Enterprise System = a system that suports people conduction business activities throughout the enterprise. Three basic function: input, process, output
Modules/Subsystems = SCM, OPS, HRM, CRM and Accounting
Integrated Enterprise System = shares data across functional areas within the enterprise, the same information is used by different departments
Accounting System = captures accounting information about transactions, processes the accounting information captured and generates financial reports.
Baseline Accounting System Model = enterprise-wide view of the firms accounting, satellite-mapping, representative of most enterprises. Its 5 modules are: Vendors (purchasing cycle), Customers (sales cycle), Employees (payroll cycle), Banking (deposits, withdrawals, reconciliations), Financial (adjusting, correcting, closing entires) and Reports (output).
Purpose/SASSY = Store accounting data using people, processes and technology, Analyze data to create intelligence for decisions, Safeguard information assets using security, controls and risk management, System Design to plan and build an accounting system
Customers of AIS = Investors, Creditors, Management, External Agencies, Society/Community
Business Process Value Chain
Business Process = related activities performed by an enterprise to create value by transforming input into output
Value Chain = organizing framework for business processes that is useful in coordinating activities with suppliers and customers. Series of activities that create value. Innovation includes designing new products and services. (Vendor > Purchase > Make > Sell > Support > Customer)
Types of Databases
Database = a collection of related tables
Operational Database = Internal Database. Routine business activities, on--going transactions, information about people, things and transactions
Relational Database = A structure of operational database in which the tables are related or connected through fields that are common to two or more tables. Quicker processing, storage and extraction. Less storage space. SQL language is relatively easy.
Hierarchal/Network/Object-Oriented Databases = less common structures of operational databases. Records are parent child.
Data Warehouses = Internal Database. Not routine, used to improve business decisions, could be current/historical/estimate
External Databases = collected by other organizations (industry, market, unemployment info)
3 Tiers: Database, Application, User
1) Database Tier = Large centralized relational database and DBMS. Back-end.
Database Administrator (DBA) = responsible for managing enterprise's database security, access and disaster recovery
Database Management System (DBMS) = Messenger and translator between accoutning software and database. This drives a database engine. It creates, transfers, updates, deletes and sorts records.
2) Application Tier = Accounting software, specialized computers that store and run the application. Contain the enterprise business process modules (SCM, CRM, OPS, HRM Accounting) Back-end.
3) User Tier = Forms and reports. Front-end client user computers
Firewall = a software program on the router that controls traffic between two networks, preventing unauthorized access to servers
Database vs Manual Accounting
Manual System = General (vendor, customer, employee), Adjusting, Correcting and Closing transactions are all posted manually. Account balance are manually brought up-to-date. Financial Statements and Reports are prepared manually using all prior work.
Database Accounting System = General (vendor, customer, employee) entered using forms, Adjusting/Correcting posted onscreen in journal, Closing automatically posted, Account Balances automatically calculated, Financial Reports are retrieved from tables using queries.
4 Steps to Build a Database
1) Identify and build database tables = People, things, transactions. Use source documents and expected analysis to conceptualize these.
2) Identify and enter fields for each table = Consider how raw data will be used, divide into fields for accessibility. No calculated amounts as they are redundant data.
3) Select primary key = Each record must have a unique identifier in a table, this is its "Primary Key"
4) Identify and build relationships among database tables = Each table must be related to at least one other table. Could be one-to-one, one-to-many, and many-to-many (create intersection table & composite key for these)
Form = onscreen form or screen interface used for entering or updating data to database
Guidelines: Enter data once, use data validation, use autoentry, format forms to mirror hard-copy forms, create user-friendly forms, implement security measures
4 Report Types
Financial Accounting and Regulatory Reports = External users. For investors, creditors and regulatory agencies. (Ex. P&L, BS, Cash Flows)
Tax Reports = External user. Used to file federal, state or local taxes. (Ex. Payroll Tax Forms, Income Tax Returns)
Management Reports = Internal User. Provided to managers for decision making. (Ex AR/AP Aging Summary, Budgets)
Sustainability Reports = Evaluate an enterprse's responsiveness to economic, environental and social sustainability challenges.
Database Query Building
Query = Search and retrieval of specific data from one or more database tables
Query Builder Tools = Streamline query building. Make it possible make queries without code.
Query By Example = shows database tables with fields on the user's screen, user simply chooses fields to inclue in query
Structured Query Language = Programming code that the RDBMS translates to search and retrieve items from the database. Syntax includes Select, From and Where.
Camel Code = Taking the names of the entities and attributes, capitalizing all words, and omitting all intermediate spaces (Ex. SalesOrder#)
Naming Convention = tblSalesOrder (SalesOrder#, Date, [Customer#], [Salesperson#], . . .)
Prefixes = tbl, qry, frm, fsub, rpt, mcr, cmd, mnu (Ex. tblReceiveFees)
ABCs of Accounting Systems
Accounting System = Baseline System + Customization
Baseline Accounting System = Generic, inclues workflow and processes frequently used.
Customized = configure the baseline system to accommodate needs of enterprise
PROS: Time Saving, Best Practices, Standardization
CONS: Not a good fit, Costly customization, Change management
4 Business Process Mapping Notations
Business Process Mapping = Graphically describes processes step-by-step.
Three reasons: 1) Communication Tool (accounting/IT for system design), Documentation Tool (records activities in order), Streamlining tool (vision of improvement and how it will work)
Business Process Management =
Flowchart = Easy to learn quickly, simply portrayed, not detailled. Level 1 is basic high level. Level 2 is drill down sub-flowchart of each step.
Data Flow Diagram (DFD) = Specifies an agent, has no decisions, includes a data store
Unified Modeling Language (UML) = Too complex to learn, it has many symbols. IT professionals like this, Accounting professionals dislike it.
Business Process Model and Notation (BPMN) = Good for IT and Business users.
BPMN & BPMN2
BPMN = Looks at processes, not data. But it does break it up by participants into swimlanes.
BPMN 2.0 = New items are intermediate events, data stores, subprocesses
Steps to build a BPMN:
1) Write a narrative for the business process
2) Annotate the narrative
3) Create a business process map organizer to organize activities
4) Develop a business process map using information in organizer.
5) Repeate step 1-4 for subprocesses as needed. (Add + to process symbol)
What to avoid: Blackholes (data goes in but none exit), Miracles (no input, somehow output ), Gray Holes (input data does not generate the respective output information)
5 Modules and their cycles
Vendor Module = Create PO, Receive items, Enter bills
Customer Module = Create invoices, Receive customer payment
Employee Module = Enter time, Calculate payroll
Banking Module = Pay bills, Make deposits, Pay employees, Pay payroll liabilities
Financial Module = Adjusting, Correcting, Closing entries and General Ledger
Reports Module = Management reports, Tax reports, Financial/Regulatory reports, Sustainability reports
Integrated System CharacteristicsInt
Integrated Enterprise System = data flows among functional areas as it passses through value chain. Automated workflow, business processes, internet technologies.
PROS: Imrpove communication (upstream/downstream), coordinate activities, reduce duplication, best practices integrated.
CONS: Not a good fit, costly, shifting from functional silos to integrated system business processes and change management.