Chapter 1The Information System: An Accountants Perspective

TRUE/A!SE
1. Information is a business resource.
ANS: T
2. An information system is an example of a natural system.
ANS: F
3. Transaction processing systems convert nonfinancial transactions into financial transactions.
ANS: F
!. Information lac"ing reliability may still #ave value.
ANS: F
$. A balance s#eet prepare% in conformity &it# 'AA( is an example of %iscretionary reporting.
ANS: F
). T#e *anagement +eporting System provi%es t#e internal financial information nee%e% to manage a
business.
ANS: T
,. *ost of t#e inputs to t#e 'eneral -e%ger System come from t#e Financial +eporting System.
ANS: F
.. /#en preparing %iscretionary reports0 organi1ations can c#oose &#at information to report an% #o& to
present it.
ANS: T
2. +etrieval is t#e tas" of permanently removing obsolete or re%un%ant recor%s from t#e %atabase.
ANS: F
13. Systems %evelopment represents .3 to 23 percent of t#e total cost of a computer system.
ANS: F
11. T#e %atabase a%ministrator is responsible for t#e security an% integrity of t#e %atabase.
ANS: T
12. A bac"bone system is completely finis#e%0 teste%0 an% rea%y for implementation.
ANS: F
13. T#e internal au%itor represents t#e interests of t#ir%party outsi%ers.
ANS: F
1!. Information Tec#nology 4IT5 au%its can be performe% by bot# internal an% external au%itors.
ANS: T
1$. T#e single largest user of computer services is t#e personnel function.
ANS: F
1). Increase% control is one of t#e "ey a%vantages of %istribute% %ata processing.
ANS: F
1,. T#e flatfile approac# is most often associate% &it# socalle% legacy systems.
ANS: T
1.. In a flatfile system0 files are easily s#are% by users.
ANS: F
12. -egacy systems &ere eliminate% in t#e effort to ma"e systems 627 compliant.
ANS: F
23. 8ne of t#e greatest %isa%vantages of %atabase systems is t#at all %ata is al&ays available to all users.
ANS: F
21. 9n%er S8: legislation au%itors are no longer allo&e% to provi%e consulting services to au%it clients.
ANS: T
22. 9n%er S8: legislation au%itors are no loger allo&e% to provi%e consulting services to t#eir clients.
ANS: F
T#ey cannot provi%e suc# services to au%it clients but may still provi%e t#em to nonau%it clients
"U!TIP!E C#$ICE
1. /#ic# of t#e follo&ing is not a business resource;
a
.
ra& material
b
.
labor
c
.
information
%
.
all are business resources
ANS: <
2. /#ic# level of management is responsible for s#ortterm planning an% coor%ination of activities
necessary to accomplis# organi1ational ob=ectives;
a
.
operations management
b
.
mi%%le management
c
.
top management
%
.
line management
ANS: >
3. /#ic# level of management is responsible for controlling %ayto%ay operations;
a
.
top management
b
.
mi%%le management
c
.
operations management
%
.
executive management
ANS: ?
!. T#e ability to ac#ieve t#e goals of a system %epen%s upon t#e effective functioning an% #armonious
interaction bet&een its subsystems. T#is is calle%
a
.
system %ecomposition
b
.
system re%un%ancy
c
.
bac"up system
%
.
subsystem inter%epen%ency
ANS: <
$. T#e value of information for users is %etermine% by all of t#e follo&ing but
a
.
reliability
b
.
relevance
c
.
convenience
%
.
completeness
ANS: ?
). An example of a nonfinancial transaction is
a
.
sale of pro%ucts
b
.
cas# %isbursement
c
.
log of customer calls
%
.
purc#ase of inventory
ANS: ?
,. An example of a financial transaction is
a
.
t#e purc#ase of computer
b
.
a supplier@s price list
c
.
a %elivery sc#e%ule
%
.
an employee benefit broc#ure
ANS: A
.. /#ic# subsystem is not part of t#e Accounting Information System;
a
.
Transaction (rocessing System
b
.
Axpert System
c
.
'eneral -e%gerBFinancial +eporting System
%
.
*anagement +eporting System
ANS: >
2. T#e ma=or %ifference bet&een t#e Financial +eporting System 4F+S5 an% t#e *anagement +eporting
System 4*+S5 is t#e
a F+S provi%es information to internal an% external usersC t#e *+S provi%es information
. to internal users
b
.
F+S provi%es %iscretionary informationC t#e *+S provi%es non%iscretionary information
c
.
F+S reports are prepare% using information provi%e% by t#e 'eneral -e%ger SystemC t#e
*+S provi%es information to t#e 'eneral -e%ger System
%
.
F+S reports are prepare% in flexible0 nonstan%ar%i1e% formatsC t#e *+S reports are
prepare% in stan%ar%i1e%0 formal formats
ANS: A
13. T#e purpose of t#e Transaction (rocessing System inclu%es all of t#e follo&ing except
a
.
converting economic events into financial transactions
b
.
recor%ing financial transactions in t#e accounting recor%s
c
.
%istributing essential information to operations personnel to support t#eir %aily
operations
%
.
measuring an% reporting t#e status of financial resources an% t#e c#anges in t#ose
resources
ANS: <
11. T#e Transaction (rocessing System inclu%es all of t#e follo&ing cycles except
a
.
t#e revenue cycle
b
.
t#e a%ministrative cycle
c
.
t#e expen%iture cycle
%
.
t#e conversion cycle
ANS: >
12. T#e primary input to t#e Transaction (rocessing System is
a
.
a financial transaction
b
.
an accounting recor%
c
.
an accounting report
%
.
a nonfinancial transaction
ANS: A
13. /#en %esigning t#e %ata collection activity0 &#ic# type of %ata s#oul% be avoi%e%;
a %ata t#at is relevant
.
b
.
%ata t#at is efficient
c
.
%ata t#at is re%un%ant
%
.
%ata t#at is accurate
ANS: ?
1!. T#e most basic element of useful %ata in t#e %atabase is
a
.
t#e recor%
b
.
t#e "ey
c
.
t#e file
%
.
t#e attribute
ANS: <
1$. In a %atabase0 a complete set of attributes for a single occurrence of an entity class is calle%
a
.
a "ey
b
.
a file
c
.
a recor%
%
.
a c#aracter
ANS: ?
1). Affective information #as all of t#e follo&ing c#aracteristics except
a
.
relevance
b
.
completeness
c
.
summari1ation
%
.
structure
ANS: <
1,. <atabase management tas"s %o not inclu%e
a summari1ation
.
b
.
storage
c
.
retrieval
%
.
%eletion
ANS: A
1.. T#e aut#or %istinguis#es bet&een t#e Accounting Information System an% t#e management
Information System base% on
a
.
&#et#er t#e transactions are financial or nonfinancial
b
.
&#et#er %iscretionary or non%iscretionary reports are prepare%
c
.
t#e en% users of t#e reports
%
.
t#e organi1ational structure of t#e business
ANS: A
12. /#ic# activity is not part of t#e finance function;
a
.
cas# receipts
b
.
portfolio management
c
.
cre%it
%
.
general le%ger
ANS: <
23. *ar"et researc# an% a%vertising are part of &#ic# business function;
a
.
materials management
b
.
finance
c
.
mar"eting
%
.
pro%uction
ANS: ?
21. /#ic# function manages t#e financial resources of t#e firm t#roug# portfolio management0 ban"ing0
cre%it evaluation0 an% cas# receipts an% %isbursements;
a
.
accounting
b
.
finance
c
.
materials management
%
.
%istribution
ANS: >
22. /#ic# of t#e follo&ing is not part of t#e accounting function;
a
.
managing t#e financial information resource of t#e firm
b
.
capturing an% recor%ing transactions in t#e %atabase
c
.
%istributing transaction information to operations personnel
%
.
managing t#e p#ysical information system of t#e firm
ANS: <
23. T#e term Daccounting in%epen%enceE refers to
a
.
%ata integrity
b
.
separation of %uties0 suc# as recor% "eeping an% custo%y of p#ysical resources
c
.
generation of accurate an% timely information
%
.
business segmentation by function
ANS: >
2!. In t#e %istribute% %ata processing approac#
a
.
computer services are consoli%ate% an% manage% as a s#are% organi1ation resource
b
.
t#e computer service function is a cost center
c
.
t#e en% users are bille% using a c#argebac" system
%
.
computer services are organi1e% into small information processing units un%er t#e
control of en% users
ANS: <
2$. T#e %ata control group is responsible for
a
.
performing t#e %ayto%ay processing of transactions
b
.
security an% integrity of t#e %atabase
c
.
liaison bet&een t#e en% user an% %ata processing
%
.
provi%ing safe storage for offline %ata files
ANS: ?
2). <ata processing %oes not involve
a
.
%ata control
b
.
computer operations
c
.
system maintenance
%
.
%ata conversion
ANS: ?
2,. In%epen%ent au%iting is performe% by
a
.
external au%itors
b
.
internal accountants
c
.
license% au%itors
%
.
t#ir%party accountants
ANS: A
2.. /#ic# in%ivi%ual is least involve% in ne& systems %evelopment;
a
.
systems analyst
b
.
external au%itor
c
.
en% user
%
.
%ata librarian
ANS: <
22. T#e ob=ectives of all information systems inclu%e all of t#e follo&ing except
a
.
support for t#e ste&ar%s#ip function of management
b
.
evaluating transaction %ata
c
.
support for t#e %ayto%ay operations of t#e firm
%
.
support for management %ecision ma"ing
ANS: >
33. /#ic# in%ivi%uals may be involve% in t#e Systems <evelopment -ife ?ycle;
a
.
accountants
b
.
systems professionals
c
.
en% users
%
.
all of t#e above
ANS: <
31. An appraisal function #ouse% &it#in t#e organi1ation t#at performs a &i%e range of services for
management is
a
.
internal au%iting
b
.
%ata control group
c
.
external au%iting
%
.
%atabase a%ministration
ANS: A
32. A%vantages of a %atabase system inclu%e all of t#e follo&ing except
a
.
elimination of %ata re%un%ancy
b
.
open access to all %ata by all users
c
.
single up%ate for c#anges in %ata
%
.
confi%ence t#at all %ata is current
ANS: >
33. <isa%vantages of %istribute% %ata processing inclu%e all of t#e follo&ing except
a
.
mismanagement of organi1ation&i%e resources
b
.
#ar%&are an% soft&are incompatibility
c
.
cost re%uctions
%
.
%ifficulty in #iring Fualifie% IT professionals
ANS: ?
3!. A%vantages of %istribute% %ata processing inclu%e eac# of t#e follo&ing except
a
.
cost re%uctions
b
.
better management of organi1ation resources
c
.
improve% operational efficiency
%
.
increase% user satisfaction
ANS: >
3$. <isa%vantages of t#e %istribute% %ata processing approac# inclu%e all of t#e follo&ing except
a
.
possible mismanagement of organi1ation resources
b
.
re%un%ancy of tas"s
c
.
soft&are incompatibility
%
.
system is not responsive to t#e user@s situation
ANS: <
3). A+( pac"ages inclu%e all of t#e follo&ing mo%ules except
a
.
#uman resources
b
.
general le%ger
c
.
inventory management
%
.
t#ey inclu%e all of t#e above
ANS: <
3,. All of t#e follo&ing are external en% users except
a
.
cost accountants
b
.
cre%itors
c
.
stoc"#ol%ers
%
.
tax aut#orities
ANS: A
3.. 9seful information must possess all of t#e follo&ing c#aracteristics except
a
.
relevance
b
.
timelessness
c
.
accuracy
%
.
completeness
ANS: >
32. T#e ob=ectives of an information system inclu%e eac# of t#e follo&ing except
a
.
support for t#e ste&ar%s#ip responsibilities of management
b
.
furt#ering t#e financial interests of s#are#ol%ers
c
.
support for management %ecision ma"ing
%
.
support for t#e firm@s %ayto%ay operations
ANS: >
!3. Accountants play many roles relating to t#e accounting information system0 inclu%ing all of t#e
follo&ing except
a
.
system users
b
.
system %esigners
c
.
system au%itors
%
.
system converters
ANS: <
S#$RT A%S&ER
1. Antities outsi%e t#e organi1ation &it# a %irect or in%irect interest in t#e firm0 suc# as stoc"#ol%ers0
financial institutions0 an% government agencies0 are calle% GGGGGGGGGGGGGGGGGGGG.
ANS:
sta"e#ol%ers
2. T#e process of brea"ing a system into smaller subsystem parts is calle%
GGGGGGGGGGGGGGGGGGGGGGGGGGGGGG.
ANS:
system %ecomposition
3. Transactions &it# tra%ing partners inclu%e GGGGGGGGGGGGGGGGGGGG an% GGGGGGGGGGGGGGGGGGGG.
ANS:
sales0 purc#ases
!. A system is a group of t&o or more interrelate% components t#at
GGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGG.
ANS:
serve a common purpose
$. T#e tas" of locating an% transferring an existing recor% from t#e %atabase for processing is calle% %ata
GGGGGGGGGGGGGGGGGGGG.
ANS:
retrieval
). T#ree &ays t#at a business can be %ivi%e% into segments are by GGGGGGGGGGGGGGGGGGGGGGGGGG0
GGGGGGGGGGGGGGGGGGGGGGGGGG an% by GGGGGGGGGGGGGGGGGGGGGGGGGG.
ANS:
geograp#ic location0 pro%uct lines0 function
,. T#ree activities t#at are part of t#e finance function are GGGGGGGGGGGGGGGGGGGGGGGGGG0
GGGGGGGGGGGGGGGGGGGGGGGGGG0 an% GGGGGGGGGGGGGGGGGGGGGGGGGG.
ANS:
portfolio management0 treasury0 cre%it0 cas# %isbursements0 cas# receipts
.. T&o %istinct &ays to structure t#e <ata (rocessing <epartment are GGGGGGGGGGGGGGGGGGGG an%
GGGGGGGGGGGGGGGGGGGG.
ANS:
centrali1e%0 %istribute%
2. T&o met#o%s to acFuire information systems are to GGGGGGGGGGGGGGGGGGGGGGGGGG an% to
GGGGGGGGGGGGGGGGGGGGGGGGGG.
ANS:
%evelop customi1e% systems0 purc#ase commercial systems
13. Au%its are con%ucte% by GGGGGGGGGGGGGGGGGGGG0 GGGGGGGGGGGGGGGGGGGG0 an%
GGGGGGGGGGGGGGGGGGGG au%itors.
ANS:
internal0 external0 IT
11. Sales of pro%ucts to customers0 purc#ases of inventory from ven%ors0 an% cas# %isbursements are all
example of GGGGGGGGGGGGGGGGGGGGGGGGGG.
ANS:
financial transactions
12. T#e t#ree ma=or subsystems of t#e AIS are GGGGGGGGGGGGGGGGGGGGGGGGGGGGGGG0
GGGGGGGGGGGGGGGGGGGGGGGGGGG0 an% GGGGGGGGGGGGGGGGGGGGGGGGGGGGGGG.
ANS:
t#e transaction processing system0 t#e general le%gerBfinancial reporting system0 t#e management
reporting system
13. T#e GGGGGGGGGGGGGGGGGGGGGGGGGG an% GGGGGGGGGGGGGGGGGGGGGGGGGG stan%ar%s t#at c#aracteri1e
t#e AIS clearly %istinguis# it from t#e *IS.
ANS:
legal0 professional
1!. T#e transaction processing system is comprise% of t#ree cycles: GGGGGGGGGGGGGGGGGGGGGGGGGG0
GGGGGGGGGGGGGGGGGGGGGGGGGG0 an% GGGGGGGGGGGGGGGGGGGGGGGGGG.
ANS:
revenue0 expen%iture0 conversion
1$. T#e +AA mo%el i%entifies an organi1ation@s GGGGGGGGGGGGGGGGGGGG0 GGGGGGGGGGGGGGGGGGGG0 an%
GGGGGGGGGGGGGGGGGGGG.
ANS:
resources0 events0 agents.
1). Sarbanes8xley legislation reFuires t#at management %esigns an% implements controls over t#e entire
financial reporting process. /#at systems %oes t#is inclu%e;
ANS:
T#is inclu%es t#e financial reporting system0 t#e general le%ger system0 an% t#e transaction processing
systems t#at supply t#e %ata for financial reporting.
1,. /#y is it necessary to %istinguis# bet&een AIS an% *IS;
ANS:
>ecause of t#e #ig#ly integrative nature of mo%ern information systems0 management an% au%itors
nee% a conceptual vie& of t#e information system t#at %istinguis#es "ey processes an% areas of ris"
an% legal responsibility from t#e ot#er 4nonlegally bin%ing5 aspects of t#e system. /it#out suc# a
mo%el0 critical management an% au%it responsibilities un%er S8: may not be met.
1.. Ho& #as S8: legislation impacte% t#e consulting practices of public accounting firms;
ANS:
(rior to S8:0 a gray area of overlap existe% bet&een assurance an% consulting services. Au%itors &ere
once allo&e% to provi%e consulting services to t#eir au%it clients. T#is is no& pro#ibite% from %oing so
un%er S8: legislation.
12. /#at is %iscretionary reporting;
ANS:
+eports use% by management t#at t#e company is not obligate% by la&0 regulation0 or contract to
provi%e. T#ese are often use% for internal problemsolving issues rat#er t#an by external constituents.
23. Name t#e five c#aracteristics of information;
ANS:
+elevance0 accuracy0 completeness0 summari1ation0 an% timeliness.
ESSA'
1. ?ontrast t#e responsibilities of operations management0 mi%%le management0 an% top management.
Axplain t#e %ifferent information nee%s for eac# level of management.
ANS:
8perations management is %irectly responsible for controlling %ayto%ay operations. 8perations
managers reFuire %etaile% information on in%ivi%ual transactions suc# as sales0 s#ipment of goo%s0
usage of labor an% materials in t#e pro%uction process0 an% internal transfers of resources from one
%epartment to anot#er. >u%geting information an% instructions flo& %o&n&ar% from top an% mi%%le
management to operations management.
*i%%le managers perform s#ortterm planning an% coor%ination of activities necessary to accomplis#
organi1ational ob=ectives. *i%%le management reFuires information t#at is more summari1e% an%
oriente% to&ar% reporting on overall performance an% problems0 rat#er t#an routine operations.
Top management is responsible for longerterm planning an% setting organi1ational ob=ectives.
Information provi%e% to top management is #ig#ly summari1e%.
2. Axplain t#e %ifference bet&een %ata an% information.
ANS:
<ata are facts &#ic# may or may not be processe%C %ata #ave no particular impact on t#e user.
Information is processe% %ata t#at causes t#e user to ta"e action.
3. /#y %o accountants nee% to un%erstan% t#e organi1ational structure of t#e business;
ANS:
T#e structure of an organi1ation reflects t#e %istribution of responsibility0 aut#ority0 an% accountability
t#roug#out t#e organi1ation. Accountants nee% to un%erstan% t#is %istribution pattern in or%er to assess
t#e information nee%s of users0 an% to %esign t#e Accounting Information System to meet t#ose nee%s.
!. Several %isa%vantages of %istribute% %ata processing #ave been %iscusse%. <iscuss at least t#ree.
ANS:
<istributing t#e control of information resources can lea% to mismanagement of organizational
resources.
Hardware and software incompatibility can result.
<istribution of responsibility can result in many users performing redundant tasks.
In%ivi%ual user control can lea% to internal control concerns &#en users perform incompatible duties.
Small organi1ational units may #ave %ifficulty hiring qualified IT professionals.
<istribution of %ecision ma"ing can result in a lack of standards.
$. Name an% explain t#e purpose of t#e t#ree ma=or subsystems of t#e AIS:
ANS:
T(S recor%s t#e financial transactions of t#e firm
'-BF+S pro%uces t#e financial statements etc. reFuire% by la&
*+S provi%es information to internal management for %ecision ma"ing
). /#at are t#e t#ree primary functions performe% by t#e transaction processing system;
ANS:
converting economic events into financial transaction0 recor%ing financial transaction in t#e accounting
recor%s 4=ournals an% le%gers50 an% %istributing essential financial information to operations personnel
to support %aily operations.
,. T#e most commonly state% benefits of <<( are cost savings0 increase% user satisfaction0 an% improve%
operational efficiency. Axplain.
ANS:
T#e costs of bot# processing an% %ata storage #ave %ecline% significantly in t#e time since early
automation. In a%%ition0 %ata entry can be %istribute% an% application complexity re%uce%.
9sers are typically more satisfie% &#en t#ey can control t#e resources t#at affect t#eir profitability.
Also users &ant systems people &#o &ill respon% to t#eir nee%s an% involve t#em in %evelopment an%
implementation of t#eir o&n systems.
<elegation of cost control to in%ivi%ual units lea%s to more efficient use of unit resources.
.. <ata re%un%ancy is %escribe% as a problem in flatfile systems %ue to %ata storage0 up%ating0 an%
currency issues. Axplain.
ANS:
<ata t#at is store% 13 %ifferent times ta"es up 13 times t#e storage space of %ata store% once.
If %ata is store% in multiple files0 eac# file must be up%ate% &#en a c#ange occurs.
If t#e issue of up%ates is mismanage% in a flatfile environment0 some %ata may be unc#ange%0
t#erefore be noncurrent an% lea% to incorrect %ecisions.
2. Axplain t#e elements of t#e +AA mo%el an% give an example of eac#.
ANS:
Aconomic resources are t#e assets of t#e organi1ation. T#ey are ob=ects t#at are scarce an% un%er t#e
control of t#e organi1ation. T#ey %o not inclu%e accounts receivable. An example is inventory.
Aconomic events are actions t#at affect c#anges is resources. An example is a sale to a customer.
Aconomic agents are in%ivi%uals an% business units t#at participate in economic events. An example is
a sales cler".
13. <istinguis# bet&een t#e accounting information system an% t#e management information system.
ANS:
T#e AIS processes financial 4e.g.0 cas# receipts5 an% nonfinancial 4e.g.0 a%%ition to t#e approve%
ven%or list5 transactions t#at %irectly affect t#e processing of t#e financial transaction. T#ese are
#an%le% by t#e t#ree ma=or subsystems: transaction processing0 general le%gerBfinancial reporting0 an%
management reporting.
T#e *IS processes a%%itional nonfinancial transactions t#at contribute to t#e %ecision ma"ing of
managers.
11. /#y #ave reengineering efforts been ma%e to integrate AIS an% *IS;
ANS:
*anagers of all areas typically nee% %ata from bot# t#e AIS an% t#e *IS. If t#e %ata nee%e% by
managers for %ecisionma"ing processes are locate% in t&o or more %ata sets0 t#e preparation of
reports is bot# inefficient an% expensive. Furt#er0 a lac" of coor%ination bet&een t#e t&o %ata sets can
result in %ata t#at is not consistent an% is unreliable.
12. /#y is it important to organi1ationally separate t#e accounting function from ot#er functions of t#e
organi1ation;
ANS:
T#e accounting function provi%es recor%"eeping services for all of t#e operations an% %ayto%ay
activities of ot#er %epartments0 &#ic# affect t#e financial position of t#e organi1ation. +ecor% "eeping
tas"s must be "ept separate from any area t#at #as custo%y over assets. T#us0 t#e accounting function
must remain in%epen%ent so t#at t#e protection of t#e firm@s assets is carrie% out in an environment
&it# minimum possibilities for t#eft.
13. T#e +AA mo%el is base% on t#e premise t#at Dbusiness %ata must not be preformatte% or artificially
constraine% an% must reflect all relevant aspects of t#e un%erlying economic events.E /#at %oes t#is
mean an% #o& is it applie%
ANS:
T#e +AA mo%el reFuires t#at accounting p#enomena be c#aracteri1e% in a manner consistent &it# t#e
%evelopment of multiple user vie&s not simply t#ose of t#e accounting function. As suc#0 +AA
proce%ures an% %atabases are structure% aroun% events rat#er t#an accounting artifacts suc# as =ournals0
le%gers0 c#artsofaccounts0 an% %ouble entry accounting. 9n%er t#e +AA mo%el0 business
organi1ations prepare financial statements %irectly from t#e event %atabase.
1!. A+( systems are comprise% of a #ig#ly integrate% set of stan%ar%i1e% mo%ules. <iscuss t#e a%vantages
an% potential %isa%vantages of t#is approac#.
ANS:
A%vantages of A+(
Anterprise +esource (lanning 4A+(5 systems enable organi1ations to automate an% integrate "ey
business processes.
A+(s brea" %o&n tra%itional functional barriers by facilitating %ata s#aring
A+( soft&are embo%ies an% supports t#e best business practices of a given in%ustry t#us encouraging
positive c#anges in t#e &ay firms %o business
8rgani1ations experience internal efficiencies by employing stan%ar% business practices among all
organi1ational units.
<isa%vantages of A+(
T#e implementation of an A+( system can be a massive un%erta"ing t#at can span several years.
>ecause of t#eir complexity an% si1e0 fe& organi1ations are &illing or able to commit t#e necessary
financial resources an% incur t#e ris" of %eveloping an A+( system in#ouse. Hence0 virtually all A+(s
are commercial pro%ucts %esigne% to solve stan%ar%i1e% business problems. *any organi1ations #ave
uniFue nee%s t#at reFuire customi1e% systems.
8rgani1ations t#at implement an A+( often nee% to mo%ify t#eir business processes to suit uniFue
business functions0 particularly in%ustryspecific tas"s. T#ese applications0 often calle% boltons0 are
not al&ays %esigne% to communicate &it# A+( pac"ages.
A+( pac"ages are enormously expensive. 8rgani1ation management s#oul% exercise great care in
%eci%ing &#ic#0 if any0 A+( is best for t#em.
1$. <istinguis# bet&een t#e centrali1e% an% %istribute% approac#es to organi1ing t#e computer services
function.
ANS:
In a centrali1e% %ata processing approac#0 t#e computer services function is centrally locate%. T#e
%atabases are #ouse% in one place &#ere all of t#e %ata processing occurs by one or more main
computers. All systems %evelopment an% maintenance &or" for t#e entire organi1ation is performe% by
systems professionals. An% users &is#ing to #ave ne& systems or features must submit a formal
reFuest to t#is group an% are usually prioriti1e% an% place% in a Fueue.
In a %istribute% %ata processing approac#0 t#e ?(9s are sprea% out an% control over %ata an%
processing is at t#e information processing unit 4I(95 level. T#us0 en% users #ave more influence over
t#e systems %evelopment pro=ects0 &#ic# are typically #an%le% by systems professionals at t#e I(9
level.