PART 1

INTRODUCTION TO INFORMATION SYSTEMS AND TECHNOLOGY

CONCEPTS

PURPOSE
......................
To introduce students to fundamentals of systems and information systems, types of
information systems (e.g. transaction-processing systems, information, management
information systems, decision suppport systems) and the management of business
information systems. It also covers technology concepts such as hardware, software,
database management, telecommunications, and office automation.

Figure 1 below contains a schematic presentation of the content of the AIN1501 module.

AIN1501
Accounting information systems in a computer environment

Part 1 Part 2 Part 3 Part 1

Introduction to Business Information Introduction to
information applications technology risk management
systems and systems infrastructure and technology
System
development

Topic Topic Topic Topic

1. Basic Microsoft Computer 5. Risks
information Applications networks
associated
systems and with
technology accounting
concepts information
systems in
business
 1
BASIC INFORMATION SYSTEMS AND TECHNOLOGY CONCEPTS

LEARNING OUTCOMES
After studying this topic, you should be able to:

• define a system
• explain an open and closed system
• describe system performance measurement
• explain why an information system need to be replaced or improved
• describe systems development
• explain system development lifecycles
• discuss the role of accountants and auditors in system development
• define an information system
• explain information systems and its role in an organization
• explain the stages of a computerised information process
• explain organising the IS department

This topic consists of five study units

AIN1501
Accounting information systems in a computer environment

Part 1 Part 2 Part 3 Part 1

Introduction to Business Information Introduction to
information applications and technology risk management
systems systems infrastructure and technology
System
development

Topic
1. Basic information systems and
technology concepts

SU 1: Fundamentals of systems
and information systems

SU 2: Types of Information
systems

SU 3: Management of business
Information systems

SU 4: Technology Concepts of
hardware software,
database management,
telecommunications, and
office automation

SU 5: Digital Disruption
S T U D Y U NIT 1

Fundamentals of Systems and

Information Systems (IS)
In this study unit

Introduction to systems
(definition)

What is an information system?

(definition)

The role of information Computerised information Introduction to accounting

systems in organisations systems information systems

Components Processes

1 INTRODUCTION
In the overview we looked at the information used in most organisations. Organisations use
information systems to manage their information, reduce uncertainties and costs and
increase revenues and service delivery.

Organisations make decisions daily and need planning to implement such decisions. In
order to plan, knowledge of resources, time scales for implementation and possible
outcomes are needed. This knowledge comes from the information provided by information
systems.
 Systems form part of our daily lives. The school system, which you have moved through,
is possibly the most important system you have experienced. A world with no systems
would be a disorganised place. In this study unit, you will learn more about information
systems, and the role played by information systems and computerised information
systems.

This study unit (study unit 1) deals with the development of an information system and
different development lifecycles. The advantages and disadvantages of the different
development approaches are discussed in detail.

2 WHAT IS A SYSTEM?
A system is a set of two or more components that serve a common purpose and
interact to achieve a common goal. A system consists of subsystems or elements that
perform specific functions supporting the larger system (Booyse, NJ, et al: 2017).

The components of a system and the relationship among them can be explained as
follows:

Input Processing Output

FIGURE 1.1: The components of a system

Source: (Booyse, NJ, et al: 2017)

3 OPEN OR CLOSED SYSTEMS

Although systems operate within their environment, some systems have no effect on
their environment and do not affect the environment within which they operate.

A system that is isolated from its environment is called a closed system. An example
would be an automatic washing machine, where the dirty clothes, washing powder are the
input and the processing stage of the washing cycle would be the selection of a suitable
programme and the operating of the machine. The clean clothes are the output.

An open system interacts with its environment. The environment affects it and it, in turn,
affects its environment.

Most business systems are open systems. For example, a purchasing system, where the
purchase order requests comprise the input. The processing stage consists of
identifying the i tems and the quantities that should be ordered and the output comprises
placing the order with preferred suppl i ers. Feedback includes the communication of
order dates, quantities and del i very dates to the department that placed the order.
Observable activities explain how the job should be done. The performance standards
document explains the results that are expected for satisfactory performance of the system.
A system variable i s the quantity or item that can be controlled by the decision-
maker. The price a company charges for its products i s a system variable because it can
be controlled by the company, and they can decide to change the price.

A system parameter i s a value or quantity that cannot be internally controlled,

meaning i t cannot be changed by a decision-maker i n the company. An example is the
cost of raw material, as the suppl i er determines this cost.

This system is an open system and the external environment affects the system, for
instance, suppliers’ prices, the transportation of items and the availability of items to an
organisation.
4 SYSTEM PERFORMANCE MEASUREMENT
A system needs to be properly managed and controlled, like any other function in the
organisation. To ensure that the information system adds value and supports the
organisation the quality must be monitored.

System performance measurement is the monitoring of the working of the system to ensure
it is effective, fulfil its responsibility and make the contribution it is supposed to make.

5 REASONS WHY AN INFORMATION SYSTEM NEED TO BE REPLACED OR

IMPROVED
We have already stated that all business systems should be open systems and these
are constantly influenced by changes in the environment.

Typical changes include the following:

• Changes in technology: New technology can lead to new production processes
or communication methods by using new and better equipment, which will affect
the information system.

• Changes in decision-making policies: For example, decisions to centralise

decision-making and information systems, or to decentralise decision-making
and information systems, will lead to a need to replace, change, or improve the
existing information systems.

• Changes in the needs and demands of users and stakeholders: To improve

decision-making, the needs of the different users of information change
continually.

• Changes in the business environment: Organisations need to stay competitive in

an environment where the impact of an increasingly global market is enormous.

• Changes in the nature of the organisation: Changes in the activities of the

organisation; for example, more production lines or changes in production lines.
This may also occur when two organisations merge.

• Changes to maintain a competitive advantage: A constant flow of new ideas and

changes are necessary to stay ahead of the competition.

• Changes to improve performance and productivity: Re-design of business

processes and the information system to improve the performance and
productivity of the organisation.

• Depending on the impact of the change on the current system, a total redesign
might be required (this will be covered in study units 14–16), or modifications
may be made as part of system maintenance (covered in study unit 1f).
6 SYSTEMS DEVELOPMENT
System development initiatives arise from all levels of an organisation and are both planned
and unplanned. Managers and employees are all users of information systems and are
therefore part of the development process. Solid planning and managerial involvement help
to ensure that system development initiatives support the broader organisational goals. This
means even an information system that used state-of-the-art technology ten years ago
would now most likely be regarded as outdated.

Thus, information system development is the process of creating a new information system
or modifying a current information system. By employing information technology to develop
a system, problems or opportunities are transformed into solutions. Many reasons can be
given for this, but the most important is probably the rapidly changing technological
environment and the changing output needs of information systems (Booyse, NJ, eta al
(2017).

7 SYSTEM DEVELOPMENT LIFECYCLE

The development of an information system and meeting the needs of the business are
complex, difficult and expensive endeavours. The system development lifecycle is a
practical framework, which provides a broad context for the development stages of an
information system (Boczko 2007:830) There are various approaches that all have
advantages and disadvantages to the development of a new information system. Using
the SDLC approach has some advantages and disadvantages for an organization that
needs to be considered and kept in mind when developing the system. They are;

7.1 Traditional system development lifecycle (SDLC)

To overcome the complexity of a system development project and to improve the results,
the process can be divided into several steps. Setting a goal and the tasks for each step
will ensure the development of an effective and productive system.
An overview of a traditional SDLC:

7.1.1 Prototyping
The development of new software is very expensive. One way to cut this cost is to
build a scaled-down experimental version of the new information system
(Prototyping). Prototyping, also known as evolutionary lifecycle, means the end-
users can identify what they do not want as opposed to what they do want (Boczko
200f:8f5). The feedback of end-users can be used to improve the initial system
throughout the process until the system is finally complete.

Note: Prototyping can also be used as an implementation method in the design stage
of the traditional SDLC.

An overview of prototyping:
 Specify user needs and requirements

Develop initial prototype

Modify initial prototype

Accept/reject prototype

FIGURE 1.2 Overview of a traditional SDLC

7.1.2 Rapid application development (RAD)

Rapid application development is a system development approach where work-
shops and focus groups gather the requirements of the new system from the
end-users. This method speeds up development. RAD makes the adapting of
changes to system requirements easier and reduces paper-based
documentation. User participation is facilitated, and source code is
automatically generated.

7.1.3 End-user development lifecycle

End-user development is a process where end-users develop their own
applications, using existing appIication software, to soIve their information
needs.

8 ROLE OF ACCOUNTANTS AND AUDITORS IN THE SYSTEM DEVELOPMENT

The Systems Development Life Cycle (SDLC) is of interest to accountants for two reasons:
1) the creation of an IS represents a significant financial transaction that consumes both
financial and human resources. Systems development is like any manufacturing process
that produces a complex product through a series of stages. Such transactions must be
planned, authorized, scheduled, accounted for, and controlled. Accountants are as
concerned with the integrity of this process as they are with any manufacturing process that
has financial resource implications. 2) As a more pressing concern for accountants is with
the products that merge from SDLC. The quality of AIS rests directly on the SDLC activities
that produce them. These systems are used to deliver accounting information to internal
and external users. The accountant’s responsibility is to ensure that the system apply proper
accounting conventions and rules and possess adequate controls. Therefore, the
 accountants are concerned with the quality of the process that produces AIS. For example,
a sales order system produce by a defective SDLC may suffer from serious control
weaknesses that introduce errors into databases and ultimately, the financial statements.

The newly issued International Financial Reporting Standards (IFRS) have significantly
transformed the accounting process and the Accounting information Systems (AIS).
Confronting the changes in Information Technology (IT), using AIS appropriately is crucial
to derive accurate information from which to process business transactions and report
information in compliance with new IFRS (Nguyen T, Chen JV & Nguyen TPH (2021). In
the process of selecting a system to be used by an organisation, errors, omissions and
misrepresentations in the accounting for economic feasibility such as amongst others,
ensuring only escapable costs are used in calculations of cost-saving benefits; reasonable
interest rates are used in measuring present values of cashflows of proposed system;
should be of primary concern to accountants. However, in a study conducted by Christina
V, and Brahmanan SS (2021) to find a solution to the lack of good managerial performance
using management AIS (MAIS) and effort to prevent things from happening that weaken
the influence of the AIS on managerial performance, the result showed that role conflict was
able to negatively moderate the influence of MAIS on managerial performance. It is
important to clarify what the involvement of accountants should be.

8.1 Involvement of Accountants in System development

Accountants are involved in systems development in the following three ways:

• Accountants are users. All systems that process financial transactions impact
accounting function in some way. Like user accountants must provide a clear picture
of their problems and needs to the system professionals. For example they must
specify accounting techniques to be used; internal control requirements such as audit
trail and special algorithms such as depreciation models.

• Accountants participate in IS as members of the development team. Their

involvement often extend beyond the development of strictly accounting IS
applications. Systems that do not process financial transactions may still draw on
accounting data. The accountant may be consulted to provide advice or to determine
if the proposed system constitute internal control risk

• Accountants are involved in systems development as auditors. AIS must be auditable.

Some computer audit techniques require special features that must be designed into
the system. The auditor/accountant has a stake in such systems and must be involved
early in their design.

8.2 Involvement of accountants in conceptual design

The accountants play an important role in the conceptual design of the system. They must
recognize the control implications of each alternative design and ensure that accounting
conventions and legal requirements are understood. Although at this stage it need not be
 specified in detail, they should be recognized as items to be addressed during the construct
phase of the system. Furthermore, the auditability of a system partly depends on its design
characteristics. Some computer auditing techniques require systems to be designed with
built-in audit features. Such features require resources and need to be considered at
conceptual design.

9 AN INFORMATION SYSTEM (IS)

An information system is a set of interrelated elements or components that collect (input),

manipulate (process) and disseminate (output) data and information, and provide a
feedback mechanism to meet an objective. Is used as an organised way of collecting,
processing, managing and reporting information for informed decision-making to
achieve goals (Booyse NJ, et al:2017).

Business firms and other organisations rely on ISs to carry out and manage their operations,
interact with their customers, suppliers and compete in the marketplace. An information
system (IS) is a formal, sociotechnical, organisational system designed to collect,
process, store, and distribute information. It is an integration of components for collection,
storage and processing of data where the data is used to provide information, contribute to
knowledge as well as digital products that facilitate decision making. As such IS inter-relate
with data systems on the one hand and activity systems on the other. From a
sociotechnical perspective, information systems are composed by four components which
are tasks, people, structure (or roles), and technology.

Some authors make a clear distinction between information systems, computer systems,
and business processes. Information systems typically include an ICT component but are
not purely concerned with ICT, focusing instead on the end-use of information technology.
Information systems are also different from business processes. Information systems help
to control the performance of business processes.

10 THE ROLE OF INFORMATION SYSTEMS IN ORGANISATIONS

Information systems are the heartbeat of any organisation. According to Booyse NJ et

al. (2017), information systems assist organisations with fulfilling certain functions.
Organisations that use an information system that do not meet all users’ requirements
have a definite competitive disadvantage in the market. Therefore, organisations need
to adapt their information system constantly, using the latest technology, upgrading the
existing system, or acquiring a new system. The SDLC will lead them through this
process. One of the advantages of using an SDLC model is that a project can be
managed properly. It is therefore possible to ensure that the organisation makes the
necessary progress. However, SDLC models do not guarantee that each step is
completed successfully before the next one is started. If one of the steps were neglected,
it will have a negative effect on the next step and the final result.
Information systems also assist the organization to fulfil the following:

• Planning
For long-term (strategic) planning, management needs historic information on annual
profit to determine growth. information on the needs of consumers is also required to
enable management to set real istic objectives. Information on available resources,
markets, possible outcomes of scenarios, suppliers and l ots more i s needed to do short-
term (operational) planning. information systems provide this information and assist with
the daily tasks of management.

You will learn more about strategic and operational planning in Principles of management
accounting (MAC2601) and Principles of strategy, risk & financial management
techniques (MAC2602).

• Recording transactions
Transactions are recorded to use as evidence, thus meeting legal requirements and to
assess profitability. An information system is used to capture and process these
transactions. You will learn more about the practical application of this n Practical
accounting data processing (AIN2601).

• Decision-making
One of management’s daily tasks is to make decisions and choose between alternatives.
If relevant information is available, it will reduce uncertainties and support the decision
maker in selecting an option. An information system supports the decisions taken by
management.

You will earn more about the information required to make decisions in Principles of
management accounting (MAC2601) and Principles of strategy, risk & financial
management techniques (MAC2602).

• Control an d performance measurement

Plans and objectives are put in place to enable management to measure performance.
Management must ensure that plans are executed and the objectives are met. information
on the different business units and the business is required to control and monitor
performance and to take corrective act on. You will learn more about management s role
in decision-making in Principles of management account ng (MAC2601).

• Hardware (Discussed in detail i n , study unit 3)

• Software (Discussed in detail i n study unit 3)

• Telecommunication, networks and the internet (Discussed in detail in study unit 3)

 • People (Discussed in detail in study unit 3)

People need to interact with the computer to enter data and retrieve information.
People run, manage and maintain a system and are the most important element in
a computerised information system.

• Procedures (Discussed in detail in study unit 3)

Policies, methods, rules and strategies for using the system are necessary to ensure
order and control.
Poorly developed and inadequate implementation of procedures will waste time
or result in wrong decisions.

• Databases (Discussed in detail in study unit 3)

A database comprises facts and information, organised and stored in two or more
related data files.
A database contains information on sales, purchases, inventories, employees,
customers and much more.

10 A computerised information system process

The following diagram illustrates the computerised information system process and the
relationship between the different stages

Activities Input of Processing Output of Making

data information decisions

Store data or
information

FIGURE 1.3: The computerised information system process

11 Organising the IS department

There are different ways for organising an IS department. Accordingly, the organisation
could centralise, decentralise or outsource the IS department. The organisation will
need to consider the most efficient way to organise the IS department.

11.1 Centralisation of an IS department

 A centralised IT department means that IS staff and functions are situated in a single
Iodation such as the head office.

11.2 Decentralisation of the IS department

A decentralised IS department means that IS staff and functions are distributed
throughout the organisation, with every regional office or business unit usually having its
own IS department.

11.3 Outsourcing of an IS Department

The IS function does not necessarily need to be performed by a department within the
organisation itself. It can also be outsourced to an external service provider and
monitored by means of a service level agreement. The responsibility for maintaining the
service level agreement can be assigned to an individual within the organisation.
Outsourcing the information system means obtaining some or aII activities of the
information system from an external service provider to handIe all or parts ofthe
data capturing and processing at a predetermined annual rate, rather than developing
the organisation’s information system internally.

The following three outsourcing models that can be used:

11.3 1 On-site outsourcing: This is when the service provider provides the
resources or facilities at the organisation itself.

11.3.2 Off-site outsourcing: This is when the service provider provides the
service at a location other than at the organisation itself.

11.3.3 BIended outsourcing: This refers to a combination of on-site and off-

site outsourcing.

A c t i v i t y 1.1

Go to your e-tutor site and complete this activity.

Why will an organisation have an advantage over its competitors if its information system
can produce information about sales figures, product availability and client requirements
faster than its competitors can?

Is your office supported by an in-house (on the premises) IS department or is the IS

department located at the head office (central point)? Why do you think this is the case?
If you are not currently employed, ask someone who is, about his or her organisation.
Go to the Discussion forum for study unit 1 and discuss this with your fellow students.
12 SUMMARY
Information produced by information systems, forms the basis for major day-to-day
decisions. People and organisations use information systems to help them achieve their
goals. To use information systems effectively, it is essential for individuals to understand
them in order to perform their daily tasks.

Computerised information systems are essential for today’s organisations as they process
information more accurate y and much faster. That is also the reason why an accounting
information system have become an important component of any successful business.

The next study unit (study unit 2) deals with types of information systems.
 S T U D Y U NIT 2

Application and Types of Information

systems

1 Introduction
Information system is a system that handles the flow and maintenance of information which
supports the business operations. The components of IS are people, equipment,
procedures, and data. IS are used by organisation for different purposes.

2 Accounting Information System (AIS)

As already provided the role of accountants is to produce financial statements that is

reliable, timely, complete, and understandable with quality characteristics, (Vladimir: Z:
2020). According to Trinandha, A. , Ghozali, I. , Fuad (2018), in addition to providing a
positive impact on speed and accuracy of financial statement presentation, the use of AIS
also has the risks that can provide opportunity for the users to misuse the system. Cheating
through the information technology allows criminals to fastly gain more benefits (Romney,
1976; Lynch & Gomaa, 2008). Given the large impact on computer-based accounting fraud,
it is important to examine the factors of AIS’s usage on the attention of AIS’s misuse
(computer acounting fraud). The researches on the risks and threats of AIS have been
widely conducted and the result shows that both risks and threats can happen (Loch et.al,
1992; Davis et.al., 1996; Henry, 1997; Dhillon,1999; Musa, 2006; Hanini, 2012; Muhrtala &
Ogundeji, 2013; Aleksandrova, 2016). Likewise, the research on computer related-fraud
(Thompson,1998; Haugen & Selin,1999; Dhillon,1999; Seetharaman,2003; Lee & Lee,
2002) indicates the presence of unauthorized misuse or interference on computer usage
results in computer-related fraud. This will be dealt with later in the study guide, in topic 4.

3 Application of AIS

In a research conducted in Indonesia aimed to analyse the local government accounting

information system by Kurniati, P.S., Suryanto (2021), the application of accounting
information systems is able to produce useful local government financial statements for
users in assessing accountability and making decisions in both economic, social and
political decisions. However, in its implementation even though there is an accounting
information system, there is still overlap in the use of the accounting base. This research
adds to the accounting information system literature and is important in measuring the
application of government accounting standards. Generally, AIS has an impact and effect
in any areas of the business.
 There is a significant positive effect between AISs (relevance, reliability, timeliness,
understand ability, completeness, and verifiability) in enhancing the efficiency of internal
control and attention should be paid more when performing an interal control (Alrabei, A.M:
2021). In addition, there is a relationship at a significance of the effect of the elements of
AIS on the organisational culture. Also, that (1) the hardware and software used in the AIS
are the best and the latest currently available, and (2) the AIS provides financial information
with a high predictive power which assists the users of the system. Furthermore, the proper
understanding of organisational culture leads to the improvement of work quality. In this
regard, the organisational culture regulates and strengthens employees' efforts on the
company's target track. Therefore, in order to improve quality AIS, companies must employ
highly skilled and competent professionals and accountants which have appropriate
academic qualifications to generate financial information (Jarah, B.A.F., Almatarneh,
Z:2021).

4 Accounting information system implementation under Enterprise Resource

Planning (ERP) and successful decision-making
AIS implementation under Enterptise Resource Planning (ERP) and successful decision
making indicates that firstly AIS implementation under ERP has a positive effect on useful
information, and successful decision-making. Secondly accountant competency positively
affects useful information. Thirdly the model's influences of AIS implementation under ERP
and accountant competency on useful information, and successful decision-making (Lata,
P:2021)

5 Why study an accounting information system?

A career in accounting or auditing will challenge you to evaluate the reliability and accuracy
of the information from an accounting information system (AIS). In order to do so you will
need to understand the development, operation and control of the system and be able to
identify the strengths and weaknesses of the system.

6 COMPUTER INFORMATION SYSTEM (CIS)

People can use a computerised information system to gain access to meaningful

information. An example of a computerised information system is an ATM machine.

A computerised information system is a set of hardware, software, teIecommunication,

peopIe and procedures that is used to coIIect, store and process data into information.

A computerised information system consists of different components.

Components of a computerised information system

Hardware Software People Procedure Databases

s
 FIGUR 2.1:The components of a computerised information system

It is a system that is composed of people and computers that processes or interprets

information. The term is also sometimes used to simply refer to a computer system with
software installed.

As indicated by Abdulle, A.S , Zainol, Z. , Ahmad Mutalib, H. (2019), information,

communication and technology (ICT) adoption has increased dramatically over time
irrespective of organisations, be public or private, profit or not for profit organizations around
the world. No doubt that ICT investment will spur economic growth as studies done by many
countries. The African Union Agenda 2063 has acknowledged the importance of digital
inclusivity for African countries to be on par with the rest of the world as an information
society. African nation and Somalia in particular still have some challenges to deploy ICT
on the concern of availability, accessibility and affordability. Nevertheless, in a business
environment where businesses compete in the highly fragile market, ICT modernization in
all business processes including accounting is a crucial tool for continuous improvement
towards competitive services offered to customers. The implementation and adaption
computerised accounting systems (CAIS) for any organisation such as SMEs will enable
the management and owners to improve decision-making, internal controls and financial
information, as well as enable financial reporting to be designed and processed on a
standardized format and timely. It was reported that the use of inefficient information to
support financial decision making and poor quality and reliability of financial information
were part of the major SMEs challenges.

7 Types of IS and Functions

a. Transaction Processing System (TPS)
It serves the people in the operational level of an organsation. It collects and stores
information about transactions and controls some aspects of transactions. A sale of an
item in the store is an example of a transaction.
b. Knowledge Work System (KWS)
It is used by technical staff as model functions to convert design specifications into
graphical design. It uses Computer Aided Design/ Manufacture (CAD/CAM).
c. Office Automatic System (OAS)
It serves those that belong to the knowledge level of an organization. The system helps
individuals in the processing of personal and organizational data. Perform calculations
and create documents e.g. word processing, spreadsheets, file managers, personal
calendars, presentation packages.
d. Decision- Support System (DSS)
It helps the strategic management staff (senior officers) in making decisions. The
system uses information, models, or analysis tools in order for managers to make
simulations and prediction. Example of DSS is the 5 year investment plan.
e. Management Information System (MIS)
It serves the management level of the organisations. The system condenses and
converts the TPS data into information for purposes of monitoring performance and
 managing the organisations. Transactions that were recorded in the TPS are analysed
and reported by a MIS. Example of an MIS output is the budget report.
f. Executive Support System (ESS)
It serves the strategic level of an organization. A system provides top-level executive
of a readily accessible, interactive format to get the overview of the entire organisation’s
performance.

A c t i v i t y 2.1

Go to your e-tutor site and complete this activity.

Discuss the implications of outdated software of an AIS on the organisational culture.

Illustrate this with an applicable example.

Which of the components of the computerised information system will be severly

impacted by the evolving digital trends in the near future and why?
Go to the Discussion forum for study unit 2 and discuss this with your fellow students.

8 Summary
The information systems play a pivotal role in the success of the organisation, especially
relating to the correctness of its application. Particular attention should be applied to the
relationship between AISs and the internal control function within the organisation. The
implementation of an AIS also affects the information under an ERP environment in relation
to successful decision-making.
The components within a computerised information system are critical to its effective
functioning. In addition, there are various types of information systems, which need to be
acknowledged along with their specific functions. A thorough understanding of these
systems and functions will prove useful in the management of business information
systems.
The management of business information systems will be covered in study unit 3.
 S T U D Y U NI T

Management of Business
Information Systems
In this study unit

What is information? Uses and users of information

Definition Internal users External users

The information
creating process

The characteristics
of information

1 Introduction

We are living in the information age where information is everywhere. No organisation

can function without information. It is one of the key elements in the support of any
business process and forms the basis of an organisation’s future planning and decisions.
Information Systems (IS) are used to process financial accounts, to manage human
resource and to reach their potential customers with online promoters. From the two
previous study units we have established that no organisation can function without
information. Thus, understanding the impact of information and effectiveness of IS on
an organisation is crucial in running a successful business. Such an understanding helps
managers to ensure that their organisation stays on track in a continuously changing
environment.

The most obvious reason for processing data is to reduce uncertainty and therefore most
organisations value information as a strategic asset (Booyse, NJ et al. 2017). In this
study unit, we look at information, the characteristics of information as well as the uses
and users of information.

2 What is information?

Information is derived from data or raw facts that represent real-world elements. To
understand information, it is important to first look at the term ‘‘data’’.
 Data are the raw materiaI available for processing into information. Data consists of
numbers, letters, symbols, raw facts, events and transactions, which have been
recorded but not yet processed into a form that is suitable for making decisions (ACC-
ACCAKP_BT, 2021:77).

2.1 Types of Data

According to ACC-ACCAKP_BT (2021:77) there are several types of data that an

organisation may gather:

• Quantitative data is that which is capable of being measured numerically, e.g. the
standard labour hours required to produce one unit of output.
• Qualitative data is not capable of being measured numerically but may reflect
distinguishing characteristics, e.g. the grade of labour used to produce the unit of
output.
• Data is said to be discrete when it can only take on specific fixed values, e.g. the
actual number of vehicles through a car wash per day could be 35 but not 35.3.
• Continuous data takes on any numerical value and we could, in an eight hour day,
measure the throughput of cars as 4.375 per hour, i.e. 35 cars/8 hours.
• Primary data is collected for a particular enquiry, for example by observation,
employees would be observed performing a ‘value adding’ activity when
establishing a standard time for the activity.

Therefore, Information is a set of facts or data organised and processed in such a way
that it provides additional value beyond that of the facts themselves. In other words,
information is data that have been processed in such a way as to be meaningful to the
person who receives it. This information provides knowledge that leads the user to make
decisions.

2.2 Information required for modern business

IS produces information to satisfy the needs of both the management and operating
subsystems, as well as the need of parties external to the organisation. This information
reflects the internal actions, environmental and sociological interests as well as political
and financial trends. It must represent what has happened, what is happening and most
importantly what will happen.

In a business environment, the creation of information for decision-making can be

illustrated as follows:

Activity Data Information Knowledge Decision-

making

FIGURE 3.1:The creation of information

 Example: Depicted in creation of information

Sale took place

Data are the number of sales for all

the days in the year

Information are these numbers processed in totals

per month and per year

Knowledge is recognising which month and areas are best

for business

Management makes decisions on where to focus and where to

discontinue the business

FIGURE 3.2:The creation of information (example)

2.3 The characteristics of information

According to ACC-ACCAKP_BT (2021:79-80) when using information for decision-

making purposes, it should comply with the characteristics described in the table
below:

Characteristics Explanation
Accurate Information should be sufficiently accurate for its intended purpose
and the decision-maker should be able to rely on the information.
Complete The more complete information is, the more reliable it will be.
Cost The information should not cost more to obtain than the benefit
derived from it
Understandable User friendly information is much more readily acted upon.
Relevance The information provided should concentrate on the essentials and
ignore trivia.
Adaptable Information should be tailored to the needs and level of understanding
of its intended recipients.
Reliability Information is reliable if one can depend on it. Reliability depends on
the source of information. A rumour is not reliable.
Timely Information should be delivered when it is needed. Information that is
out-of-date is a waste of time, effort and money.
Easy to use Information should be clearly presented and sent using the right
medium and communication channel. Information should not be
overly complex and should be supplied in the required format. Too
much information or information in the wrong format leads to difficulty
in determining what is important.
3 The uses and users of information

The users of information can be both internal and external users. These users of
information, both internal and external, first need to be identified before decisions on
information needs can be made. Such users need information in order to perform a
specific task or make specific decisions.

Internal users may need information for future planning and forecasting, for measuring
performance or for control in the organisation or about specific processes. External
users, such as investors or financiers, may need information on the performance of the
organisation for possible future investment, while clients may need information on
products and services.

According to ACC-ACCAKP_BT (2021:77) Information is vital to an organisation and is

required both internally and externally. Management requires information:
• to provide records, both current and historical
• to analyse what is happening in the business
• to provide the basis for decision-making in the short and long-term
• to monitor the performance of the business by comparing actual results with plans
and forecasts.
This can be illustrated as follows:

Users of information

Internal users External users

FIGURE 3.3: The user of information

3.1 Internal users

Internal users use information to assist them in performing their daily tasks. This
information can be from an internal or an external source. Internal users and the
information needed by them are the following:

• Financial managers: Financial managers need information on the financial

performance of the organisation to make decisions on cash flow and financing.
Hence, management financial statements are an internal source of information.
Financial managers also need external information on possible sources of finance
to make financing decisions.

• Production managers: Internal information on sales quantities and sales

forecasting is needed to control and plan the production process. Production
managers use external information on new technology and production processes to
improve the performance of the department.

• Staff managers: Staff managers use internal information on qualifications needed

and salary levels. External information on employees and their qualifications should
also be available to place employees in appropriate jobs.
 • Marketing managers: Internal information needed relates to products, target
markets and prices to make decisions on possible promotions and advertising
methods.

• Sales managers: Internal information is needed on production costs and all

overhead costs to make decisions on sales prices. External information on clients
and their spending patterns is used to approach the clients and determine opening
times for retail outlets.

• Purchase manager: Internal information is necessary on the quantity of the various

products or raw material needed by the production department. The purchase
manager also needs external information on suppliers and prices to make informed
decisions on the best quality and prices.

3.2 External users

Users outside the organisation may also need information from internal and external
sources for various reasons. Financial statements form one of the most important
sources of information in this regard. According to ACC-ACCAKP_BT (2021:78)
information will be used by various third parties, including:

• the shareholders or owners – who will want to know how their investment is
performing

• customers and suppliers – who will want to know how stable the business is and
therefore whether it will be a reliable trading partner

• Government agencies – The most important need for information by the government
is for use by the South African Revenue Services (SARS). SARS needs internal
financial information to determine the tax liability of the organisations

4 Structure of organisation IS

Information Systems consist of three layers as follows:

• Operational support: which forms the base of an IS and contains various
transaction processing systems for designing marketing producing, and delivering
products and services

• Support of knowledge work: forms the middle layer and contains subsystems for
sharing information within an organisation.

• Management support: contains sub-systems for managing and evaluating an

organisation’s resources and goals

5 Business information system

A business information system obtains data and other resources of IT Infrastructure as

input from environment and process them to satisfy the information needs of different
entities associated with business enterprise. While individuals use business productivity
software such as word processing, spreadsheets and graphics programs to accomplish
a variety of tasks, the job of managing a company’s information needs, fall to
 management system users, hardware, and software that support decision-making. IS
collect and stores the company’s key data and produce the information managers need
for analysis, control and decision making. For example, factories use computer-based
IS to automate production processes and order and monitor inventory. Most companies
use them to process customer orders and handle billing and vendor/supplier payments.
Banks use a variety of IS to process transactions such as deposits, ATM withdrawals
and loan payments. Most consumers’ transactions also involve IS when checking out at
supermarket, booking a hotel room online, or downloading music over the internet. IS,
record and track the transaction and transmit the date to the necessary places.

While MIS can be used by any and every level of management, the decision of which
system to implement generally falls upon the Chief Information Officer (CIO) and Chief
Technology Officer (CTO) These Officers are generally responsible for the overall
technology strategy of an organisation including evaluating how well technology can
help their organisation. They act as decision makers in the implementation process of
new MIS. This means that once decisions have been made, the IT director including
MIS director oversee the technical implementation of the system. They are also in
charge of implementing policies affecting MIS. These are either new specific policies
passed down by the CIO and CTO or policies that align the new systems with the overall
IT Policy. It is also their role to ensure the availability of data and network services as
well as security of the data involved by coordinating IT activities.
On implementation the assigned users, will have the appropriate access to relevant
information. Notwithstanding, not everyone is inputting data into MIS necessarily need
to be at management level and it is common practice that inputs to MIS are done by
non-managerial employees. However, they rarely have access to the reports and
decision-making support platforms offered by these systems.

6 Management information system (MIS)

MIS provides information which is needed to manage organisations efficiently and

effectively. Management information System (MIS) collects data from different company
units and functions. Some data however, is collected on its own through connected
computer counters and remailing data entered into the system periodically. Reports are
generated on intervals and can also be obtained on-demand using built-in query
language. The role of MIS is described and analysed considering its capability for
decision-making. The decision-making process and its impact on top level management
in a business organisation is explained with an emphasis on automated decision-
making. MIS is concerned with processing data into information which is then
communicated to various Departments in an organisation for appropriate decision-
making. MIS are distinct from other information systems as they are used to analyse
operational activities in the organisation. Organisations still need different types of MIS
serving various organisational levels, functions and business processes.

7 Objectives of MIS

a. To provide an overview of the information requirements of an organisation.

b. To analyse the role of management and its dependency on information.

c. To discuss the role of information in the decision making process.

d. To identify the need for information in the day-to-day operations of the organisation.
8 Advantages of using MIS

The following are some of the benefits that can be attained using MIS:

a. Improve an organisation’s operating efficiency, add value to existing products

engender innovation and new product development, and help managers make
better decisions.

b. Companies can identify their strengths and weaknesses due to the presence of
revenue reports, employee performance records amongst others. Identifying these
aspects can help a company improve its business processes and operations.

c. Giving an overall picture of the company.

d. Acting as a communication and planning tool.

e. The availability of customer data and feedback can help the company t align its
business processes according to the needs of its customers. The effective
management of customer data can help the company to perform direct marketing
and promotion activities.

f. IS can help a company gain a competitive advantage

g. MIS reports can help with decision making as well as reduce downtime for
actionable items.

9 Disadvantages of using MIS

These are some of the disadvantages:

a. Retrieval and dissemination are dependent on technology hardware and software.

b. Potential for inaccurate information.

Activity 3.1

Go to your e-tutor site and complete this activity.

Twenty-five employees from the finance department of a large organisation took an

introductory course in Computing. The test at the end of the course resulted in the marks
shown below. The marks were out of 50 and the pass mark was 20 out of 50.

12 19 8 21 32

25 34 22 30 20

43 21 16 45 32

27 38 39 21 18

33 11 28 26 27
At the moment, this data is simply not useful.

To give it meaning, you are required process it and turn it into information.

Application - SPCE

SPCE is a manufacturing organisation that manufactures specialist portable

communication equipment. In recent years, the development of new technology such as
wireless mobile telephones, infrared thermal imaging and global positioning has allowed
competitors to create new products. The market for such equipment has
– at the same time – grown significantly in the private and public sectors. Accordingly,
SPCE recognised that its market share is decreasing and that it does not know as much
about its competitors and the needs of its clients as it should.
Required:

As the management accountant of SPCE, you are required to advise the board on what
internal and external information it needs in order to solve the problem that SPCE is
facing.
Go to the Discussion forum for study unit 3 and discuss this with your fellow
students.

10 Summary

Information is a key resource within the organisation and forms the basis of decisions
made by internal users such as management and external users such as customers and
suppliers. It is essential to keep the characteristics of information in mind when collecting
information and to ensure that the information obtained is useful.
 STUDY UNIT 4

Technology concepts of hardware,

software, telecommunications,
database management and office
automation
In this study unit

HARDWARE SOFTWARE DATABASE TELE- OFFICE

MANAGEMENT COMMUNICATIONS AUTOMATION

1 Introduction
As indicated in previous study units, technology is revolutionising how work is done in
the office and organisational setting. The emergence of many technical devices to
support people’s lives indicates that information technology (IT) is developing rapidly
and becoming increasingly advanced in the current era of globalisation (Putri, Ardiany
& Meyla 2015). Providing accounting information for management and administration is
the basis for economic and executive decision-making in businesses as well as related
fields, such as state management agencies, business partnerships, and investors,
where an accounting information system (AIS) plays a significant role (Hien, Hung,
Huong, Ha, Trung, Thang 2020). One problem that often appears from IT development
is the reduced use of human labour. This is because work is being done by machines or
systems that have been programmed with very little error rate. Thus, work is done far
more effectively and efficiently than humans ever could. Even so, the role of accountants
cannot be eliminated within a company, as they are needed in preparing the AIS so that
the system is arranged under applicable regulations. For big companies, accounting
services are not needed as much as during the era before the development of IT;
nowadays, companies only need accountants as systems operators who will input
financial data, while data processing is computerised. Although ample workforce is
available, it cannot be absorbed by industries as the expertise of the workforce is not in
 accordance with what is needed. In this regard, government needs to provide education
or training for workers in order to obtain the required skills. Without exception, these
developments also penetrated the field of information and various aspects of
organisations’ activities (Putri et al 2015). Thus, to possess traditional accounting
knowledge is necessary; however, it is no longer sufficient for an accounting information
professional. This means that one must also understand information system design,
development, and application and be able to integrate these two bodies of knowledge
within complex organisation settings.

According to ACC_CIMA_E1 (2021), the emergence of new advancements in

technology allows organisations to do much more than they have in the past. However,
many organisations are struggling with the pace of change, constantly having to react
rather than lead with technological innovation. Several factors influence the extent and
the pace of technology adoption by organisations. These include:

• Technical feasibility
• Cost of developing, implementing and maintaining the new technology
• Economic benefits of the new technology
• Availability of labour skills to implement and use the new technology
• Regulatory and social acceptance

By implementing an up-to-date and flexible IT infrastructure, the organisation can

manage many of these factors – enabling technical feasibility, minimising costs and
maximising the economic benefit as well as having the appropriate labour skills present,
thus allowing them to embrace new technologies and opportunities they present.
Enabling transformation technology is no longer viewed mainly as a vehicle for improved
productivity but is seen as a key component of business transformation.

2 The role of accounting information professionals in business transformation

Nowadays, accountants in the digital economy and globalised world need digital
competence in soft skills more than technical or hard skills. It was found that accounting
students had sufficient digital competence, but were lacking in digital content creation
(Kongpradit, Teepjatupon & Iqbal 2020). Evidently, information currently available is
immeasurable and growing exponentially. Similarly, data processing is changing
radically. Thus, accounting is accompanied by constant technological innovations, and
in the latest wave of technology, software solutions are emerging and a large number of
routine tasks have been automated (Monteiro & Oliveira 2022).

However, while much of our daily working life has been digitalised, it is by no means
fully automated. Several issues such as programming cost, lack of skill, or project
complexity hinder the implementation of fully automated integrated solutions using
enterprise software or business process management systems. Hence, many tasks sub-
processes are still performed manually despite obvious automation potential. Robotic
processes automation (RPA) is a fairly new technology to automate these digital yet
manual tasks by only accessing the presentation layer of IT systems and imitating
human behaviour. Due to the novelty of this approach and the associated lack of
knowledge about the execution of RPA projects, up to 50% of RPA projects fail (Herm,
Janiesch, Steinbach & Wüllner 2021). Finance and accounting are leading areas for the
 implentation of RPA. Next to other technologies, RPA is a core driver of this digitalisation
of accounting (Langmann & Kokina 2021). In this regard, RPA is seen to be changing
the work of accountants and their role in their organisations’ digital transformation and
categorising the skills and competencies they will need to develop in order to
successfully work along their digital colleagues. It was revealed that accountants play
an important role as identifiers, explainers, trainers, sustainers and analysers of their
organisation’s automation initiatives. To prepare to undertake these five roles they will
need to acquire new technical skills (Kokina, Gilleran, Blanchette & Stoddard 2021).

The study conducted suggests that accounting students’ digital competence must be
promoted and advanced, both at curricula and institutional levels (Kongpradit,
Teepjatupon& Iqbal 2020). Thus, it was found that the current plans of accounting
degrees need to be changed urgently to ensure that accounting professionals acquire
the appropriate skills, such as knowledge of operational systems, linguistics and an open
mind, without which the future of accountants can be called into question in view of the
introduction of RPA and the consequent threats and opportunities this poses(Monteiro
Lopes, & Oliveira 2022).

In this regard, accounting information experts are required to integrate accounting

knowledge with a strategic perspective in order to facilitate the specification of
Information Systems (IS) requirements. Working as a member of a design development
and implementation group, it is crucial to understand IS development tools. If the
accounting information expert does not appreciate the technological possibilities and
constraints, the necessary assistance cannot be provided to management as they strive
to respond to a dynamic market environment (Dillard 2000).

3. Information system (IS)

An information system (IS) is a work system whose activities are devoted to capturing,
transmitting, storing, retrieving, manipulating and displaying information. A work system
is a system in which humans or machines perform processes and activities using
resources to produce specific products or services for customers. IS specifically aims to
support operations, management and decision-making. In support of the business
processes, IS reflects the way people interact with the information and communication
technology (ICT) that an organisation uses to manage the business.

Computerised information system (CIS) is a system that is composed of people and

computers that process or interpret information. The term is also sometimes used to
simply refer to a computer system with software installed. Traditional systems and office
practices quickly become employee mistakes and are doomed to extinction. The
introduction of new and seamless technologically advanced tools improve efficiency,
save on costs and enhance quality. For example, e-mail communication has taken the
place of memos, shared drives have kicked cabinet filing out the window and employee
timesheet stamping has been rendered useless by biometrics.

Academically, IS has a specific reference to the complementary networks of computer

hardware and software that people and organisations use to collect, filter, process,
create and distribute data. An emphasis is placed on an information system having a
definitive boundary, users, processors, storage, inputs, outputs and the aforementioned
 communication networks.

4 Components of information systems

The main components of IS are computer hardware, software, telecommunications and

databases. The hardware and software constitute information technology (IT), which is
organised in the operations and management of an organisation. Increasingly, computer
and storage services are delivered from the cloud from share facilities accessed over
telecommunications networks.

5. Difference between hardware and software

Hardware consists of all machinery and equipment in a computer system. The hardware
includes, among other devices, the keyboard, the screen, the printer and the “box” – the
computer or processing device itself. Input hardware consists of devices that allow
people to insert data into the computer in a format that the computer can use.

Computer hardware refers to the physical parts of a computer system. Computer

hardware can be classified in many ways. One way of classifying computer hardware is
to divide it into internal and external hardware devices. Internal hardware devices, also
referred to as components, include the motherboard, central processing unit (CPU),
random access memory (RAM), hard disk drive, and the BD/DVD/CD (optical disc) drive.
External hardware devices, also referred to as peripheral devices, include the monitor,
keyboard, mouse, speakers, printer and scanner.

Software consists of all the electronic instructions that tell the computer how to perform
a task. These instructions come from software developed in a format (such as CD, or
compact disk, or an internet download) that will be acceptable by a computer. An
example is a subscription cloud-based service such as Microsoft 365, formerly Office
365 (rebranded in 01 April 2020 and launched on 10 July 2017). Microsoft 365 is suitable
for individuals, businesses of all sizes and types, and educational institutions. Microsoft
365 is designed to help meet any organisation’s needs for robust security, reliability and
user productivity. It is a suite of various intelligent office applications (apps), such as
Word, Powerpoint, Excel, Outlook, Access Publisher Teams; cloud storage; and other
features such as OneDrive, and Teams that helps users to remain connected and gets
things done. These apps can be used across multiple operating systems like Windows,
macOS, Android, and iOS.

5.1 Acquisition or development of software

This refers to the acquisition of software already identified according to the specifications
set in the design stage.

Application software can be acquired by purchasing it from external developers or by

developing it in-house; this is usually referred to as the make-or-buy decision. However,
when it comes to software that serves more specialised needs, it might be better to
create new software that fits those specific needs, such as a financial system.

Off-the-shelf software is software that can be purchased commercially. It typically

requires some configuration so that the software package is tailored for the specific user.
 Thus, off-the-shelf software packages, such as word processors and anti-virus
packages, can be sold to many users. Off-the-shelf software may offer significant
savings in that the initial cost may be lower because the software development has been
spread over many customers. Moreover, the quality of the product is likely to be high
because the developers have been able to test and fix program bugs and glitches as
they are reported by users. However, it may happen that the software lacks certain
important features.

In-house developed software cannot be purchased commercially. As the name

indicates, the software needs to be developed in-house, which will result in a one-of-a-
kind program for a specific application. One advantage of having software developed in-
house is that the users can get exactly what they want. However, it takes time to develop
and test the new software and is usually more expensive than off-the-shelf options.

There are few circumstances when it makes sense to create software, as it can be very
expensive, and the benefits do not always justify the risks or costs.

5.2 Comparison of off-the-shelf software and in-house developed software

Factor Off-the-shelf (buy) In-house (developed)

Needs Might not match needs exactly Software should match your needs
exactly
Cost Cost of buying prewritten Higher cost
packages is lower
Time Time spent on development will be Can take years to develop a
drastically reduced, as the system to suits your needs
software can be acquired
straightaway
Quality Usually high quality Quality can vary depending on the
programming team
Competitive Other organisations can have the Good software can create a
advantage same software and the same ad- competitive advantage
vantage

6 Database management system

Evidently, the volume of data shared across enterprises is rapidly increasing, making it
difficult to manage. A database management system (DBMS) is a program or coIIection
of programs that enables a user and applications to store, modify, and extract
information from a database. Different types of DBMS exist, from a small system that
runs on a personal computer, to a giant system that runs on a mainframe. Microsoft
Access is an example of such a program.

Requests for information from a database are made in the form of a query, which is a
question. The set of rules for making queries is known as a query Ianguage. Each
different DBMS uses a different query language. One semi-standardised query language
is called SQL (structured query language). Complicated languages for managing
database systems are called fourth-generation languages or 4GLs.

The information from a database can be presented in various formats. Most DBMSs
 include a report writer program, including a graphics component, which enables a user
to obtain output data or information in the form of a report together with charts and
graphs. Examples of mainframe database applications include a computerised library
system, a booking reservation system and a computerised inventory system. This can
be seen in programs provided by SAP or Oracle.

Database management software (DMS) is one of the solutions that allows organisations
data accessibility and simplifies the process of document management. Thus, a
database software is a utility or software program developed to create, edit, store,
search, extract, automate, and maintain database files and records. DBMS helps users
to manage data in the form of fields, columns and tables. Simply defined, DBMS stores
data in an organised manner in a web application.

6.1 Benefits of using database software

A capable database helps organisations to enhance their access to heaps of data

generated regularly in a faster and more accurate manner. Database software is mainly
used in data analytics and presentation, for multi-user access controls, and data
security. In summary, the benefits are the following:

1. Reduced data redundancy

2. Efficient data integration
3. Consistent and compliant data
4. Data security
5. Backup and recovery
6. Privacy
7. Quicker decision-making

Database and telecommunication systems require a mix of hardware and software. As

such, acquiring hardware and software also applies to a database system and
telecommunications hardware and software (Booyse et al 2017).

7 Telecommunications

The Collins Dictionary defines telecommunications as the technology of sending signals

and messages over long distances using electronic equipment such as telephony, radio,
cable, television, and computer networks. On the other hand, a telecommunication
system is a special system for communicating at a distance where a device refers to the
exchange of information by an electronic and electrical medium over a significant
distance.

A modem connects to the internet and a router connects devices to WiFi. To wirelessly
connect multiple devices, both a modem and wireless router are needed. The modem
decodes and codes the information being sent and received through phone or fibre optic
lines. On the other hand, the router provides wireless network and additional safety
features. Modem and router combo (2-in-1) devices, known as wireless gateways, have
the technology incorporated to perform both.
 Most people use the terms modem and router interchangeably, thinking that they are
the same as telecommunications devices. This is because they look similar: rectangular
boxes with blinking lights that somehow connect to the internet. However, they are not
the same – they use different technologies and work differently.

Modem: Modem devices (modulator and demodulator) are networking devices that
communicate with the internet through a broadband connection provided by an internet
service provider (ISP). They are used to convert signals into the appropriate language
needed for information to travel through a telephone line or fibre optic cable, depending
on the type of internet used. They act as translators when sending or receiveing
information: translation of data from a digital signal to an analogue signal is called
modulation, while translation of data from an analogue signal to a digital signal is called
demodulation. Modems allow data to be transmitted via various communication
mediums owing to their being able to translate analogue electrical, light and radio signals
into digital signals. They are suitably wired for one device. There are three types of
modems: fibre, dial-up and ADSL. Wireless devices such as tablets and smartphones
will not be able to access the internet directly through a modem, as they need to connect
to a WiFi router that shares internet connection wirelessly.

Routers: Routers are commonly known as devices that give WiFi. They are small boxes
that help “route” traffic between all of the connected devices (wired or wireless) in a local
area network (LAN) and the internet. Thus, they manage all incoming and outgoing
information and direct it to the correct location. For example, if a computer and a printer
are connected to the router, a file can be printed without physically connecting to the
printer.

8 Mobile technologies

Code-division multiple access (CDMA) is the technology that underpins mobile

technology. It has developed rapidly over the last decade and increased the capability
of mobile technology. Developments in mobile technology have seen mobile phones
progress from basic call and message devices in the late 1980s and 1990s to the
smartphones and tablets we see today. These devices are more like computers than
telephones and this is reflected in the prices of the latest models.

According to ACC_CIMA_E1 (2021), the rapid development in the capability of mobile

technology has emerged at the same time as huge advances in internet technology, and
together the two technologies have been perfect partners. All aspects of modern life are
impacted by mobile technology, with major industries being completely transformed or
new ones emerging, including:

• Newspapers – Physical sales of newspapers are in terminal decline. News is now

consumed via mobile devices and is live rather than being a record of yesterday’s
news. Newspaper companies have attempted to evolve to maintain a presence in
this mobile online world.

• Advertising – Closely linked with newspapers and other media, advertising is

being transformed. Large-scale mass advertising is in decline, with a growth in
 smarter, targeted adverts.

• Music – CDs were replaced by MP3s which were seen as the future, but have in
turn have been replaced by music streaming services like Spotify.

• Banking – Increasingly, people bank via mobile apps, designed for ease and
convenience. Consequently, the traditional high street branch continues to
decline.

• Socialising – Social media has transformed how people socialise and

communicate with friends using smartphones to post and tag and photograph their
every move.

• TV/Film – Video streaming services such as Netflix and Amazon Prime as well as
on-demand TV and video sites like YouTube are designed for mobile internet
technology and are transforming how we watch TV and films.

9 Office automation

Since the advent of the steam engine, work automation has disrupted and transformed
society. This has led to exponential human growth prosperity and innovation. Artificial
intelligence (IA) brings the third transformational event and, this time, it will affect more
white-collar than blue-collar roles. It will change what people do, how they do it and the
skills needed for future career success. It will be more important than ever for businesses
to develop change leadership strategies and educational systems to prepare for the
change in skills needed by industries (Beth 2021).

The evolution of new technologies, the recent financial crises, and the parallel change
in the behaviour and needs of customers are putting pressure on world economies and,
consequently, the business world. Based on new trends such as big data, robotic
developments and artificial Intelligence (AI), humanity and the business environment will
look for new opportunities to reduce their costs and increase their revenue through
efficiency and productivity. The environment for recruiting and retaining the best talent
is becoming increasingly competitive, and organisations that adopt automation of
manual and repetitive tasks will be able to provide alternative human resource
strategies, such as part-time work or flexible work weeks, that can attract a greater set
of qualified professionals (Monteiro Lopes & Oliveira 2022).

Whether it is downloading the accounting software or acquiring an app to help with

processes such as data reporting or screening applicants during hiring, automation is
being increasingly used in the workplace. Although people still need to be involved, the
reason for employers to automate data collection is that the manpower required to, for
instance, post to multiple job boards and then sift through hundreds, if not thousands of
unqualified applications received, is overwhelming, a waste of time and resources and,
ultimately, money, that companies cannot afford. By using screening questions,
recruiters can easily select higher-potential candidates that meet the basic
requirements. Once the unqualified and high-risk applicants are removed from
consideration, human interaction is essential. Therefore, using automation and
technology will not eliminate human interaction, but allows them to find top talent more
quickly and to focus on candidates who are most likely to succeed. However, it is also
argued that whilst office automation kills some jobs, it creates and promotes others. For
example, it promotes employment in software companies and computer manufacturers.

Definition: Many sources define office automation differently, but according to

dictionary.com, it means a method or system or electronic equipment, such as word
processors and computers, in the operation of an office. On the other hand, Collins
Dictionary refers to it as an introduction (to an organisation or business) of computer
machinery and software for the purposes of carrying out clerical work and office
procedures, amongst others. Thus, it refers to using computers and software to carry
out and help optimise clerical work and office procedures.

Aim: Office automation helps in optimising or automating office procedures. Whatever

the definition, the aim of automating office procedures is to reduce workloads for
humans, thus allowing for more creativity. In doing so, it uses computers and software
to carry out clerical work and other office automation for filing, documenting
correspondence, communication and many other office functions. In this regard, raw
data storage, electronic transfer and management of electronic business information
comprise the basic activities of an office automation system. For example, using cloud
computing (cloud) for online storage helps to store and share data throughout the office,
thus reducing the need for physical storage space. Moreover, by keeping everything in
digital format remotely, there is no risk of people breaking in and stealing.

Automation and automation technology (AT): Automation technologies (AT) allow

the production and sale of goods and services with no or minimum human involvement.
These include a wide range, such as:

• industrial robots
• service and social robots
• artificial intelligence
• vending machines
• ATMs
• kiosks
• chatboxes
• automated trading algorithms
• other technologies

The International Federation of Robotics reported that, in 2018 alone, the number of
newly installed industrial robots was 422 271, to reach a total of 2 439 543 operating
industrial robots. In addition, claims in recent studies are that 47% of jobs in the United
States (US) and in other countries are susceptible to computerisation, putting more fuel
into the fear engine that employees will become obsolete in a robotic society (Ivanov,
Khunumdzihiev & Webster 2020).

Automation technology characteristics: Every AT simultaneously has both

enhancement and substitution effects. The enhancement effect means that the adoption
of new technology allows the employees to perform better at their jobs and increase
 their productivity. On the other hand, through the substitution effect, the human workers
who were previously doing the same tasks are replaced. The massive implementation
of AT changes the nature of work employees perform, and creates expectations and
fear among employees that they may lose their jobs and be replaced. Furthermore, the
use of ATs raises concerns regarding what individuals, companies and social institutions
would do if the automation fears materialise into severe technological unemployment
(Ivanov et al 2020).

Origins of fear of automation and AT: This fear stems from how easily the employees
would be able to find a new job in the same or another industry, so that they do not find
themselves in a financially stressful situation. Employees would not fear automation if it
is directed not at substitution but at enhancement; a tool to achieve higher productivity
and greater personal well-being. However, although the fear of automation used to be
largely about losing jobs, currently there is resistance to AT based on concerns
regarding creating difficulties and sophisticated situations for humans. They fear that
they would lose jobs when mundane, repetitive tasks are increasingly replaced by AT
tools and technologies. This fear is increased by lack of knowledge about AT. It has
been established, for instance, that journalists consider the new technologies as
liberating rather than subordinating them.

Advantages of automation and AT: Although automation will substitute human

employees in the long run, AT and elimination of work should be embraced because
work is inherently detrimental and impedes humans flourishing and leading a meaningful
life. AT would have a positive impact on society not only by liberating humans from
repetitive , tedious, dangerous, and dirty jobs, but by providing new opportunities for
creating value for humans, improving life and their well-being in economic, health and
social terms.

9.1 Potential factors influencing the fear of automation

a. General perception of AT: people can have both positive and negative perceptions
about the role of AT in society. When AT has high perceived benefits for society as
a whole, companies and public institutions would be inclined to implement them.

b. Characteristics of AT as production factors compared to human employees:

From an economic point of view, AT is concerned with production factors. As such,
it has both advantages and disadvantages compared to human employees. For
example, ATs process information much faster than humans, can provide more
accurate information with fewer mistakes, are more relilable than humans and have
higher productivity and greater cost-efficiency. Some of the perceived
disadvantages of AT inlcude lack of creativity, less interactive than humans and
operating mostly in highly structrured/standard situations.

c. Self-image of human employees: Prior studies have indicated that the image
people have about themselves influences the way they behave, the products they
buy, and their attitude towards acceptance of new technologies. Characteristics of
human employees include innovativeness, professionalism and technical skills.

d. Demographic characteristics of human employees: Demographic characteristics

 have been found to influence perceptions towards AT such as robots. Statistics by
the International Labour Organisation (ILO) show that, globally, men dominate in
manufacturing, construction, and transport and storage, where industrial and
warehouse robots and autonomous vehicles would be introduced in future. On the
other hand, men also hold more managerial positions than women, which are less
automatable than operational level jobs. Women dominate in professions where
emotional intelligence and social skills are key requirements, which are more difficult
to automate. Job positions occupied by men seem at a greater risk of automation
than those occupied by women.

e. Job characteristics: The automability of a job position and its level within the
organisational structure of the company determine the probability of a job being
automated. At the current state of technological development, some tasks (such as
routine/repetitive tasks, calculations, information processing, moving objects) are
easier to automate than others (such as non-routine or tasks that require emotional
intelligence) through physical or cognitive automation. People whose jobs involve a
lot of personal interaction are less afraid of losing their jobs to ATs.

f. Work experience: An experienced person would be more confident that they

perform well (effectively and efficiently) on the job because of direct work experience
or overall accumulated work experience. Hence, they may not be so fearful of losing
their job to automation or may use this experience as a competitive advantage to
find a new job elsewhere.

g. Social influence: Social influence stemming from television, shows online, media,
posts in social media and blogs, and conversations with colleagues, friends and
relatives, among others, has been found to have an impact on peoples’s behaviour
and opinions about a vast range of topics, including AT. The information people are
exposed to at work, at home, with friends or online contributes to the formation of
specific attitudes toward technologies (positive or negative).

9.2 Solutions to automation fears

These are solutions to the threat and consequences of technology unemployment. They
can be divided into three groups depending on who has a responsibility to implement
them. These are individual, corporate and social.

Individual solution: This includes all those actions employees can undertake to
mitigate the negative consequences of automation on their employability. These can be
divided into three possible strategies, as follows:

a. Fight: This strategy encompasses action aimed at remaining competitive in the

labour market by improving their qualifications in order to perform their current jobs
better than AT or by learning how to use AT to be more productive in their current
jobs. This is achieved by utilising the enhancement effect of technology or fighting
the substitution effect.
b. Flight: Looking for a new job that will not be automated soon in the same or another
industry.
c. Passive: Avoid proactive behaviour, do nothing, and wait for the automation impact
 to unfold.

Corporate solution: This includes actions that companies can undertake to decrease
the fear and negative impact of automation on employment. For example, procedures
of ATs can evaluate and publicly announce the impact of AT on jobs. In that way, people
and governments would be familiar in advance with the likely effect of these technologies
in various industries. Similarly, companies that use ATs can evaluate and publicly
announce their impact on jobs before the technologies are adopted.

Social solution: This includes a set of economic and administrative actions of

governments and public institutions directed not at the automation fears of a specific
person but society as a whole. For example, government may provide free education to
everyone to improve their qualifications in order to be more productive and be able to
use AT effectively and efficiently, or it can provide free education only to those who have
lost their jobs due to automation (Ivanov, Khunumdzihiev & Webster 2020).

9.3 Functions of office automation software

These functions are:

a) Eliminating paperwork
b) Requiring less storage space
c) Minimising errors
d) Making data storage and retrieval easy
e) Allowing several people to access data
f) Retrieving information instantly
g) Eliminating data redundancy

9.4 Benefits of office automation

Regardless of the organisation’s size and their industry, businesses that have already
implemented full office automation systems may reap many benefits. But the feature that
cuts across is the ability to reduce manual efforts, save on time and store a large volume
of data. The tools assist in streamlining the daily administrative and management
practices, ensuring no delays and errors, and enhancing process visibility. This gives
administrators an upper hand at proactively spotting and dealing with bottlenecks.

Activity 4.1

Go to your e-tutor site and complete this activity.

How do you see office automation evolving five years from now and what do you think
could its impact be on the South African economy, currently and in the near future?

a. We have learnt that there are pros and cons in selecting in-house developed
software versus buying off-the-shelf software. Considering the technology
 concepts and software, which option would you consider a better option (in-
house or off-the-shelf) for a small-medium enterprise that would like to stay
relevant in an ever-changing digital environment?
Go to Discussion Forum 1 for study unit 4 and discuss this with your fellow
students.
b. We have learnt that the evolution of new technologies, the recent financial
crises, and the parallel change in the behaviour and needs of customers are
putting pressure on world economies and, consequently, the business world.
Based on new trends such as big data, robotic developments and artificial
intelligence (AI), humanity and the business environment will look for new
opportunities to reduce their costs and increase their revenue through efficiency
and productivity.
Go to Discussion Forum 2 for study unit 4 and discuss with your fellow students
the effects of office automation on accounting information professionals.

10 Summary

In summary, in this study unit we learnt that providing accounting information for
management and administration forms the basis of economic and executive decision-
making by business owners as well as related stakeholders, where the accounting
information system plays a significant role. Evidently, the volume of data shared across
enterprises is rapidly increasing, making it difficult to manage. In this regard, technology
is revolutionising how work is done in organisational settings and in offices. In support
of the business processes, an information system (IS) reflects the way people interact
with information and communication technology (ICT) that an organisation uses to
manage the business. Therefore, IS specifically aims at supporting operations,
management and decision-making. As a work system, its activities are devoted to
capturing, transmitting, storing, retrieving, manipulating and displaying information. A
computerised information system (CIS), on the other hand, is composed of people and
computers that process or interpret information. Database and telecommunication
systems require a mix of hardware and software. A database management system
(DBMS) is a program or coIIection of programs that enables a user and applications to
store, modify, and extract information from a database. Database software is used
mainly for data analytics and presentation, multi-user access controls, and data security.
Acquiring hardware and software also apply to a database system and
telecommunications hardware and software. Telecommunications is the technology of
sending signals and messages over long distances using electronic equipment by
telephony, radio, cable, television and computer networks, among others, using a
modem or a router or both. As computer hardware can be classified in many ways, one
way is to divide it into internal and external hardware devices. Application software can
be acquired by purchasing it from external developers or by developing it in-house; this
is usually referred to as the make-or-buy decision. All aspects of modern life are
impacted by mobile technology, with major industries being completely transformed or
new ones emerging. The rapid development in the capability of mobile technology has
emerged at the same time as huge advances in internet technology and, together, the
two technologies have been perfect partners. Automation is gradually replacing humans
to ensure data is generated regularly in a faster and more accurate manner, in other
words, putting people out of work. It comes with enhancement and substitution effects
for employees. In this regard, employees fear losing their jobs, especially in a situation
where they believe that they do not have a competitive advantage. Regardless of the
organisation’s size and their industry, businesses that have already implemented full
office automation systems may reap many benefits. However, it is also argued that whilst
office automation poses a threat to jobs, it creates and promotes jobs in other forms. For
example, it promotes employment in software companies and computer manufacturers.
 S T U D Y U NIT
5

Digital Disruption
In this study unit

DIGITAL ENTERPRISE

DIGITAL DISRUPTION

SURVIVING DIGITAL DISRUPTION

1 Introduction
In the first two study units of this topic, we dealt with information and information
systems. As we are living in a digital age, in this section, we will provide you with
information about digital disruption to help you to obtain a better understanding of the
digital evolution.
Evidently, the nature of business today is changing, with bits replacing atoms, online
replacing face-to-face and virtual superseding physical. The World Economic Forum
(WEF) calls this change the Fourth Industrial Revolution (4IR). According to them, it will
fundamentally alter the way we live, work and relate to one another. On the other hand,
according to Forbes, most of us know this shift as the ‘digital transformation’ and
recognise that it reshapes every aspect of business. Thus, the role of information
technology (IT) within larger organisations requires a fundamental rethinking.
In the past, IT’s role was clear: its function was to support the business. Now, IT is the
business. This is because IT was expected to develop applications to help divisions such
as sales, finance and operations perform their duties. Today, IT infuses the products
and services that make up the digital economy and is a core component of these
offerings. Moreover, IT must be part of the team that creates and takes them to market.
In short, IT must undergo its own digital transformation to support the largest business
transformation in decades.
Acknowledging and accepting that technology will increasingly change and disrupt the
ways in which society, organisations and therefore the finance function operate, will be
an important part of a finance professional’s skill set (Golden 2021).
2 The digital enterprise

In the 21st century, there has been unprecedented growth in the use and availability of
technologies upon which to base a business model. Organisations have always relied
on technology to innovate and improve productivity; the Industrial Revolution, which
started around 1760, was just such an example. However, the rate at which this is
happening has accelerated enormously in recent years.
Consumers are increasingly willing to buy goods and services through digital channels,
as the role players of the music industry (e.g., Spotify), TV (Netflix, Showmax), goods
(Takealot, etc.), and travel can demonstrate. (In fact, it is estimated that the majority of
flights are now booked online). This acceleration in the use of technology presents
opportunities and threats for all organisations, perhaps at differing speeds. The business
that is ‘born digital’ has an inevitable advantage in some respects, as its proposition is
challenging the status quo. For example, compare Uber with an established taxi operator
– they have fundamentally different business models. Uber shows that technology can
be put at the forefront of operations to reduce costs and offers a very different proposition
that customers find appealing. So, identifying that new proposition based on technology
is an opportunity – all the entrepreneur has to do, is bring IT successfully into play.
Businesses that have been established for a long time may see technology as a threat,
as newly formed organisations ‘disrupt’ their industry. However, technology should also
be a potential opportunity, a chance to introduce new revenue streams, augment
existing offerings or reduce costs.
So, established businesses can adapt through successfully identifying how technology
can add to competitive advantage; it is not just newly created organisations that should
be thinking about being digital. Indeed, a failure on the part of management to view their
organisation as becoming a digital enterprise may be disastrous – adopting the mind-
set of ‘what has worked in the past will always work in the future’ is blinkered, at best.
Admittedly, new start-ups tend to move at a much faster speed and can innovate what
is proposed to the customer very quickly, whereas established organisations have a
history, culture, and systems, amongst other things, which means that moving at such
speed simply is not possible. But in the modern business environment, all organisations
need to consider the need to become, to some degree at least, a digital enterprise.

3 Digital disruption
As previously mentioned, in today’s business environment, many industries are
experiencing change at an increasingly rapid rate, and one of the fundamental drivers
of such change is digital transformation. Digital disruption is a new ordinary. The ascent
of distributed computing has shaken up the whole IT industry. Everything – from the
Internet of Things to huge information systems and man-made brainpower – is being
applied to improve procedures and create new client support choices. As this
advancement emerges, so are new cybersecurity dangers which, if not handled wisely,
can bring about loss of income-producing capacity and noteworthy notoriety harm
(Sono, Soddhono, Mailana, Putra & Shofii 2020). Traditional business models are being
re-examined as use of technological advances enables organisations to challenge the
status quo and create value in new ways.
Two features are shared by all the above-mentioned companies – they have become
incredibly valuable in terms of market capitalisation in an astonishingly short space of
time; and they have had a profound impact on the businesses that were already present
in their industries. What is it about these businesses which has allowed them to change
enormously how their industries work and the ways in which they deliver value? How
might organisations in other industries learn lessons from the disruptors mentioned
above and other similarly successful companies? In addition, how might that impact
those in senior finance roles? To a great extent, the answers to these questions lie in
the use of disruptive technology. Disruptive technology relates to instances where
technology is used to fundamentally change and ‘disrupt’ the existing business model in
an industry.

The two largest growth sectors for disruptive technology are health services and
financial services. According to Khan, Khan, Hameed and Zada (2021), recent studies
have found that disruptive technologies such as financial technology (commonly known
as Fintech) have the potential to overturn existing business models and overthrow
incumbents. These have demonstrated that newly emerging digital platforms financing
early-stage ventures threaten traditional venture capital (VC). Fintech is, for example,
completely disrupting the traditional banking sector – long seen as a highly technical,
highly regulated industry dominated by giant banks. Fintech businesses exist which can,
amongst other things, provide investment advice, offer banking services, transfer money
internationally, provide mortgages and loans as well as exchange currency.

Fintech has the following advantages:

• better use of data – providing better understanding of their customers and giving
customers a wider choice
• a frictionless customer experience, using elements such as smartphone apps to
provide a broad and efficient range of services
• more personalisation of products/services to individual customers
• the lack of a physical presence (with associated overheads and operating costs)
• access to cheap capital to fund growth – much like when internet-based businesses
first came to prominence in the 1990s, investors want to get in on the growth
potential that Fintech offers. This gives Fintech a wide scope for raising cheap
finance in order to fund their future expansion.

There are also many examples of industries that are about to be disrupted or are in the
early stages of disruption. For example, autonomous vehicles are forecast to change
the way in which people use cars, and detailed testing has been underway in some
countries for a while. How soon before they become the ‘norm’? And what sort of impact
might it have on who is successful in the industry? Will traditional names such as Ford,
Mercedes, and Renault come up against significant competition from organisations such
as Apple, Dyson, and Alphabet (the parent company of Google)? All of these latter
names have been investing major sums in vehicle research and development.

Social, legal and economic arrangements will impact how these changes affect nation-
states. For policymakers, there will be serious dilemmas as they will have to
simultaneously nurture and support many aspects of these changes, while also
mitigating or channelling some of the outcomes so as to protect privacy, income equality,
and fair taxation (Kenney, Rouvinen & Zusman 2015).
4 Additional examples of digital disruption

a. Netflix
Netflix disrupted Blockbusters video, by focusing on DVDs instead of tapes. Today,
Netflix keeps on disrupting the status quo as a major player in the video streaming
business. On-demand viewing has turned traditional broadcasting and cable services
on their collective heads. Not only are the conventional carriers jumping on board the
video stream train, but a host of other online TV platforms has also sprung up, such as
Hulu.
b. Smartphones
When you talk about disruption technology, smartphones should not only be part of the
conversation but probably at the top of the list. Smartphones are everywhere today and
have decimated landlines and payphones.
c. E-mail
While the sight of the mortal person dropping mail off in your mailbox is not going away
anytime soon, it is abundantly clear that the invention of e-mail has put a deep dent in
the post office. This has replaced the hassle of writing a letter, mailing it, and waiting
several days for the recipient to get it whilst you can fire off an e-mail in a fraction of the
time.
d. Online references and encyclopaedia
No one thinks of buying bulky bound volumes and sets of encyclopaedias anymore as
they might end up being obsolete within five years, especially since logging on to
Wikipedia or other online reference sites enables one to get current information cheaper
and faster.
e. Personal computers and hand-held devices
Bulky desktop computers proliferated households and workplaces in the ‘80s and ’90s.
Although they do still exist in great numbers, their era of dominance is over.
Miniaturisation, increased processing power and the advent of wireless technology have
made desktops almost obsolete. Laptops, pads, and tablets offer everything a computer
can, but with the added advantage of mobility and convenience.

5 Elements of digital disruption

According to Golden (2021), the bottom line regarding all these new technologies is that
the nature of IT is morphing, and IT organisations need to develop new skills to prepare
for the digital world. Too many IT organisations hope that their existing staff will magically
transform themselves into a digitally enabled workforce. Other IT organisations are
under the illusion that they can hire their way to digital competence. The truth is that
neither approach will do the job. Most IT organisations will need to rely on existing staff
to implement their digital initiatives, but they do not have time to wait for magical self-
transformation. Smart IT organisations will develop a comprehensive training
programme designed to quickly build digital skills, because a digitally savvy workforce
is a bedrock of participating in today’s revolution, and IT organisations ignore staff
education at their peril. Digital disruption breaks down into four distinct elements, each
with the potential to change business ways. These are:
 a. Technology: a consistent company-wide digital culture where companies must
move as one, embracing new technology. This adoption is essential for companies
that have not gone digital yet and includes training in new digital-based skills.
b. Business: covers marketing, development, delivery, and pricing, amongst others
c. Industry: involves customers, methods, processes, and standards, amongst others
d. Society: encompasses movements, culture, and habits, amongst others

6 Areas where IT must change its game to meet the requirements of its new
role

a. A new application lifecycle

Clearly, the pace of application development needs to accelerate. Too many IT

organisations mired in heavyweight processes like Information Technology
Infrastructure Library (ITIL) find themselves unable to meet the demands of the digital
economy. To achieve agile development, both an application group that speeds up the
development and an operational group ensuring more frequent deployments, are
necessary and should be part of the new application lifecycle, along with cloud
computing and integrated business and IT collaboration. Every part of the application
lifecycle must be streamlined to achieve digital capabilities to ensure it is addressed in
its entirety. This will ensure overall improvement in speed.

b. World of Internet of Things (IoT)

Five years ago, most IT organisations targeted one client device for their applications: a
web browser. That monolithic entity started to break down with the release of the iPhone
and the rise of smartphones as primary computing devices. Today, the explosion of new
edge computing means IT organisations need to support a wide variety of devices.

c. Real-time event processing

Many IoT devices throw off data in unpredictable patterns based on the characteristics
of the environment in which they operate. This means data arrive erratically and
applications must be able to ingest and process data in real time. The new application
paradigm for this requirement is to function as a service, or more succinctly, serverless.
As the IT revolution gets bigger and bigger, applications will grow dramatically as the
category of cloud providers are all offering serverless capabilities with frameworks that
simplify delivery event data to serverless functions.

d. Data warehousing becomes machine learning

Machine learning of millions of devices and billions of events means that sorting,
structuring, and analysing data is a critical competence for IT organisations. The scale,
speed and nature of this data mean that the old approach of analytics based on the
extraction of data into a separate relational data warehouse is no longer sufficient.
Instead, the end-user drilling down into event stream data is necessary as the business
units need to respond much more rapidly to data analysis. The new approach to analysis
is called machine learning and it is based on applying algorithms to massive amounts of
data to extract patterns and make predictions. It is a very different approach to
performing analysis. This leads us back to cloud computing because only the very
 biggest cloud provider can deliver the infrastructure scale necessary for the data
volumes required by machine learning.

7 Elements to be adopted by companies that want to grow and succeed in

the face of digital disruption

These companies must consider the following:

a. Developing a consistent company-wide digital culture. The company must move as

one, embracing new technology. This approach is essential for companies that have
not gone digital yet, and must include training employees in new digital-based skills.

b. Creating new customer experience and producing unique outcomes. Disruptive

technologies bring new ways of serving customers and exciting new results.

c. Shifting from time-based decisions to data-driven decisions. Timeliness is important

but there is little benefit in being the first company in the pack to make an ill-
informed, destructive decision. Evidently, processes relating to digital disruption
have created awareness that tons of valuable, actionable data are available, and
innovative companies will take advantage of this.

d. Incorporating new technology and business models into existing services and
products. Companies that want to stay ahead of the pack and increase their market
share will embrace the new and abandon the old, or at least modify the old with
better procedures and technology.

e. Working with partners to create and innovate new procedures and policies where
teamwork is key. This ensures that everyone wins – your company, partners and
customers. This means taking advantage of the existing partnerships experience
and skills to collaborate on better business practices.

8 The top disruptive technologies in 2021

According to Golden (2021), the following five technologies will have a more significant
disruptive effect in 2022.
a. Online learning

Crises breed innovation, and there is nothing like a worldwide pandemic and its ensuing
lockdown to help inspire people to design better ways to learn online. Online education
offers students a cheaper, more convenient way of getting a degree or certification,
circumventing the expensive university system. While this industry is still evolving, online
learning is poised to threaten the traditional college learning model.

b. 3D Printing

3D printing looks like something out of a science fiction movie or TV show. But it is here
right now and gaining traction. Currently, 3D printing mainly supports established
manufacturing processes, but if the technology becomes better developed and cheaper,
we could see households having their 3D printers creating items instead of ordering
 through retailers. 3D printers are becoming increasingly sophisticated and 2022 could
be the year we see their stock rise.

c. Cryptocurrency

Many of us have heard talk of Bitcoin and Blockchain technology, but it does not yet
dominate everyday commerce. Note the use of the word “yet”. Cryptocurrency offers
greater security levels, something that both consumers and businesses value highly in
these days of rising cybercrime and data breaches. Digital wallets could potentially
disrupt traditional banking and even online payment services, the latter of which has
already disrupted traditional bill-paying methods.

d. Person-to-person (P2P) commerce

P2P commerce involves two individuals interacting directly without a go-between, selling
and buying goods and services to and from each other. Think of Airbnb. Although P2P
is not anywhere close to crippling the hotel and hospitality industry as yet, there are
online warnings.

e. Ride-sharing and car-sharing

While we will always need taxis, companies such as ZipCar, Lyft, and Uber have thrown
the cab industry for a loop. These services, which are cheaper, more convenient and do
not even require cash to change hands (another innovation), will likely only continue to
rise in popularity. If technology companies ever get all the kinks out of driverless car
technology, it will only add to the overall disruptive effect.

9 Surviving digital disruption

So how might management ensure that their organisations survive digital disruption and
rethink their business models so that they can thrive in a digital age? The consultancy
group Accenture wrote a report in 2015 called Accenture Technology Vision, which
highlighted five emerging trends that were shaping the digital landscape for
organisations and which business leaders should focus on in developing digital
strategies:

• The Internet of Me – users are being placed at the centre of digital experiences
through apps and services being personalised.

• Outcome economy – organisations have an increased ability to measure the

outcomes of the services that they deliver; customers are more attracted to
outcomes than just simply to products, and this is what organisations should focus
on.

• The platform (r)evolution – global platforms are becoming easier to establish and
cheaper to run. Developments such as cloud computing and mobile technology offer
huge potential for innovation and quicker delivery of next-generation services. The
rate of evolution will only increase.
 • The intelligent enterprise – using data in a smart way, enables organisations to
become more innovative and achieve higher degrees of operating efficiency.

• Workforce reimagined – whilst greater use is made of smart machines, the role of
human beings is not being removed altogether; they are simply being used in a
different way. Ways need to be identified in which man and machines can work
effectively together to create better outcomes. There are also several common
myths about digital transformation. This is understandable, given the rate of change
that has been seen in many industries over the last few years, but such impressions
need to be shown as misleading if management are to see digital transformation as
an opportunity instead of a threat.

Disruptive technologies, including big data and cloud computing, are forces impacting
business and government communities. For our collective future, alignment with the
Digital Earth (DE) Vision is recommended. Better governance and better business
represent a key foundation for sustainability and therefore should be explicit DE guiding
principles. Benefits of technological advances will manifest in business performance
improvements based on capitalising the locational attributes of corporate and
government assets, the foundation of big data. Big data, which will be dealt with in the
next study unit (study unit 6), will continue to increase as the Internet of Things and
social media converge into a new era of “huge data” (Foresman 2016).

Activity 5.1

Go to your e-tutor site and complete this activity.

Explain how machine learning can be utilised in a South African business context.
Illustrate this by way of an example.

Select one of the four elements of digital disruption and discuss how that particular
element can change the ways in which a business operates.
Go to the Discussion Forum for study unit 5 and discuss this with your fellow students.

10 Summary

In summary, in this study unit we have learnt that digital disruption is a new ordinary.
This means that in today’s business environment, many industries are experiencing
change at an increasingly rapid rate. Fundamentally, this shift is altering the way we live,
work and relate to one another, and reshaping every aspect of business. The driver of
such a change is digital transformation. In this regard, the nature of business today is
changing – with bits replacing atoms, online replacing face-to-face, and virtual
superseding the physical. Consumers are increasingly willing to buy goods and services
through digital channels. On the other hand, disruptive technologies, including big data
and cloud computing, are forces impacting business and government communities. The
two largest growth sectors for disruptive technology are in health services and financial
services. Finally, we learnt about five emerging trends that will shape the digital
landscape for organisations which business leaders should focus on in developing digital
strategy for survival. We learnt about technologies that will have a more significant
disruptive effect in 2022, including elements to be adopted by companies that want to
grow and succeed in the face of digital disruption. Ultimately, acknowledging and
accepting that technology will increasingly change and disrupt the ways in which society,
organisations and therefore the finance function operate, will be an important part of a
finance professional’s skill set.
 S T U D Y U NIT 6

BIG DATA

IN THIS STUDY UNIT

SHIFT TO BIG DATA

BENEFITS AND PROBLEMS OF

BIG DATA

DATA ANALYSIS

1 Introduction
We are indeed in one of the fastest-changing technology phases in human history. The
world’s most valuable resource is no longer oil, but data. Big Data is a term for a
collection of data which is so large that it becomes difficult to store and process using
traditional databases and data-processing applications (ACC_CIMAKP_E3,2021:482).
It describes data sets so large and varied they are beyond the capability of traditional
data processing (ACC_CIMAKP_E1, 2021:138). Companies are experiencing a rapid
growth in the volume of data. This data is sourced from different areas of the business,
for example, transactional data and access to trillions of bytes of information about
customers, vendors, employees, operational and productive process.

Big Data often also includes more than simply financial information and can involve other
organisational data (both internal and external), which is often unstructured. Data that
inputs into Big Data systems can include social network traffic, web server logs, traffic
flow information, satellite imagery, streamed audio content, banking transactions, web
 page histories and content, government documentation, GPS tracking, telemetry from
vehicles, and financial market data.

2 The shift to Big Data

Traditionally, businesses gathered structured information on relevant issues from a
variety of sources and placed them into a database, or data warehouse. As the world is
increasingly moving towards digitisation (and especially through the growth of the
internet), almost all information relating to the organisation and its environment can be
stored electronically. The amount of unstructured data generated by electronic
interactions has increased significantly, through e-mails, online shopping, text
messages, social media sites as well as various electronic devices (such as
smartphones), which gather and transmit data. In fact, it is estimated that around 90%
of the information in the world today has been created in the last few years.
(ACC_CIMAKP_E3,2021:482).

The amount of data which businesses must store and interrogate has increased at an
exponential rate, requiring new tools and techniques to make the most of them.
Leveraging this resource for visualisation, structure and support, optimal decision-
making has become a commercialised privilege for many companies. Visualisation tools
like Power Bi and SAP Lumira have become a well-used tool amongst companies with
substantial data lakes (systems of repository of data stored in its natural or raw format)
that want to sort and visualise it in an easy and understandable way. This includes the
amount of personal data available to and used by organisations. In this regard, the
privacy, sensitivity and security of data are significant considerations in modern
business. In the context of the organisation, privacy refers to all information that is
considered confidential and in need of protection from public disclosure. The Protection
of Personal Information Act (POPIA) provides for a general prohibition on the processing
of special personal information. Special personal information includes information
relating to the health, political persuasion, race or ethnic origin, or criminal behaviour of
the data subject. POPIA will be dealt with in study unit 15.

2.1 THE FEATURES OF BIG DATA

According to Gartner (2021), Big Data can be described using the “3Vs”:
 • Volume – this refers to the significant amount of data that the organisation needs
to store and process. Match.com (an online dating company) estimates that it has
70 terabytes of data about its customers.
• Variety – Big Data can come from numerous sources. For example, Match.com
(with user permission) also gathers data on users’ browser and search histories,
viewing habits and purchase histories to build an accurate view of the sort of
person the customer might like to date.
• Velocity – data is likely to change on a regular basis and needs to be continually
updated. In the case of Match.com, for instance, new customers will join the
service, or existing customers may find their needs and wants in respect of a
partner may change. Match.com needs to continually gather data to ensure that
they are able to deal with this. (ACC_CIMAKP_E3,2021:484).

Another V which is sometimes added by organisations to the above list is:

• Veracity (truthfulness) – it is vital that the organisation gathers data that is

accurate. Failure to do so will make analysis meaningless. Match.com has found
that, when gathering customer data, customers may lie to present themselves in
the most positive light possible to prospective partners. This will lead to inaccurate
matches. Using non-biased sources of information (such as purchasing or web
browser histories) rather than relying on customer feedback is therefore important.
(ACC_CIMAKP_E3,2021:484)

2.2 Sources of big data

The onset of the Industrial Revolution 4.0 that is characterised by unprecedented

innovation and development, especially in the field of technology, has produced large
amounts of data which provide various opportunities for more developed industries.
However, this technology has also become a threat to employees in that it can cause
them to lose their jobs, especially in the case of the millennial generation who lives in
the digital era (Deniswara, K., Handoko, B.L. & Mulyawan, A.N., :2020). Big Data comes
in two main forms, namely, structured and unstructured.

Structured data is deliberately produced and collected for a specific purpose and
therefore exhibits a clear, deliberate structure. For instance, feedback data when people
are requested to rate a service or product.

Unstructured data is captured passively, without a clear purpose. Social media posts
and “likes” are an example of this. Its format is highly variable and non-standard. Every
 two years, the volume and variety of computer-generated data double, and most of it
originates from unstructured (because it is raw) data such as e-mails, Twitter, Facebook,
posts, and images. Using Big Data enables companies to gain insight into customer
preferences and purchasing behaviour, affording them an enormous advantage when
customising products and services, specific to the respective individual. Industrial Big
Data uses the same phenomenon as ordinary big data, but data is generated by
industrial machines and requires a stronger computing power (Ahmad, B: 2020).

According to ACC_CIMAKP_E1 (2021:138), the principal sources of these two forms

of data are classified as follows:

• Human-sourced data – billions of data points are produced every day from social
media, text messages, web browsing, e-mails, and so forth.
• Machine-generated data – smart technologies and the Internet of Things are a
growing source of data. Sensors built into all aspects of modern technology, log
and upload data constantly. Home assistants, smart meters, TV boxes and cars
are a small selection of items producing machine-generated data.
• Processed data – Traditional data, held on databases of businesses and
organisations recording customers, transactions and company assets
• Open data – Publicly available data stemming from sources such as governments,
the public sector, and national statistics agencies

2.3 Benefits of Big Data

Big Data benefits the organisation in various ways, including:

• Driving innovation by reducing the time taken to answer key business questions,
thus speeding up decision-making.
• Gaining competitive advantage by identifying trends or information that have not
been identified by rivals.
• Improving productivity by identifying waste and inefficiency or identifying
improvements to working procedures.

A recent study by Bain & Co suggested that, of 400 large companies, those that had
adopted Big Data analytics have gained a significant market advantage.

2.4 Big Data problems

 Extra challenges arise because of the huge volume of data and information that need to
be protected, the variety of sources, types of information and the speed with which it is
updated. Making use of it can be challenging, but also making sure that it is accessible,
trustworthy and private can become very costly (ACC_CIMAKP_P3, 2021:649).

As mentioned before, one of the difficulties with Big Data is the ability to convert it to
useful information. To help with this, several new open-source platforms have emerged
to help organisations make sense of Big Data, such as Hadoop and Cassandra, though
these may be difficult to integrate with existing data warehouses.

New roles and careers are also emerging in business, such as “data scientists” (data
analysts), whose role is to help the organisation derive meaning from the data it stores.
However, due to the rapidly changing nature of Big Data analysis, there is a shortage of
skills and support for these systems.

It is important to realise that just because something CAN be measured, this does not

mean it should be. There is a risk that valuable time and money will be spent measuring

relationships and information that has no value for the organisation. The organisation

needs to consider how to keep its data secure from viruses and hackers. This stimulates

the question of whether the organisation actually owns the data on individuals it has

collected. There may be legal (data protection) and privacy issues if it holds large

amounts of data on potential customers

3 Data analytics

This section is intended to introduce the concept of data analytics which will be dealt

with comprehensively in AIN3701. Analytics is defined as something that is used to

describe statistical and mathematical data analysis, that clusters, segments, scores, and

predicts which scenarios are not likely to happen (Ahmad, B., :2020). Various software

can be used to conduct analysis of Big Data, which could increase efficiency in jobs.

The presence of various advanced technologies like Big Data, 3D printing, drones,

virtual reality, and the Internet of Things can benefit work and people. In the pre-
technology era when humans worked manually, people gradually started looking for

data, receiving data (inputs), albeit limited and few, and processing them into

information. But now, with the existence of the internet where one can connect many

objects and devices, companies can receive large amounts of data (Big Data), and

machines do not require human performance to complete a lot of work in a limited time

(Deniswara, et al :2020).

Thus, data analytics is the process of collecting, organising and analysing large sets of

data (Big Data) to discover patterns and other information which an organisation can

use to inform future decisions.

According to ACC_CIMAKP_E1 (2021:140), the data analysis process includes the

following:

• Data collection – Organisations have access to greater quantities of data available

from various internal and external sources

• Organisation of data – Once the data has been captured, it needs to be organised

and stored for future use, often using data warehousing facilities

• Data analysis – Data-mining software uses statistical algorithms to discover

correlations and patterns to create useful information.

Understanding the potential value of data and its significance to an organisation

presents a real opportunity to gain unique insight. This can be used to improve

competitive position and potentially gain competitive advantage over rivals.

According to ACC_CIMAKP_E1 (2021:141), an organisation can realise the following

benefits from effective data analytics:

 • Fresh insight and understanding – Seeing underlying patterns through the

intelligent use of data can give insight into how a business operates, and reveal

issues that management may not have known existed.

• Performance improvement – Data, processed and sorted into relevant

management information in real time, can lead to significant operational gains

and improved decision-making and resource utilisation.

• Market segmentation and customisation – Refining customer groups into ever

more specific segments and understanding the wants and needs of those groups

can lead to increased personalisation and customisation of products and

services.

• Decision-making – Real-time information that is relevant can lead to faster

decisions and decisive advantage over competitors.

• Innovation – Existing products can be improved from understanding the

features and elements that customers enjoy and use. This can also lead to the

development of new products.

• Risk management – Risk management and control are vital in the effective

running of any organisation. The use of data can enhance all stages of the risk

management process.

4 Role of accounting profession

Big Data techniques are not as widely used by professional accountants as in other

related fields. Modern engagements in the accounting profession often imply reviewing

clients by means of Big Data in order to remain competitive and relevant. In a Big Data

environment, the professional accountant has the potential to perform more advanced

projections analysis (Groșanu, A., Fülöp, M.T., Cordoș, G.S. & Raita, G. 2021). Forming

a standardised view of the accountant led organisations to form a consensus that the

role of management accountants was to conduct financial analysis, file reports, and
gather information. However, they lacked real influence over business decisions and

strategy (Ahmad B: 2020). The management accounting role has been researched in

several different settings in the last century. Academic professionals share the same

opinion when it comes to transformation in the role of management accountants (MAs).

The time for bean counters has passed. Management accountants are perceived as a

strategic partner with influence in decision-making. In this regard, the prominent view of

MAs having a binary role as either “bean counter” or “business partner” – in some cases

switching between these two – is ignoring the possibility of incoherent role development

within different contexts (Ahmed, 2020). MAs’ role in production is evolving – they have

different backgrounds, skills and mindsets. This new form is labelled as an adaptive

form, because they no longer belong to either group, but rather just adapt to different

contexts. Thus, the role of MAs will eventually look different based on the production

environment (PE). They will no longer be labelled according to a binary role, but will

rather be defined by the work they do. MAs in these settings are no longer just

conducting analyses; they are contributing as designers and developers of dashboards.

This emphasises the effective utilisation of MAs so that they can reach the desired goal

of optimisation and cost reduction (Ahmad B: 2020).

Go to your e-tutor site and complete this activity. How can organisations use data `

analytics to leverage the benefits (i.e., driving innovation, gaining competitive

advantage, and improving productivity) of Big Data? Give examples.

We have learnt that new roles and careers are also emerging in business. The role of
“data scientists” (data analysts), for instance, is to help the organisation derive meaning
from the data it stores. However, due to the rapidly changing nature of Big Data analysis,
there is a shortage of skills and support for these systems. We also learnt that Big Data
 techniques are not widely used in the accounting profession and that management
accountants used to be regarded rather as bean counters than business partners.

Discuss this view with your fellow students. What measures can be taken to address the
a) shortage of skills and support for these systems, and b) the view that data techniques
are not widley used in the accounting profession? Identify the gaps and weaknesses,
and suggest solutions.
5 Summary

In this study unit, we learnt that the amount of data which businesses must store and
interrogate has increased at an exponential rate, requiring new tools and techniques to
make the most of them. In this regard, understanding the potential value of data and its
significance to an organisation presents a real opportunity to gain unique insight. This
can be used to improve competitive position and potentially gain competitive advantage
over rivals. Big Data techniques in the accounting profession are not as widely used by
professional accountants as in other related fields. Modern engagements in the
accounting profession often imply reviewing clients using Big Data in order to remain
competitive and relevant in the market. In a Big Data environment, the professional
accountant has the potential to perform more advanced projections analysis. Big Data
often also entails more than simply financial information and can involve other
organisational data (both internal and external), which is often unstructured. We also
learnt that various software can be used to conduct analyses of Big Data, which could
increase job efficiency. Advanced technologies (e.g., Big Data, 3D printing, drones,
virtual reality, the Internet of Things) can help the work environment and people in their
activities.
 S T U D Y U NIT 7

MICROSOFT EXCEL

1 Introduction

Application software is programs that run on computer systems, which users utilise
to perform specific tasks. Business applications are applications or software that
help businesses to increase their productivity and users to perform specific tasks (e.g.,
they allow users to create and edit documents or reports to perform simple or complex
calculations needed by the business).

Application software may consist of a single program, such as a media player,

or a collection (often referred to as a software suite) of related but independent
programs and packages that have a common user interface or shared data format,
such as Microsoft Office, which consists of a closely integrated word processor,
spreadsheet, database and so on. Advantages of using a software suite include that
all the packages have a similar look and feel, making them easy to use, information
can easily be transferred between all the packages and all the packages are
installed in a single operation. An example of integration between the packages
included in a software suite could be the creation of a spreadsheet with complex
calculations, which can then be transferred to a word processor to form part of a
detailed annual financial report.
 Application software can be either off-the-shelf software or in-house
developments.

In this study unit, we will examine the use of spreadsheets as a business application
tool, more specifically Microsoft Office Excel (MS Excel). In creating user-friendly
spreadsheets, we will be looking at the basic principles of mathematics, signs or
operators and components of a spreadsheet. Workbook basics will be discussed as
well as operating and formatting workbooks, finishing off with printing and page
layout.

2 Basic principles to revise before working on Microsoft Office Excel

N
O
T
E

For this module, you require certain pre-existing mathematical and accounting
knowledge as well as the ability to apply that knowledge. Section 2 merely emphasises
some basic mathematics, accounting and suchlike knowledge that you should already
have.

2.1 Microsoft Excel signs/operators

In some instances, Microsoft Office Excel uses different signs or operators from those
usually seen in mathematics. Always use the applicable Microsoft Office Excel signs or
operators and not the mathematical ones when writing a Microsoft Office Excel formula.
The table below indicates the mathematical signs or operators with their associated
Microsoft Office Excel signs or operators:
 Assessment tip!
Please ensure that all your formulas start with an “equal” sign for all your assignment and
examination answers. Failure to do so will result in students losing marks
unnecessarily!
Example: =SUM(A1:A5)

2.2 Order of operation

The order of operation is the sequence of computation that a formula follows to arrive
at an answer. Microsoft Office Excel uses the same order of operation as mathematical
rules, and it will therefore perform computations in the following sequence:

Sequence Explanation and process

First computations/calculations in parentheses/brackets,
no matter where they are in the formula
Second computations with exponents
Third computations involving multiplication (*) and division (/)
from left to right
Fourth computations involving addition (+) and subtraction (–)
from left to right

Examples

10 + 10 * 5 = ? What do you think the answer would be?

Microsoft Office Excel will first calculate 10 * 5 = 50 and then add the 10 to the answer, that
is,
10 + 10 * 5 = 60

How do you write the formula if you want Microsoft Office Excel to first add the
two 10s together and then multiply the answer by 5? What do you think? According to
the order of operation, we know Microsoft Office Excel will first perform
computations in brackets or parentheses. By inserting the 10 + 10 in parentheses,
Microsoft Office Excel will calculate the amount and then multiply the answer by 5
because multiplication is third in the sequence and c o m e s after parentheses.
Your formula will thus change to (10 + 10) * 5 = 100

In which order would Microsoft Office Excel perform this formula?

150 + 150 / (2 + 12) *12 / 4 = 182.14

Sequence Formula Reason

1st (2 + 12) = 14 Computations/calculations in parentheses/brackets, no
matter where they are in the formula.
2nd 150 / 14 = Computations involving multiplication (*) and division (/)
10.714 from left to right. The 14 relates to the answer calculated in
the 1st sequence.
 3rd 10.714 * 12 = Computations involving multiplication (*) and division (/)
128.568 from left to right. The 10.714 relates to the answer calculated
in the 2nd sequence.
4th 128.568 / 4 = Computations involving multiplication (*) and division (/)
32.142 from left to right. The 128.568 relates to the answer
calculated in the 3rd sequence.
5th 150 + 32.142 Computations involving addition (+) and subtraction (-)
= 182.142 from left to right. The 32.142 relates to the answer
calculated in the 4th sequence.

Calculation activity 7.1

Using the examples below, recalculate each formula and compare your answer
with the answer provided. Keep trying, by using the order of operation in 2.2 until
you find the same answer.

100 + 100 / 2 = 150 (100 + 100) / 2 = 100

25 * 4 / 2 + 10 = 60 25 * 4 / (2 + 10) = 8.333
150 + 150 / 2 + 12 * 12 / 4 = 261 (150 + 150) / 2 + 12 * 12 / 4 =186
(150 + 150) / (2 + 12) * 12 / 4 = 64.29

2.3 Changing the sign of an amount

To change the sign of an amount from a positive to a negative, or from a negative to a
positive, the amount can be multiplied by -1. For example; +50 * -1 = -50 and -100 * -1
= +100.

2.4 Percentages (%)

If a whole cake is equal to 100% and you and 4 friends need to share it equally, each
one of you will receive 20% of the cake. How did we calculate this? 1 person/5 persons,
that is, 1/5 = 0.2 or 20%.
A percentage is a fraction in which one (1) equals the whole or 100%. In Microsoft
Office Excel and mathematics, 1 = 100% (100 / 100 = 1). Everything less than 1 (but more
than 0), is a percentage (%) thereof. Please use the applicable fraction when working with
percentages in Microsoft Office Excel. For example:

% in numerical format How to write it in Microsoft Office Excel

33.33% 0.3333
100% 1
15% 0.15

When you see a cell on a spreadsheet reflected as a percentage, always remember that
the underlying value of the cell is still a fraction. The format of the cell (see section 8.1
in this study unit) was only changed to display the fraction as a percentage, but the
underlying value did not change – that is, the underlying value of the fifty percent (50%)
in the cell is 0.50. When you use a cell displaying a percentage format in any of your
formulas or functions,
DO NOT multiply or divide the value by 100.
2.5 Working with VAT percentage, gross profit percentage and markup
You are expected to be able to calculate amounts both inclusive and exclusive of VAT,
as well as the VAT amount itself, by using the applicable VAT percentage. You should
also be able to calculate sales amounts, cost of sales and gross profit, markup and
gross profit percentage. You can use the following formula, or any other formula you
are comfortable with, to help you with these calculations:

Formula: VAT, GROSS PROFIT (GP) and MARKUP PERCENTAGES

Basic
principles:

• Sales price excluding VAT + VAT = sales price

including VAT

EXAMPLE 1: VAT

R % Microsoft Office
Excel underlying
value
Selling price (excluding VAT) 500 100 1.00
VAT 75 15 0.15
Selling price (including VAT) 575 115 1.15

Calculate the selling price excluding VAT, using the selling price
including VAT and the VAT percentage.

The amount you need in rand = the amount you need in % / the
amount you have in % * the amount you have in rand.

– The amount you need in % = 1.00 (you need to calculate the

selling price excluding VAT).
– The amount you have in % = 1.15 (the selling price including VAT).
– The amount you have in R = R575 (the selling price including VAT in
rand).
– 1.00/1.15 * R575 = R500.
(Using mathematical rules, this formula can be simplified to R575/1.15 =
R500.)

Calculate the selling price including VAT, using the selling price
excluding VAT and the VAT percentage (VAT %).

The amount you need in rand = the amount you need in % / the
amount you have in % * the amount you have in rand.

– The amount you need in % = 1.15 (you need to calculate the selling
price including VAT).
– The amount you have in % = 1.00 (the selling price excluding VAT).
– The amount you have in R = R500 (the selling price excluding VAT in
rand).
– 1.15/1.00 * R500 = R575.
(Using mathematical rules, this formula can be simplified to 1.15 * R500 =
R575.)
Calculate the VAT amount using the selling price including VAT and the
VAT %. The amount you need in rand = the amount you need in % /
the amount you have in % * the amount you have in rand.

– The amount you need in % = 0.15 (you need to calculate the VAT
amount).
– The amount you have in % = 1.15 (the selling price including VAT).
– The amount you have in R = R575 (the selling price including VAT in
rand).
– 0.15/1.15 * R575 = R75.

Calculate the selling price including VAT using the VAT amount and the
VAT %. The amount you need in rand = the amount you need in % /
the amount you have in % * the amount you have in rand.

– The amount you need in % = 1.15 (you need to calculate the

selling price including VAT).
– The amount you have in % = 0.15 (the VAT%).
– The amount you have in R = R75 (the VAT amount in rand).
– 1.15/0.15 * R75 = R575.
Concepts: GROSS PROFIT AND MARKUP

The business world uses the terms “markup” and “gross profit
margin” interchangeably, although there are differences between the
two.

Markup, like gross profit, is the difference between the selling price
and cost price of an item.

Markup may be expressed either as a rand amount or as a percentage.

If an item has a cost price of R100 and it sells for R150, then the markup
is R50 (i.e., R150 less R100) if it is expressed in rand.

The markup margin of the item would be 50% (selling price [R150] minus
cost [R100] divided by cost price [R100] of the item) if it is expressed as a
percentage.

Gross profit margin, however, is calculated as the difference between

the selling price and cost price of an item, divided by the selling price of
the item. Thus, as in the example above, the gross profit margin of the
item would be 33% (selling price [R150] minus cost [R100], divided by
selling price [R150] of the item), which is expressed as a percentage.

Basic principles:

• Gross profit or markup = sales – cost of sales

• Sales = cost of sales + gross profit or markup
• Markup margin (%) = markup/cost of sales
• Gross profit margin (%) = gross profit/sales

EXAMPLE 2: Markup and markup margin

The markup margin (percentage) in this example is 20%.

R % Microsoft Office Excel

underlying value
Cost of sales 1,580 100 1.00
Markup 316 20 0.20
Sales 1,896 120 1.20

Calculations: MARKUP AND MARKUP MARGIN

Calculate the cost of sales amount, using the sales amount of

R1,896 and the markup margin.

The amount you need in rand = the amount you need in % / the
amount you have in % * the amount you have in rand.

– The amount you need in % = 1.00 (you need to calculate the cost of
sales).
 – The amount you have in % = 1.20 (the sales).
– The amount you have in R = R1,896 (the sales amount in rand).
– 1.00/1.20 * R1,896 = R1,580.
(Using mathematical rules, this formula can be simplified to
R1,896/1.20 = R1,580.)

Calculate the sales amount, using the cost of sales amount of R1,580
and markup margin.

The amount you need in rand = the amount you need in % / the amount
you have in % * the amount you have in rand.

– The amount you need in % = 1.20 (you need to calculate the sales
amount).
– The amount you have in % = 1.00 (the cost of sales).
– The amount you have in R = R1,580 (the cost of sales amount in rand).
– 1.20 / 1.00 * R1,580 = R1,896.
(Using mathematical rules, this formula can be simplified to R1,580 * 1.20
= R1,896.)

Calculate the markup amount, using the sales amount of R1,896 and
markup margin.

The amount you need in rand = the amount you need in % / the amount
you have in % * the amount you have in rand.

– The amount you need in % = 0.20 (you need to calculate the markup amount).
– The amount you have in % = 1.20 (the sales).
– The amount you have in R = R1,896 (the sales amount in rand).
– 0.20/1.20 * R1,896 = R316.

Calculate the sales amount, using the markup amount of R316 and
markup margin.

The amount you need in rand = the amount you need in % / the amount
you have in % * the amount you have in rand.

– The amount you need in % = 1.20 (you need to calculate the sales amount).
– The amount you have in % = 0.20 (the markup margin).
– The amount you have in R = 316 (the markup amount in rand).
– 1.20/0.20 * 316 = R1,896.

EXAMPLE 3: Gross profit and gross profit margin

The gross profit percentage in this example is 20%.

R % Microsoft Office Excel

underlying value
Cost of sales 2,000 80 0.80
Gross profit 500 20 0.20
 Sales 2,500 100 1.00

Calculations: GROSS PROFIT AND GROSS PROFIT MARGIN

Calculate the cost of sales amount, using the sales amount of

R2,500 and the gross profit percentage.

The amount you need in rand = the amount you need in % / the
amount you have in % * the amount you have in rand.

– The amount you need in % = 0.80 (you need to calculate the cost of
sales).
– The amount you have in % = 1.00 (the sales).
– The amount you have in R = R2,500 (the sales amount in rand).
– 0.80/1.00 * R2,500 = R2,000.
(Using mathematical rules, this formula can be simplified to 0.80 *
R2,500 = R2,000.)

Calculate the sales amount, using the cost of sales amount of

R2,000 and gross profit percentage.

The amount you need in rand = the amount you need in % / the
amount you have in % * the amount you have in rand.

– The amount you need in % = 1.00 (you need to calculate the sales
amount).
– The amount you have in % = 0.80 (the cost of sales).
– The amount you have in R = R2,000 (the cost of sales amount in
rand).
– 1.00/0.80 * R2,000 = R2,500.
(Using mathematical rules, this formula can be simplified to
R2,000/0.80 = R2,500.)

3 How to solve a problem in Microsoft Office Excel

Here are a few simple guidelines to keep in mind, before you start with your spreadsheet:

• Understand the business problem you are dealing with. What is the problem? What
should I calculate? What is it based on? Which amounts do I have? What assumptions
should I make?
• How will you solve/fix the problem? Formulate your desired results.
• Plan your spreadsheet before you create it in Microsoft Office Excel.
• Now go to Microsoft Office Excel and prepare the spreadsheet in such a way that it will
give you the required output or deliverable.
• Use neighbouring columns and rows when organising your information.
• Do not skip columns or rows just because you want to spread the information. Use the
formatting functions instead.
• Use a single column at the left of the table for row headings.
• Use a single row at the top of the table for column headings.
 • If your table requires a title, put it in the row above the column heading and in the same
column as the row heading.
• Put all your assumptions or variables on the face of your spreadsheet. As far as
possible, do not hard code any formulas, such as entering an amount or percentage in a
formula. Instead, refer to a cell where the amount or percentage is displayed.
• Build in checks and balances where possible to ensure that the spreadsheet you
created, functions correctly.
• Keep the spreadsheet logical.

NOTE

Hint:

If you are struggling to write a formula using cell references, first write the formula
using amounts and replace the amount with the relevant cell reference.

4 Using Microsoft Office Excel: regional settings

PLEASE NOTE

For reporting purposes, one should adhere to ISO31-0 (International Organisation for
Standardisation) used in South Africa, where the thousands separator is a space (“ “) and
the decimal separator is a comma (,).

For example: 8 355 214

1 234,81
R 235 789,19

However, when using Pastel Accounting and spreadsheets (Microsoft Office Excel or
OpenOffice Calc) for AIN1501 purposes, you will need to ensure that your computer’s
regional settings are set up as follows to ensure standardisation of spreadsheet formulas
and functions:
• Click on the Microsoft start button and the following image will appear:

Microsoft
start button

• Type Control Panel as indicated below.

Control Panel
• The following image will appear:

• Click on the control panel image.

Control panel image

 • In the control panel window, locate Change date, time or number formats which is in
blue just under the Clock and Region tab.

Change
date, time or
number
formats

• Select the formats tab, make sure that the current format is English (South Africa) and
then click on the Apply button.

English
Formats
(South
Africa)
• On the formats tab, click on Additional settings button.

Additional
settings

• On the numbers tab, ensure that the options are selected as follows, then click Apply.
• On the currency tab options, ensure that the options are selected as follows, then click
Apply.

• After changing the Decimal symbol, Digital grouping symbol and List separator
according to the instructions above, click on the Apply button for these settings to
take effect.

In AIN1501, numbers and currency will be formatted

as follows: For example: 8,355,214

1,234.81
R 235,789.19

Note: The reason for the above deviations from the accepted standard used
in South Africa as mentioned above, is to

• ensure the standardisation of spreadsheet formulas and

functions in this course
• increase the user friendliness of spreadsheets (e.g., the displayed
amounts are easier to read)

See section 8 in this study unit for worksheet and cell formatting.
 PLEASE NOTE

If information is used for most formal reporting purposes, the above-mentioned

ISO standard should be used.

BEFORE CONTINUING, NOTE THE FOLLOWING

You should perform all the activities included in this study unit to familiarise
yourself with Microsoft Office Excel. By performing these activities, you will learn
the basics of Microsoft Office Excel. You will need to know these basics when
commencing the subsequent study units in this topic because this information
will not be discussed in detail later on.

Note: These are not manual exercises. You need to do them on a

computer!

5 Background

5.1 What is a spreadsheet?

A spreadsheet is a grid of columns and rows that cross (intersect), much like a
chessboard. Columns appear vertically and are identified by a letter (say, A, B, C, etc),
while rows appear horizontally and are identified by a number (say, 1, 2, 3, etc).
Where a column and a row intersect, a cell is formed. Each cell has a unique cell
reference (address) based on the specific column and row in which it can be found. A
cell’s reference is always expressed as first the column reference and then the row
reference. Cell B6, for example, refers to a cell found where column B and row 6
intersect. B6 is known as a cell reference. A cell reference can never change, but the
data value entered in a cell can change.
5.2 Components and layout of a spreadsheet
When working in Microsoft Office Excel, you can have many files or workbooks. Each
file can have many separate sheets called worksheets. These worksheets are identified
as Sheet1, Sheet2, Sheet3 and so on. (Since the terms “workbook” and “file” mean the
same thing, you can use either term when working with spreadsheets.)

The most recognisable difference between a word-processing document and a

spreadsheet is that the spreadsheet uses rows and columns. Numerical data entered
into a spreadsheet is easier to read, understand and manipulate when presented in rows
and columns. Another major advantage of using a spreadsheet is that complicated
calculations can be done with the use of formulas and functions, whereas this is not
possible in a word-processing document.

Below is a typical Microsoft Office 365 Excel spreadsheet layout:

5.3 A selection of the spreadsheet components

A selection of the spreadsheet components will now be explained in more detail.
(a) Active cell
A cell becomes active when you select or click on that cell. The active cell is
outlined in black (see A1 above), the headings for the column and the row in which
the cell is located are also highlighted. In the example above, a cell in column A
row 1 was selected. The headings in column A and row 1 are highlighted, and cell
A1 is outlined. The cell reference of the active cell (A1 in this example) will also
appear in the Name Box (see the upper-left corner of the worksheet). Note that
anything you type or any function you insert will be entered or inserted into the
active cell.

(b) Ribbon
The Ribbon contains tabs on which items are organised in groups of related tools.

• Tabs. In a default setup, each of the eight tabs (File, Home, Insert, Page Layout,
Formulas, Data, Review and View) represents core tasks in Excel. The
commands on the Home tab are those that Microsoft identified as the most
commonly used when you do basic tasks in worksheets. The File tab will open
a menu with commands used to open, save, print, share and close your
workbooks or files. Options included in the File tab menu will give you access
to set options.
• Ribbon groups. Each tab contains a set of ribbon groups with related controls.
Example: Font and Alignment ribbon groups in the Home tab.
• Commands. Commands are specific icons within each of the ribbon groups.
These icons are displayed in picture format to help you to easily recognise the
command you want to use. Each icon performs a particular command when
you click on it with the mouse. (Hint: Hovering with your mouse pointer over
an icon or command, will make the description of the icon appear.)

The current commands on the Ribbon are the commonly used ones and
user specific. Not all command functions will display each time you work on
Excel, but are displayed on the working screen, depending on the functions
being performed at a particular point in time. For example, if your worksheet
does not have a chart, the commands needed to work with charts are not
 visible. However, once a chart has been created, the Chart Tools will then
appear, with two tabs: Design and Layout.

Do not worry if all the commands are not visible all the time because they will
appear as soon as you have taken the first step.

(c) Dialog Box Launcher

The Dialog Box Launcher is an arrow-like icon located at the lower-right corner of
some of the Ribbon groups. The icon signifies the fact that, within that particular
ribbon group, there are more options available for that group. When you click on
the arrow with your mouse, it will open a dialog box or a task pane.

(d) Quick Access Toolbar

The commands on the Quick Access Toolbar are always visible. You can add
commands you often use, to this toolbar by right-clicking on the command or icon
you want to add and click on Add to Quick Access Toolbar. To remove a button
from that toolbar, right-click the button on the toolbar, and click Remove from
Quick Access Toolbar.

(e) Formula Bar

The formula bar is used to enter any applicable function to perform any particular
calculation(s). Excel has a number of embedded calculations, such as: PMT, FV,
SUM, and so forth, which can be accessed by clicking on the fx icon (located just
before the formula bar).

6 Workbook basics
We will now take you through various activities to help you understand workbook
basics.

6.1 Starting a workbook

You will be able to start working with Microsoft Office Excel by following these steps:
 Computer Activity 7.2
• Click on the Windows start icon or button.
• Select All Programs.
• Select Microsoft Excel
OR

• Select the Excel shortcut icon from your computers’ desktop if it is

visible.

• Click on the Microsoft start button and the following image will appear:

Microsoft
start button

▪ Click on the Excel image.

Excel

The Microsoft Office Excel window with a full-sized workbook window will open. The
workbook will be displayed in the same way as discussed under the layout of the
workbook. The workbook will contain a file titled Book 1.
 6.2 Saving a file

Computer activity 7.3

• Click on the File tab.

• This will open Save As menu
options.
• Click on the Save As option.

Documents

Save as

Browse

File name

Save

• Select the preferred folder from which you wish to save your document. In most
instances, you will save your document in the My Documents folder.
• Type the name of the file (Test01) into the File name field, which is beside
File name. (You will be typing over/replacing the default file name Book1.xlsx.).
• On the Save as type drop-down list, select the Excel Workbook option.
• Click on the Save button.

PRACTICAL HINTS:

❖ Create separate folders (in a logical place), for example, create a folder for
all your AIN1501 files.
❖ Use descriptive file names.
When creating a file, consider its compatibility with the Excel versions used by other users
to whom you would like to send the file or with whom you would like to share the file.

6.3 Close a file and exit Microsoft Office 365 Excel

(a) Closing an active Excel file while Microsoft Office 365 Excel is still open.
 Computer activity 7.4

▪ Click on File

File

▪ Click on Close

Close

• Excel will then display the below warning message, asking you to choose an
appropriate option between Save, Don’t Save and Cancel. Click on

o Save – Excel will save the all the activities performed on the file you
wish to save.
o Don’t Save – Excel will not save any activities performed after any
preceding saved activities.
 o Cancel – In case you changed your mind about saving the file, Excel
allows you the cancel opportunity. Subsequently, you may continue
working on the file.

• Please take note that instead of Book1, the actual name of your file will
be displayed (which in this case is Test01).

(b) Closing the active Excel file as well as Microsoft Office Excel via Shortcut
option

Computer activity 7.5

• Click on the File tab icon at the top-left corner of the file.
• Select the appropriate option of action you wish to take: Save, Don’t
Save or Cancel.

“Close”
shortcut

NOTE

Always ensure that you click the Save option to save the changes you have made
(i.e., if you wish to keep the changes).

Before you start the next section, start Microsoft Office Excel, and open the
existing workbook file, Test01.

6.4 Naming or renaming worksheets

 Computer activity 7.6

• On the Sheet tab bar, right-click on the sheet tab for Sheet1.
• Click on Rename. Sheet1 will now be highlighted.
• Type the name test to rename Sheet1 to test.
• Press Enter on the keyboard.

Shortcut option

• Double-click on Sheet1.
• Type the name test.
• Press Enter.

6.5 Inserting additional worksheets

Computer activity 7.7

• Click on the Home tab.

• In the Cells group, click on the arrow below Insert.
• On the drop-down menu, click on Insert Sheet.
A new Worksheet, called Sheet1 or Sheet2 or Sheet3, will be added
to your workbook.

Shortcut options

• Place your cursor on Sheet1/2/3 and right-click.

• Click on Insert option and select to add a new worksheet.

OR
• Click on New sheet icon to add a new worksheet.

OR
• Click on (Shift+F11) on the keyboard.
6.6 Inserting columns or rows

To insert a single column, click on any cell in the column immediately to

the right of where you want the new column to be inserted, and click on the
applicable command.

Computer activity 7.8

• On the sheet named test, enter Old column B in cell B1 and

Old column C in cell C1.
• Click and highlight the whole of column C.
• Click on the Home tab.
• In the Cells group, click on the arrow below Insert.
• On the drop-down menu, click on Insert Sheet Columns.

• The spreadsheet will now appear as follows:

 To insert a single row, click on any cell in the row immediately below
where you want the new row to be inserted, and click on the applicable
command.

Computer activity 7.9

• On sheet 2, enter Old row 2 in cell A2 and Old row 3 in cell A3.
• Click on any cell in row 3 (e.g., A3).
• Click on row 3 to highlight row 3.
• Right-click on row 3.
• Click on Insert.

Row 3

Insert

• The spreadsheet will now appear as follows:

 6.7 Deleting worksheets

Computer activity 7.10

• Click on sheet 2/3 (the worksheet you want to delete).

• Click on the Home tab.
• In the Cells group, click on the arrow below
Delete.
• Select Delete Sheet.

Home Delete

Delete
Sheet

Shortcut option
 • Click on the tab of the sheet you wish to delete.
• Right-click and select Delete to delete the selected sheet.

6.8 Deleting columns or rows

To delete a single column, click on any cell in that column and click on the applicable
command.

Computer activity 7.11

• On the sheet named test, click on any cell in column C.

• Click on the Home tab.
• In the Cells group, click on the arrow below Delete.
• On the drop-down menu, click on Delete Sheet Columns.
• The spreadsheet will now appear as follows:

To delete a single row, click on any cell in that row and click on the applicable command.

Computer activity 7.12

o

• On sheet 2, click on any cell in row 3.

• Click on the Home tab.
• In the Cells group, click on the arrow below Delete.
 • On the drop-down menu, click on Delete Sheet Rows.
• The spreadsheet will now appear as follows:

6.9 Moving around in a spreadsheet

Besides using the mouse to move around in a spreadsheet, the following keyboard
keys can also be used:

CTRL + HOME Move the active cell to A1.

Move the active cell to the last-used cell (right bottom)
CTRL + END
in the worksheet.
END + → Move to the last column.

END + ↓ Move to the last row.

Page Up Move one screen up.

Page Down Move one screen down.

F5 Allows you to specify the cell reference to go to

6.10 Selecting a worksheet range

To select a worksheet range, you need to anchor the cell pointer in the cell, which will
form the starting point of the range, and then select the required range.

Computer activity 7.13

• Click in Cell A1.

• Press and hold the mouse button (left button) in Cell A1.
• While holding down the mouse button, drag across the worksheet to Cell F6.
• Release the mouse button.
• The address of the range you have just highlighted is A1:F6.
7 Operating the workbook
Computer activity 7.14

7.1 Entering data

(a) Entering numbers

• Click in Cell A1.

• Enter the numbers 12345678.
• Press Enter.

(b) Entering text

If the first character you enter is a letter, Microsoft Office Excel automatically
precedes the entry with a label-prefix character (‘). If you wish to enter numbers as
a label, you should start your entry with a label-prefix character (‘). For example, if
007 is entered as a number, it will display as 7, but if it is entered with a label-prefix
character ‘, and thereafter enter/type 007, it will be displayed as 007.

Comput er act i vi t y 7.14 ( cont i nue d) :

• Click in Cell A2.

• Enter the text Spreadsheet
• Click in Cell C2.
 • Enter the value 50 000 as a label.
• Press Enter.

7.2 Editing data

Data can be corrected in two stages:

(a) Correcting errors while data is being entered

Comput er act i vi t y 7.15

• Click in Cell A5.
• Enter the text DECENBER (do not press Enter).

You realise you have misspelt the word DECEMBER.

• Click with the mouse pointer to the left of the character N.

• Press the Delete key.
• Type the character M.
• Confirm the entry by pressing Enter on the keyboard.

(b) Correcting errors after data has been entered

Comput er act i vi t y 7.16

• Click in Cell A6.

• Enter the text DECENBER.
• Confirm the entry by pressing Enter on the keyboard.

You realise that you have misspelt the word DECEMBER.

• Double-click with the mouse pointer on the word or press F2.

• Click with the mouse pointer to the left of the character N.
• Press the Delete key.
• Type the character M.
• Confirm the entry by pressing Enter on the keyboard.

7.3 Removing data

Comput er act i vi t y 7.17

• Click in Cell A1.

• Select range A1:J10 with the mouse.
 • Press the Delete key on the keyboard.

7.4 Copying data

Computer activity 7.18

• Click in Cell A1.

• Type the text JANUARY.
• Click in cell A2.
• Type the text FEBRUARY.
• Select range A1:A2 with the mouse.
• Click on the Home tab
• In the Clipboard group, click on Copy.

• Click on C1, the destination cell to which the information will be

copied to.
• Click on the Home tab.
• In the Clipboard group, click on Paste.

• The data is copied to the new destination and will appear as follows:

Note: When you copy data, you will not remove the data from the cell,
but merely make a copy. The copy will be pasted in another location
and the original data will still be displayed on the original place. When
the content of the cell has been pasted, it overwrites the existing
cell content where it was pasted.
 Shortcut options

• Copy: Press CTRL + C simultaneously.

• Paste: Press CTRL + V simultaneously.

7.5 Moving/Cutting of text

Computer activity 7.19

• Select range A1:A2 with the mouse.

• Click on the Home tab.
• In the Clipboard group, click on Cut.

• As soon as Cut is clicked, the data to be cut will be highlighted

by the green-dotted box (see below).

Note: The range content will be placed on the CLIPBOARD, which

is a temporary storage area.

• Click on E1, the destination cell.

• Click on the Home tab.
• In the Clipboard group, click on Paste.
• The data is moved to the new destination and will look like
this:
 Note: When you cut data, you will remove the data from the original
cell and paste it in the selected (new) location. When the
content of the cell has been pasted, it overwrites the existing
cell content.

Shortcut options

• Cut: Press CTRL + X simultaneously.

• Paste: Press CTRL + V simultaneously.

8 Workbook and cell formatting

Every time a new file is created, the default setting is applicable. If you exit the
program and return to it, the settings in the dialog will be the default settings.

Comput er act i vi t y 7.20

• Open a New Workbook and name it Formatting exercise
 Do not change any of the column widths before being instructed to do so.

• In cell A1, enter Microsoft Excel Formats.

• In cell A2, enter JANUARY.
• In cell A3, enter Format cells.
• In cell B2, enter 100000.
• In cell B3, enter 50000.
• In cell B5, enter 0.02.
• In cell B6, enter 2.
• In cell C2, enter 80000.
• In cell C3, enter 6500.54.

We will now use the “Formatting exercise” file to perform computer activity 4.20
to cover the more frequently used formatting options

(a) Number formatting

Comput er act i vi t y 7.20 ( cont i nued)

Use number formatting to differentiate one kind of numeric data from
another, for example, currency (R), percentage (%) and so forth. There are
different ways to access the different options needed.

• Using your Formatting exercise file.

• Select cell B2.
• Click the Home tab and locate the Number ribbon group option.
• Change the current B2 number style to the comma style by
clicking the Comma Style icon.
• Still in the Number ribbon group, click on the drop-down arrow
next to the Accounting Number Format icon, and then select
English (South Africa) option.

Number formatting – continued

• Select cell C2.

• Click on the Home tab on the Ribbon.
 • In the Number group, click on the Dialog Box Launcher
arrow. This will open the Format Cells dialog box.
• Select the Number tab.
• Under Category, select Number.
• Select three decimal places, tick the 1 000 separator and leave
the negative numbers on the first option (-1,234.210).
• Select OK to change the format.
• Select cell C3.
• Right-click on your mouse and select Format Cells.
• Select the Number tab.
• Under Category, select Currency.
• Under Symbol, select: $ English (United States).
• Select one decimal place and leave the negative numbers on
the first option (-$1,234.1).
• Select OK to change the format.
• Select cell B5.
• Click on the Home tab on the Ribbon.
• In the Number ribbon group, click on Percent Style icon.
• Select cell B6.
• Click on the Home tab on the Ribbon.
• In the Number group, click on the Dialog Box Launcher
arrow. This will open the Format Cells dialog box.
• Select the Number tab.
• Under Category, select Percentage.
• Select two decimal places.
• Click on OK.

Did cell B5 or B6 reflect 2% after the Percent Style format was

applied to it?

Take note that the cell B5 value was entered as 0.02.

It is VERY important to remember that the underlying value of any

cell formatted as a (%), is a fraction – that is, in this instance, the
underlying value of cell B5 is 0.02 and not 2, and the underlying
value of cell B6 is 2, and not 200. See section 2.4 in this study unit.

(b) Alignment of data

Comput er act i vi t y 7.20 ( cont i nued)

This will give you various options in text alignment, text control and text
direction.

Merge combines the selected cells into one cell.

• On your Formatting exercise file, select range

A1:C1.
 • Click on the Home tab on the Ribbon.
• In the Alignment group, click on the arrow next to Merge &
Centre.
• On the drop-down menu, select Merge &
Centre.

Wrap text makes all the contents in a cell visible, displaying it on

multiple lines.

• Select range A2:A3.

• Click on the Home tab on the Ribbon.
• In the Alignment group, click on the Wrap text
icon.

(c) Changing fonts and attributes

Under the Font group, you will see some of the following default settings
for the workbook (your default settings may differ from what is shown
below):

• Font name: Arial

• Font style: Regular
• Size: 10
• Colour: Automatic
• Underline: None

Under this group, you can change any of the above-mentioned settings and
add bold, italics and underlining to the text.

Comput er act i vi t y 7.20 ( cont i nued)

• On your Formatting exercise file, select cell A1.

• Click on the Home tab on the Ribbon.
• In the Font group, click on the arrow next to the Font box.
• On the Font drop-down menu, select Comic Sans MS.
• In the Font group, click on the arrow next to the Font size box.
• On the drop-down menu, select 12.
• In the Font group, click on the Bold icon.
• Select range A2:C6.
• In the Font group, click on the Dialog Box Launcher arrow.
This will open the Format Cells dialog box.
• Select the Font tab.
• Under Font, select Arial.
 • Under Size, select 11.
• Select OK to change the format.

Bold icon

(d) Creating borders

You can frame the data with border lines and different
edges.

Comput er act i vi t y 4.20 ( cont i nued)

• On your Formatting exercise file, select cell B3.

• Click on the Home tab.
• In the Font ribbon group, click on the arrow next to the Border icon.
• On the drop-down menu (shown above), select the Bottom Double
Border icon.
• Select cell C3.
• Click on the Home tab on the Ribbon.
• In the Font group, click on the arrow next to the Border icon.
• On the drop-down menu, select the Top and Double Bottom Border
icon
(e) Changing filing and font colours.

• Here you can set the background and/or font colour and pattern of
the cells selected.
• These settings can be changed on: Home tab/Font ribbon group

(Do not change any of these for this activity.)

(f) Protection and security settings

Here you can lock cells, so that they cannot be changed when a
worksheet is protected.

(Do not change any of these for this activity.)

Protection and spreadsheet security will be dealt with in detail in study

unit 6.

Feedback on activity 7.20

• Your results for activity 4.20 should appear as follows:

 8.2 Column width
The column width should be set to fit the largest set of characters in a cell.
If you see the following in a cell, ######## (hashes), it means the column
width is too small to fully display all the contents of the cell. Example

There are two ways of correcting this

problem:

• Using an icon/command

• Click on the Home tab on the

Ribbon.
• In the Cells group, click on the
arrow below the Format icon.
• Click on the Column Width and
increase the column width until the
data appears

• Using the mouse

• Move the mouse pointer to the border

line between column “B” and column “C”.
• The mouse pointer then changes to a
cross-like icon with a two-headed vertical
arrow.
• Then double-click on the border line to increase
the column width OR
• Click and drag to the right to increase the width
of the column (while still holding in the mouse
button), or to the left to decrease the column
width.

The data will now be displayed without hashes.

8.3 Row height

 The row height should be set to fit the largest set of characters in a cell. If you
cannot see all the text in a cell, it means the row height is too small. For example:

There are two ways to correct this problem:

• Using an icon/command

• Click on the Home tab on the Ribbon.

• In the Cells ribbon group, click on the arrow below the Format icon.
• On the drop-down menu, select Row Height and increase the row height
until the data appears.

• Using the mouse

• Move the mouse pointer to the number 1 of the row header.

• Point to the bottom of the row border.
• The mouse pointer changes to a cross-like icon with a two-headed horizontal
arrow.
• Click the mouse and drag down to increase the height of the row (while still
holding in the mouse button) or drag upwards to decrease the row height OR
• Double-click the mouse to fit the largest data cell.

The data will now be displayed in full.

9 Printing and page layout

9.1 Print area

This defines or selects the area of a worksheet you want to print. Always define the
area you want to print before you continue with the rest of the page setup (see section
9.2 in this study unit).

Computer activity 7.21

• Select the area you want to print (as you would select a range).
• Click on the Page Layout tab on the Ribbon.
• In the Page Setup ribbon group, click on the arrow below the Print
Area icon.
• On the drop-down menu, select Set Print Area.
(a) Page

• Orientation

Orientation is used to set up printing preference as either portrait or landscape

format.

Ribbon: Dialog Box Launcher:

Page Layout tab Page Setup dialog box
• Click on the Page Layout tab. • Select the Page tab in the Page
• In the Page Setup group, click on Setup dialog box.
the arrow below the Orientation • Click on either the Portrait or
icon. Landscape option button.
• On the drop-down menu, select
either
Portrait or Landscape, depending
on your printing needs.

• Leave the default selection as is.

• Scaling

Scaling is used to set the width or height of a printed worksheet to a maximum

number of pages or to stretch or shrink the printed worksheet to a percentage of
its actual size.

Ribbon: Dialog Box Launcher:

Page Layout tab
• Click on the Page Layout tab.
• In the Scale to Fit group
- By clicking on the arrow next to
Scale, you can increase or
decrease the size in relation to
the normal size.
- By clicking on the arrow next to
Width, you can define over how
many pages wide you want to
print the selected area.
- By clicking on the arrow next to
Height, you can define over how
many pages tall you want to print
the selected area.
• Leave the default selection as is.
Page Setup dialog box
• Select the Page tab in the Page
Setup dialog box.
• By selecting Adjust to, you can
stretch or shrink the printed
worksheet to a percentage of its
actual size.
• By selecting Fit to, you can
reduce
the width and/or the height of the
printed worksheet to fit a maximum
number of pages wide and/or tall.
For example, if you set both wide
and tall to 1, your selected print
area will print the print area set in
section 9.1 in this study unit, to one
page only.

• Paper size

Select the size of paper you are printing to

Ribbon: Dialog Box Launcher:

Page Layout tab
• Click on the Page Layout tab.
• In the Page Setup group, click on
the arrow below the Size icon.
• On the drop-down menu, select
the
• applicable paper size.
Page Setup dialog box
• Select the Page tab in the Page
Setup dialog box.
• Select the applicable paper size
from the drop-down menu.

• Select A4.

(b) Margins

Here you can change the margin size of the printed worksheet.
 Ribbon:
Page Layout tab
• Click on the Page Layout tab.
• In the Page Setup group, click on
the arrow below the Margin icon.
• On the drop-down menu, select
the applicable margins, or select
Custom Margins to open the Page
Setup dialog box
Dialog Box Launcher:
Page Setup dialog box
• Select the Margins tab in the
Page Setup dialog box.
• Increase or decrease the margins
to the required size.

• Select Normal margins.

(c) Header/Footer

Headers or footers can be included to provide useful information in your

worksheet printouts such as page numbers, the date and time and the file name,
or other predefined information.

Ribbon: Dialog Box Launcher:

Insert tab Page Setup dialog box
• Click on the Insert tab. • Select the Header/Footer tab in
• In the Text group, click on the the Page Setup dialog box.
Header & Footer icon. • Include the applicable Header and/
• Click the left, centre, or right header or Footer.
or footer text box at the top or at the
bottom of the worksheet page.
• Type the text you want.
• Clicking on any of the text boxes,
will display the Design tab.
• On the Design tab, in the
Header & Footer Elements
group, click the element that you
want to include.

• Include your name as a Header.

• Include the page number as a Footer. By clicking on the Footer icon on the
Design tab, select the desired type of footer.

(d) S h e e t g r i d l i n e s a n d r o w a n d c o l u m n h e a d i n g s

Gridlines, row headings (1, 2, 3, etc) and column headings (A, B, C, etc) are
displayed by default in Page Layout view, but they are not printed automatically
when printing a worksheet. To print the gridlines and/or row and column headings,
do the following:

Ribbon: Dialog Box Launcher:

Page Layout tab
• Click on the Page Layout tab.
• In the Sheet Options group:
– Tick Print under Gridlines to
print gridlines.
– Tick Print under Headings to
print row and column headings.
Page Setup dialog box
• Select the Sheet tab in the Page
Setup dialog box.
• Under Print
– Click on Gridlines to print
gridlines.
– Click on Row and column
headings to print the headings.
 9.3 Print and print preview

CC Comput er act i vi t y 7.21 – Pri nt ing

• Click on the File tab.

• Select Print icon.
• This will open the following Print options and settings.

• Print preview is automatically displayed on the right-hand side of the screen.

• To print, click on Print icon/button.

Comput er act i vi t y 7.21 – Pri nt ing ( cont i nued)

• Copies – Set the number of copies you want to print.

• Printer – To which printer do you want to print your document? Leave

the default selection.

• Settings – Under Settings, the following print settings appear:

 Refer to the drop-down menus below when the arrows on the right-
hand side of the settings are clicked.

• The main settings include the following:

– What to print:
◊ Click on the first arrow next to the Print Active Sheets.
◊ Active sheet (print the sheet that is displayed)
◊ Entire workbook (print all the sheets in the file)
◊ Selection (print the range you have selected)
– Pages
◊ Define the range of pages you want to print – either print
everything or only certain pages (Pages: ? to ? ).
◊ Leave the default selection.

– Page orientation
 ◊ Select either Portrait or Landscape.

10. Summary
In this study unit, we looked at the basics of using Microsoft Office Excel as a
business application tool. We revised some of the basic principles of
mathematics, signs or operators and explained the components of a
spreadsheet. Workbook basics were also discussed, as well as operating and
formatting workbooks, ending with printing and page layout, all integrated into
various activities.

In the next study unit, you will be introduced to and shown how spreadsheets
can be used as a business application tool, performing both simple and
complex calculations to help you solve business and accounting problems. This
will be done by showing and explaining to you how to create different formulas
and use various functions – the real power of spreadsheet.
 STUDY UNIT 8
MICROSOFT WORD

IN THIS STUDY UNIT

1 INTRODUCTION
Microsoft Word or MS Word is a popular word-processing program used mainly for creating
documents, such as brochures, letters, learning activities, quizzes, tests, and students'
homework assignments. It was first released in 1983 and is a Microsoft Office Suite
application. The following is the logo for Microsoft Word:

2 WHAT IS MICROSOFT WORD USED FOR IN YOUR BUSINESS?

Here are some useful features available in Microsoft Word to make your business more
versatile and effective:

• Letters and mailings

o Businesses use Word to manage their outgoing correspondence needs. Mail
merge functions can automatically populate a letter template with contact and
address information, using databases you create in Word or other Office programs
such as Excel or Outlook, which you can import. Word can also print address labels
and envelopes.

• Creating documents and forms

o You can create any business document, including presentations, proposals,
company reports, plans, and budgets. Word’s design features are simple and easy
to use so that you can build a library of key forms such as memos, agendas,
invoices, and statements.
 • Producing promotional materials
o Word helps you create promotional and marketing materials like brochures, flyers,
and newsletters you can send out to prospects and clients. You can also format
and produce your own letterheads and business cards. This may be particularly
useful for small businesses that may struggle to pay third-party design and print
costs.

• Brand building
o You can standardise a letter or memo format that you design and save as a
template that the entire company can use. This ensures consistency of colour,
fonts, and effects. You can also download free Microsoft templates. Microsoft
groups some templates into style sets, so you could apply the same theme to a
range of marketing materials, documents, and forms, giving you a consistency of
branding.

3 CREATING A DOCUMENT IN WORD

With Word on your PC, Mac, or mobile device, you can:

▪ create documents from scratch, or a template

▪ add text, images, art, and videos
▪ research a topic and find credible sources
▪ access your documents from a computer, tablet, or phone with OneDrive
▪ share your documents and work with others
▪ track and review changes

3.1 How do I create a document in Word?

1. On the File tab, click New.

Tip: To start from scratch, select Blank document. Or, for practice using Word features,
try a learning guide like Welcome to Word, Insert your first table of contents, and
more.
 2. In the Search for online templates box, enter the type of document you want to create,
and press ENTER.

3.2 How do I add and format text in Word?

1. Place the cursor on the middle of the document and type some text.
2. To format, select the text and then select an
option: Bold, Italic, Bullets, Numbering, and more.
3.3 How do I add pictures, shapes, Smartart, chart, and more in Word?

1. Select the Insert tab.

2. Select what you want to add:
▪ Tables – select Table, hover over the size you want, and select it.
▪ Pictures – select Pictures, browse for pictures from your computer, select a stock
image, or even search Bing.
▪ Shapes – select Shapes, and choose a shape from the drop-down list.
▪ Icons – select Icons, pick the one you want, and select Insert.
▪ 3D Models – select 3D Models, choose from a file or online source, go to the
image you want, and select Insert.
▪ SmartArt – select SmartArt, choose a SmartArt Graphic, and select OK.
▪ Chart – select Chart, select the chart you want, and select OK.
▪ Screenshot – select Screenshot and select one from the drop-down list.

4 SAVING YOUR DOCUMENT TO ONEDRIVE IN WORD

4.1 How do I save my document to Onedrive in Word?

When you save your files to the cloud, you can share and collaborate with others, and get
to your files from anywhere – on your computer, tablet, or phone.

1. Select File > Save As.

2. Select OneDrive.

Save personal files to OneDrive – Personal, and work files to your company OneDrive.
You can also save to another location in the list or Add a Place.

3. Enter a descriptive name for the file and select Save.

5 DESIGNING AND EDITING IN WORD

5.1 How do I use styles in Word?

Styles templates apply a consistent font, font size, font colour, and spacing to headings,
paragraphs, and titling throughout your document.

1. Select the words, paragraph, list or table to edit.

2. On the Home tab, select a style.

If you don't see the style you want, click the More button to expand the gallery.
5.2 How do I apply themes in Word?

Themes add a professional look to your document.

1. Select Design > Themes.

2. Point to a theme to preview how it will look.
3. Select the theme you want.

5.3 How do I check spelling and grammar in Word?

Word marks misspelled words with a red squiggly underline and grammar mistakes with a
blue double underline.

1. Right-click the word.

2. Select a correction or select Ignore.

Note: Spelling and grammar check work a little differently in newer versions of Word and
Microsoft 365. You will use the Editor on the right-hand side of the top ribbon.
5.4 How do I find and replace text in Word?

1. Select Home > Replace.

2. For Find what, enter a word or phrase to search. For Replace with, enter the new text.
3. Select Find next, and then select:
▪ Replace to replace the first instance, or
▪ Replace all to replace all instances.

6 COLLABORATING IN WORD

6.1 How do I share my document in Word?

To share a file from within Word:

1. Select Share on the ribbon.

Or, select File > Share.

 Note: If your file is not already saved to OneDrive, you'll be prompted to upload your file
to OneDrive to share it.

2. Select whom you want to share with from the drop-down list or enter a name or e-mail
address.
3. Add a message (optional) and select Send.

6.2 How do I co-edit a document in Word?

After you have shared your document, you can work on that file at the same time with
others.

▪ For the best experience, work together in Word for the web and see real-time
changes.
▪ Under Share, you will see the names of who else is editing the file.
▪ Coloured flags show you exactly where each person is working in the document.

6.3 How do I track and review changes in Word?

1. To track changes, select Review > Track Changes.

2. To review changes, place the cursor before a change and select:
▪ Accept to keep the change, or
▪ Reject to remove it.
7 CHANGING MARGINS IN WORD

In Word, each page automatically has a one-inch margin. You can customise or choose
predefined margin settings, set margins for facing pages, allow extra margin space to allow
for document binding, and change how margins are measured.

1. Select Layout > Margins.

2. Select the margin configuration you want or select Custom Margins to define your own
margins.

8 INSERTING A TABLE IN WORD

For a basic table, click Insert > Table and move the cursor over the grid until you highlight
the number of columns and rows you want.
 For a larger table, or to customise a table, select Insert > Table > Insert Table.

Tips:

▪ If you already have text separated by tabs, you can quickly convert it to a table.
Select Insert > Table, and then select Convert Text to Table.
▪ To draw your own table, select Insert > Table > Draw Table.

9 CREATING NEWSLETTER COLUMNS IN WORD

1. To lay out the whole document in columns, select Layout > Columns.
2. Choose the option you want or choose More Columns to set your own column
format.

9.1 Making part of your document into columns

1. Select the paragraphs you want to lay out in columns.

2. Select Layout > Columns, and then choose the options you want.

10 CHANGING PAGE ORIENTATION TO LANDSCAPE OR PORTRAIT IN WORD

10.1 Changing orientation of whole document

1. To change the orientation of the whole document, select Layout > Orientation.
2. Choose Portrait or Landscape.

10.2 Changing part of a document to landscape

1. Select the content that you want on a landscape page.

2. Go to Layout and open the Page Setup dialog box.

3. Select Landscape, and in the Apply to box, choose Selected text.

11 INSERTING A HEADER OR FOOTER IN WORD

1. Go to Insert > Header or Footer.

2. Choose the header style you want to use.

Tip: Some built-in header and footer designs include page numbers.

3. Add or change text for the header or footer.

4. To eliminate a header, such as deleting it on the title page, select it and then check
the Different First Page box.
5. Select Close Header and Footer or press Esc to exit.

To delete, select Insert > Header (or Footer) > Remove Header (or Remove Footer).

12 INSERTING PAGE NUMBERS IN WORD

1. Select Insert > Page Number, and then choose the location and style you want.
2. If you don't want a page number to appear on the first page, select Different First
Page.
3. If you want numbering to start with 1 on the second page, go to Page
Number > Format Page Numbers, and set Start at to 0.
4. When you're done, select Close Header and Footer or press Esc.

Tip: To get back to a header or footer to make changes, double-click in the header or
footer area.
13 CONVERTING OR SAVING TO PDF IN WORD

1. Go to Export > Create PDF/XPS Document > Create PDF/XPS.

2. Select where you want to save your document, like OneDrive.
3. Check Options... to change properties.
4. Select Publish.

14 PRINTING MY DOCUMENT IN WORD

1. Select File > Print. On the right, you’ll see a preview of your document. On the left,
you'll see the Print button and the configurable Settings.
2. To see each page, click the arrow at the bottom of the preview, and if the text is too
small, use the zoom slider to adjust it.

3. Choose the number of copies you want, and choose the printer to use.
4. Explore Settings to print on both sides of the paper, change the paper orientation,
and other configurations. These functions will differ according to the capabilities of
your printer.

Note: For some settings, like printing in colour or black and white, select Printer
Properties.

5. When you're ready, select Print.

15 WRITING AN EQUATION OR FORMULA IN WORD

15.1 Inserting build-in equation

1. Select Insert > Equation or press Alt + =.

2. Select the equation you need.
3. See the ribbon for more Structures and Convert options.
15.2 Writing a new equation
To type an equation from scratch, press Alt += on your keyboard.
or
Insert > Equation > Insert New Equation.
Use your finger, stylus, or mouse to write your equation.
See the ribbon for more Structures and Convert options.

16 ADDING AN EQUATION TO THE EQUATION GALLERY

1. Select the equation you want to add.

2. Choose the down arrow and select Save as New Equation....
3. Type a name for the equation in the Create New Building Block dialog.
4. Select Equations in the gallery list.
5. Choose OK.

16.1 Editing equations

To change or edit an equation that was previously written,

1. Select the equation to see Equation Tools in the ribbon.

2. Choose Design to see tools for adding various elements to your equation. You can add
or change the following elements to your equation.
▪ In the Symbols group, you’ll find math-related symbols. To see all the symbols,
click the More button. To see other sets of symbols, click the arrow in the upper
right corner of the gallery.
▪ The Structures group provides structures you can insert. Just choose a structure
to insert it and then replace the placeholders, the small dotted-line boxes, with your
own values.

▪ The Professional option displays the equation in a professional format optimised

for display. The Linear option displays the equation as source text, which can be
used to make changes to the equation if needed. The linear option will display the
equation in either Unicode Math format, or LaTeX format, which can be set in the
Conversions chunk.
 ▪ It is possible to convert all equations in a document to the Professional or Linear
formats, or a single equation only, if the math zone is selected or the cursor is in
the equation.

17 CREATING A BIBLIOGRAPHY, CITATIONS, AND REFERENCES IN WORD

1. Put your cursor at the end of the text you want to cite.
2. Go to References > Style, and choose a citation style.

3. Select Insert Citation.

 4. Choose Add New Source and fill out the information about your source.

Once you've added a source to your list, you can cite it again:

1. Put your cursor at the end of the text you want to cite.
2. Go to References > Insert Citation, and choose the source you are citing.

3. To add details, like page numbers if you're citing a book, select Citation Options,
and then Edit Citation.

17.1 Creating a bibliography

With cited sources in your document, you're ready to create a bibliography.

 1. Put your cursor where you want the bibliography.
2. Go to References > Bibliography, and choose a format.

Tip: If you cite a new source, add it to the bibliography by clicking anywhere in the
bibliography and selecting Update Citations and Bibliography.

18 INSERTING FOOTNOTES AND ENDNOTES IN WORD

Footnotes appear at the bottom of the page and endnotes come at the end of the document.
A number or symbol on the footnote or endnote matches up with a reference mark in the
document.

1. Click where you want to reference to the footnote or endnote.

2. On the References tab, select Insert Footnote or Insert Endnote.

3. Enter what you want in the footnote or endnote.

4. Return to your place in the document by double-clicking the number or symbol at the
beginning of the note.
19 KEYBOARD SHORTCUTS
Keyboard shortcuts let you quickly perform tasks in one step, without reaching for the mouse
or finding a command on the ribbon.

You’re probably already familiar with a few keyboard shortcuts, like Ctrl+S, Ctrl+C, Ctrl+X,
and Ctrl+V, which are the Windows shortcuts for save, copy, cut, and paste. Here are some
more time-saving shortcuts when you're using Word on a Windows computer (US keyboard
layout):

20 WRITING AND FORMATTING

Insert hyperlink Ctrl+K
Undo Ctrl+Z
Redo Ctrl+Y
Select all Ctrl+A
Bold Ctrl+B
Italics Ctrl+I
Underline Ctrl+U

20.1 Finding what you need quickly

Find Ctrl+F
Find and replace Ctrl+H

20.2 Printing
Print Ctrl+P

20.3 Getting help

Open the Tell me search box Alt+Q

21 SUMMARY
In this study unit, you learned what Microsoft Word is, what it is used for in business and
by accountants as well as how to use the basic functions it has to offer.
 STUDY UNIT 9

MICROSOFT POWERPOINT

IN THIS STUDY UNIT

1 INTRODUCTION
Microsoft PowerPoint is one of the most popular software offerings for presentations.
PowerPoint is the presentation software of the Microsoft Office software suite, one of
the most widely used office programs. PowerPoint has applications for personal use,
academics and business. PowerPoint allows you to build your own presentations using
text, images, video, audios, and tables of data, and has a relatively simple user interface.
However, mastering each of its functions will allow you to create impressive
presentations to engage your audience. PowerPoint is compatible with all other software
in the Microsoft Office suite; you can export slides into Word documents or use Excel
charts within your presentation. It is highly customisable; you can edit PowerPoint
presentations to be as personal or professional as you want. Thus, PowerPoint has
conquered the presentations game (Visual Hackers, 2021; Techwalla, 2020).

The following is the current logo for Microsoft PowerPoint:

2 WHAT IS POWERPOINT?
If you have Microsoft PowerPoint or the entire Microsoft Office package installed
in Microsoft Windows, you can find PowerPoint in your Start menu. Keep in mind
that new computers do not automatically include PowerPoint. It must be
purchased and installed before it can run on your computer.

PowerPoint is sometimes abbreviated as PP or PPT and is a presentation

program developed by Microsoft that creates a slide show of important
information, charts, and images for a presentation. It is most often used for
business and school presentations.

3 BENEFITS OF USING POWERPOINT

The following are the benefits of using Microsoft PowerPoint:

• Easy to download and use virtually anywhere

PowerPoint is considered a standard product in many professional settings.
This allows you to take your user licence virtually anywhere to create the
graphics needed for your presentation. By putting your presentation on a USB
flash drive or in any cloud storage app, your PowerPoint presentation will be
available at any time. Using a PowerPoint presentation is so common, in fact,
that you may create a negative first impression if you don’t offer one (Visual
Hackers, 2021).

• Interesting presentation
Even interesting presentations can get drawn out and boring. With an
animated presentation, interesting quotes or other fun slides, you can capture
people’s attention once more (Brandongaille, 2016).

• Detailed customisation
PowerPoint gives you full control over the appearance of your slides, so that
you can align content, add annotations, use lists, and highlight important
 information visually. Images on a slide can be decreased or increased in scale
to fit your needs. It only takes a few clicks to insert, alter, and align images to
create a visual representation. You can even use arrows, pointers, or other
shapes to highlight key points (Techwalla, 2020).

• It is a simple process to create follow-along handouts.

You can print each slide directly from PowerPoint. Then you can copy those
slides to become a helpful handout for each presentation participant
(Brandongaille, 2016).

• Collaborative solution
Working from home is now a normal phenomenon. The Covid-19 pandemic
has caused rapid and significant changes. Tools that provide solutions for
working together with your team, even if you are in different locations, are in
high demand. PowerPoint has adapted to this situation. With its online cloud
storage, you can now work on presentations at the same time, or work on the
same presentation without sending it to each other (Brandongaille, 2016).

• Suitable for beginners

While training helps with using PowerPoint's advanced features, beginners
can quickly get started thanks to the program's huge selection of templates.
These templates come with a variety of backgrounds, layouts and themes.
You can search by project types such as résumés, posters or charts.

4 DISADVANTAGES OF USING POWERPOINT

• There’s always the chance of running into technical difficulties.

Even tech-savvy individuals can experience presentation issues when the
technology does not work as intended. The computer could stop working. Or
you could lose power to your outlet. The overhead display could be faulty. This
can very quickly alter the positive first impression of a presentation.
• Capturing your audience
As PowerPoint presentations are commonly used at conferences, business
meetings and universities, your audience will probably see a few before it is
your turn. You need to capture your audience’s attention from the outset with
the appearance of the presentation or your skills in presenting, otherwise they
will get bored and stop listening. Make sure you spend enough time preparing
your PowerPoint material; a good presentation with a fine speech will hit the
target (VisualHackers, 2021)

• Slides with too much information can become overwhelming.

Because so many options can be included in a PowerPoint presentation, one
can easily overdo the number of colours, sounds, shapes, and other items that
can be used. By adding too many things, you can detract from the information
that needs to be shared.

• It is not a substitute for what a presenter must do.

Many who use PowerPoint tend to rely on the information on the slide instead
of providing a learning narrative. It is easy to become too reliant on the
software and forget that there is an actual presentation that needs to be
completed.

• Costs are ongoing.

Because it is part of the Office 365 package, you no longer receive a
proprietary software licence for a specific price. You must pay a monthly or
annual subscription cost, which, over time, can add up to more than what the
proprietary licence once offered. You must also download the software to each
computer, which consumes data that may be capped in the case of small
business owners.
 • Some participants may tune out your narrative.
If your PowerPoint presentation is very detailed, some participants may focus
on your handouts and slides more than your actual narrative. This may make
it difficult to make the call to action that you want participants to follow at the
end of the day.

5 HOW TO START POWERPOINT

To launch the PowerPoint:
• Click on the Office Start button.

• Click on the PowerPoint icon from the options panel.

• The PowerPoint Template window will appear.
• To create a presentation from scratch, select Blank Presentation

• To use a prepared design, select one of the templates.

6 POWERPOINT FEATURES

Image Term Description

Number
1 Quick Access Toolbar Displays quick access to commonly used
commands.

2 Title Bar Displays the name of the open file.

3 File Tab It helps you to manage the Microsoft application and

provides access to options such as Open, New,
Save As, Print, etc.

4 Thumbnail Slide Displays a snapshot of each slide.

5 Title Placeholder Section where text is entered

6 Subtitle Placeholder Section where text and/or graphics are entered

7 Status Bar Displays information about the slide presentation,

such as page numbers.

8 Ribbon Displays groups of related commands within tabs.

Each tab provides buttons for commands.

9 Collapse Collapses the ribbon so only the tab names show.

10 Work Area Each slide has an area where text and graphics are
entered for a presentation. There are various slide
layouts to work from.

11 View Option Displays several view modes for slides.

7 SAVING A PRESENTATION
When you are ready to save your presentation, it is the same as saving any
other file in the Microsoft Office Suite (refer to study unit 7 – saving a file). You
can do any of the following:
• Select File, Save or Save As, and then select the location under
Recent to save the file, for example, a OneDrive location or This PC.
• If the location is listed, then select it and enter a suitable name. Then,
select Save.
• Otherwise, select Browse to locate a different folder in which to save
the file.

8 CREATING A NEW PRESENTATION

PowerPoint allows for an unlimited number of presentations to be created. When you
are busy with a presentation, you can create a new presentation by:

• Going to File and selecting New. Then select a template or theme, or

• Typing Ctrl+N to create a new blank presentation from the keyboard.

9 OPENING AN EXISTING PRESENTATION

There are many methods to open an existing presentation:

• Open PowerPoint and select the presentation from the Recent folder list.
• Go to File, then Open (Ctrl+O) and select the presentation from the Recent folder
list. Or, select the location, such as a OneDrive location or This PC and locate the
folder in which the file is stored. If you navigated to the wrong folder, select the Up
arrow to navigate back through the file system. When you find the presentation,
select it once and then select Open or Enter on your keyboard.
• Select Ctrl+F12 to access the Open dialog box, locate the folder in which the file is
stored, select it once, and then select Open or Enter on your keyboard.
• Access the context menu (right-click) and select Recent, and then select Open or
open a copy from the submenu.
9.1 ADDING A SLIDE

Once you have completed a slide, you can create a new slide by clicking on the New
Slide icon. Notice that your previous slides still appear on the left-side frame. You can
still access your previous slides by simply clicking on them from this location.

To add new slides:

• Click on the Home tab.

• Click on New Slide in the Slides group.
• Choose a slide layout.

This following will appear:

 Each slide in PowerPoint has a slide layout. Slide layouts contain formatting,
positioning, and placeholders for all the content that appears on a slide. By selecting
the drop-down arrow on the New Slide button, a different type of slide from the
available layout options is chosen.

PowerPoint includes nine built-in slide layouts. Depending on the theme that you are
using, you might have different layouts than the one in the following image:

9.2 DELETING A SLIDE

To duplicate a slide, perform the following steps:

• Select the slide thumbnail. You can select multiple slides by holding down Ctrl while
you select additional thumbnails.
• Right-click on the selected slide or slides or open the context menu.
• Select Delete Slide. The following screenshot depicts the slide thumbnail context
menu with Delete Slide highlighted:
9.3 ADDING CONTENT TO THE SLIDE

• Add any additional slides you need.

• Select the title placeholder and begin typing.
• Select the content placeholder and begin entering text or select one of the options
in the centre of the placeholder, such as the pictures option, to insert a picture from
your computer.

As soon as you begin entering text, the options will disappear. However, you can
simply go to the Insert tab and use the appropriate command to insert whatever you
need at any time. If there is more text than can fit into the placeholder, PowerPoint will
shrink the text to fit it all in. This is known as AutoFit. If this happens to you, you have
a couple of options:

• Resize the placeholder by dragging the resize handles outward.

• Turn off the AutoFit feature (the following link provides further information on how to
do this).
• Enter less text into the placeholder.
 If you add more text than can fit in a text placeholder, PowerPoint resizes your text to a
smaller font size so that all of it fits. Automatic text resizing is called AutoFit.

1. AutoFit Options button

2. Placeholder
3. Text that extends below the placeholder

Activity 9.1

Go to your e-tutor site and complete this activity.

Create a presentation using Microsoft PowerPoint. You have been shortlisted for a
new position or you want to apply for a position. The presentation should focus on
your personal interests, hobbies and the activities you do during the holidays. It
should exclude personal information such as ID number and cellphone number.

Application - Choices

Go to your Discussion Forum for study unit 9.

You are advising your line manager on the importance of using the Microsoft PowerPoint
for his presentation for the funding of a new project. Explain how you will convince your
line manager and which features (at least two) you will recommend and why.
10 SUMMARY
In this study unit, you have learnt about Microsoft PowerPoint, why it is used widely and
the benefits and disadvantages of using it.
In the next study unit, you will learn about another Microsoft application: Microsoft
Teams.
 STUDY UNIT 10

MICROSOFT TEAMS

IN THIS STUDY UNIT

1 Introduction

Microsoft Teams is a collaboration app built for hybrid work, so you and your team stay
informed, organised, and connected — all in one place. Explore how Teams can help you
and your colleagues come together, no matter where you are. Chat with or message
someone or a group to talk about work, projects, or just for fun.
In this study unit, we will be looking at why and how Microsoft Teams can be used. The
following is the logo of Teams which you should search for to download Microsoft Teams
on your laptop or mobile phone.
2 Availability of Teams

Teams is availability in all common operating systems:

- Online in every web browser, although voice and video calls are not supported.
- Desktop app for Windows (32/64)
- Desktop app for IOS
- Mobile app for Android
- Mobile app for IOS
- Desktop app for Linux (32/64)

Most smartphones have Microsoft Teams pre-installed when you buy a new phone in
South Africa.

According to the Southern Illinois University, the main reasons for supporting Microsoft
Teams are:

2.1 Teams empowers

Using Teams, no perspective is lost. It enables involvement from everyone on your team
from various backgrounds, age groups, and cultures. This sparks ideas and innovation that
would not have happened without getting all these people involved in one common thread
of communication.
2.2 Enhanced communication
Having conversations with one person or multiple people. Jazz up your messages with
emojis, stickers, and formatting tools. Show someone appreciation by sending them a
customisable “praise” card. Having conversations with your team ensures a constant thread
of communication that you can return to later.
2.3 Real-time collaboration
Easily share files with your team members and work on them together in real time. Should
you be working on the same file, you can see the exact spot in the file that your team
member is working on so that your work does not overlap. If you have a question about a
specific document, you may start a conversation and invite specific team members (or the
whole team) to discuss it — all without having to exit the document.
2.4 Streamlined meetings
Check team member availability and schedule meetings. Change your phone call into a
video call with the click of a button. Should you realise during a meeting that you need
another team member to be a part of it, you may invite them to join. Should you need
someone in a meeting that is outside of your team, you could invite them, too.
2.5 Seamless integration
Access websites, videos, surveys, and more from outside applications like YouTube,
SurveyMonkey, and Adobe PDF Reader, all without leaving Teams. Should you need to
access something while not on campus, you can access everything in Teams.

2.6 Reliable security

Users can trust the security of Teams channels, files, and projects with end-to-end security
powered by Microsoft Office 365.

According to J Chester (June 2020), the ten benefits of Microsoft Teams are:
1. The quick question
It is much quicker than using e-mail if you have a quick question for your co-worker or
student.

2. Microsoft Teams video calling

Video or regular audio calls are effortless. Simply press Join to attend a meeting,
Meet Now to start one or call someone without video, from any device.

3. Microsoft Planner App in Teams

This will help you to be and remain productive.

4. Fewer e-mail threads

Having fewer e-mail threads is a benefit of Microsoft Teams.

5. Integration with Microsoft Suite

Easily and effortlessly integrates with Microsoft Suite.

6. Making calls (and more) from any device

Teams is mobile friendly. Use Teams seamlessly on your phone, tablet, laptop or
desktop.

7. Scheduling meetings in Teams

Schedule meetings with ease.

8. Your activity feed

Start your day with a quick glance: who said what, when and where. See your most
urgent to-dos, mentions and messages, all in one place.
 9. Personalise your WFH office or room
Show your personality or make your office appear more professional with a
background.

10. Security
With the focus increasingly on cybersecurity and security of documents, files and
personal information, Teams makes this easy with all its built-in security and
encryption.

3 Microsoft Teams at a glance

Microsoft Teams has a very user-friendly interface. The diagram below shows you where
to find what at the click of a button.
Every team has Start a new Add tabs Use the command
chat Launch a Manage profile
channels Click one to box Search for
one-on-one or settings Change
see the files and Highlight apps, specific items or
small-group app settings,
conversations about services, and files people, take quick
conversation. change your pic, or
that topic, at the top of a actions,and launch download the
Move around Teams department, or channel. apps. mobile app.
project.
Use these buttons to
switch between
activity feed, chat,
Teams, calendar and
files.

View and organise

Teams Click to see
your teams. In the
teams list, drag a Manage your team
team name to
reorder it. Add or remove
members, create a
new channel, or Add files
Find personal get a link to the
team. Let people view
apps Click to find
a file or work on
and manageyour
it together.
personal apps.

Reply

Join or create a team Your message is

attached to a Compose a message
Add apps Find the team you’re specific
Type and format it
looking for, join with conversation.
here. Add a file, emoji,
Launch apps to a code, or make one
GIF, or sticker to liven it
browse, or search of your own.
up!
apps you can add to
Teams.
4 How do I sign into Microsoft Teams?

In Windows, click Start > Microsoft Teams.

On Mac, go to the Applications folder and click Microsoft Teams.
On a mobile phone, tap the Teams icon. Then sign in with your Office 365 username and
password. (If you are using Teams free of charge, sign in with that username and

password.)

5 How do I start a conversation in Microsoft Teams?

With the whole team... Click Teams , pick a team and channel, write your
message, and click Send .

With a person or group... Click New chat , type the name of the person or group in the
To field, write your message, and click Send

6 How do I pick a team and channel in Microsoft Teams?

A team is a collection of people, conversations, files, and tools — all in one place.

A channel is a discussion in a team, dedicated to a department, project, or topic. Click

Teams and select a team. Pick a channel to explore the Conversations, Files, and
other tabs.
7 How do I start a meeting in Microsoft Teams?
Click Meet now under the area where you type a message to start a meeting in a
channel.
(If you click Reply, then Meet now , the meeting is based on that conversation.) Enter
a name for the meeting, then start inviting people.

8 How do I make video and audio calls in Microsoft Teams?

Click Video call or Audio call to call someone from a chat.
To dial a number, click Calls on the left and enter a phone number. View your call history
and voicemail in the same area.
9 How do I reply to a conversation in Microsoft Teams?

Channel conversations are organised by date and then threaded. Find the thread you want
to reply to, then click Reply. Add your thoughts and click Send.

10 How do I @mention someone in Microsoft Teams?

To get someone’s attention, type @, then their name (or pick them from the list that
appears). Type @team to message everyone in a team or @channel to notify
everyone who favourited that channel.
11 How do I add an emoji, meme or GIF in Microsoft Teams?

Click Sticker under the box where you type your message, then pick a meme or
sticker from one of the categories. There are also buttons for adding an emoji or GIF.

12 How do I stay on top of things in Microsoft Teams?

Click Activity on the left. The Feed shows you all your notifications and everything that
has happened lately in the channels you follow.

13 How do I add a channel in Microsoft Teams?

Click by the tabs at the top of the channel, click the app you want, and then follow the
prompts. Use Search if you don’t see the app you want.
14 How do I share a file in Microsoft Teams?
Click Attach under the box where you type messages, select the file location and
then the file you want. Depending on the location of the file, you will get options for
uploading a copy, sharing a link, or other ways to share.

15 How do I work with files in Microsoft Teams?

Click Files on the left to see all files shared across all your teams. Click Files
at the top of a channel to see all files shared in that channel. Click More options
... next to a file to see what you can do with it.

In a channel, you can instantly turn a file into a tab at the top.

16 How do I search for something in Microsoft Teams?

Type a phrase in the command box at the top of the app and press Enter. Then select the
Messages, People, or Files tab. Select an item or click Filter to refine your search
results.
17 How do I find my personal apps in Microsoft Teams?
Click More added apps to see your personal apps. You can open or uninstall
them here. Add more apps under Apps. .

18 How do I add apps in Microsoft Teams?

Click Apps on the left. Here, you can select apps you want to use in Teams,
choose the appropriate settings, and Add.

19 Summary
In this study unit, you learned what Microsoft Teams is, how to use it, what it is used for
and why you should enjoy using it.
 S T U D Y U NIT 11

ACCOUNTING IN TECHNOLOGY
IN THIS STUDY UNIT

1 Introduction
Society is becoming more dependent upon computer and communications technology.
Many would argue that we have left the industrial age behind, and the information age
has taken over (ACC_ACCAKP_E1_202201, 2021:216).

2 Blockchain
A blockchain has been described as a decentralised, distributed and public digital ledger
that is used to record transactions across many computers so that the record cannot be
altered retroactively without the alteration of all subsequent blocks and the consensus
of the network (ACC_CIMAKP_E3_202201, 2021:488).

Alternatively, it has been defined by the Bank of England as a technology that allows
people who do not know each other to trust a shared record of events
(ACC_CIMAKP_E3_202201, 2021:488). It is used in cryptocurrency such as bitcoin. In
blockchain, transactions are basically publicly stored to form a shared ledger and
verification (Park, Kim, Kim, & Ryou, 2020).

2.1 Benefits of a blockchain

The main benefit of blockchain is security. In the digital era, cybersecurity is a key risk
associated with the use of IT systems and the internet. This is because traditional
systems have been “closed”, and so modifications to data have been carried out by just
one party. If the system is hacked, there is little control over such modification to prevent
it from happening (ACC_CIMAKP_E3_202201, 2021:488).

2.2 Features of a blockchain

According to ACC_CIMAKP_E3_202201 (2021:488), the following are the key features
of a blockchain:

• In a blockchain system, transactions are recorded by a number of participants

using a network which operates via the internet. The same records are
maintained by a number of different parties; as a transaction is entered, it is
recorded by not just two parties, but instead by all of the parties that make up
 the overall chain. This can happen because all the records in the blockchain
are publicly available and distributed to everyone that is part of that network.

• When a transaction takes place (e.g., between a buyer and a seller), the details
of that deal are recorded by everyone – the value, the time, the date and the
details of those parties involved. All the ledgers that make up the blockchain
are updated in the same way, and it takes the agreement of all participants in
the chain to update their ledgers for the transaction to be accepted.

• The process of verifying the transaction is carried out by computers; it is

effectively the computers which make up the network that audit the transaction.
If all the computers review the transaction and verify that the details are correct,
the systems of all participants in the blockchain have updated records. The
computers work together to ensure that each transaction is valid before it is
added to the blockchain. This decentralised network of computers ensures that
a single system cannot add new blocks to the chain.

• When a new block is added to a blockchain, it is linked to the previous block

using a cryptographic hash generated from the contents of the previous block.
This ensures that the chain is never broken and that each block is permanently
recorded. It is intentionally difficult to alter past transactions in the blockchain
because all the subsequent blocks must be altered first.

• It is this control aspect of blockchain technology which addresses the main

concern of cybersecurity. If anyone should attempt to interfere with a
transaction, it will be rejected by those network parties making up the
blockchain whose role it is to verify the transaction. If just one party disagrees,
the transaction will not be recorded.

2.3 Typical stages in a blockchain transaction

1.Transaction is requested.

2. A block is created as digital representation of the transaction.

 3. The block is sent to every node in the network (distributed ledger).

4. The nodes validate the authenticity of the transaction.

5. The nodes receive a reward or the proof of work, such as bitcoin

6.The completed authorised block is added to the chain.

Figure 11.1

Source: ACC_CIMAAKP_E1_202201, 2021:147

2.4 The relevance of blockchain technology to finance professionals

Much of the accountancy profession is concerned with ascertaining or measuring rights
and obligations over property, or planning how best to allocate financial resources. For
accountants, using blockchain provides clarity over ownership of assets and existence
of obligations and can dramatically improve efficiency. Ultimately, blockchain provides
an unalterable, transparent record of all accountancy-related data.

Examples of how blockchain can enhance the accounting profession include the
following (ACC_CIMAKP_E3_202201; 2021:490):

• Reducing the costs of maintaining and reconciling ledgers

• Providing absolute certainty over the ownership and history of assets, the
existence of obligations and the measurement of amounts owed to a business
and owed by a business
• Helping accountants gain clarity over available resources
• Freeing up resources to concentrate on planning and valuation, rather than
record-keeping.

3 Fourth Industrial Revolution

 The phrase Fourth Industrial Revolution (4IR) is defined as the advent of a “cyber-
physical system” (CPS) involving entirely new capabilities of people and machines.
While these capabilities are reliant on the technologies and infrastructure of the Third
Industrial Revolution (3IR), 4IR represents entirely new ways in which technology
becomes embedded in societies and even our human bodies. Examples include
genome editing new forms of machine intelligence, breakthrough materials and
approaches to governance that rely on cryptographic methods such as blockmail (Davis,
2016).

Thus, the 4IR is the age that represents revolutionary changes to everything and
describes the phenomenon as it aptly applies to both the technical shift of Second
Machine Age (2MA) and how people will live in it. In the 2MA, the technological progress
in digital hardware, software and networks is about automation of knowledge. It is
underpinned by (a) exponential growth of Moore’s law yielding a new regime of
computing, (b) the digitalisation of everything, and (c) the emergence of an infinite
number of combinational possibilities for innovation of the two. In this regard, transition
is profound, and the pace is massive amounts of data being collected (Penprase, 2018).
Therefore, the 4IR can be generalised as ‘‘a rapid and major change in an economy,
driven by a shift in the methods and types of work undertaken’’. It is a new phase where
the fusion of several technologies is not only automating production, but also knowledge.
Thus, the changes that are occurring, are happening now because humans have finally
developed the computing capacity to store massive amounts of data which in turn enable
machine learning. The outcome of this is the development of CPS, which emerged in
Germany around 2000. In 2016, the 4IR officially sounded an alarm that labour costs
were about to be disrupted and the way we live and work would be permanently altered
by the introduction of CPS (Davis, 2016; Penprase, 2018).

3.1 Understanding of CPS

The term “cyber-physical system” was coined in 2006 by the US National Science
Foundation (USNSC), with the hosting of several workshops on artificial intelligence (AI)
and robotics. CPSs are physical and engineered systems where operations are
monitored, coordinated, controlled and integrated by a computing and communication
core. How we live and work is transformed by CPS and other new technologies such as
3D-printing, the Internet of Things, blockchain and artificial intelligence. Just as the
internet transformed how humans interact with one another, CPS transforms how we
interact with the physical world around us.

3.2 Emergence and navigating the industrial revolutions

 Technologies emerged and are emerging that affect our lives in ways that are
unimaginable (according to ACC_CIMAKP_E1_202201, 2021:132; Davis, 2016; &
Penprase, 2018).

The First Industrial Revolution (4IR) occurred roughly between 1760 and 1830.
Characterised by the generation of steam, the development of craft industries and
mechanical production equipment, it fundamentally changed the basis of the economy
of the time for many countries. It entailed a shift from our reliance on animals, human
effort and biomass as primary source of energy to the use of fossil fuels and mechanical
power. Furthermore, it constituted a shift from rural, agricultural life to urban,
industrialised societies.

The Second Industrial Revolution (2IR) took place from 1870 to 1914, thus between
the end of the 19th century and the first two decades of the 20th century. It was
characterised by the division of labour, the generation of electricity, and mass
production. It brought major breakthroughs in the form of electricity distribution, both
wireless and wired communication, and new forms of power generation. This saw the
growth of vast corporations and a wave of globalisation.

Third Industrial Revolution (3IR): It began in the 1950s with the development of digital
systems, communication, and rapid advances in computing power, which have enabled
new ways of generating, processing and sharing information. It also emerged with the
development of Information Technology (IT) and electronics, which enabled more
efficient production. In 1969, it manifested as electronics, IT, automation, and
production. It saw a move from mechanical and analogue technology to the digital
technology of today and is known as the Digital Revolution. Developments and
improvements in communications, computers and the introduction of the internet were
some of the key drivers of this period of rapid change. We are now in the Fourth
Industrial Revolution (4IR).

3.3 Features of the Fourth Industrial Revolution

Each industrial revolution above impacted society in their own specific way. The
characteristics predicted to define the 4IR include:

• Fusion – cyber and physical systems will continue to fuse, becoming

increasingly autonomous
• Employment – robotics, automation and digitisation are predicted to make
many jobs redundant or fundamentally different to today
 • Artificial intelligence and machine learning – improved computing speed and
optimised supply chains enable products to be customised more easily and
more cheaply
• Machine-led manufacturing – the shift from machines helping workers
manufacture, to workers helping machines, will accelerate
•
Improved asset management – benefits to the natural world through more
efficient use of natural assets, a shift to renewables, innovations in recycling,
coupled with digitisation, are anticipated to benefit the natural world.
(ACC_CIMAKP_E1_202201, 2021:133).

3.4 4IR and new jobs

The most discussed issue is the potential for 4IR to increase unemployment, and thus
drive inequality. Many of the new jobs that will exist even ten years from now cannot be
predicted or imagined yet. However, it is predicted that the well-paying jobs are expected
to involve creativity, data analytics and cybersecurity, as there is dearth of talent in this
area. What is known is that the skills needed to take full advantage of the automation
economy are different from those that have been emphasised by higher education (HE)
institutions in the past. According to the World Economic Forum (WEF) “Future of Jobs”
report, the top ten skills that will be needed in order of priority by employers by 2020 are:

a. complex problem-solving
b. critical thinking
c. creativity
d. people management
e. coordinating with others
f. emotional intelligence
g. judgment and decision-making
h. service orientation
i. negotiation
j. cognitive flexibility

Active listening and quality control, which were the skills identified as needed in 2015,
are no longer needed and were replaced by cognitive flexibility and emotional
intelligence in 2020. This is because, as work becomes automated, it will also become
much more fluid, needing employees to be agile and able to jump between very different
types of tasks and contexts (Penprase, 2018).
3.5 Major areas of concern

In his article published by World Economic Forum Global Agenda, Davis (2016) predicts
three major areas of concern. These are inequality, security and identity, as explained
below:

• Inequality: The richest 1% of the population now owns half of all household wealth,
according to Credit Suisse’s Global Wealth Report of 2015. Oxfam’s new report
presents an even more dramatic concentration of assets, finding that 62 individuals
controlled more assets than the poorer 3.6 billion people combined, or half of the
world’s population. On the eve of the World Economic Forum, Sanders and Price
(2018) revealed that Australia’s richest 1% owned 23% of the country’s wealth. In
the previous year, the figure had risen to 22%, more than the bottom 70%
combined.
• Security: Increasing inequality does not only affect production, mental health and
trust, but also creates security concerns for both citizens and states. The Forum’s
Global Risks Report 2016 highlighted that a hyperconnected world, when
combined with rising inequality, could lead to fragmented segregation and social
unrest (Davis, 2016). This mix of factors creates the conditions for violent
extremism and other security threats enabled by power-shifting to non-state actors.
The combination of a digital world with emerging technologies is creating new
“battle spaces” and expanding access to lethal technologies. This makes it harder
to govern and negotiate among states to ensure peace.
• Identity, voice and community: As reflected above, 4IR is the first where the tools
of technology can become literally embedded within us and even purposefully
change who we are at the level of our genetic make-up. It is important that the
emerging technologies of the 4IR increase diversity and the potential for
collaboration rather than driving polarisation. Emerging technologies, particularly
in the biological realm, are also raising new questions about what it means to be
human.

3.6 Role of higher education institutions in the era of 4IR

According to Penprase (2018), HE is changing around the world already, as a result of

the fast-shifting global economy and types of employees and thinkers it demands. Thus,
HE is at the centre of massive change and transformation along with the rest of society,
as it is accessible to more people, more places, and more ways than ever in human
history. Evidently, it needs to change to better prepare thinkers of the 4IR, and several
good books have already been released on what needs to change. However, the
importance of interdisciplinarity is emphasised throughout, as learners of all ages must
meet the challenges of the automation economy with creativity and curiosity, automation
being a tangible reality for anyone in higher education. Among others, the following key
observations were made:

a. Today’s HE was designed to meet the needs of past industrial revolutions, with
mass production powered by electricity. Those systems are not suited for the
automation economy. Today’s learners of all ages are faced with major challenges
in demographics, population (both growing and shrinking), global health, literacy
inequality, climate change, nuclear proliferation and much more. Thus, as they
 leave university, the 4IR world makes significantly different demands on them than
have previously existed.
b. The design, construction and verification of CPS pose a multitude of technological
challenges, that must be addressed by a cross-disciplinary community of
researchers and educators.
c. Information transfer is no longer the sole purview of institutions of higher education.
Everyone is now responsible for lifelong learning and upskilling as the skills that
will carry one through as the content will always be changing. To develop these
skills, learning must go way beyond information transfer.
d. Although traditional undergraduate, graduate and research education will remain
important to society, space must be created for adult learners to continue their
learning as well.
e. In collaboration with governments and industry, HE must prepare lifelong learners
together.
f. Whatever was promised before by completing an HE degree, is not promised any
longer.
g. Neither a high school or undergraduate education, nor a master’s degree or a PHD
is enough.
h. Nearly everyone will work with AI; this means, what one majored in will not
determine one’s job or career. The content and a deep understanding of it matters,
but it is also about what one can do with it.
i. The information transferred through the traditional lecture and test format does not
get the student up very high in cognitive capacity ranks of higher-order thinking.

Therefore, education is a mechanism that must propose learning that serves to interact
with the context that demands certain skills to be efficient. Thus far, the change in HE
has been considered inadequate, although some institutions are trying to adapt. As
classified by Bloom’s taxonomy of higher learning, remembering, understanding,
applying, analysis, evaluating and creativity are six levels of learning and knowing
(Penprase, 2018). Ultimately, university systems are responsible for training the
accounting professionals in the development of new skills of the new accountant and
auditors. This requires the innovation and updates that respond to the 4IR, without
neglecting the social and ethical responsibilities of anti-corruption (Gómez Méndez &
Janampa Acuña, 2020).

3.7 Skills level of public accountants in the digitalised economy

According to Stablings (2020), accounting and data processing are intertwined, but the
development of concepts that adequately reflect the changing situation is delayed.
During the last two decades, institutions have focused on integrated internal data
processing and receiving data from or transference to other institutions using
communication infrastructure. Now, the focus is on uploading data – fixed paper
documents – to computer media without using the keyboard, because this task requires
a lot of staff time and diligence. The use of computer version devices and elements of
AI allows automation accounting data input processes.

A study conducted by Gómez Méndez and Janampa Acuña (2020), intended to find
whether public accountants are qualified to face the 4IR and analyse the professional
 skills of accounting to provide services in the digitalised economic entities in Peru,
reached the following conclusions:

a. Although the 4IR does not replace public accountants, they do require new skills.
b. Accounting practice, which is a science that accountants cannot escape, is not
immune to the changes of globalisation and digital internalisation. Thus, for
chartered accountants (CAs), the arrival of the 4IR poses a dilemma common to
the profession.
c. Accountants (accounting and auditing professionals) are (in reality) not prepared
to take on and not ready to face the challenges of the 4IR. They seem to fail in
critical thinking, analysis and solving complex problems.
d. Skills that continue to grow in importance towards 2022 include analytical thinking,
innovation, active learning and learning strategies, as well as human skills such as
creativity, originality and initiative.
e. The accounting profession must expand its horizons and open itself to the
internalisation of financial markets and the advances of ICT and big data, which
are required to meet the demands of business organisations and users of
information.

The users of information and big data and users of information topics are covered
comprehensively in study units 1 and 6, respectively).

4 Enterprise systems

These are accounting information systems (AIS). According to Klaus, Rosemann and
Gable (2000), enterprise systems are commercial software packages that enable
integration of transactions-oriented data and business process throughout an
organisation. They include enterprise resource planning (ERP), software and related
packages, such as advanced planning and scheduling sales force automation, and
product configuration.

4.1 What is an ERP?

Many organisations prefer to use one computer system that can be used throughout
the organisation by integrating all the functions. Thus, ERP is that system integrating
management information through the management of the flow of data across the entire
enterprise (Khoualdi & Basahel, 2014). In this regard, it integrates the data gathering
and data processes of departments and functions into one singIe system of integrated
applications. It handles the vital operations of the entire organisation and often includes
some functions of the strategic and technical level of the organisation as well. Examples
of an ERP are SAP and Oracle (Booyse, Leonard, Scott & Viviers, 2017). These will be
dealt with below.

4.2 Why companies buy an ERP system

According to (Khoualdi & Basahel, 2014) companies acquire the system because of the
following:
 a. The application of ERP systems improves the performance of an organisation
in its daily operations by addressing inefficiency of institutional processes.
Through automating business processes, operational efficiency is enhanced,
and access to information eased.
b. To simplify the management and operations of large-scale companies that
have grown organically or through acquisition, where this involves multiple
currencies, offices or business areas.
c. To replace or upgrade an outdated, unwanted or ineffective existing ERP
system. This can involve improved information management through the
promotion of access to information, reducing duplication and improving
predictive capabilities.
d. ERP deals with many complex and overlapping business problems. Most
organisations expect to receive trade benefits through ERP implementation.
One of these benefits is to achieve the financial goals of the company through
productivity gains and efficiency resulting from business process automation.

4.3 Application of an ERP system

According to Faccia, Mosteanu, Fahed and Capitanio (2019), AIS are fundamental for
the recording of accounting transactions and for the preparation of financial statements,
as required by the legislation governing financial accounting. Thus, the application of
ERP has contributed to numerous changes in accounting information systems in the
modern era of networked computing. The most significant are:

a. Elimination of routine tasks of accountants, since the tasks that were once
performed by accountants are now performed by computers. In fact, they are
aimed at serious tasks such as analysis and performance measurement.
b. Although the application can imply the loss of some basic traditional accounting
skills, the requirements that are set before the accountants, are not reduced in
scope and complexity.
c. Operational management possesses require a lot more accounting knowledge,
which confirms the necessary decentralisation of that knowledge. Additionally,
the management is responsible for its own activities.
d. A large part of routine accounting tasks is done centrally and automatically,
while the coordination and preparation of various operational reports are
entrusted to the ERP.
e. Some of the traditional accounting tasks are transferred to other employees in
the enterprise, the most important being the issue of adequate high-quality
information support to management owing to ERP.
f. On the basis of advanced technology, the so-called centres of excellence arise,
that is, the teams of specialists who perform more demanding tasks, such as
statutory (financial) and tax reporting, including internal audit.

Also refer to study unit 2 on the accounting information system implementation in an

ERP environment and decision-making.
 The following diagram explains an ERP system (Booyse et al, 2017):

INPUT

OUTPUT
Data from transactions
with customers
Information for managing
production
(processes and products)
Data from transactions
with suppliers

Information for managing

ERP customer relationships
CRM
Data from employees
(hours worked, etc)

Accounting information
(general ledger, asset
Data about product register, cash books)
inventories

FIGURE 1 1 . 1 : Explanation of an ERP s y s t e m

4.4 Advantages and disadvantages of an ERP system

They are presented in the following table:

Advantage
Any authorised user (restricted to a profile)
linked to the server with a computer, has
access to the authorised information.
An ERP is a system that is implemented
throughout the organisation.
It makes processes and workflow more
efficient.
It eliminates expensive and inflexible
systems.
Has a familiar interface, menus across all
modules.
It improves tracking and forecasting.
Disadvantage
An ERP is expensive and time
consuming to implement.
It is difficult to implement changes.
Risks arise when using only one
vendor.
If implementation fails, all
departments have a problem.

Data only captured once will then be It might fail to live up to expectations;
available to all modules connected to ERP. however, this is a risk inherent to
 It is easier to upgrade only one system. any system.

4.5 Role of accountants

With the rise of implementation of ERP at the end of the 20th century and the beginning
of the 21st, public accountants have an imperative to develop new skills and
competencies to manage information systems. They must be broadly knowledgeable
about digital data and achieve the valid evaluation of the overdose of digital information.

Increasingly, their work is becoming more complex. The more demanding role of
accountants implies high analytical ability of data interpretation, a broad knowledge of
the business and information technology, a willingness for teamwork, strategic thinking,
communication and interpersonal skills as well as the ability of ethical evaluation and
decision-making. On the other hand, management accountants are required to have a
much higher level of knowledge of multidisciplinary tasks (Sanchez-Rodriguesz, &
Spraakman, 2012).

5 SAP

As mentioned above in defining what an ERP is, through a single, comprehensive ERP
system, many companies have introduced new systems that help in upgrading and
managing their daily business, reserves, and processes, and linking the sections. Many
companies specialise in building these systems. The most famous such company is
SAP, which produced a product that bears its name (SAP). The SAP program, which
began in 1972, was developed initially by three German programmers working for
International Business Machinery (IBM). Its main activity is to produce management
programs that help enterprises improve their businesses and connect them into one
system. The objective was to ensure its coherence and efficiency without having to use
several software systems from different companies, which are expensive and most often
purchased by the largest companies. SAP has evolved the software until it has become
a comprehensive program for all sections of a company, whether small, medium or large.
The applications in SAP are called modules and they are connected, but usually one
can buy one module or more separately according to one’s needs. It is now one of the
latest companies that provide practical business solutions (Khoualdi & Bashel, 2014).

6 Relationship between SAP and ERP software

SAP was found to be one of the best, the most popular and the most widely accepted
ERP software in a study conducted in Serbia. However, results showed the following:

a. The process of implementation of SAP and its initial phases, is complex, and
more attention is devoted to configuring the basic modules.
b. In one of enterprises surveyed, the implementation process itself has lasted for
more than 18 months and has still not ended. This resulted in simultaneously
using both SAP and the old software solution. Thus, a longer time necessary for
the full implementation of SAP can be conducted in a subsequent appearance of
expected effects.
 c. A time gap was identified between the moment of the implementation of the
system and the first positive effects less involved with data entry, thus allowing
them to undertake more analysis – as non-financial information is more
extensive.

6.1 Management accounting changes for companies using SAP

The role of management accountants has changed significantly. A study was done by
Malinic and Mirjana (2012), in relation to how management accounting changed under
the influence of ERP in industrial enterprise, given the intensive application of ERP
systems for the companies using SAP. It was concluded that SAP reduces the time
required for the traditional tasks of management accounting, while increasing the time
required for the activities of data analysis performance measurement and subtle
strategic reporting. Although SAP does impact the management accounting, that impact
is relatively modest in relation to the expectations. Thus, there is no strong causal
relationship between implementation of SAP and changes in practice of management
accounting. That is, the stabilising effect on management accounting is more
widespread.

7 Oracle

Since Oracle database is a popular product, its performance will impact many
applications in information systems. With the development of computer network and
database technology, information management has become the core of many
enterprises, while database is all business foundation; its importance is self- evident.
Oracle is a relational database, attempting to stay the world leader and maintain the
biggest market share. But, in the early days in China, although a large relational
database, generally only large enterprises were able to use it. Along with the shared
SQL, a multithread server system structure was introduced. This greatly reduced Oracle
resource usage and increased Oracle compatibility and processing ability, on a low-
grade soft hardware platform with fewer resources to use. According to Greenwald,
Stackowiak, and Stern (2013), over the past approximately 30 years, Oracle grew from
being one of many vendors that developed and sold a database product to being widely
recognised as the database market leader. In Oracle, the term “database” refers to the
physical storage of information, and the term “instance” refers to the software executing
on the server that provides access to information in the database and the resources that
software uses. Oracle includes many features that make the database easier to manage.
Although early products were typical of a startup company, the Oracle Database grew
such that its technical capabilities are now often viewed as the most advanced in the
industry. The foundation of Oracle’s database Server is known as Oracle Database
12c”.

7.1 Oracle Database 12c

Oracle releases new versions of the flagships database every three to five years. With
each database release, Oracle has improved the scalability, functionality, and
manageability of the database. New releases typically follow themes and introduce a
 significant number of features. In recent releases, these themes are indicated in the
product version’s naming. Typically, the terms “Oracle” and “database” are used when
describing them. In 2012, Oracle Database 12c appeared to be used somewhat
interchangeably as it included all the features of previous versions. It was released in
2013 and introduced a number of deployments. Today, enterprise Manager 12c
continues to be a framework used for managing the database (Greenwald, Stackowiak,
and Stern, 2013).

7.2 Managing the Oracle Database

Manageability and rapid provisions features are especially useful in the private and
public cloud computing environment, where hardware infrastructure and the database
are delivered as a service over a network, building upon capability introduced in previous
releases. There are three fundamental types of physical files that make up an Oracle
database. They are:

• Control file
• Data file
• Redo log files

Oracle also offers an Application Server and Fusion Middleware business intelligence
tools and business applications (the e-business suite, PeopleSoft, JD Edwards, Siebel,
Hyperion and Fusion, among others).

7.3 Database application development features

Oracle database is typically used to store and retrieve data through applications. All
versions of the Oracle database include language and interfaces that enable
programmers to access and manipulate the data in the database. Database
programming features usually interest developers who create Oracle-based applications
to be sold commercially, or Information Technology organisations building applications
unique to their business. Data in Oracle can be accessed using SQL/XML, XQuery, and
WebDev. Programs deployed within the database can be written in PL/SQL and Java
(Greenwald, Stackowiak, and Stern, 2013).

7.4 Optimisation of Oracle system

Optimising the Oracle system is becoming more and more important (Yang & Yang:
2012). According to Park et al (2020), as blockchain-based application and research
into, for instance, cryptocurrency increase, an Oracle problem to bring external data in
the blockchain is emerging. Among the methods to solve the Oracle problem, a method
of configuring practice-based transport layer support (TLS), and existing internet
infrastructure have been proposed. However, these methods have the disadvantage of
not supporting privacy protection for external data, and limitations in configuring the
process of a smart contract based on external data verification for automation.

7.5 Pastel

According to Tapang and Jones, 2018, Sage Pastel accounting software is the preferred
choice for many businesses. The accounting payroll ERP and business solutions allow
 for effortless daily financial management. This will enable customers to go “beyond
accounting” and focus on business.

8 E-commerce and digitalisation

In years to come, we will look at 2020 as the moment that changed everything. Nowhere
else has such unprecedented and unforeseen growth occurred as in the digital and e-
commerce sectors amid the Covid-19 crisis. While most sectors experienced slowing
economic activity, Covid-19 has led to a surge in e-commerce and accelerated digital
transformation. As lockdown became the new normal, business and consumers
increasingly “went digital”, providing and purchasing more goods and services online,
raising e-commerce’s share of global retail trade from 14% in 2019 to about 17% in
2020. These and other findings are showcased in a new report, Covid-19 and E-
commerce: A Global Review, by UNCTAD and e-Trade, for all partners, reflecting
powerful global and regional industry transformation recorded throughout 2020. At an
event to release the report, UN General Assembly President, Bozkir, said that that the
trend towards e-commerce was likely to continue throughout the recovery from Covid-
19. Thus, we need to recognise the challenges and take steps to support governments
and citizens as they continue to embrace new ways of working. Since the outbreak of
the pandemic, all e-Trade partners have worked together to raise awareness of the e-
commerce opportunities and risks emerging during the crisis. They also identified ways
in which businesses in developing countries could overcome the challenges. In this
regard, the Covid-19 repository launched in the fall of 2019 and e-commerce report are
the initiatives’ latest collective efforts to build a sustainable digital future (United Nations
Conference on Trade and Development news 15 March 2015).

8.1 E-commerce

Electronic commerce, also known as e-commerce, is the online business process of

selling, buying, delivering, servicing and paying for products and services over computer
networks such as the WWW or the internet.

The objective of e-commerce is to add and expand revenue streams, enhance

relationships with customers and business partners and improve efficiency using
computer networks. It is important to remember that although the largest part of e-
commerce is conducted entirely electronically, some part will entail manual interaction,
as a service that has to be rendered or a product that is sold, must be physically
transported and delivered to a customer.

Driven by e-commerce’s capabilities to empower clients, many companies are moving

from the traditional push business model, where manufacturers, suppliers, distributors
and marketers have most of the power, to a customer-driven pull model
(ACC_CIMAKP_E3_202201; 2021:155).

8.2 The main e-commerce categories

According to Unisa (Booyse et al, 2017), e-commerce can be divided in five main
categories, differentiated according to the participants.
 • Business-to-business (B2B): Both participants in the electronic transaction are
organisations, for example when a wholesaler sells to a retailer. Depending on
the e-commerce interface provided by the wholesaler, possibly through its
extranet, the retailer will be able to place orders, track the delivery of the orders,
search for new products and so on, all online.
• Business-to-consumer (B2C): This is one of the better-known e-commerce
categories and involves an organisation selling its product or service directly to
the public. You, a Unisa student, can for example electronically order and pay
for your prescribed textbooks using www.kalahari.net or www.vanschaik.com.
The business Van Schaik Bookstore sells textbooks, the product, directly to
you, the Unisa student as customer. bidorbuy (www.bidorbuy.co.za) is another
well-known example, where the sellers are often businesses, but a C2C site as
well.
• Consumer-to-consumer (C2C): C2C is an online version of the classified pages
of a newspaper, where consumers can sell their products or services directly
to other consumers. Gumtree and Junkmail are good examples of C2C e-
commerce sites.
• Consumer-to-business (C2B): This is a less well-known and used category,
where a consumer can post his request for a product or service online,
indicating the details for the product or service needed, that is, amount
available, delivery dates and other specifications. Organisations can then
review the consumer’s requirements and bid on the project. Based on the bids,
the consumer can then select the organisation that delivers the product or
service.
• E-government: This allows governments to transact with organisations, their
citizens, and other governments. For example, SARS e-filing
(www.sarsefiling.co.za) can be used by organisations and citizens to file their
tax returns and make payments to SARS. South African citizens can enquire
about their ID book, passport and permit application status and can verify their
marital and ID status by using the Department of Home Affairs website
(www.home-affairs.gov.za).

8.3 Action points for e-commerce

They are:

a. Governments need to prioritise national digital readiness so that more local

businesses can become producers of digital economy, and not just consumers.
b. Building an enabling e-commerce ecosystem requires changes in public policy
and business practices to improve the digital and trading infrastructures,
facilitate digital payments and establish appropriate legal and regulatory
frameworks for online transactions and security.
c. The approach should be holistic. Policies should not be made in silos.
d. To capture value form digital trade, entrepreneurship must become central
focus. This requires faster digitalisation for smaller businesses and more
attention to digital entrepreneurship, including reskilling, especially of women.
 e. Countries also need better capabilities to capture and harness data and
stronger regulatory frameworks for creating and capturing value in the digital
economy.
f. The international community needs to find new, bold and smart ways to work
with governments and the private sector to leverage these opportunities.
According to Bozkir, the digital divide which was real long before Covid-19, is
a challenge which can be removed through our collective efforts and
international support (Source: UNCTAD Article: How Covid-19 triggered the
digital and e-commerce turning point, 2021).

8.4 Advantages and disadvantages of e-commerce

Advantages
Direct customer relations: Organisations can
interact directly with their customers, thereby
el i minating third parties (the intermediary).
Through this direct contact with customers,
organisations can obtain knowledge of their
customers’ buying behaviour and
preferences. Using this intimate customer
knowledge, customer service can be
enhanced, and customer loyalty increased. A
further effect of the el i mination of third parties
is that services and products can be offered
to customers at reduced cost.
Disadvantages
Product expectations not met: Customers are
not physicall y able to touch or see the
products, as only pictures and/or descriptions
of the products and goods are available on the
business website. The customers’
expectations of the product/ service bought
and then actual l y received may be material l y
different. This can cause customer complaints
and negatively affect the organisation’s
reputation. The Consumer Protection Act 68
of 2008 protects customers where products
del i vered are not the promised product.

Always open for business: While most Technological costs: Appropriate hard- ware,
traditional business are l i mited to working software and staff with the correct technical
hours, organisations using e-commerce are skills are needed to set upland operate an
open 24/7, that is, 24 hours seven days a effective e-commerce site. The costs to
week. These prolonged shopping hours obtain and maintain these i tems can be
make i t more convenient for their material.
customers.
Access to global markets:
Through e-commerce, organisations can
reach customers anywhere i n the world, as
long as the customer has internet access.
This al l ows an organisation to explore new
markets and opportunities, as i t i s not
limited to the geographical area in which the
organisation has physical stores. Global
access offers opportunities for developing
organisations and countries, and levels the
playing field.

Source: (Booyse et al, 2017).

8.5 Digitalisation
 Digitalisation refers to the technical process of converting analogue or traditional paper-
based tasks or processes to digital form so that computers can help in accessing, storing
and transmitting information. By contrast, it refers to sociotechnical process of
leveraging digitalised products or systems to develop new organisational procedures,
business models or commercial offerings. Thus, it denotes partially or fully converting
elements of firm value-chain activities and business models to using emergent digital
technologies (Amankwah-Amoah, Khan, Wood & Knight, 2021). Study unit 5, which
deals with the broad concepts of digital disruption, forms the basis of understanding the
concepts of applying digitalisation and what to consider towards being digitalised,
especially post Covid-19, which is seen as the great accelerator of digitalisation.

8.6 Applying digitalisation in enterprises and redefining business models

A business model (BM) is a function that maps business enterprise to its customers
and/or stakeholders. The success of a business idea depends significantly on the
comprehensive development, durability, and mapping of the parameters of the applied
BM. It is evident that a successful BM is strongly linked to rigorously scrutinised and
established BMs. Anticipating the significance of the interactions among the established
BMs in certain newer BMs for better value to customers, Framework was coined and
developed (Kumar & Lindgren, 2017). As digitalisation is redefining products and BMs
worldwide, evidence abound in the construction industry as a sector that is slow to its
adoption. While digitalisation tools have been applied in modifying processes or
procedures in the global north, a larger percentage of the sector in the global south is
yet to be disrupted. For indigenous firms to join rapid transformation, the
interrelationships between digitalisation and building information modelling was studied.
Results revealed production task and goal attainment, information or communication
technologies, workforce, innovation, learning and knowledge management as well as
conflict and dispute resolution as the prevalent cultural orientation. The availability of
resources to communicate, interact and collaborate digitally and leadership to organise
and coordinate digitally, are the top two strategic capabilities. On strategy, firms need
support from institutions or government on policies that will cushion the effect of the
provisions of resources for transformation (Zakariyyah & Ijaola, 2020).

8.7 Fast-tracking of digitalisation by Covid-19

Inspired by a burgeoning of scholarly interest in the role of digitalisation in the Covid-19

pandemic, Amankwah-Amoah et al (2021) conducted a study on how it was driving and
constraining the digitalisation of business around the globe. They established that it is
the “great accelerator” in fast-tracking the existing global trend towards embracing
modern emerging technologies, ushering in transformation in lifestyle, work pattern, and
business strategy. Thus, it has evolved to be a “catalyst” for the adoption and increasing
use of digitalisation in work organisations and the office, alongside presenting foreseen
and unforeseen opportunities, challenges and costs, leading to positive feedback. Whilst
digitalisation may bring new opportunities, the process imparts risks that may be hard to
mitigate or prepare for.

8.8 Barriers in the adoption of emerging technologies

 The adoption of emerging technologies may be hindered by vested external interest,
nostalgia, and employer opportunism, as well as negative effects on employee well-
being that undermine productivity, work-life balance, and future of work. Despite the
importance and effects of digitalisation, coupled with emergent research on implications
of the pandemic, and the proliferation of accounts on Covid-19’s likely impact, scholarly
work exploring the challenges confronting firms and their workers in transitioning to
digital technologies in the wake of this new environment challenge is only emerging.
Psychological barriers to the adoption of these emerging technologies are hampering
the efforts of firms and their decision-makers to embrace digital platforms. With
digitalisation, the stakes are high.

8.9 Areas of technology that will thrive post the pandemic

In an article, Mika Ruokonen, business director at Futurice, identified four areas that are
set to boom post the pandemic:

a. Data-enabling healthcare initiatives will increase: With the right privacy links in
place, the resulting massive increase in healthcare data represents an opportunity
for various data and artificial intelligence (AI). Specialists will develop useful
solutions that will help reduce risks of contagion and relieve consumer anxiety,
while also providing reassurance to help them cope with these difficult times. As
consumers focus much more on their health, testing is the order of the day, whether
for Covid-19 or other medical conditions.
b. Scalable digital business models (BMs) will start replacing product-focused
operations: As covid-19 pressurises the global supply chains of companies such
as Best Buy, Wayfair, Nike and Gap, companies will increasingly start to build
resilience in their businesses with complementary product-focused models with
scalable and stable digital alternatives. This might include business diversifying
from their core offer to sell data and AI assets to third parties. For example,
supermarkets such as Walmart already sell point-of-sales data to brands who use
it to ensure adequate stock of products in their warehouse and to promote real-
time availability of their product in grocery stores. Beyond retail, we can expect the
digital-enabled sharing economy to accelerate into B2B much more rapidly as
businesses face urgent pressure to find smart and quick ways to slash costs and
monetise existing assets.
c. E-commerce will experience a renaissance: Due to self-isolation, consumers who
normally visit physical stores are increasingly shopping online. Consequently, e-
commerce is booming, especially when it comes to tinned goods, pasta, health and
sanitary products. The uptake in e-commerce will become permanent if people
remain wary of mingling in real life and increasingly replace shop visits with online
purchases. Some logistics platforms are already revamping their concepts to
match the new market circumstances by enabling retailers to home-deliver fast.
d. Digital collaboration and entertainment tools should see an upsurge in valuation:
as companies rapidly and, in some cases, also permanently move towards remote
working, the market for digital collaboration tools such as Microsoft Teams, Google
Hangouts and Zoom is likely to grow exponentially. Zoom has already experienced
a 50% increase in its share price since the start of 2020. Instead of visits to
concerts, museums and events, consumers are seeking equivalent augmented
reality (AR) and virtual reality (VR) experiences which can be enjoyed safely while
 sitting on the sofa. Hand in hand with this, we are already seeing a growing demand
for digital media and entertainment, including gaming, social media, news, video-
streaming and books, as people seek to relieve boredom and fill time previously
taken up with travelling and socialising face to face (Ruokonen, 2020). PwC (2020)
and Dimelgani (2021) estimated that AR and VR applications have a potential to
deliver a £1,4 trillion boost to the global economy by 2030.

8.10 Solutions

In sectors that are less impacted by the pandemic, businesses need to fundamentally
rethink what creates value, what is important right now, and in the future, and what role
digital innovation can play in making new things happen. Companies which stay human
and customer focused and manage to quickly innovate new digital businesses to solve
problems created by the new condition, are best placed to seize any nascent
opportunities. Right now, it is essential for businesses to create and maintain a strong
and pervasive digital culture. As work becomes increasingly remote, leadership styles,
mindsets, habits and ways of working matter now more than ever. Winning cultures
encompass trust in people, transparency of work, caring for others as well as continuous
learning. Nurturing these important values during difficult times will ensure that firms
retain their digital talent, get things done and continue to thrive (Source: article by Mika
Ruokonen, a business Director at Futurice).

9 Current trends
9.1 Artificial intelligence (AI)

Although artificial intelligence techniques such as machine learning are not new, and the
pace of change is fast, widespread adoption in business and accounting is still in
relatively early stages. Increasingly, we are seeing systems that are producing outputs
that far exceed the accuracy and consistency of those produced by humans. In the short
to medium term, AI brings many opportunities for finance professionals to improve their
efficiency, provide more insight and deliver more value to businesses. In the longer term,
AI brings opportunities for much more radical change, as systems increasingly carry out
decision-making tasks currently done by humans (ACC_CIMAKP_E3_202201;
2021:474).

AI, no doubt, will contribute to substantial improvements across all areas of accounting,
equipping those in finance with powerful new capabilities, as well as leading to the
automation of many tasks and decisions.

Examples include:

• using machine learning to code accounting entries and improve on the accuracy of
rules-based approaches, enabling greater automation of processes
 • improving fraud detection through more sophisticated, machine learning models of
“normal” activities and better prediction of fraudulent activities
• using machine learning-based predictive models to forecast revenues
• improving access to, and analysis of, unstructured data, such as contracts and e-
mails (ACC_CIMAKP_E3_202201; 2021:474).

Despite the opportunities that AI brings, it must be remembered that it does not replicate
human intelligence. The strengths and limits of this different form of intelligence must be
recognised, and we need to build an understanding of the best ways for humans and
computers to work together (ACC_CIMAKP_E3_202201; 2021:474).

9.2 Cloud and mobile computing

Cloud and mobile computing is computing based on the internet. It avoids the needs for
software, applications, servers and services stored on physical computers. Instead, it
stores these with cloud service providers who store these things on the internet and
grant access to authorised users.

Benefits of cloud and mobile computing

• Store and share data – cloud services can often store more data than traditional,
local physical drives, and the data can be shared more easily (regardless of
physical location).
• On-demand self-service – customers and users can gain access to technology on
demand. For example, every time you download an app from iTunes or the Play
Store, you are downloading it from a cloud service where it is stored
(ACC_CIMAKP_E3_202201; 2021:475).

A simple example of how cloud and mobile computing might be of use to finance
professionals, can be seen in the budgeting process. Any organisation which has a
number of different locations (such as a multinational company), has historically
experienced difficulties and time delays in constructing budgets which require input from
people in different places. Cloud computing means that budget templates can be worked
on simultaneously by many people, without them having to be in the same location
(ACC_CIMAKP_E3_202201; 2021:476).
10 Cryptocurrencies

Blockchain has the potential to deal with some unique sets of requirements like
confidentiality and immutability and can therefore be deployed in many areas other than
cryptocurrency. Bitcoin is a digital currency that was introduced in 2009. Other
cryptocurrencies exist, such as Ethereum, Cardano, XRP and Solana. Cryptocurrencies
are being developed at a heightened and intensified rate, with decentralised finance
(DeFi) and non-fungible tokens (NFS) being the latest additions to the crypto market.
Bitcoin is the oldest cryptocurrency. There is no physical version of bitcoin; all bitcoin
transactions take place over the internet. Unlike traditional currencies, bitcoin is
decentralised, meaning it is not controlled by a single bank or government. Instead,
bitcoin uses a peer-to-peer (P2P) payment network made up of users with bitcoin
accounts (ACC_CIMAKP_E3_202201; 2021).

Bitcoin acquisition can be done using a bitcoin exchange such as LUNO, or

ALTCOINTRADER in South Africa. Coinbase and Binance are the most popular crypto
exchanges in the world. These exchanges allow users to exchange rands for bitcoins.
Bitcoin mining involves setting up a computer system to solve maths problems
generated by the bitcoin network. As a bitcoin miner solves these complex problems,
bitcoins are credited to the miner. The network is designed to generate increasingly
more complex maths problems, which ensures that new bitcoins are generated at a
consistent rate. When a user obtains bitcoins, the balance is stored in a secure “wallet”
that is encrypted using password protection. When a bitcoin transaction takes place, the
ownership of the bitcoins is updated in the network on all ledgers, and the balance in the
relevant wallets updated accordingly (ACC_CIMAKP_E3_202201; 2021).

A c t i v i t y 11.1

Go to your e-tutor site and complete this activity.

The new current trends discussed in this study unit, are artificial intelligence, cloud and
mobile computing, and cryptocurrency. Many companies are said to be moving away
from the traditional “push” business.
Explain how you see these trends and this move by companies (as driven by e-
commerce’s capabilities to empower clients, and the main categories of e-commerce)
affecting the emerging role of accountants.

–
 Digital collaboration and entertainment tools are to see an upsurge in valuation as one
of the areas of technology that will thrive post Covid-19. Consequently, as companies
rapidly and, in some cases, permanently move towards remote working, the market for
digital collaboration tools such as Microsoft Teams, Google Hangouts and Zoom is likely
to grow exponentially. For example, Zoom has already experienced a 50% increase in
its share price since the start of 2020. In addition, instead of visits to concerts, museums
and events, consumers are seeking equivalent AR and VR experiences which can be
enjoyed safely while sitting on the sofa. Hand in hand with this, we are already seeing a
growing demand for digital media and entertainment, including gaming, social media,
news, video-streaming and books, as people seek to relieve boredom and fill time
previously taken up with travelling and socialising face to face.

Go to the Discussion Forum for study unit 11 and discuss the above with your fellow
students. Describe how:

(a) it would impact the barriers in the adoption of emerging technologies.

(b) the solutions would help reduce the impact on these barriers.

(c) the role of the accounting profession and accountants in general would be
impacted.

11 Summary

In this study unit, you learnt that we are living in a digital age, where, among others, the
digital adoption, the new way of living and use of new technologies have been
accelerated by the Covid-19 pandemic. We also speculated that things will not be the
same and provided you with areas of technology that are predicted to thrive post the
pandemic.

We thus provided you with the concept of digital r/evolution by creating a better
understanding of concepts such as blockchain, 4IR, enterprise systems, SAP, Oracle,
pastel, e-commerce and digitalisation. Other new concepts that are currently trending
were also introduced to you, such as artificial intelligence, cryptocurrencies, cloud and
mobile computing.

In the next study unit, you will learn about the components of communication network in
this digital age.
 S T U D Y U NIT 12

COMPONENTS OF
COMMUNICATION NETWORK

IN THIS STUDY UNIT

1 Introduction
A computer network, also referred to as a network, consists of two or more computers
or devices linked to one another by communication media, which facilitate
communication among these connected computers or devices. The purpose of networks
is to allow users to share resources, data and information, and to facilitate
communication. In this study unit, we will be looking at why computer networks are used,
as well as the various components of communication networks that enable
communication between the devices connected to the network (Booyse et al, 2017,
Unisa study guide).

2 Purpose of Communication Networks

Computer networks are used for various purposes:
➢ Facilitating communication: Networks enable people to communicate
efficiently and easily via e-mail, instant messaging, telephone, video
telephone calls, and video conferencing

➢ Sharing hardware: Networks enable computers connected to the network

to access and use hardware resources on the network, such as printing a
document on a shared network printer.

➢ Sharing files, data, and information: Networks enable authorised users to

access data and information stored on other computers in the network.
The ability to provide access to data and information on shared storage
devices is an important feature of many networks.

➢ Sharing software: Networks enable users to run application programs on

remote computers (Booyse et al, 2017, Unisa study guide).
 Information preservation: Backups of information are shared and stored in multiple
locations for easy recovery if information is lost or corrupted in the case of a system
failure or as part of disaster recovery.

3 Components of Communication Networks

Components of communication networks include both the hardware and the software
needed to enable computer systems to communicate with one another. Refer to study
unit 4 to revise your understanding. In communication networks, a node is a connection
point. A physical network node is an active electronic device that is connected to a
network, which is capable of sending, receiving or forwarding information over a
communication medium (Booyse et al, 2017, Unisa study guide).

3.1 Communication media or channels

Communication media enable signals to move from one point to another. These
communication media or channels are either cables or antennae that transmit signals
from one location to another. Communication media can also be split between wired and
wireless transmission (Booyse et al, 2017, Unisa study guide).

3.2 Wired transmission

Wires and cabIes are media through which information can move from one network
device to another. The type of cable chosen for a network is related to the network’s
configuration (topology), protocol and size. Common wired mediums include

➢ twisted pair wire

➢ coaxial cable
➢ fibre optics
3.3 Wireless transmission

With wireless transmission, signals are broadcast as electromagnetic waves through

free air space. Wireless signals are transmitted by a transmitter and received by a
receiver. Wireless systems may be inexpensive because no wires need to be installed
to transmit the signal. Wireless transmissions are, however, susceptible to both
electromagnetic interference and physical interference. Common wireless media include
the following

❖ Microwave transmission
Microwave transmissions are high-frequency signals
sent through the air using earth-based transmitters and
receivers.

❖ Satellite transmission

Satellites use microwave radio to transmit

information and are capable of transmitting voice,
data and TV signals.

❖ Radio transmission

Radio transmissions are signals of electromagnetic waves,

 which can travel through certain obstructions such as walls.
Radio transmissions can be used to transmit voice and data,
with both wireless LANs and cellular phones using radio
technology (Booyse et al, 2017, Unisa study guide).

❖ Infrared transmission

Signals in the form of light waves are transmitted through the air
between devices, requiring line of sight for transmitting within short
distances of less than a few hundred metres (Booyse et al, 2017, Unisa
study guide).

3.4 Specific hardware needed for communication

Networking hardware includes network interface cards, network cables or

communication mediums, switches and hubs, routers, modems, firewalls and other
related hardware needed for communication within a network.
➢ A network interface card (or network adapter) provides a physical
connection between the computer and the network cable or
communication medium.

➢ The communication medium or channel, as described in the previous

section, enables signals to move between locations.

➢ A switch or hub is a device that provides a central connection point for

cables from workstations, servers and peripherals. Switches are usually
active, which means that they electrically amplify the signal as it moves
from one device to another.

➢ A router translates information and allows communication from one

network to another. Routers choose the best path to transmit a signal,
based on the destination address and origin.

➢ Firewalls are the most important part of a network with respect to security.
Firewalls can be either hardware or software. A network system
implementing a firewall does not need human interaction for data transfer
monitoring, as automated processes to reject access requests from unsafe
sources and to allow actions from recognised sources, can be set up. With
the increase in cyberattacks to steal data, plant viruses,and so on, firewalls play
a very important role in network security (Booyse et al, 2017, Unisa study
guide).

Owing to improvements in wireless technology performance and technology becoming

more cost effective, current trends are to move from a wired to a wireless networking
environment. As discussed above, a wireless router is a router that includes the functions
of a wireless access point and a network switch. Such devices allow access to the internet
or a computer network without the need for a wired connection (Booyse et al, 2017,
Unisa study guide).
4 Dealing with Computer Network Intrusion

In this era of digital revolution, and the Internet of Things (IoT), technologies have
removed the digital barriers and accentuate the seamless exchange of data and
information among ubiquitous systems. Therefore, the challenge of information
theft, privacy, and confidentiality of data and information on the internet has become
a major dilemma for many users of several online platforms (Sarumi, Adetunmbi, &
Adetoye, 2020). The wireless technologies that are used to carry out public and
personal communication are vulnerable to various types of attacks, where attackers
can access signal to listen in or to cause damage on wireless networks (Intrusion
Detection and Prevention Systems in Wireless Networks, 2017). Network intrusion
detection systems are a viable approach to curb the menace of information theft
and other data security threats on the internet (Sarumi et al, 2020). According to
Duan, Wei, Fan, Yu & Hu (2020), Wi-Fi has been widely deployed to facilitate home
office, or even stadium-scale wireless access to the internet, and will be an
essential part of future wireless networks through being integrated with 5G cellular
networks. However, security threats are still a big concern for Wi-Fi due to the open-
share nature of the wireless medium and the easy access to Wi-Fi intrusion tools.
Therefore, these systems play a critical role in identifying attacks experienced in
order to apply further methods. According to Musa, Chakraborty, Abdullahi & Maini,
2021, computer networks are exposed to cyber-related attacks due to common
usage of the internet. As hackers become more prevalent and savvier, additional
tools to help protect network environment are needed. A key research issue in
securing networks is detecting intrusion. In 2008, Azad Tariq Bin stated that it helps
to recognise unauthorised usage and attack as a measure to ensure network
security. Intrusion detection is a strategy that is defined as the ability to monitor and
react to computer misuse. Many hardware and software products in the market
provide various levels of intrusion detection.

4.1 Intrusion detection technologies

The research in intrusion detection started in 1972 when James Anderson

published his report on the need for detection breaches in computer systems. Since
then, several monitoring systems such as Intrusion Detection systems (IDS),
Intrusion Prevention Systems (IPS), which are also called Intrusion, Detection, and
Prevention Systems (IDPS), have been proposed and implemented. IDPS
technology can be used to monitor and analyse signals for any infiltration to prevent
interception or other malicious intrusion. Consequently, several IDSs were
proposed by researchers (Musa et al, 2021).

Over the years, various works were evaluated on different databases for detecting
illicit or abnormal behaviour using IDS. This culminated in proposing various
approaches to determine the most effective features to enhance the efficiency of
IDSs. Methods include machine learning-based (ML), Bayesian-based algorithms,
and Markov neural network, among others (Musa et al, 2021). This work was used
to develop new and sophisticated detection and prevention methods based on and
managed by combining smart techniques, including machine learning, data mining,
 and game theory, using risk analysis and assessment techniques. Their role is thus
assisting wireless networks to remain secure and aiding system administrators to
effectively monitor their systems (Musa et al, 2021).

As new attacks emerge daily, IDSs play a key role in identifying possible attacks to
the system and giving proper responses (S Sen, 2015). This makes intrusion
detection an indispensable part of a security system. IDSs should adapt to these
new attacks and attack strategies, and continually improve.

A c t i v i t y 12.1

Go to your e-tutor site and complete this activity.

Wireless transmissions are part of our daily lives. Examples include using your cell
phone to call a friend to arrange to watch a movie on Netflix.
What role does wireless transmission play in your daily life? Give at least ten
examples and explain each.

Sharing files, data, and information: Networks enable authorised users to access
data and information stored on other computers in the network. The ability to
provide access to data and information on shared storage devices is an important
feature of many networks.

Go to the Discussion Forum for study unit 12. From the perspective of study unit
6 (Big data), which you have already studied, particularly looking at features,
sources, and problems of big data, discuss the statement above with your fellow
students.

5 Summary

Computer networks allow communication and the sharing of resources (including

hardware, files, data and information), and enable software sharing and information
preservation. The components of communication networks include communication
media, specific hardware, data communication protocols, as well as software.

The next study unit deals with network configurations, including network topologies
and geographical scope. Distributed processing, client server systems and cloud
computing will also be discussed.
 S T U D Y U NIT 13

NETWORK CONFIGURATIONS
IN THIS STUDY UNIT

1 Introduction
Networks can be classified and configured in various ways depending on the size of the
network, the distance, or area of network coverage, as well as the media to be used.
The previous topic dealt with the uses of networks as well as the components needed to
enable computers and devices to communicate with one another. In this study unit, we
will be looking at network topologies and geographical scope and touch on distributed
processing, client server systems and cloud computing (Booyse et al, 2017).

2 Communication Network Configuration

Networks may be classified according to a wide variety of characteristics.
2.1 Network topologies
In computer networking, a topology refers to the shape or layout of connected
devices. A topology is a network’s physical layout or virtual shape or structure.

The five most common types of network topology are the following:

▪ Bus topology:
All devices are connected to a central communication cable,
called the bus or backbone (O’Leary et al, 2015).

▪ Ring topology:
All devices are connected to one another in the shape of a circle or aring,
thus each device is connected directly to two other devices, one on either
side. Communication signals travel through the ring in the same direction,
either clockwise or counter-clockwise (O’Leary et al, 2015).
 ▪ Star topology:
All devices are connected to a central switch, hub, or router.
Devices communicate across the network by sending data
through the switch. This is the most common type of topology,
especially for home networks (O’Leary et al, 2015).
Star

▪ Tree topology:
A tree topology is a hybrid, integrating multiple star
topologies, connected onto a linear bus backbone. A
star/bus hybrid approach supports the future growth of a
Tree
network (O’Leary et al, 2015).

▪ Mesh topology:
Devices are connected, with many redundant connections
between network devices. A mesh network in which every
device connects to all the others, is called a full mesh Mesh
(O’Leary et al, 2015).

3 Geographical Scope
Networks can also be categorised according to their geographical scope.
Geographical scope refers to the distance or coverage area of the network, as well
as the communication media or channels connecting the whole network together.
Examples of different network methods include the following:
▪ Personal area network
A personal area network (PAN) is a network that connects different information
technology devices around an individual person. PANs generally cover a range of less
than ten meters. PANs may include wired and wireless devices. Wired devices
usually connect using USB or FireWire connections, while wireless devices can
connect via Bluetooth or Wi-Fi technologies (O’Leary et al, 2015).

▪ Local area network

A local area network (LAN) is a network that connects different computers and
devices within a relatively small area. Examples include small office and home
networks confined to one building or closely positioned buildings (O’Leary et al,
2015). Organisations connect their computers in local area networks (LANs),
enabling them to share data (for example, via e-mail) and devices (such as printers)
(ACC_CIMAKP_E1_202201, 2021:369.)

Wireless LANs (WLAN) are LANs that use wireless technologies instead of wires
and cables to connect computers and devices in the network (O’Leary et al, 2015).

▪ Metropolitan area network

A metropolitan area network (MAN) is a network that is larger than a LAN but smaller
than a WAN, usually spanning a medium-sized area such as a large campus or a
 city (O’Leary et al, 2015).

▪ Wide area network

A wide area network (WAN) is used to connect LANs, so that computer users in
one location can communicate with computer users in another location
(ACC_CIMAKP_E1_202201, 2021:369). WANs are a network that covers a large
area, such as networks linking across metropolitan, regional, or international
borders. The internet is the largest example of a WAN, which is made up of
numerous smaller networks (O’Leary et al, 2015).

▪ Virtual private network

A virtual private network (VPN) is a computer network that uses public networks to
connect nodes. Networks are created by using the internet as the medium
for communicating data. VPNs use encryption and other security systems to ensure
that only authorised users can access the network and that the data is not
intercepted (Booyse et al, 2017).

4 Selecting a suitable Network Configuration

Selecting the correct network configuration will require an understanding of the
networking and information system needs of the organisation.

In selecting a suitable network configuration, the following factors should be considered:

▪ Area of coverage or distance between nodes

The geographic scope should be considered, as LANs will probably be used to
connect office computers and devices to a network. The need to connect offices in
different cities or countries also needs to be considered, as this will lead to long-
distance communication.

▪ Data communication volume and speed

The amount of data expected to be communicated within a network needs to be
considered, as well as the speed at which the organisation requires the data to be
communicated. This will influence the specific topology chosen, as well as the data
communication media or channels.

▪ Security
Access to the internet may lead to security risks, for example, hackers may access
an organisation’s database; hence, applicable security measures should be
implemented.

▪ Hardware and software compatibility

The various hardware (including the communication mediums) and software used
in the network should be compatible, enabling all nodes in the network to
communicate with ease (Booyse et al, 2017).
5 Distributed Processing
In a computer-networking environment, computers connected to the network may
access and use the resources provided by the other computers and devices on the
network. Distributed processing refers to multiple remote computer systems linked
together, where processing is distributed to more than one of these computers.
Distributed processing allows computers to work together in processing information
or in performing tasks, or allows workstations to utilise powerful servers to enable
more efficient and faster task processing (Booyse et al, 2017).

6 Client Server Systems

In a client or server network architecture, certain powerful computer systems
provide a specific service or perform a specific task. These computer systems are
called servers. Computers, called clients in this setting, which are connected to the
network, have access to the resources provided by the servers. Clients then request
the services provided by the servers connected to the network. These servers have
operating system software installed that manages the network activities. As
discussed in study unit 5 that dealt with computer hardware, there are various types
of servers, including database servers, file servers, transaction servers and web
servers (Booyse et al, 2017).

7 Cloud Computing
Cloud computing is defined as the delivery of on-demand computing
resources – everything from applications to data centres – over the
internet (ACC_CIMAKP_E1_202201, 2021:135.). These computing resources
and services are provided on demand by the applicable data centre. This means
that users do not need the required hardware or applications to perform the
specific tasks since the computing is done by the service provider who sends the
required results to the user. Therefore, any user with an internet connection can
access the cloud and the services it provides. The service provider carries out
all the maintenance and development needed to provide the applications and
services. Examples include online backup services, social networking services
and web-based e- mail such as Hotmail and Gmail (Booyse et al, 2017).
The basic idea and application of cloud computing sees users log in to an account
in order to access, manage and process files and software via remote servers
hosted on the internet. This replaces the traditional method of owning and running
software locally on a computer or networked server.
According to ACC_CIMAKP_E1_202201(2021:135), there are two main types of
cloud setups:
▪ Public cloud hosted by a third-party company. Specialist companies sell
their cloud computing services to anyone over the public internet who
wishes to purchase them.
▪ Private cloud sees IT services provided over a private infrastructure,
typically for the use of a single organisation. They are usually managed
internally.
 According to ACC_CIMAKP_E1_202201 (2021:160), cloud computing has driven
the following changes in the structure and working of the finance function:
• Collaboration – File sharing and version control issues are minimised.
Services such as a Google drive, for instance, allow multiple collaborators to
update documents in real time.
• Flexible working – Full access to all files and documents anywhere with an
internet connection has facilitated increased flexibility to work patterns and
arrangements.
• Increased security – Cloud service providers understand and acknowledge
that the security of data, especially financial data, is critical to their success.
• Up to date – Continually up-to-date software helps to ensure compliance with
regulations such as GDPR.
• Easier integration – Cloud-based accounting software can easily link with other
cloud-based software such as customer relationship management (CRM),
allowing an integrated approach to business in a cost-effective way when
compared with traditional software solutions.

7.1 Features of cloud computing

ADVANTAGES
Flexibility and scalability – Cloud computing
allows simple and frequent upgrades, which
allows access to the latest systems
developments. A company does not
become burdened with expensive hardware
and software that quickly become obsolete.
This allows organisations to evolve and
change, to adapt to new opportunities and
working practices.
Cost efficient – Limited IT maintenance
costs and reduced costs of IT hardware,
see capital expenses and fixed costs
become operating expenses. Cloud
technology also allows pay-as-you-go
computing, with charges based on what a
company needs.
Security – Cloud service providers, like any
outsource provider, are specialists. The
security and integrity of their systems are
fundamental to their business model and
will be a strategic priority. Disaster recovery
and backups are built in.
DISADVANTAGES
Flexibility and scalability – Cloud computing
allows simple and frequent upgrades, as
well as access to the latest systems
developments. A company does not
become burdened with expensive hardware
and software that quickly become obsolete.
This allows organisations to evolve and
change, to adapt to new opportunities and
working practices.
Contract management – The cloud provider
will immediately become a very significant
supplier. Managing this relationship,
monitoring performance and ensuring
contractual obligations will introduce new
challenges and costs.
Security, privacy & compliance – Whilst
cloud providers will be specialists, they are
bigger targets for malicious agents. This
can threaten the security of sensitive
information. Additionally, compliance with
data regulations is put largely in the hands
of a third party.
 ADVANTAGES
Flexible working – The increase in remote
and home working is supported by cloud
computing and the ability to access your
desktop from any location.
Environment – Less waste from disposal of
obsolete technology. More efficient use of
scarce resources.
DISADVANTAGES
Reliance – More so than with a standard
outsource arrangement, the reliability of the
cloud service provider is essential. Often,
the entire provision of information systems
fundamental to the operation of a business
is passed to this third party.

A c t i v i t y 13.1

Go to your e-tutor site and complete this activity.

Suppose one could make use of cloud computing on a daily basis.

a) Give 15 examples of how useful cloud computing could be.
b) Regardless of whether you are currently using cloud computing or not, explain how it
can contribute to or change one’s life (10 examples).

Reading through the study units of this module, we now understand that society,
including organisations, is becoming more dependent on computer and
communications technology. In study unit 13, you read about cloud and mobile
computing being one of the current trends in digitisation. With this background in mind,
explain how businesses can benefit from cloud computing and networks.
Note: In your answer, do not use the example provided in study unit 13.

Go to the Discussion Forum for study unit 13 and discuss this with your fellow students.

8 Summary
In this study unit, we looked at data communication networks, specifically how networks
are classified. This includes networks classified according to their topologies as well as
their geographical scope. Other concepts were also briefly explained, including
distributed processing, client/server systems and cloud computing. The next study unit
deals with the internet, intranets, and extranets.
 S T U D Y U NIT 14

THE INTERNET, INTRANET AND

EXTRANET
IN THIS STUDY UNIT

1 Introduction
The internet is a global network of computer networks, which supports
communication and the sharing of data and offers vast amounts of information
through a variety of applications (services and tools).
In the previous study unit, we looked at network configurations, distributed
processing, client server systems and cloud computing, where we mentioned the
internet.
This study unit will deal with the internet, including internet applications (WWW and
e-mail), e-commerce and using the internet as a research tool. We will also briefly
discuss intranets and extranets.

2 The Internet and how it works

The internet is a network that connects millions of networks, big and small, across
the globe. The internet includes academic, corporate, government, public and
private computer networks, and is the world's largest network.
2.1 How the internet works
An internet service provider (ISP) is a company that provides access to the internet
to individual people and organisations. Examples include Cell C, MTN, Telkom and
Vodacom. The providers are already connected to the internet and provide a path
or connections for individuals to access (O’Leary et al, 2015). The internet uses the
standard Internet Protocol (IP) technology to link different networks together. An IP
is a communication standard or rules that define the way computers communicate
and exchange data and enables two networks to be connected, and an IP address
is a unique number used to identify computers on the internet.
The Domain Name System (DNS) was developed to allow the use of easier-to-
remember domain names, instead of IP addresses, to locate computers on the
 internet. Domain names consist of words and letters. Domain names consist of two
parts. The first part names the host computer or organisation that registered the
domain name (also known as the second-level domain or SLD), where the second
part identifies the top-level domain (TLD). TLDs identify the type or nature of the
organisation using the address. The TLD includes
• .com commerce a organisations
• .gov governments
• .org non-profit organisations
• .ac or .edu academic or educational institutions
• .net networking organisations
• .int international organisations

Country code TLDs also exist. They appear to the right of the TLD, and include for
example
• .za South Africa
• .au Australia
• .uk the United Kingdom
• .us the United States

A Uniform Resource Locator (URL) is a unique address assigned to each computer

connected to the internet, which identifies the computer to other hosts. A URL
consists of the following parts: the scheme name, commonly called “protocol”,
followed by a colon. Depending on the scheme, a domain name or, alternatively,
an IP address follows (Booyse et al, 2017).

3 Internet Applications
Although many people think the internet and the World Wide Web (WWW) are the
same thing, they are not. The WWW is one of the many applications of the internet.
The WWW and e-mail and are some examples of internet applications that will be
discussed.
3.1 The world wide web (WWW)
The WWW, also simply known as the Web, is one of the services that run on the
internet. It is a collection of interconnected documents and other resources, linked
by hyperlinks and URLs. The Web is an application running on the internet. A web
browser may be used to view websites. To view a web page on the WWW, one
usually begins by typing the URL of the web page into a web browser. Another way
of doing so is to follow a hyperlink to the web page. In this regard, the web browser
sends a series of communication messages to retrieve and display the web page.
The web browser translates HTML so that the internet user is able to read the web
page (O’Leary et al, 2015).
3.2 E-mail and instant messaging
 E-mail or electronic mail is a method of exchanging messages digitally over
computer networks between users. E-mail is also one of the services that operate
across the internet or other computer networks. Documents can be attached to e-
mail messages, allowing files to be transferred between users via the e-mail
protocol (O’Leary et al, 2015).
An even faster, instant method of communicating by using text is instant messaging
(IM). Using a computer or mobile device like a cell phone, a person can send text
messages and get immediate answers if the other person is online. The advantages
of instant messaging are that it is faster if the other person is available online, and
you do not have to click through the same number of steps, as you need to, with e-
mail. A well-known instant messaging provider is the WhatsApp messaging app
(Booysie, et al:2017).
Using the internet as a research tool
The WWW can be compared to a library to which users donate documents;
however, in the absence of a classification system, it is difficult to find information.
Search engines are web search tools that searches the web for keywords. Google
is one of the most popular internet search engines freely available on the web.
Examples of information available on the web for research include journals,
encyclopedias, dictionaries, government reports, calendars, indexes, statistical
reports, research reports, books, manuals, manuscripts, video material, geographic
maps, unpublished material, previously published textbooks and interactive
communication (Booyse et al, 2017).

4 Intranets and Extranets

In the current business environment, organisations have to be able to communicate
more effectively, both internally with their employees and externally with their
trading partners and customers.

An intranet is an internal or private network that is under the control of a single

organisation. Intranets use IP standards and tools such as web browsers and file
transfer applications, allowing employees to gain access to the organisation’s
information, making internal communication easier and less expensive. Only
computers or users connected to the intranet can access the information available.
Typical applications include electronic telephone directories, e-mail addresses,
employee benefits information, internal job openings and much more. Employees
find surfing their organisational intranet easy compared to surfing the internet
(O’Leary et al, 2015).

An extranet is a private network that connects more than one organisation. It links
selected information and resources on an organisation’s intranet with trusted
customers, suppliers, or business partners. The purpose is to increase
efficiency and reduce costs. For example, an automobile manufacturer has
hundreds of suppliers for the parts that go into making a car. By having
access to car production schedules, suppliers can schedule and deliver
parts as they are needed at the assembly plants. In this way, operational
efficiency is maintained by both the manufacturer and suppliers (O’Leary et
 al, 2015).

Secure intranet and extranet access applications usually require the use of
firewalls, user authentication, message encryption and the use of VPNs.

5 Internet of Things
The Internet of Things (IoT) can be described as the interconnection, via the
internet, of computing devices embedded in everyday objects, enabling them to
send and receive data. It is expected that, by 2030, there will be over one trillion
“connected” devices, all with multiple sensors, generating constant data about how
devices are used and performing (ACC_CIMAKP_E1_202201, 2021:190). The
Internet of Things (IoT) is greatly enhancing the creation of and access to data and
producing ever-increasing transparency (ACC_CIMAKP_E2_202201, 2021:31).
The Internet of Things is considered a network of smart devices with inbuilt sensors
and internet connectivity. They collect and transmit data constantly and are an
increasingly significant element of Big Data. The ability to make virtually any asset
a business owns and operate a “smart” asset by building in some relevant sensors
and internet connectivity, can lead to some very useful data. It should facilitate
better business planning and resource allocation, and will help to optimise
processes, minimise expenditure and give advanced warning of potential issues
(ACC_CIMAKP_E1_202201, 2021:171).
The growth in the Internet of Things, often termed “smart technology”, is fuelled by
improvements in broadband connectivity and the development of 4G
communication networks. As governments look to roll out the next-generation 5G
networks, connectivity will be improved further. As people and businesses are
increasingly comfortable with the idea and operation of this smart technology, it is
anticipated that the Internet of Things will continue grow, becoming increasingly
central to how we live and work as new and innovative applications for the
technology emerge all the time (ACC_CIMAKP_E1_202201, 2021:150).

A c t i v i t y 14.1

Go to your e-tutor site and complete this activity.

The use of the internet has increased rapidly. Smart technology has made it
possible for all of us to connect online. Give ten examples of each and explain how
life can be transformed by the internet, search engines, and Internet of Things.

The Internet of Things is considered a network of smart devices with inbuilt sensors and
internet connectivity. They collect and transmit data constantly and are an increasingly
significant element of big data. The ability to make virtually any asset a business owns
and operate a “smart” asset by building in some relevant sensors and internet
 connectivity, can lead to some very useful data. It should facilitate better business
planning and resource allocation, and will help to optimise processes, minimise
expenditure and give advanced warning of potential issues.

In study unit 6, you learnt that Big Data often includes more than simply financial
information and can involve other organisational data (both internal and external), which
is often unstructured. This study unit also clarifies the following concepts:

a) The shift to Big Data relates to the amount of data which businesses must store and
interrogate, which is increasing at an exponential rate, requiring new tools and techniques
to utilise optimally. Leveraging this resource for visualisation, structure and support, as
well as optimal decision-making, has become a commercialised privilege for many
companies.
b) Data analytics is the process of collecting, organising and analysing large sets of data (Big
Data) to discover patterns and other information which an organisation can use to inform
future decisions.
c) The accounting and management accounting profession is no longer regarded as bean
counters. It is now perceived as a strategic partner with influence in decision-
making.

Go to the Discussion Forum for study unit 14 and discuss this with your fellow students.
Within the context of Internet of Things, and the application of internet, intranet, extranet,
including the three concepts provided above, analyse and explain how businesses and
management accountants (within those businesses) use the Internet of Things to:

a) facilitate better business planning

b) facilitate resource allocation
c) optimise processes and minimise expenditure
d) give advanced warning of potential issues

Note: In your discussion, under each heading, clearly indicate at least five
steps that businesses and the accountants (respectively) can do.

6 Summary
In this study unit, we looked at the internet: how it works, as well as various internet
applications, including the WWW and e-mail. You were also introduced to concepts
such as intranet, extranet, and Internet of Things.
 S T U D Y U NIT 15

THREATS, RISKS, CONTROLS,

PRIVACY, ETHICS AND
GOVERNANCE
IN THIS STUDY UNIT

1 Introduction
The purpose of this study unit is firstly to create an understanding of the common
risks and threats faced by an information system. Thereafter, the importance of
implementing appropriate and effective computer controls, including information
technology governance to address these threats, will be explained. Concerns
regarding privacy and ethics in a computerised information system will be raised
and possible measures to alleviate these concerns discussed.

In the previous study unit, we looked at internet, intranet, extranet, as well as

Internet of Things.

2 Vulnerability, Threat, Exposure and Risks

According to Booyse et al (2017), it is important to understand that although the

terms vulnerability, threat, exposure and risk are often used interchangeably, they
all have different meanings. Once you understand what these four concepts entail,
the relationship between them will also be clear.

Vulnerability refers to a security weakness or flaw in the information

system that creates an opportunity for an attack on confidentiality, integrity
and availability of the information (CIA triad).
The potential exists that vulnerabilities might be exploited, either
intentionally or accidentally. This potential is known as a threat.
The existence of vulnerabilities in the system exposes the organisation to
financial losses and can be expressed as a function of the financial impact
and the probability that these events will occur.
 A risk can be explained as the likelihood of an attack on information
assurance occurring, that is, the probability of the vulnerability being
exploited, and can therefore be quantified. Risk is seen as some
combination of a threat, exploiting some vulnerability, that could cause
harm to an asset.
Cyber risk is a focus area for organisations. It is the risk of financial loss,
disruption, or damage to an organisation caused by issues with the
information technology systems they use (ACC_CIMAKP_P3_202201;
2021:18).

3 Risk of Security Vulnerabilities

Being aware of the vulnerabilities that could create problems for an

organisation is one thing, but being aware of the implications of the
vulnerabilities is also vital. According to ACC_CIMAKP_P3_202201;
(2021:532), vulnerabilities can be classified as either technical, procedural
or physical.
• Technical deficiencies include issues like defects in the software being
used, or not using appropriate protection (such as encryption) correctly.
• Procedural deficiencies are either IT related (for example, system
configuration mistakes or not keeping software security patches up to
date) or user related (for example, not complying with company guidelines
on changing passwords or using passwords that are too simple).
• Physical occurrences, where a physical event, like a fire or flood, causes
damage to the information technology system.

Whatever the reason for the vulnerability, its exploitation can lead to costly
problems for the organisation involved.

4 Information Security Management Systems (ISMS)

The International Organisation for Standardisation (ISO) produced standard

ISO27001 which concerns information security management systems. It serves as
a framework that focuses on all aspects of an organisation’s information risk
management processes. The standard was also developed to provide a model for
establishing, implementing, operating, monitoring, reviewing, maintaining and
improving an information security management system.
 The key principle behind the standard, in line with the AICPA approach, is to ensure
a proactive rather than reactive approach to cybersecurity risk management. Given
the high regard for ISO standards, a lot of larger organisations require B2B partners
to be ISO27001 compliant or to be progressing towards compliance before they will
do business with them; this a is further risk mitigation (ACC_CIMAKP_P3_202201;
2021:587).

5 Cyber Risks of Social Media to Organisations

As always, with opportunity there also risks. Some of the risks presented by social
media include (according to ACC_CIMAKP_P3_202201; 2021:529–530):

Human error – a mistake by an employee could range from being hacked

after clicking on fraudulent links on their work computer, to making
inappropriate comments on social media (either through their personal
account, or if they have access to it, via the company account).
Productivity – while there are clearly positives to be gained from social
media, if employees can access social media at work, it can disrupt their
work and reduce the operational efficiency of the company.
Data protection – regulatory requirements are increasing around how
companies gather, use and store data about their customers. Firms need
to make sure they have secure networks, and they comply with all
legislation.
Hacking – as with any computer program, a hacker may try to infiltrate
social media accounts for malicious reasons, or use social media accounts
to harvest data to assist with a social engineering attack, like phishing or a
business e-mail compromise attack.
Reputation – any mistakes a company makes on social media (such as
an inappropriate post made by a staff member), could have a negative
impact on the brand of the organisation and result in lost customers, sales
or even employees.
Inactivity – as maintaining an online presence becomes increasingly
important, not using social media or not keeping existing accounts up to
date, could be as damaging as using it badly.
Costs – in theory, using social media costs nothing, but to use it well, and
control the accompanying risks, could cost a significant amount. Also, any
fines from non-compliance with regulations could also be significant.
6 Cyber Risks of Cloud and Mobile Computing
The following are the risks:
• Reliance on the service provider: as with any outsourcing decision,
relying on the cloud service provider means that any failings at the service
provider could be more problematic without backup plans for bringing
services back in-house. There are not only issues with the trust and
security required from the service provider; it also needs to be considered
whether the provider’s services are suitable for the tasks required; whether
the technology is advanced enough to give adequate competitiveness;
whether the service provider will continue as a going concern; whether the
service provider can ensure continuity in the light of external events such
as system failure; whether initial prices will be maintained, and so forth
(ACC_CIMAKP_E1_202201; 2021:476).
• Regulatory risks: data security is often highly regulated in terms of what
can be stored, who can access it, how long it can be stored for, and how it
can be used. Organisations will be reliant on cloud service providers for
this compliance. This may become a problem if the service provider is
based in a different jurisdiction with different regulations and rules
(ACC_CIMAKP_E1_202201; 2021:476).
• Unauthorised access of business and customer data: this can come
in two forms. Firstly, the cloud service provider is more likely to be a target
of hacking than the individual small businesses that use it. If the service
provider is targeted, all users suffer, even if they were not individual targets
themselves. Secondly, providing business and customer data to an
outsourced service provider means that the data can be accessed by that
service provider’s staff. It will also be important that the service provider
does not share this data with unauthorised users such as other users of
that service provider’s services (ACC_CIMAKP_E1_202201; 2021:477).

7 Threats to an Information System

Most organisations use an information system to process financial and operational
data. Various threats may exist in such an environment because of system flaws.
For example, due to human error, revenue may be overstated in an instance where
an invoice amount is captured as R40 000,00 instead of R4 000,00. However, the
spotlight in this section will fall on potential threats in a computerised information
 system rather than a manual information system. As explained earlier, threats exist
because of certain vulnerabilities. These threats can be caused by nature, for
example natural disasters, the environment, such as power failures, or human error.

7.1 Cybercriminal tools on networks and /or computers

Hacking is the gaining of unauthorised access to a computer system. It might be a

deliberate attempt to gain access to an organisation’s systems and files to obtain
information or to alter data (perhaps fraudulently). Once hackers have gained
access to the system, there are several damaging options available to them. For
example, they may (ACC_ACCAKP_BT_202109, 2021):

• gain access to the file that holds all the user ID codes, passwords and
authorisations
• discover the method used for generating or authorising passwords
• interfere with the access control system, to provide the hacker with open
access to the system
• obtain information which is of potential use to a competitor organisation
• obtain, enter, or alter data for a fraudulent purpose
• cause data corruption by the introduction of unauthorised computer
programs and processing on to the system (computer viruses)
• alter or delete files.

“Hackers” is a broad term, but there are different types of hackers, defined
according to their reason for hacking. Regardless of their reason, they all require a
certain level of skill (ACC_ACCAKP_BT_202109, 2021):
• Unethical hackers: these are the stereotypical hackers that hack with
malicious intent. They typically break into secure systems and networks to
steal data, destroy it or perhaps just modify it. Critically, it is all done without
the company’s permission.
• Ethical hackers usually hack with the company’s permission. They are
trying to help the company understand what an unethical hacker may try
to do so it can protect the computer network. Some people describe the
ethical hacker as a security expert.

IP spoofing means to forge the source IP address, thereby concealing the actual IP
address and making it appear to be the IP address of a trusted or authorised source.
This enables the cybercriminal to remain anonymous while carrying out criminal
activities. For example, by using IP spoofing, a criminal can send a fake sales order
to an organisation, which seemingly comes from a legitimate client. This
organisation might then manufacture and deliver goods that were never ordered,
thereby incurring unnecessary costs.

Computer forgery takes place when advanced computer technology and programs
are used to forge documents, for example official letterheads, matric certificates,
degrees, and identity documents. These forged documents are then used to commit
fraud.

Computer fraud can be defined as any fraudulent activity where a computer,

computer system, or network is used to unlawfully take, alter, or use information or
computer programs. Examples of computer fraud include altering accounting
transaction data to conceal unauthorised, fraudulent transactions or deliberate
altering of a computer program’s logic to calculate interest incorrectly for the benefit
of the computer fraudster.

Computer-related scams are a subsection of computer fraud and usually offer too-
good-to-be-true deals, requiring sensitive personal information from the victim or
money to be paid into the cybercriminal’s bank account. For example, the victim is
informed, via e-mail, that he has won a large amount of money in a foreign lottery
and that the money will be paid out after the receipt of an amount of money for
administration fees.

Malware is the term used for malicious software, regardless of the intended
purpose. It can do any number of things, ranging from the stealing of credentials,
other information or money to the general wreaking of havoc, or denial of service.
There are various ways to execute malware, including
(ACC_ACCAKP_BT_202109, 2021):
• Ransomware is designed to prevent a business from accessing its data,
information or a whole computer system until a specified amount of money
is paid.
• Botnets are networks of private computers that are infected with a malware
and controlled by a “botnet agent” designed to follow the attacker’s
instructions without the knowledge of the owner of the computer
(ACC_ACCAKP_BT_202109, 2021).
 • Trojans are named after the Trojan horse in an ancient Greek story where
a wooden horse was allowed into the city as it was deemed harmless, but
which concealed soldiers inside, ready to attack the city. This type of
malware does a very similar thing: it pretends to be a useful piece of
software whilst secretly releasing malware into the system, usually with the
capability to be controlled by the attacker from a different location (known
as a remote-access Trojan or RAT). Once on the system, it can then
prevent access to the system (ransomware), infect the system damaging
and destroying files, or act as spyware. Trojans refer to malicious software
designed to destroy and interrupt business operation and information
through illegal access and use (ACC_ACCAKP_BT_202109, 2021).
• A computer virus is a program or programming code that replicates or
copies itself repeatedly without the user’s knowledge or consent. Viruses
spread via attachments to e-mails and downloaded files or are copied to a
USB flash drive.
• A worm is also a self-replicating program or program code, but differs from
a virus in the sense that it does not need to be attached to an existing
program. These copies are sent via the computer network to other
computers in the network.
• A logic bomb is an intentionally inserted program code that will set off a
malicious function (for example, delete or corrupt data or files) when
triggered under certain conditions.

A rootkit is a tool that grants an attacker continuous full access to a computer while
hiding its presence. A well-written rootkit can rewrite a computer’s login script, which
will then accept the cybercriminal’s login even if the user or administrator tries to
change it.

Spyware is, as the name says, software that “spies” on a user. The spyware
program will secretly transmit personal information or web browsing habits to a
cybercriminal. The user is typically unaware of this invasion of privacy.

Advertisements rooted in a software package, which typically display as a pop-up

message, are known as adware. The purpose of adware is to generate web traffic
and obtain e-mail addresses.

A blended threat is a combination of different malware used to exploit the

vulnerabilities in a system.
Identity theft occurs when personal information is acquired and used fraudulently
without the owner’s knowledge or consent, for example, targeting tourists during a
world sport event to steal their identity documents or passports. Identity theft is not
limited to natural persons but also entails the theft of an organisation’s identity.
Identity theft is used to obtain goods and services fraudulently, such as withdrawing
money from the victim’s bank account, blackmail, terrorism, illegal migration, and
so on. Criminals steal a person’s identity by stealing e-mails, going through
garbage, wallets and handbags, spyware, and so forth. Other methods used include
social engineering, shoulder surfing and phishing.

Social engineering means to study the user’s social networking profile or chat
rooms to get clues on what the user’s password might be, as people usually use
something familiar as their password, for example, the name of a loved one or a
pet, a favourite musician or writer.

Shoulder surfing refers to shadowing the targeted user to “accidentally” see or hear
the password.

Phishing literally means to “fish” for sensitive personal information, such as

usernames, passwords, online-banking login details, and credit card details.
Phishing misleads the victim into thinking that electronic correspondence has been
sent by a trustworthy source, for example, a financial institution, thereby luring the
victim to a spoofed (fraudulent) website. At this spoofed website, the victim is
requested to divulge sensitive personal information. Both the e-mail and the
spoofed website usually appear to be those of legitimate organisations. It is
important to train users to be aware of the danger of phishing attacks.

A denial-of-service (DoS) attack overwhelms a system’s resources so that it cannot

respond to service requests. A distributed-denial-of-service (DDoS) attack is also
an attack on a system’s resources, but it is launched from a large number of other
host machines that have already been infected by malicious software controlled by
the attacker (ACC_CIMAKP_P3_202201; 2021.516).

Injection with SQL (Structured Query Language) has become a common issue with
database-driven websites. It occurs when the attacker uses an unprotected input
box on the company’s website to execute a SQL query to the database via the input
data from the client to server. A successful SQL injection can read sensitive data
from the company’s database, modify (insert, update or delete) database data,
execute administration operations (such as shutdown) on the database, recover the
 content of a given file, and, in some cases, issue commands to the operating system
(ACC_CIMAKP_P3_202201; 2021:516).

Cross-site scripting attacks (XSS attacks) occur when a victim is attacked when
they visit another organisation’s website. The attacker uses the third-party web
resources to run scripts in the victim’s web browser or scriptable application.
Specifically, the attacker injects malicious code (often associated with JavaScript)
into a website’s database. When the victim requests a page from the website, the
website transmits the page, with the attacker’s code as part of the HTML body, to
the victim’s browser, which executes the malicious script. For example, it might
send the victim’s cookie to the attacker’s server, and the attacker can extract it and
use it for session hijacking (ACC_CIMAKP_P3_202201; 2021:516).

Buffer overflow attack – A buffer overflow occurs when a system cannot store as
much information as it has been sent and consequently starts to overwrite existing
content. A buffer overflow attack occurs when an attacker sends a malicious
program which deliberately overloads the system and starts to overwrite existing
data (ACC_CIMAKP_P3_202201; 2021:517).

8 CONTROLS

Controls can be classified using various methods. Two of the most common ways
are according to the type of control, which includes general and application controls,
or by the function of the control, which includes prevention, detection and
correction. Specific system controls should be implemented to ensure reliable data
communication and the safeguarding of assets. It is important to take into account
that a control can fall into more than one category. For example, the control of duty
segregation can be classified as both a general and preventive control (Booyse et
al, 2017).

8.1 General controls

These review the reliability of the data generated by the IT systems and check
that they are operating correctly. General controls include
(ACC_ACCAKP_BT_202109, 2021):

➢ Physical controls – these involve controls to avoid unauthorised access

to computer equipment, such as security personnel, door locks and card
entry systems. They also include safeguards against possible
environmental damage to the computer equipment, such as surge
 protectors in case of lightning strikes or other power surges.
➢ Hardware and software configuration – these controls are designed to
ensure that any new IT is tested and installed correctly into the system to
minimise the risk of errors or damage to the systems.
➢ Logical access – these controls are designed to prevent unauthorised
access to the organisation’s information systems. These could include
password systems.
➢ Disaster recovery – these will ensure that the organisation will be able to
continue operating despite adverse conditions. For example, off-site
backup may be kept of all systems.
➢ Output controls – these ensure that the outputs from the system are both
complete and secure. This could include controls over whom outputs (such
as reports or lists) are distributed to within the organisation.
➢ Technical support – it is important that all the users of the organisation’s
IT systems are competent. Training policies and technical support for
workers can be a valuable control.

General controls
Organisational Segregation of duties within each task in the transaction
controls cycles should be present. By segregation of duties, we mean
that one single staff member should not be responsible for the
initiation, authorisation, processing and review of a
transaction. In a computerised transaction processing
system, the segregation of duties regarding system
development and data processing is extremely important.
Operational controls Every task within the transaction processing system must be
described in a procedure manual. These manuals should be
kept in a safe place, such as a fireproof safe.
Only competent staff should be appointed to take
responsibility for the transaction processing system. Training
will also ensure staff competence. Rotation of tasks assigned
to certain staff should be done on a random basis.
A sound control environment starts with management in a top-
down approach. Management could implement general
controls – for example, compiling a policy on changes, or
development system procedures and human resource
policies and practices that make a commitment to excellence.
Controls to protect The information centre is the place where all the information
the IT environment system activities take place. The controls listed below are all
examples of restricting access to the computer or information.
● Controls against human access to the information
centre should be implemented. These controls include
fences around the restricted area; locks and keys to
restrict access to the information centre; key staff
wearing badges to tell them apart from intruders,
physically inspecting the restricted area and
consulting a logging access report of the area over a
specific period. It could also include installing
biometric access controls, which involve using
computer software to identify fingerprints, handprints,
voice patterns, signatures and retinal scans of
individuals authorised to enter the restricted area.
● Access to computer and information: Access control
software ensures only authorised users obtain access to
powerful
programs and sensitive information by controlling and
monitoring user access and the way information is
shared between users. Access control software firstly
controls the identification of users, that is, users need
to identify themselves – usually through user IDs
(login IDs) – or unique account numbers (your bank
account number, for example). The user is then taken
through an authentication process (e.g., entering a
password) to verify the user is the person he/she
claims to be. After users have been identified and
authenticated as authorised users, access control lists
will define the specific programs and data they have
access to and what permissions they have (read,
write, copy, etc).

Different permissions and access to programs and

data can be assigned to different users. For example,
only the human resources manager and the divisional
manager will have access to individual staff members’
salaries on the staff system. The financial clerk will
only have access to totals for the entire division’s
salary bill to enable him/her to process the necessary
transactions in the financial system. The human
resource manager might only have view (read) access
of the salary bill in the financial system while the
financial clerk will have processing (write) rights.

It is management’s responsibility to ensure the

implementation of an access control policy.
 Passwords, usernames and personal identification
keys (PIN) are effective ways of preventing unwanted
computer access. Individuals should take care when
selecting passwords, PINs, or usernames that they
will not be easily identifiable or obvious for intruders.
Passwords should include numbers, capital letters
and special characters and should not be a word
related to your everyday life. Also, never divulge your
password, especially not to somebody you do not
know very well.
● Firewalls are technological barriers designed to
prevent unauthorised or unwanted communication
between computer networks or hosts.
● Encryption: This is a process of transforming
information into a readable format and is a measure of
control. Encryption is the conversion of data into a form
called ciphertext that cannot be
easily understood by unauthorised people. Decryption
is the process of converting encrypted data back into
its original form, so that it can be understood.

Controls against natural elements are very important for

preventing or minimising the impact of disasters, and include
the following (disaster planning is discussed in the next
section):
● Backup power, in the form of an uninterrupted power
supply (UPS), generators or solar power to prevent
damages to equipment or loss of information in the case
of power failures.
● Smoke detectors, which alert staff and emergency
services to the possibility of a fire. Early detection can help
to prevent or limit the damage to computer equipment and
save lives. The information centre should have sufficient
fire extinguishing equipment in order to prevent the spread
of fires in emergencies.
● If the floor in the information centre is raised, it will prevent
water damage from flooding. Temperature control in the
information centre is necessary to prevent damage, as
computer systems should be kept at a constant
temperature.
● It is important to pay a monthly insurance fee to enable the
organisation to replace computer equipment in the event
of damage or loss. Maintenance on computer equipment
should be done on a regular basis to monitor the usability
of hardware.
 IT asset Controls ensuring the accuracy of information should be
accountability implemented and executed by staff who are not responsible
controls for processing or capturing of transactions, for example:
● The details of control accounts in the general ledger
should be documented in subsidiary accounts.
● Reconciliations should be prepared by a staff
member who is not involved in capturing, and
reviewed by an independent senior staff member.

(Booyse et al, 2017)

8.2 Application controls
These controls are fully automated and tend to be designed to ensure that the data
input into the system is complete and accurate. These controls will vary from system
to system, but are often designed to ensure (ACC_ACCAKP_BT_202109, 2021):

• completeness – has all necessary data been input?

• authorisation – is the person inputting the data authorised to do so?
• identification – can the person inputting the information be uniquely
identified?
• validity – is the information being input by the user valid?
• forensic checks – is the information being input by the user mathematically
accurate?

Application controls are specific to the functioning of individual applications.

Application controls relating to a computerised information system comprise the
following:
 Application controls

Input controls The purpose of input controls is to prevent and detect errors when
entering information into the information system in order to ensure
validity, timeliness and accuracy.

Input edit checks of transaction data, for example, check digits,

incorrect dates or date formats, completeness checks to ensure no
blank fields are recorded, and visual verification to confirm the
general reasonability of documentation. See discussion on
programmed edit checks under detective controls as well.

Data transcription, for example, using a batch control log, batch serial
numbers.

Data observation and recording, using record counts, control totals

or other ways to balance the input totals with the source documents.

Transmission of transaction data by using, for example, transmittal

documents (batch control tickets) or read-backs, where the sender
immediately receives feedback on the input information for
comparison and approval purposes.

Processing Processing controls are designed to ensure that all transaction data
controls have been processed accurately and in time. When the processed
information is reviewed, the reviewer needs to confirm that no data
were lost, altered, or added during processing. Processing controls
are also important to ensure that the database and files stay
maintained. Examples of processing controls include the following:

Physical inspections and checks: These may include reconciliations,

checking the work of another employee, and acknowledgements.

Logic checks: Programmed edit checks, such as sequence and

reasonableness checks, may also be applied in processing. For
example, an input value should not be 0 when there will be a number
that divides it somewhere in a program. See discussion under
detective controls to see how this works.
 Run-to-run totals: To ensure batched data are completely and
accurately transferred between processes, output control totals are
calculated and used as input control totals for the next processing
sequence, thereby linking the one process to the next.

Audit trails: An audit trail is a set of steps put in place to keep proof
of each action taken to execute a business process, for example,
keeping complete original records, like receipts, of petty cash
transactions. It enables individual transactions to be traced, provides
support for general ledger balances, provides data to prepare
financial reports with and corrects errors where applicable.

Output controls Output controls ensure the reliability and integrity of output
information after the input and processing phase.

● The output information should be reconciled to the input data

based on documented procedures.

● Discrepancy reports should be generated and investigated.

● Files should be verified and audited on a surprise

basis.

(Booyse et al, 2017)

8.3 Controls classified by function

There are three key types of control that can be considered:
8.4 Preventive controls
These are controls that prevent errors or frauds occurring. For example,
authorisation controls should prevent fraudulent or invalid transactions taking place.
Other preventive controls include segregation of duties, recruiting and training the
right staff and having an effective control culture (ACC_ACCAKP_BT_202109,
2021).

Preventive controls are the first layer in the internal control shield. Preventive
controls prevent and discourage adverse events such as fraud, errors, theft, loss,
and so on from occurring. Implementing preventive controls and thereby preventing
adverse events from occurring is more cost effective and creates fewer interruptions
in the normal operations than detecting and correcting adverse events after they
occurred. Examples of preventive controls include the following:
Backup of data and documentation: It is vital that backup copies of all important
data and documentation are readily available in the event of original data being
destroyed or damaged. Backups of important data should therefore be made
regularly as per a pre-defined backup plan. For example, most financial system
data is backed up daily, weekly, monthly and yearly. Files should be backed up on
a different storage device, which is also physically removed from the original data
storage device, to ensure that the backup data is not destroyed or damaged in the
same adverse event that damaged the original data, for example a fire. Backup files
must have the same level of protection as the original data and documents, as they
contain the same sensitive information and are open to cybercrime, corruption and
destruction as well. Backups must be regularly tested to ensure backup files are
uncorrupted and that the relevant data and documents are being backed up
(Booyse et al, 2017):
• Antivirus software: This software is used to prevent virus infections on
computers and computer networks. Depending on the antivirus software
program, the software will scan the computer, computer networks, e-mails,
secondary storage devices, and so on, regularly for viruses. As soon as a
virus is found, the program will “clean” the virus, that is, destroy it. It is very
important not to ignore a virus warning from antivirus software. Antivirus
software must also be updated regularly to ensure it protects against the
latest viruses (Booyse et al, 2017).
• Antispyware: Antispyware is similar to antivirus software, the only
difference being that antispyware protects the computer and computer
system against the installation of spyware. As with antivirus software,
antispyware must be regularly updated to ensure it protects against the
latest spyware (Booyse et al, 2017).
• Spam management software: Spam management software filters e-mails
to identify spam. If an e-mail is identified as spam, the e-mail is quarantined
and not delivered to the recipient’s e-mail account. Recipients are informed
of the e-mail and can usually request the mail administrator to release the
e-mail, if it is not spam. If no instruction to release the e-mail is received,
the e-mail is automatically deleted after a predetermined time. It is
important to allow recipients to identify spam e-mail senders and for the
mail administrator to add these spam e-mail addresses to a list of e-mails
that are automatically blocked as spam. A recipient must also be able to
remove an e-mail address from the possible spam list so that e-mails from
 that specific e-mail address will go to the recipient’s e-mail address directly
and not be quarantined first (Booyse et al, 2017).
Training of staff: Staff must understand why controls are imposed, what the benefits
of these controls are and how to execute these controls. This will ensure staff will
not try to circumvent controls and that they know how to execute controls properly.
For example, they should know how to make backups or why it is important not to
share your password with colleagues (Booyse et al, 2017).

Software change and implementation controls: These controls ensure that only
authorised changes are made to existing software programs or that only authorised
new programs are installed on the computer network (Booyse et al, 2017).

Adequate disposal of used/damaged/redundant equipment: When hardware

reaches the end of its useful life (technological redundancy, damage, etc), a
decision regarding the proper disposal needs to be taken in order to ensure that the
confidentiality of data is maintained and the negative impact on the environment is
minimised (Booyse et al, 2017).

8.5 Detective controls

These are controls that detect if any problems have occurred. They are designed
to pick up errors that have not been prevented. These could be exception reports
that reveal that controls have been bypassed (e.g., large amounts paid without
being authorised). Other examples could include reconciliations, supervision and
internal checks (ACC_ACCAKP_BT_202109, 2021). Examples of detective
controls include the following:

Programmed edit tests: These detective controls are automatically performed by

the application software used in the data entry. Depending on the software program,
errors identified can reflect immediately on the input screen to allow the input clerk
to take corrective steps instantaneously to rectify the data, or the errors can reflect
on an error report created periodically, and the errors must be corrected at a later
stage. Some of the programmed edit tests which can be performed include the
following:

Check digit: A check digit is used to verify the accuracy of an entered numeric code
(e.g., bank account number, ID number, inventory bar code). The check digit is
usually the last number of the numeric code and is calculated by applying a
mathematical formula to the basic code (the other numbers in the numeric code).
When the numeric code with the check digit is entered, the computer will
automatically recalculate the check digit. If the check digit is not the same, the
computer will indicate that the numeric code has been entered incorrectly and must
be re-entered. A very simplistic example is the following: An inventory bar code,
756-543-6, is seven digits in length. The first six numbers are the basic code and
the last number is the check digit. The check digit is calculated as the sum of the
first three numbers less the sum of the last three numbers, that is, 6 [(7+5+6)-
(5+4+3)]. If, for example, this specific inventory bar code is entered as 756-643-6
the computer will recalculate the check digit and get 5 instead of 6. The computer
will then flag the inventory bar code as incorrectly entered. In practice, the
mathematical formulas used to calculate the check digit are very complicated
(Booyse et al, 2017).
• Mathematical accuracy checks: The computer will re-perform calculations
and compare the answers to calculations manually performed. For
example, the total of the line items on an invoice must be equal to the
original invoice total captured.
• Alpha/numeric checks: Data fields can be set to contain only numeric or
only alphabetic characters. The alpha/numeric test will then test if the data
entered in that specific data field were entered in the correct format. For
example, if a data field can only contain numeric characters (1234567) and
alphabetic characters (abcde) or alphanumeric (abcd4567) characters are
entered into that specific field, that entry will be flagged as an error.
• Limit checks: When data are entered, these tests check whether the data
fall within pre-set limits. For example, the quantity sold for a specific item
can only be between 0 and 100, the working hours for casual staff can only
be between 0 and 15 hours per week or payment terms must be 30, 60 or
90 days.
Activity logs: Activity logs indicate which users accessed a certain system and at
what time. These logs should be reviewed regularly for atypical activities, that is,
users logging in at unconventional hours, as these activities might indicate
fraudulent activities (Booyse et al, 2017).

Intrusion detection system (IDS): IDS is software that monitors and logs attempts
to access computer system and networks. An intrusion detection alarm is raised if
the attempt to access the system falls outside predetermined activity parameters
(unsuccessfully trying to access more than three times, etc) or falls within the
 parameters of possible malicious attacks (the predictable behaviour of a worm). An
IDS is used to detect attacks from inside as well as outside the organisation (Booyse
et al, 2017).

Hash totals: A hash total is created by adding together all the data for a specified
nonfinancial numeric field (e.g., inventory codes, invoice numbers, supplier and
customer account numbers) in a batch. (A batch is a group of transactions
processed together.) The total has no specific value other than as control to ensure
the batch is captured completely and accurately. This is done by calculating the
hash total for the batch at the start and ensuring that it agrees with the calculated
hash total for the batch at the end (Booyse et al, 2017).

Other examples: Detective controls, discussed earlier in this study unit, are
• run-to-run totals
• audit trails
• smoke detectors.
8.6 Corrective controls
These are controls that address any problems that have occurred. So, when
problems are identified, the controls ensure that they are properly rectified.
Examples of corrective controls include follow-up procedures and management
action. Clearly, the most powerful type of control is preventative. It is more effective
to have a control that stops problems occurring rather than detecting or correcting
them once they have occurred. There is always a possibility that it is too late to sort
out the problem (ACC_ACCAKP_BT_202109, 2021).

Corrective controls are the last layer in the internal control shield. Corrective
controls, also sometimes called corrective measures, commence as soon as the
detective controls have uncovered and identified an adverse event. The purpose of
corrective controls is to limit and repair the damage caused by the adverse event
and should bring the organisation back to its normal working operations as
effectively as possible. It is important to remember that for each adverse event
identified, there can be more than one corrective control and that the optimum
corrective control must be chosen to rectify each adverse event. As with detective
controls, corrective controls can have the effect of modifying existing controls or
implementing new controls (Booyse et al, 2017).

Even with the availability of more advanced technology, the recovery of data is not
certain. It is therefore of the utmost importance to ensure that backups of important
 documents are made regularly. Backup data restoration: The applicable data
backup is restored. This restores the data and information back to the form it was
in at the point the backup was made. All transactions between the backup date and
the date the backup is restored will therefore be “lost” and must be redone. It is,
therefore, very important to inform all users before a backup is restored, to ensure
they have a list of transactions that need to be redone. The restoration of a backup
is the last option, as redoing work is time consuming (Booyse et al, 2017):.

Please remember that it is very important that backups must be tested regularly to
ensure they can be restored. An organisation does not want to find out that backups
are corrupt and cannot be restored when it needs to restore the data.

● Data recovery: In the event of a damaged or corrupted secondary storage

device, multiple tools can be used to recover data, including specialised data
recovery software or the replacement of a broken hardware component, among
other things.

An operating system failure is the most common reason for the need to recover data
and a CD, called a live CD, containing a complete, functioning and operational
operating system, can be used to boot up the computer so that the file system error
can be fixed. Data and system backups can also be made regularly for data recovery
purposes.

• Other examples of corrective controls are:

– disaster recovery of complete system (in order to minimise financial loss and
prevent a material impact on the financial reporting process, controls should
be in place that enable a business to resume normal operations as soon as
possible after a disaster has struck the organisation)

– fire extinguishers (to minimise the damage caused by a fire)

– backup power (to minimise the impact of a power outage)

– insurance (to recover damage to be able to be in operation as soon as

possible).

9 Potential Threats and Controls

Information systems are exposed to privacy and security issues. The organisation
must safeguard the privacy and security of data as well as ensure complete and
 accurate processing of data. There are different privacy and security risks that exist,
together with solutions as to how the organisation can tackle each risk.
Potential threat
Natural disasters – for example,
fire or floor
Malfunction – of computer
hardware or software
Unauthorised access, usage,
damage or theft
Viruses – a small program that,
once introduced into the
system, spreads extensively.
Can affect the whole computer
system.
Potential controls
• Fire procedures – fire alarms
extinguishers, fire doors, staff training
and insurance cover
• Location, for example, not in a
basement area liable to flooding
• Physical environment – for example, air
conditioning and dust controls
• Backup procedures – data should be
backed up on a regular basis (ideally in
real time) to allow recovery.
• Business continuity planning – to decide
which systems are critical to the
organisation continuing its activities.
• Network design – to cope with periods
of high volumes
• Backup procedures and business
continuity planning (as above)
• Personnel controls – include
segregation of duties, policy on usage
and compliance with regulations such
as GDPR, hierarchy of access.
• Access controls – such as passwords
and time lockouts
• Computer equipment controls – to
protect equipment from theft or
destruction
• Antivirus software – should be run and
updated regularly to prevent corruption
of the system by viruses.
• Formal security policy and procedures,
for example, employees should only
download files or open attachments
from reputed sources.
• Regular audits to check for
unauthorised software
Potential threat
Hackers – deliberate access to
systems by unauthorised
persons
Human errors – unintentional
errors from using IS
Human resource risk – for
example, repetitive strain injury
(RSI), headaches and eye
strain from computer screens,
tripping over loose wires
Source: (ACC_CIMAKP_E1_202201; 2021:366–368):
Potential controls
• Firewall software – should provide
protection from unauthorised access to
the system from the internet.
• Passwords and usernames – limit
unauthorised access to the system.
• User awareness training and a formal
security policy so that employees are
aware of the risks that exist and how
best to mitigate them.
• Data encryption – data is scrambled
prior to transmission and is recovered in
a readable format once transmission is
complete.
• Training – adequate staff training and
operating procedures.
• Controls ensuring only valid data is
input/processed and that all data is
processed.
• Ergonomic design of workstations
should reduce problems such as RSI.
• Anti-glare screens reduce eye
strain.

10 Business Continuity and Disaster Recovery

Most organisations now expect to be subject to a cyberattack. Therefore, part of
the cyber risk management process must be to set up business continuity plans
and disaster recovery plans (although the use of these plans is not limited to
recovery from cyberattacks).

➢ Business continuity planning – is proactive and designed to allow the

business to operate with minimal or no downtime or service outage whilst the
recovery is being managed.
➢ Disaster recovery planning – is reactive and limited to taking action to restore
the data and applications and acquire new hardware
(ACC_CIMAKP_P3_202201; 2021:583).

Disaster recovery planning takes place in order to recover information systems from
business-critical events after they have happened. It involves:
 ➢ Making a risk assessment
➢ Developing a contingency plan to address those risks.

Examples of backups that organisations (ACC_CIMAKP_P3_202201; 2021:583)

use now are:

➢ Mirror site – this is effectively a complete copy of a website, but hosted on a

different URL (web address). It can be used to relieve traffic on a server to
speed up performance of a website, or it can be used if the main website goes
down for any reason. It is a very expensive approach, but if something is
business critical, it could be cheaper than the costs incurred as a result of not
having one if something goes wrong.
➢ Hot backup site – this is a building that physically replicates all of the current
data centre/servers, with all systems configured and ready to go with the
latest backup. • Warm backup site – this is a building that has all the critical
hardware for the servers and systems in place, but they will need to be
configured and the most recent backup of the data/information installed
before the site can take over the organisation’s activities.
➢ Cold backup site – this is an area where, should anything go wrong, new
hardware could be set up and a recovery operation could begin. None of the
hardware needed is actually in place, so it would take a significant amount of
time to restore operations. This is the cheapest option.

The location of backup facilities is also an important issue.

➢ If the backup facilities are too close, they may be taken offline along with the
primary site.
➢ If the backup facilities are too far away, that could impact on operations.

Finding the right balance for an organisation will require significant consideration.
There are also third-party providers who maintain sites, which could be cheaper but
could also create problems with ensuing compatibility. Third-party providers are
likely to have many other commitments to other clients, and this could impact the
availability and accessibility of the backup in a disaster, particularly as disasters can
impact various organisations at the same time (ACC_CIMAKP_P3_202201;
2021:583).

11 Privacy
 The amount of personal data available to and used by organisations means that the
privacy, sensitivity and security of this data are very significant considerations in
modern business. In the context of the organisation, privacy refers to all information
that is considered confidential and in need of protection from public disclosure.
Privacy has become an important issue owing to the vast amounts of data being
made available to stakeholders of organisations. In most organisations, information
is computerised, making it easily accessible. It is important that proper control
measures be put in place to ensure that information is managed as well as that it
reaches its intended recipients only. Individuals must respect the value and
ownership of the information they receive and should not disclose any of its
contents without the appropriate authority unless there is a legal or professional
obligation to do so (Booyse et al, 2017).

12 Protection of Personal Information

On 1 July 2021, the Protection of Personal Information Act (POPIA or the Act), 4 of
2013, came into effect. The Act has implications for all research activities that
involve the collection, processing, and storage of personal information. POPIA
provides for a general prohibition on the processing of special personal information.
Special personal information includes information relating to the health, political
persuasion, race or ethnic origin, or criminal behaviour of the data subject. There is
a similar ban on the processing of personal information relating to a child. There
are some exceptions to these bans.

It provides for the development of codes of conduct to guide the interpretation of

the Act with respect to a sector or class of information. Prior authorisations are
required for using unique identifiers of personal information in data processing
activities, and for sharing special personal information or the personal information
of children with countries outside of South Africa that do not have adequate data
protection laws. In order to understand and functionally interpret the provisions of
POPIA for the research community in the Republic of South Africa (South Africa),
the Academy of Science of South Africa (ASSAf) is leading a process to develop a
code of conduct (Code) for research under the Act. During 2020, ASSAf was
approached by scientists in South Africa to consider the development of a code for
research.

Within the research setting, POPIA regulates the processing of personal information
for research purposes, and the flow of data across South Africa's borders to ensure
 that any limitations on the right to privacy are justified and aimed at protecting other
important rights and interests. The new regulatory system that POPIA established,
functions alongside other legislation and regulatory structures governing research
in South Africa. The law which takes precedence will be that which provides the
most comprehensive protections to the rights of individuals in South Africa.

12.1 Processing of personal information

POPIA provides for the lawful processing of personal information in South Africa. It
sets out the roles for various parties involved in the processing (including collection,
use, transfer, matching and storage) of personal information. Briefly, these roles
include but are not limited to

• the “Responsible Party”, which – in this case – is the researcher (Principal

Investigator) or research institution responsible for determining why and
how the personal information is being processed
• the “Operator” – a third party contracted by the responsible party to
process personal information on their behalf
• an “Information Officer” who is the designated individual within an
institution responsible for ensuring compliance with POPIA
• the “Data Subject” who is the person whose information is being processed
and, in the case of research, would be the “study/research participant”

12.2 Conditions of lawful processing of personal information

POPIA outlines eight (8) conditions for the lawful processing of personal
information, all of which must be fulfilled for such processing to be lawful. These
conditions are:

a. Accountability: the responsible party must ensure that all the conditions for
the lawful processing of personal information laid out in POPIA are complied
with at the time of the determination of the purpose of processing and during
processing (section 8).
b. Process limitation: the responsible party must ensure there is a lawful basis
for the processing of personal information; that such processing is necessary
for a defined purpose and could not be achieved without processing such
personal information; and that the information is collected directly from the
data subject and with informed consent (sections 9–12). The lawful basis
must be determined at the outset of the processing and will influence the
rights of data subjects. The following lawful bases outlined in POPIA are in
 section 11(1):
(i) the data subject or a competent person where the data subject is a
child consents to the processing;
(ii) processing is necessary to carry out actions for the conclusion or
performance of a contract to which the data subject is party;
(iii) processing complies with an obligation imposed by law on the
responsible party;
(iv) processing protects a legitimate interest of the data subject;
(v) processing is necessary for the proper performance of a public law
duty by a public body; or
(vi) processing is necessary for pursuing the legitimate interests of the
responsible party or of a third party to whom the information is
supplied. Further guidance in this regard is provided under the Code.
c. Purpose specification: the collection and processing of personal information
must be for a defined purpose; records should not be retained longer than is
necessary and must be deleted or destroyed after the purpose for collection
and processing has been fulfilled. The retention of records containing
personal information is allowed for research purposes where there is a
specifically defined need to retain such information and where further relevant
safeguards are in place (sections 13–14).
d. Further processing limitation: further processing of personal information is
permitted where such information is used for research, and only research,
purposes (section 15).
e. Information quality: personal information collected and stored must be
accurate, up to date, complete and not misleading (section 16).
f. Openness: responsible parties must maintain a record of all processing of
personal information. The data subject must be informed regarding: why the
information was collected, who collected it and where it is being held, what
rights the data subject has to access and delete or correct the data, and if the
data will be transferred to a third party and/or internationally during the
processing. It is not necessary to inform the data subject of the above if their
information is being processed only for research purposes (sections 17–18).
g. Security safeguards: responsible parties must ensure that personal
information is kept secure to maintain confidentiality and integrity, and to
prevent data breaches. Any security breaches must be reported to the
Information Regulator (sections 19–22).
h. Data subject participation: the responsible party must ensure that the data
 subject is informed of their right to access, correct and delete their personal
information and of the manner in which to do so (sections 23–25).

In a paper delivered by Netshakuma (2020) in a consultative workshop to formulate

code of conduct, it was established that most participants were not aware of the
POPIA, and a lack of collaboration existed between the legal practitioners, records
managers and archivists. Internal control systems with information communication
technology (ICT) need to be in place to provide information integrity, and the value
of international integrity about the international students and staff.

12.3 Social Implications

If the POPIA is not properly implemented, it can contribute to the violation of

information integrity of the international students partaking in research and cultural
exchange programmes. Internationally, it can affect SA trade relations with
European countries, if requirements for non-European Union General Data
Protection Regulation (GDPR) are not followed. It is also essential for the POPIA to
be aligned with international norms and standards such as GDPR.

13 Ethics
Ethics is defined as the moral values and principles of an individual. It is a rule or
set of rules that is composed to maintain professionalism and guide members of
their profession to assure the public that a profession will maintain a high level of
performance. If the rule is not met, it means that the professional has not achieved
the standard, which can be considered as malpractice (Biduri, 2018).

The King IV Report regards exercise of ethical and effective leadership by the
governing body as corporate governance. Ethics plays a critical role in moving from
tick-box compliance to genuine application of corporate governance. Ethical
leadership is exemplified by integrity, competence, responsibility, accountability,
fairness, and transparency (ICRAFT). It involves anticipating and preventing or at
least ameliorating the negative consequences of organisational activities and
outputs on the economy, society, the environment as well as capitals that it uses
and affects. Thus, ethical organisation made up of ethical individuals will act
responsible and fairly, even when nobody is watching.

Accounting scandals such as Enron and Worldcom have raised a great deal of
attention on ethics. The publication of the Sarbanes-Oxley Act in 2002 was an initial
response. Ever since then, ethics is considered important enough to be taught in
 universities and included in the accounting curriculum. Despite all the efforts,
accounting scandals remain.

13.1 Ethics and the individual professional accountant

In an information environment, the individual may act unethically for various
reasons. These may include self-interest or familiarity with organisation information,
or because of intimidation by a dominant senior staff member trying to influence the
decision-making process. Ethical behavioural cannot be taught, as it is not based
on rules and regulations. Although an action might be legal, it might not necessarily
be ethical. The test for ethical behaviour is to ask oneself the question: “What is the
right thing to do in this situation?”

A professional accountant is required to comply with the following five

fundamental principles (ACC_CIMAKP_E1_202201, 2021).

Fundamental principle Interpretation

Integrity Integrity means being straightforward, honest and
truthful in all professional and business
relationships.
Objectivity Objectivity means not allowing bias, conflict of
interest, or the influence of other people to override
your professional judgement.
Professional competence This is an ongoing commitment to maintain your
and due care level of professional knowledge and skill so that
your client or employer receives a competent
professional service. Work should be completed
carefully, thoroughly and diligently, in accordance
with relevant technical and professional standards.
Confidentiality This means respecting the confidential nature of
information you acquire through professional
relationships such as past or current employment.
You should not disclose such information unless
you have specific permission or a legal or
professional duty to do so. You should also never
use confidential information for your or another
person’s advantage.
Professional behaviour This requires you to comply with relevant laws and
regulations. You must also avoid any action that
could negatively affect the reputation of the
profession

14. Understanding Ethics in the Accounting Profession

Public accounting as a professional career, is born from the need to train people in
 a technical, professional and ethical way so that they specialise in and are
responsible for the management of the finances of a natural or legal person. Thus,
a presentation of financial reports with reliable figures in order to improve the
decision-making processes in the management of any organisation is needed
(Hermandez-Gil et al, 2019). Accounting is therefore a service, while the provision
of service should be directed to specific interest.

Ludigdo & Kamayanti (2012) argued in their study that accounting harmonisation,
through adoption of International Financial Reporting Standards (IFRS), favours the
interests of investors. They established that multinational companies (MNC), as the
leaders of neo-globalisation, have a goal of expanding areas of “power” and
increasing their wealth. This was because most corporation managements are still
at a physical level, that is, very egocentric, rather than at a spiritual level, which is
“community-centric”, resulting in the growth of a “capitalist culture” which is the
“culture of having”. In this regard, an important question that may direct ethics
purpose as well, needs to be answered. The question relates to who the users of
information generated by accountants (both in financial and audit) are. Thus, it is
crucial to ensure the confidentiality of users of audited financial statements and
other services provided by public accountants. This requires a good audit quality,
generally measured by adherence to the audit process, and standards established
and approved by the Indonesian Institute of Certified Public Accountants.

Therefore, as an independent party, public accounting as a profession requires the

trust of the public in the reliability of those statements. Accordingly, quality financial
reporting also demands a qualified auditor. Notwithstanding, awareness of the
importance of financial statements for stakeholders is still not sufficient (Jaya & C
Irene, 2016). Building on the idea that birth cohorts, otherwise known as
generations, are useful proxy for the socio-cultural environments of different time
periods, it is believed that the perceptions of accountants of the millennial age group
(young workers and students born in the 1980s and 1990s, and the so-called
“GenMe”) are particularly important for the future of the accounting profession. After
all, it is these young people who will become professional accountants or the
accountants’ future clients. Specifically, the factors that contribute to influencing
GenMe perceptions of accountants’ ethics, are levels of education, having attended
an accounting course at high school level, gender, and membership of accounting
professions (Caglio & Cameran, 2017).

14.1 Accountants and ethics

 The growing concern over the ethics of professionals makes it important
considering the perception of the public, students, and accountants of the values of
accountants in the working world.

Building from the above about the accounting profession, the function that
accountants fulfil in the economic system is dependent on their ability to maintain
the perception of high ethical standards. However, according to Hermandez-Gil et
al (2019), creative accounting is a scourge that affects the organisational and
professional ethics of those who consent to committing fraudulent acts for the
simple reason of accommodating figures and showing a reality that does not
correspond to what is truly executed. Therefore, accountants as students need to
possess certain essential personal qualities that their employers look for. The study
by Caglio & Cameran (2017) indicated that there is room for improving public
perceptions of accountants’ ethics through university courses in ethics, continuing
education programs and focused communication strategies by accounting firms
and professional bodies.

14.2 Forensic accountants and ethics

According to Bryan Howison (2018), although being ethical is identified as an

important characteristic, the question of what constitutes a “good forensic
accountant” has not hitherto been investigated. This is because of the
multidisciplinary and highly technical nature of forensic accountants, as they are
significantly at risk of conflating ethics with compliance with law. In this regard, prior
literature has identified several technical and personal characteristics and attributes
that are desirable in forensic accounts practitioners. The understanding of virtue
ethics and especially the virtue of practical wisdom will help forensic accountants
maintain public confidence and quality in their service and provide practical
guidance on the exercise of professional judgement. Practical implications suggest
that the primacy currently given in forensic accounting literature and practice to a
commercial logic technical competence, risks damaging the professional standing
of forensic accountants. Over time, it will reduce their ability to exercise professional
judgement in complex, unstructured situations. In this regard, virtue ethics can act
as a useful counterpoint to these threats.

14.3 Perceptions on ethics between teaching accountants, accounting students,

and accountants

Prayogo, Tenku Afrizol (2021) conducted a study on the difference in perceptions

between teaching accountants and accountants on the ethics of preparing financial
 statements, and ethical indicators for the financial preparation of financial
statements as represented in earnings management, misstatements, disclosures,
cost-benefit and responsibilities. Results showed that teaching accountants,
accounting students and accountants have different perceptions. However, there
were no differences in perception between teaching accountants and accountants.
Therefore, it was concluded that there are differences in perception between
teaching accountants, accounting students and accountants on the ethics of
preparing financial statements.

14.4 Basic principles for auditors’ ethics

In carrying out their duties, auditors are expected to always be guided by the basic
principles of professional ethics, which are:

a. Principle of integrity – every practitioner or auditor must be firm and honest in

establishing professional and business relationships in carrying out his work
b. Principle of objectivity – every practitioner or auditor shall not allow
subjectivity, conflicts of interest to influence professional judgement
c. The principle of competence and attitudes of professional precision and
awareness (Biduri, 2018).
14.5 The effect of electronic information technology (IT) systems and the auditors’
ethics on audit quality
The interaction between electronic IT systems and auditor ethics affects the quality
of audit. Based on theory, the interaction between electronic IT systems and auditor
ethics has a positive effect on audit quality. Electronic information technology-based
systems are indispensable for auditors in complex audit assignments, where
analytical, rapid decision-making and communication among audit teams is
essential. Electronic-based information systems (IS) are needed for decision-
making oriented to professional consideration and complexity of the assignment.
The electronic IT systems support IS used by auditors in the assignment of audits.
An understanding of ethics will bring the auditor up to speed with attitudes,
behaviour and action necessary in maintaining the quality of audit (Prayogo, Tenku
Afrizol, 2021).

15 Governance

Governance outcomes: Corporate governance is not presented as an end in itself

but rather a means towards realising certain benefits, or governance outcomes,
such as ethical culture, good performance, effective control and legitimacy.
 The principles are an expression of the fundamental aspirations of any
organisation wishing to achieve corporate governance. For example, King IV
provides the following principles, among others, for a governing body. It should:

a. lead ethically and effectively.

b. govern risk in a way that supports the organisation in setting and achieving its
strategic objectives, among others.

c. ensure the organisation remunerates fairly, responsible and transparently so

as to promote the achievement of strategic objectives and the positive
outcomes in the short, medium and long term.

15.1 Corporate governance and the financial crisis

The credit crunch is increasingly presented as a crisis in corporate governance. The

regime of corporate failures came on the heels of the global financial crises of 2007
and 2009. This emphasised the fact that corporate objectives, goals and priorities
had been compromised by organisational or corporate gatekeepers. This results in
a breakdown of planning, control and evaluation phases in corporate management.
These gatekeepers, as represented by accountants, auditors, corporate managers
and the regulatory authorities, have in some way been implicated in this gruesome
dance of death. Global response to this downwards spiral is twofold. First, there
has been a renewed emphasis on the overhaul and adoption of uniform
International Financial Reporting Standards (IFRS) with an eye on best practices.
Second, corporate governance principles and practice are emphasised to avert the
misadventures of the past.

15.2 Objectives and importance of corporate governance

Corporate governance is the means by which a company is operated and

controlled. The aim of corporate governance is to ensure that companies are run
well in the interests of their shareholders, employees and other key stakeholders
such as the wider community. It deals with the mechanism by which stakeholders
of a company exercise control over corporate managers and provide overall
direction to the firm, such that the stakeholders’ interests are protected. In such
situations, the firm operates more responsible and profitably, relations are
enhanced between the firm and all stakeholders – shareholders, policyholders,
employees, suppliers and society at large. The quality of executive and non-
executive directors is improved, the long-term information needs of all stakeholders
are satisfied, and executive management is monitored properly in the interest of
 shareholders.

The aim is to try and prevent company directors from abusing their power, which
may adversely affect these stakeholder groups. For example, the directors may pay
themselves large salaries and bonuses whilst claiming they have no money to pay
dividends to shareholders. Similarly, they may be making large numbers of staff
redundant but awarding themselves a pay rise. In response to major scandals (for
example, Enron) regulators sought to change the rules surrounding the governance
of companies, particularly publicly owned, ones. In the United States (US), the
Sabarnes-Oxley Act (2002) introduced a set of rigorous corporate governance laws.
The UK Corporate Governance Code introduced a set of corporate governance
initiatives into the UK.

The King Committee on Corporate Governance periodically produces a booklet of

guidelines for the governance structures and operation of companies in South
Africa (SA), called the King Report on Corporate Governance (King Report). It has
been cited as the “most effective summary of the best international practice in
corporate governance”. Compliance with the King Report is a requirement for
companies listed on Johannesburg Stock Exchange (JSE). Three reports were
issued: in 1994 (King I), 2002 (King II) and 2009 (King II), and a 4th revision (King
IV) in 2016. The first report (King I), when published, was recognised internationally
as the most comprehensive publication on the subject, embracing the inclusive
approach to corporate governance. The Institute of Directors in SA (IoDSA) owns
the copyright of the King Report and the King Code of Corporate Governance.
Unlike other corporate governance codes, such as Sarbanes-Oxley, the Code is
non-legislative and based on principles and practices. It also espouses an apply-
or-explain approach unique to the Netherlands, and now also found in the 2010
Combined Code of the United Kingdom (UK). The philosophy of the Code consists
of the three elements of leadership, sustainability and good corporate citizenship.
One of the definite fallouts of the Enron saga was a global preoccupation with the
twin challenge of corporate governance and corporate accountability.

15.3 Information and technology

As we learnt in earlier study units, information, like technology, is a growing source

of competitive advantage for the enhancement of the intellectual capital of an
organisation. For serving its customers more effectively, King IV recognises that
information and technology overlap but are also distinct sources of value creation,
each of which has its own risks and opportunity. King IV takes cognisance of the
 advances in technology that are revolutionising business and societies and
transforming products, services and businesses models. To reinforce this
distinction in King IV, the Code now refers to information and technology instead of
information technology.

Principle 12 provides that the governing body should govern technology and
information in a way that supports the organisation, setting and achieving its
strategic objectives. So profound are these effects that many believe they herald
the dawn of a Fourth Industrial Revolution, as they cause significant disruption. In
line with King IV’s assertion that risk often creates opportunity, organisations should
strengthen the processes that help them anticipate change and respond by
capturing new opportunities and managing emerging risks. The practices assist the
governing body to do so.

15.4 Role of accountants in good corporate governance

The role of an accountant is to maintain a proper balance between the components

of the system to ensure that the audit and accounting tools are performing proper
governance roles and that the pillars of good governance procedures are well in
place. They must keep a governance checklist on the front burners to ensure that
the auditing and accounting tools serve an overall governance in the firm.

In this regard, the role and responsibilities of accountants can be comprehensively

explained as follows:

a. The primary task of an accountant is to ensure that there is checklist of good

corporate governance practices. It is not enough to define in theory the roles
of the different components of the governance structure; more importantly,
those components must be seen to operate efficiently in design and
effectively in operations.

b. The responsibilities fall rather heavily on accountants to help the company

ensure full compliance with the requirements of good and effective corporate
governance. Firms with good corporate governance frameworks are usually
fraud resilient. In the final analysis, it is part of accountants’ duties to ensure
that companies:

(i) implement enhanced Board of Directors oversight of fraud risk

management

(ii) appoint an executive-level member of management responsible for fraud

management
 (iii) establish formal fraud control policy or strategy

(iv) implement risk management goals, performance measurement and

periodic process evaluations

(v) coordinate efforts of different functions to reduce overlapping activities

and address risk management gaps

(vi) formalise roles and responsibilities of the board, audit committee,

management and staff related to fraud risk management.

c. Ultimately, the role of the accountant is to aid proper corporate planning –

setting achievable standards, establishing reporting, monitoring and
evaluation standards, and crafting an overall vision for the enterprise.

d. Accountants also aid the setting up of proper controls, efficient and effective
audit systems, good fraud risk management, and full, fair and adequate
disclosure that satisfies international standards and best practices (Benjamin
Chuka Osisioma, 2013)

15.5 Advantages of a company following good corporate governance principles

These are the following:

a. Greater transparency

b. Greater accountability

c. Efficiency of operations

d. Better able to respond to risks

e. Less likely to be mismanaged

Activity 15.1
Go to your e-tutor site and complete this activity.

In this study unit you have learnt about risks, threats and controls that relate to
cybersecurity. When a major firm has system downtime (as Facebook did in March
2019 when Facebook, Instagram and WhatsApp were all offline simultaneously for
almost 24 hours), the truth about why it happens can take a long time to come out.
The company stated that it had made some changes to server configuration that
triggered a series of issues. Facebook is arguably the most powerful social
media and social networking site out there. You can use Facebook to connect with
your family, friends, work colleagues, and you can even meet new people. Most
organisations have a Facebook account. Most people who know how to use a
computer and internet have a profile on Facebook. Many commentators are
unconvinced by the explanation and believe that Facebook was flooded with traffic
and ultimately overwhelmed by a DDoS attack. Facebook could be unlikely to admit
to an attack of this nature as it would indicate that they are susceptible to such an
attack and others may try to exploit this weakness.

A Explain the cyber risks that Facebook is faced with. Give at least ten
cyber risks.

B Explain the cyber threats that Facebook as an organisation is faced with.

Give at least ten threats.

C Explain the cyber controls that Facebook needs to have in place to

secure its operations.

In a study on the adoption of the International Federation of Accountants (IFAC)

Code of Ethics in Indonesia, the question of what was wrong with the present
accounting profession and their ethics was raised. In conducting this study, the
stakeholder approach was used. It was established that since ethics carry values,
the adoption of the IFAC Code of Ethics in Indonesia meant that “foreign” values
are coerced into Indonesian accountant ethics, resulting in accountants’ inability
to solve local problems. This meant values adopted will be reflected in practice,
or in other words, practice is the object of culture. An accountant code of ethics
can thus be viewed as a cultural property originating from the values of the culture
of origin. Referring to this logic, there should be no doubt that Western values are
inherent in the Indonesian Code of Ethics. Institutions’ adoption of Western ethics
as a result of Indonesia’s involvement in IFAC, can be regarded as coercive
isomorphism, due to the enactment of power of professional bodies to accomplish
standardisation. Internalising Indonesia’s noble values in the accountant code of
ethics might help solve accounting scandals in Indonesia. Ultimately, the study
concluded that what needs to be scrutinised, is the values adopted in the
accountant code of ethics.

In the context of governance and ethics provided in this study unit, go to the
Discussion Forum for study unit 15 and discuss this with your fellow students:
 (a) In a South African context, would you agree that the adoption of an
applicable international code of ethics could negatively impact SA
accountant ethics?

(b) If you agree, would this result in accountants being unable to solve
local problems? If so, how?

(c) Would you agree that an accountant code of ethics can be viewed as
a cultural property originating from the values of culture of origin (in this
case SA)?
(d) Would internalising South African noble values in the accountant code
of ethics help solve accounting scandals in SA.

16 Summary

In this, the last study unit in this module, we looked at cyber risks, threats, controls,
privacy, and ethics. In summary, you learnt about many issues. These include
concepts and an understanding of vulnerability and exposure to threats and
security, risk exposure relating to social media, and risks of cloud and mobile
computing. The study unit emphasised that the amount of personal data available
to and used by organisations necessitates that the privacy, sensitivity and security
of this data be given significant consideration in modern business. Hence, you were
exposed to the POPIA. You also learnt about information security management
systems. In addition, you learnt about the effect of electronic information technology
systems and auditors’ ethics on audit quality. This includes creating an
understanding of ethics in the accounting profession. Finally, you learnt about good
corporate governance and its principles, including the role of accountants in it, and
corporate governance and the financial crisis, including advantages of a company
following such principles.