Most organizations use purchase orders to authorize inventory and other purchases. If a company’s purchase order contains a column labeled product code, it most likely uses what kind of coding?
Mnemonic
Information should be evaluated based on — criteria
5
Which generic element of the AIS is focused on master files, transaction files and junction files?
Storage
Define AIS
A set of interrelated activities, documents, and technologies designed to collect data, process it, and report information to a diverse group of internal and external decision makers in organizations
5 elements of the AIS structure
Inputs Processes Outputs Storage Internal controls
Includes documents such as sales invoices and purchase orders
Inputs
Includes computers and satellites
Processes
Includes general purpose financial statements as well as internal reports such as variance analyses
Outputs
Data stored in paper form, electronically, or a mix of both; if electronically, broken down in 3 broad file types; master files typically contain data about “things” such as inventory, customers, and vendors; transaction files usually focus on activities such as earning revenue and incurring expenses; junction files link other files together
Storage
Includes daily backup of data and separation of duties
Internal controls
Process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information
Accounting definition
That part of accounting devoted to identifying and measuring the economic information
Bookkeeping
Common internals controls associated with the accounting cycle
Sequential numbering
Physical security
Transaction limits
A method of efficiently aligning an organization with the wants and needs of clients is:
Business process management
Motivation is determined by what 3 factors? (Also the definition of expectancy theory)
Expectancy
Valence
Instrumentality
4 common chart of accounts coding systems
Sequential coding
Block coding
Hierarchical codes
Mnemonic codes
Numbers are assigned in blocks; each block is reserved for a particular kind of account; example: equity accounts all start with “5”
Block coding
Sophisticated form of block coding; each digit/block of digits conveys important information to people who know the code
Hierarchical codes
Help people remember the meaning of the code
Mnemonic codes
A process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in effectiveness and efficiency of operations, reliability of financial reporting and compliance with applicable laws and regulations
Internal control
COSO definition of internal control:
It is a process
It necessarily involves people in the organization
It is designed to provide reasonable assurance
It provides reasonable assurance in a few common areas such as operations, financial reporting, and human behavior
4 Purposes of internal control
Safeguarding assets
Ensuring financial statement reliability
Promoting operational efficiency
Encouraging compliance with management’s directives
COSO’S ERM 8 elements:
Internal environment Objective setting Event identification Risk assessment Risk response Control activities Information and communication Monitoring
5 levels of the capability maturity model
Chaotic Repeatable Defined Managed Optimized
Give the user a “big picture” look at an information system
Systems flowcharts
Show the logic associated with a computer program
Program flowcharts
Show the various documents involved in a system; also portray procedures performed on those documents
Document flowcharts
Show the computers, printers, monitors, input devices, and other hardware elements associated with an information system
Hardware flowcharts
Unlike flowcharts, DFDs incorporate — symbols
4
What is the organization of DFDs vs. flowcharts?
DFDs: leveled sets, each depicting more detail than the last
Flowcharts: columns representing areas of responsibility
Difference between DFD and flowchart formats
DFD processes are numbered in the following formats: level zero 1.0, level one 1.1, level two 1.1.1
Flowcharts: numbers can be used for on and off-page connectors, not for processes
Difference in focus for DFDs vs. flowcharts
DFDs: focus on data and how they move btwn business processes, external entities, and data stores
Flowcharts: are concerned with data, but also with documents and processing tools
Difference of lines in DFDs vs. flowcharts
DFDs: line represent data; they are labeled with noun phrases
Flowcharts: lines represent movement btwn processes, areas of responsibility, and the like; they are not labeled
REA models are organized in 3 columns. What are they?
Resources (left)
Events (middle)
Agents (right)
Define extensible as it relates to XBRL
X stands for extensible; the XBRL language is able to be extended; just like we now have words such as wifi and iPod in English, the XBRL language is extensible in that users can add new ideas and phrases to the basic XBRL w/o changing its fundamental purpose, structure, or existing terminology
Define specification in terms of XBRL
Specification is a particular example of a larger group; ex: California is a specification of the US; XBRL is a specification of XML
Define taxonomy in terms of XBRL
A taxonomy is a way to organize knowledge; the table of contents of a book is a taxonomy; assets, liabilities, and equity are taxonomies of a balance sheet
Define namespace in terms of XBRL
An XBRL dictionary; namespaces have internet addresses(URLs) just like web pages
Define instance document in terms of XBRL
Specific example of property tagged XBRL information
Different kinds of internal controls for e-businesses as opposed to brick and mortar
Customer identity authentication via usernames and passwords
Control number input requirement
Billing address must match credit card address
Secure server
Name 5 taxonomies or e-business categories
Business to consumer Business to business Govt. to consumer Govt. to business Consumer to consumer
Define business to consumer
Purchasing online
Define consumer to consumer
Transactions associated with eBay
Define business to business
When two organizations do business over a computer network; ex: university bookstore may use e-business techniques to order textbooks from publishers each semester
Define govt. to consumer
Ex: IRS
Define govt. to business
EDGAR (SEC)
A modular, relational database designed to provide internal organizational stakeholders with more timely, comprehensive information for decisions
Enterprise resource planning system
Enterprise resource planning system is — in nature
Relational
Typical models in an ERP system include
Financial management
Supply chain management
HR management
Customer relationship management
Risks to information systems
Fraud Error Service interruption delays Disclosure of confidential information Intrusions Information theft Information manipulation Malicious software Denial-of-service attacks Website defacement Extortion
7 types of computer criminals
Script kiddies Hackers Cyber-criminals Organized crime Corporate spies Terrorists Insiders
The protection of data in a system against unauthorized disclosure, modification, or destruction, and protection of the computer system itself against unauthorized use, modification, or denial of service
Information security
Information security is based on what 3 fundamental principles?
Confidentiality
Data integrity
Availability
3 IT controls
Physical
Technical
Administrative
Sales/collection process purpose
To provide goods and services to clients and to collect payment from them
Acquisition/payment process purpose
To obtain the resources The organization needs and to pay for them
Acquisition/payment process steps in order
Request goods and services based on monitor need Authorize a purchase Purchase goods/services Receive goods/services Disburse cash When necessary, process purchase returns
Conversion process purpose
To convert direct material, direct labor, and manufacturing overhead into a finished product
When units of product are differentiated from one another
I.E.: custom-built homes
Job costing
Produced undifferentiated goods (can’t tell them apart)
Process costing
Internal controls based on common risk exposures
Thorough background checks
Forced vacations
Adequate training and supervision