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Accounting information systems |
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Definition
Integrated framework within a firm that employs people, procedures, and information technology (hardware and software) to transform financial data into information for operating and managing
the firms activities and reporting the firms achievements to interested parties and provides adequate controls to safeguard the organization's assets |
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Free from error or bias; accurately represents organization events or activities |
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Reduces uncertainity, improves decision making, or confirms or corrects prior expectations |
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Does not omit important aspects of the events or activities it measures |
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Provided in time for decision makers to make decisions |
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Presented in a useful and intelligible format |
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Two independent, knowledgeable people produce the same information |
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Available to users when they need it and in a format that can use |
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facts that are collected, recorded, stored, and processed by an information system
- Raw Facts: Have no organization or meaning to users
- Organization collects: Resources, Events, Agents
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data that have been organized and processed to provide meaning and improve the decision-making proces
- Organized/Processed Data
- Is Meaningful and Useful to users
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repetitive/routine/well understood
- CAN be automated
- Lower level employees
o Ex: Credit check/Inventory Control |
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incomplete rules/subjective assessments and judgments
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nonrecurring and nonroutine
o Ex: new product line
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Enterprise Resource Planning (ERP) |
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integrated software packages designed to provide complete integration of an organization’s business information processing systems and all related data
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- No documentary evidence of control procedures performed
- Electronic readable records
- Automation of accounting and business information
- Less detectable error routines
- More Reliable with proper controls
- More difficult to make changes after implementation
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- Integration of an organization’s data and financial information
- Data is captured once
- Greater management visibility, increased monitoring
- Better access controls
- Standardized business operating procedures
- Improved customer service
- More efficient manufacturing
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o Improper use of technology
§ Premature/Early user of new hardware/software
o Inability to control technology
§ Little time/efforts to develop/install technology controls
o Inability to translate user needs into technology requirements
o Illogical processing due to automation
o Inability to react quickly
o Cascading of Errorsè Domino Effect
§ Associated with changes with application programs
o Repition of errors
§ Insufficient program testing/inadequate checks on data entry/failure to monitor the results of processing
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processing data at a given time interval
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Advantages of Batch processing |
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- Simple and less expensive design
- Relatively efficient
- Use batch for total control
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Disadvantages of Batch processing |
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- Master files are out of date
- Difficult to correct errors
- Time consuming for sorting and updating
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Processes data immediately after it is captured |
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Advantages of Online Real-time |
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- Data is up to date and complete which improves customer satisfaction
- Integrated Applications-fewer duplicates
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Disadvantages of Online Real-time |
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- More expensive and more complex
- Difficult to maintain an audit trail which is a means to check accuracy and the validity of your balances
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- Automate FS disclosure checklist/Manually checking for accuracy
- Expert Systems prepare FS/Human-Semi-auto preparation of FS
- comparing Accounting policies/Comparing numerically only
- Conversion from GAAP to international standards/Manual conversion
- Power search virtual documents/Limited search
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