Tapley-Morgan

Chapter 7 Write-Up/Discussion Post

Question: Explain different activity modeling options for conversion.

Activity models can show the steps in business processes and the collaboration
involved in making things happen. Each company is unique in its processes and requires
models tailored to its specific needs.
BPMN is one option for showing conversion activities. The circle shows the start and
end. Below is one I made based off one in the Accounting Information Systems, Second
Edition by Vernon Richardson, Janie Chang, and Rod Smith. Obviously, it would be more
useful if it were refined enough to tell us something more meaningful about the process.

[Brackets are used to show comments

Below is another imitation of a slightly more elaborate BPMN model showing the
inventory manager updating the records in his lane and the conversion partners making the
product. There is an intermediate error event showing the discarding of unusable materials
and the reissuing of materials. The process then resumes as usual. There are also gateways,
the diamonds, showing the looping that occurs keep things organized as batches.

Parts of the process could be turned into collapsible subprocesses to simplify things.
We could even show more detail by adding a third swim to show more detail about the
inspection process or any other part of the process. If we wanted to make a database, we
might use a UML diagram instead to help facilitate the design, implementation, and use of a
relational database.
UML diagrams operate within the REA (Resources, Events, and Agents) framework.
Resources are things with economic value to a firm. Agents are the people or organizations
who participate in the business activities. Events are classes that model transactions and are
important happenings affecting the flow of activities. Events could include the raw materials
issue event, where the value of the materials is added to work-in-process. Then there would be
the production authorization event, which adds the cost of goods manufactured to finished
goods inventory. Type images are classes that are used to summarize information by category.
UML diagrams also incorporate multiplicities, such as one to many relationships (Chang,
Richardson, and Smith, 2018).

References:
Richardson R., Chang C., & Smith R. 2018. Accounting Information Systems, Second Edition.
New York, NY: McGraw-Hill Education

True. The conversion process involves business activities pertaining to maintaining inventories
of raw materials, work-in-process, finished goods, producing those goods, tracking direct
labor and direct equipment costs, and applying overhead. Allocation of overhead is often
based on direct labor hours, although other cost drivers are possible in an activity-based
costing system. Conversion costs are accounted for at a standard based upon estimates
and then adjusted for actual costs. Work-in-process inventory is debited and raw
materials inventory is credited when the transfer of raw materials to work-in-process
occurs. Manufacturing wages is debited and cash or wages payable is credited to record
payroll. Work-in-process inventory is debited and manufacturing wages is credited to
record direct labor. Manufacturing overhead is debited and utilities payable is credited to
record manufacturing overhead costs. Work-in-process inventory is debited and
manufacturing overhead is credit to allocate manufacturing overhead to work-in-process
inventory at whatever percent of direct labor is necessary. Finished goods is debited and
work-in-process inventory is credited to record the transfer of work-in-process inventory
to finished goods. There are business rules that guide the process the whole way through. 
References:
Richardson R., Chang C., & Smith R. 2018. Accounting Information Systems, Second Edition.
New York, NY: McGraw-Hill Education

Agreed.  Some access controls are the following:

1. The partner authorizing production be unable to modify inventory records.
2. The partner who records issuance of materials shall not modify bill of material.
3. The partner recording labor costs cannot alter authorization of production.
4. The partner who records inspection cannot change inventory records.
5. The partner who records the updating of inventory records cannot change the
production authorization.
Some application controls are as follows:
1. When authorizations of production happen, the system shall provide authorization
order number control, default values, range checks, and limit checks. The system
also must create an audit trail. (The goal during this step of the process that we
hope to accomplish with these controls is to make sure that the partner with the
proper authority is the one who authorizes production to ensure that finished goods
are available when they should be.)
2. When work is performed, the system should only allow partners to enter numbers
of items that are issued based on the bill of material. Those numbers are subject to
range and limit checks on quantities. The date defaults to the current date. (The
goal is to record direct labor costs promptly and accurately.)
 3. The system needs to provide control numbers, hours, costs range, and limit checks.
The date defaults to current date when work gets inspected and defects are
discarded to ensure quality control.
4. The system defaults to the current date, and inventory update is dependent upon
authorization when production is completed and the finished inventory must be
updated (Richardson, Chang, and Smith, 2018).
References:
Richardson R., Chang C., & Smith R. 2018. Accounting Information Systems, Second Edition.
New York, NY: McGraw-Hill Education