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CPA Business Notes - Chapter 4

CPA Business Notes - Chapter 4

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Published by: Future CPA on Oct 10, 2009
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10/15/2014

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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
Journal
Ledger
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:
o
 
With end users, determine the requirements for a system
o
 
Design the specifics to satisfy those requirements
o
 
Design the overall application system
 
Becker 2008 Edition Chapter 4 Page 3 of 15-
 
Purchased system:
o
 
System analysts are system integrators
o
 
Learn the purchased application
o
 
Integrate it with existing applications by designing interfaces
o
 
Determine how to convert the initial data from other applications
o
 
Provide training to end usersComputer Programmer: include application programmers and system programmers-
 
Application programmer/software developer
o
 
Responsible for writing/maintaining application programs.
o
 
Handles the testing of application
o
 
Train computer operator
o
 
Programming budget will normally be devoted to program maintenance-
 
System programmer
o
 
Install, support, monitor, and maintain operating system.
o
 
Forecast hardware capacity and perform other capacity planning functions.
o
 
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)
o
 
Responsible for the actual software – maintaining and supporting the databasesoftware.
o
 
May perform security functions.
o
 
Perform similar functions for database software as system programmers for operatingsystem.
o
 
Should not have write/update access to data in production databases
o
 
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