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CPA Business Notes - Chapter 4

CPA Business Notes - Chapter 4

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Published by Future CPA

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Published by: Future CPA on Oct 10, 2009
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Becker 2008 Edition Chapter 4 Page 1 of 15
Chapter 4 – Information Technology
Introduction to Information Technology:Components:1.
Hardware: actual physical computer or computer peripheral device.2.
Software: programs that process data and turn that data into information. General (i.e. MS Word) orspecific (internal audit program).3.
Data: raw facts. Production data (real, live data) or test data (staging/false data) are kept separately.4.
Network: communication media that shares data and information simultaneously.5.
People: various job titles and job descriptions (internal and/or outsourced).* Information organized and processed data. Data
InformationStakeholder: anyone in the organization who has a role in creating or using the documents and datastored on the computers or networks.Business Information System – a software that accurately records and summarizes transactions for thebusiness; basic component of a business. 3 roles in business operations:1.
Process detailed data: transaction processing systems process and record the transactionsnecessary to conduct the business.2.
Assist in making daily decisions: management information systems, decision support systems,and knowledge systems meet the varied information needs of the different organizational levelsof the business.3.
Assist in developing business strategies: executive information systems collect and summarizedata on which strategic decisions will be made.Lower-level: more detailed Higher-level: less detailedHuman errors: random Computer errors: systematicSeries of events: hardware technicians – network administrators – software developers – end userAccounting Information Systems: Type of management information system, partly transactionprocessing system, partly knowledge system.Components of BISTransactionProcessing System(TPS)Decision SupportSystem(DSS)ManagementInformation System(MIS)Knowledge System(KS)ExecutiveInformation System(EIS)OverlapAccounting InformationSystems(AIS)
Becker 2008 Edition Chapter 4 Page 2 of 15Example of accounting audit trail:INPUT OUTPUTSource document
Trial Balance
Financial Statements Reports(invoice, timecard)
 STORE FILEFile original paper source documentObjective of AIS: record valid transactions, properly classify, input proper values, record in properaccounting period, and present the transactions in the financial statements.Well-designed AID contains an audit trail that allows a source document or a source transaction to betraced from input all the way to the final output and backwards!!!-
Test for completeness, existence, vouch...Components of BIS:TPS – systems that process and record routine daily transactions necessary to conduct the business.DSS – assist managers in making daily business decisions. Do not automate decisions, but provideinteractive tools with subjective judgments. Data driven and model driven systems “Expert systems”.MIS – Management reporting systems (MRS). Provide managerial and other end users with reportsES – Only used by top managers for monitoring business conditions. Assist in strategic, not daily decisionTypes of reports:1.
Periodic scheduled reports – available on regular basis to end users (weekly, monthly).2.
Exception reports – “red flag reports”. Produced when specific condition occurs.3.
Demand reports – “pull reports”. Some information from MIS is available on demand.4.
Ad Hoc reports – “on the fly”. Does not currently exist, but can be created on demand withouthaving to get a software. Called a user report writer.a.
Query – specific question made up of various criteria5.
Push Reports – similar to pull reports, it is a specific or general reports downloaded and possiblyaggregated from the internet. Example: if every time an end user logged on to a computer, areport window displayed the latest report that the end user needed.
People – Roles and Responsibilities Within the IT Function
Segregation of duties – most important characteristics.System Analyst: Architect of the overall computer hardware specifications.-
Internally-developed system:
With end users, determine the requirements for a system
Design the specifics to satisfy those requirements
Design the overall application system
Becker 2008 Edition Chapter 4 Page 3 of 15-
Purchased system:
System analysts are system integrators
Learn the purchased application
Integrate it with existing applications by designing interfaces
Determine how to convert the initial data from other applications
Provide training to end usersComputer Programmer: include application programmers and system programmers-
Application programmer/software developer
Responsible for writing/maintaining application programs.
Handles the testing of application
Train computer operator
Programming budget will normally be devoted to program maintenance-
System programmer
Install, support, monitor, and maintain operating system.
Forecast hardware capacity and perform other capacity planning functions.
Time can be spent testing and applying operating system upgrades-
For internal control, system programmers and application programmers should not be givenwrite/update access to data in production systems.Computer Operator:-
Outdated, because automated now.-
Scheduling processing jobs, running or monitoring scheduled production jobs, hanging tapes.-
End users are NOT computer operators.Control Clerk:-
Outdated, because automated now.-
Logged/input and maintained error and correction logsIT Supervisor:-
Manage the functions and responsibilities of the IT department.File Librarian:-
Store and protect programs and tapes from damage and unauthorized use.-
Most work is now automated.Security Administrator:-
Responsible for assignment of initial passwords and often the maintenance of those passwords.System Administrator:-
Database Administrator (DBA)
Responsible for the actual software – maintaining and supporting the databasesoftware.
May perform security functions.
Perform similar functions for database software as system programmers for operatingsystem.
Should not have write/update access to data in production databases
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