Elements in a Data Flow Diagram 47
Subdividing the DFD 50
Flowcharts 54
Flowchart Symbols 54
Document Flowcharts 56
System Flowcharts 61
Program Flowcharts 61
AIS IN ACTION:Chapter Quiz 62
Discussion Questions 63
Part Ⅱ Control and Audit of Accounting Information Systems 65
CHAPTER 4 Control and Accounting Information Systems 66
Introduction 68
Why AIS Threats Are Increasing 68
Why Control and Security Are Important 69
Overview of Control Concepts 69
The Sarbanes-Oxley and Foreign Corrupt Practices Acts 71
Levers of Control 72
Control Frameworks 72
COBIT Framework 73
COSO's Internal Control Framework 73
COSO's Enterprise Risk Management Framework 74
The ERM Framework Versus the Internal Control Framework 76
The Internal Environment 77
Management's Philosophy,Operating Style,and Risk Appetite 77
The Board of Directors 78
Commitment to Integrity,Ethical Values,and Competence 78
Organizational Structure 79
Methods of Assigning Authority and Responsibility 80
Human Resources Standards 80
External Influences 83
Objective Setting 83
Estimate Likelihood and Impact 86
Identify Controls 87
Estimate Costs and Benefits 87
Determine Cost/Benefit Effectiveness 88
Implement Controlor Avoid,Share,or Accept the Risk 88
Control Activities 89
Proper Authorization of Transactions and Activities 89
Segregation of Duties 90
Proiect Development and Acquisition Controls 93
Change Management Controls 94
Design and Use of Adequate Documents and Records 94
Safeguard Assets,Records,and Data 94
Independent Checks on Performance 96
Information and Communication 96
Monitoring 97
Perform ERM Evaluations 97
Implement Effective Supervision 97
Use Responsibility Accounting 97
Monitor System Activities 97
Track Purchased Software 98
Conduct Periodic Audits 98
Employ a Computer Security Officer and Computer Consultants 99
Engage Forensic Specialists 99
Install Fraud Detection Software 99
Implement a Fraud Hot Line 100
AIS IN ACTION:Chapter Quiz 100
Discussion Questions 102
CHAPTER 5 Information Systems Controls for Systems Reliability—Part 1:Information Security 103
Introduction 105
Three Fundamental Information Security Concepts 106
1 Security Is a Management Issue,Not a Technology Issue 106
2 The Time-Based Model of Security 109
3 Defense-in-Depth 109
Preventive Controls 109
Authentication Controls 110
Authorization Controls 112
Training 113
Controlling Physical Access 114
Controlling Remote Access 115
Host and Application Hardening 121
Encryption 123
Detective Controls 129
Log Analysis 130
Intrusion Detection Systems 130
Managerial Reports 131
Security Testing 131
Corrective Controls 132
Computer Emergency Response Team 132
Chief Security Officer ICSOI 133
Patch Management 133
AIS IN ACTION:Chapter Quiz 134
Discussion Questions 135
CHAPTER 6 Information Systems Controls for Systems Reliability——Part 2:Confidentiality,Privacy,Processing Integrity,and Availability 136
Introduction 138
Confidentiality 138
Privacy 140
Processing Integrity 142
Source Data Controls 143
Data Entry Controls 145
Processing Controls 146
Data Transmissinon Controls 147
Output Controls 148
Example:Credit Sales Processing 148
Availability 152
Minimizing Risk of System Downtime 152
Disaster Recovery and Business Continuity Planning 153
Chanage Management Controls 157
AIS IN ACTION:Chopter Quiz 158
Discussion Questions 159
Part Ⅲ Accounting Information Systems Applications 161
CHAPTER 7 The Revenue Cycle:Sales and Cash Collections 166
Introduction 168
Revenue Cycle Business Activities 170
Sales Order Entry 170
Shipping 177
Billing 181
Cash Collections 185
Information Processing Procedures 188
Control Objectives,Threats,and Procedures 190
Sales Order Entry 190
Shipping 192
Billing and Accounts Receivable 193
Cash Collections 194
General Control Issues 195
Revenue Cycle Information Needs 196
AIS IN ACTION:Chapter Quiz 200
Discussion Questions 200
CHAPTER 8 The Expenditure Cycle:Purchasing and Cash Disbursements 202
Introduction 204
Expenditure Cycle Business Activities 205
Order Goods 206
Receive and Store Goods 211
Pay for Goods and Services 213
Information Precessing Procedures 217
Control Obiectives,Threats,and Procedures 219
Order Goods 219
Receive and Store Goods 224
Approve and Pay Vendor Invoices 225
General Control Issues 228
Expenditure Cycle Information Needs 229
AIS IN ACTION:Chapter Quiz 230
Discussion Questions 231
CHAPTER 9 The Production Cycle 232
Introduction 234
Production Cycle Activities 235
Product Design 236
Planning and Scheduling 237
Production Operations 242
Cost Accounting 243
Information Processing Procedures 244
Raw Materials Usage Data 246
Direct Labor Costs 246
Machinery and Equipment Usage 246
Manufacturing Overhead Costs 246
Control Obiectives,Threats,and Procedures 247
Product Design 247
Planning and Scheduling 248
Production Operations 249
Cost Accounting 250
General Threats 251
Production Cycle Information Needs 252
Criticism 1:Inappropriate Allocation of Overhead Costs 252
Criticism 2:Misleading Reports 255
AIS IN ACTION:Chapter Quiz 257
Discussion Questions 258
CHAPTER 10 The Human Resources Management and Payroll Cycle 259
Introduction 261
Overview 261
Payroll Cycle Activities 264
Update Payroll Master File 264
Update Tax Rates and Deductions 265
Validate Time and Attendance Data 265
Prepare Payroll 268
Disburse Payroll 271
Calculate Employer-Paid Benefits and Taxes 271
Disburse Payroll Taxes and Miscellaneous Deductions 272
Outsourcing Options:Payroll Service Bureaus and Professional Employer Organizations 272
Control Obiectives,Threats,and Procedures 273
Employment Practices 273
Payroll Processing 274
General Control Issues 277
Key Decisions and Information Needs 278
AIS lN ACTION:Chapter Quiz 279
Discussion Questions 280
CHAPTER 11 General Ledger and Reporting System 282
General Ledger and Reporting System Activities 285
Update General Ledger 285
Post Adiusting Entries 287
Prepare Financial Statements 287
Produce Managerial Reports 287
XBRL:Revolutionizing the Reporting Process 288
Control Obiectives,Threats,and Procedures 293
Threat 1:Errors in Updating the General Ledger and Generating Reports 294
Threat 2:Loss or Unauthorized Disclosure or Alteration of Financial Data 296
Threat 3:Poor Performance 297
Supporting Management's Information Needs 297
The Balanced Scorecard 297
Using Data Warehouses for Business Intelligence 299
Principles of Graph Design 301
AIS IN ACTION:Chapter Quiz 304
Discussion Questions 305
CHAPTER 12 Database Design Using the REA Data Model 306
Introduction 308
Database Design Process 308
Entity-Relationship Diagrams 309
Three Basic Types of Entities 311
Structuring Relationships:The Basic REA Template 312
Developing an REA Diagram 313
Step 1:Identify Relevant Events 315
Step 2:Identify Resources and Agents 317
Step 3: Determine Cardinalities of Relationships 318
AIS IN ACTION:Chapter Quiz 325
Discussion Questions 328
CHAPTER 13 Implementing an REA Model in a Relational Database 329
Integrating REA Diagrams across Cycles 331
Rules for Combining REA Diagrams 333
Merging Redundant Resource Entities 334
Merging Redundant Event Entities 335
Validating the Accuracy of Integrated REA Diagrams 336
Implementing an REA Diagram in a Relational Database 336
Step 1:Create Tables for Each Distinct Entity and M:N Relationship 337
Step 2: Assign Attributes to Each Table 337
Step 3:Use Foreign Keys to Implement 1:1 and 1:N Relationships 340
Completeness Check 341
Using REA Diagrams to Retrieve Information from a Database 342
Creating Journals and Ledgers 343
Generating Financial Statements 344
Creating Managerial Reports 346
AIS IN ACTION:Chapter Quiz 347
Discussion Questions 348
CHAPTER 14 Special Topics in REA Modeling 350
Additional Revenue Cycle Modeling Topics 352
Additional Events 352
Attribute Placement 354
New REA Feature—Employee Roles 355
Sale of Services 355
Digital Assets 356
Rental Transactions 356
Additional Expenditure Cycle Modeling Topics 357
Additional Events 357
Attribute Placement 360
New REA Feature—M:N Agent-Event Relationships 360
New REA Feature——Locations 360
New REA Feature——Relationships Between Resources and Agents 360
Acquisition of Intangible Services 361
Rental Transactions 361
Production Cycle REA Model 362
Additional Entities——Intellectual Property 363
Production Cycle Events 364
New REA Feature——Relationships Between Agents 365
Combined HR/Payroll Data Model 365
HR Cycle Entities 366
Tracking Employees'time 367
Tracking Employees'Time 367
Financing Activities Data Model 368
AIS IN ACTION:Chapter Quiz 369
Discussion Questions 371
Part Ⅳ The Systems Development Process 373
CHAPTER 15 Introduction to Systems Development and Systems Analysis 374
Introduction 376
Systems Development 379
The Systems Development Life Cycle 379
The Players 381
Planning systems Development 382
Feasibility Analysis 38SCalculating Economic Feasibility Costs and Benefits 386
Capital Budgeting 388
Systems Analysis 388
Initial Investigation 388
Systems Survey 389
Feasibility Study 392
Information Needs and Systems Requirements 392
Systems Analysis Report 395
AIS IN ACTION:Chapter Quiz 395
Discussion Questions 396
CHAPTER 16 AIS Development Strategies 398
Introduction 400
Purchasing Software 400
Purchasing Software and the SDLC 401
Selecting a Vendor 402
Acquiring Hardware and Software 402
Evaluating Proposals and Selecting a System 402
Development by In-House IS Departments 405
End-User-Developed Software 406
Appropriate End-User Development and Use 407
Benefits of End-User Computing 407
Risks of End-User Computing 408
Managing and Controlling End-User Computing 409
Outsourcing the System 410
The Growth in Outsourcing Applications 410
The Benefits of Outsourcing 411
Risks of Outsourcing 412
Business Process Reengineering 412
Challenges Faced by Reengineering Efforts 414
AIS IN ACTION:Chapter Quiz 414
Discussion Questions 416
CHAPTER 17 Systems Design,Implementation,and Operation 417
Conceptual Systems Design 419
Evaluate Desingn Alternatives 420
Prepare Design Specifications 421
Prepare the Conceptual Systems Design Report 421
Physical Systems Design 421
Output Design 421
File and Database Design 423
Input Design 423
Program Design 425
Procedures Design 426
Controls Design 426
Physical Systems Design Report 426
Systems Implementation 428
Implementation Planning 428
Site Preparation 429
Select and Train Personnel 429
Complete Documentation 430
Test the System 431
Systems Conversion 431
Conversion Approaches 431
Data Conversion 433
Operation and Maintenance 433
AIS IN ACTION:Chapter Quiz 433
Discussion Questions 436