AIS test 1.txt

inflormation that flows downward from senior management to junior managers. examples include instructions, quotas and budgets

• 1) trading partners--exchanges include sales, billing, supplies
• 2) stakeholders--entities with a direct interest in the organization

• 1) more than one component
• 2) must serve a common purpose
• 3) system vs. subsystem
• 4) serve at least one purpose

the set of formal procedures by which data are collected, procedded into information and distributed to users

• 1) a transaction is an event that affects or is of interest to the organization and is procedded by its information system as a unit of work
• 2) types: financial and nonfinancial

• 1) transaction processing system (TPS)
• 2) general ledger/ financial reporting system (GL/FRS)
• 3) management reporting system (MRS)

supports daily business operations with numerous reports, documents and messages

produces the traditional finanacial statements

• provides internal managemetn with special-purpose financial reports and information needed for decision making
• i.e. budgets, variance reports and repsonsibility reports

are facts, whcih may or may not be processed and have no direct impact of the end user

causes the user to take an action that he or she otherwise could not, or would not, have taken. more simply, processed data

• 1) data collection
• 2) data processing<-->database management
• 3) information generation
• 4) feedback/external end users

• 1) to support the stewardship of management
• 2) to support management decision making
• 3) the support the firms day-to-day operations

are completely finisked and tested systems that are read for implementation. usually purchased

consist of a basic system stucture on which to build. the logic is preprogrammed and is tailored to suit the business

are custom system the client organizations purchase commercially rather than develop in house

• 1) purchasing--ordering inventory
• 2) receiving--accepting the inventory
• 3) stores--takes custody of the inventory

• 1) production planning--scheduling
• 2) quality control
• 3) maitenance

all data processing is performed by one ore more large computers housed at a central site that serves users throughout the organization

reorganizing the IT finction into small information processing units (IPU) that are distributed to end users and placed under their control

• 1) loss of control
• 2) inefficient use of resources
• 3) destruction of audit trails
• 4) increased potenial for errors, failures and the lack of standards

• 1) cost savings
• 2) increased user satisfaction
• 3) operational efficiency

an environment in which individual data files are not related to other files. end users own their own data. involve large mainframe computers

• 1) data storage-multiply storage to share documents
• 2) data updating-increased cost due to separate files
• 3) currency of information-outdated info

centralizes the organizations data into a common database that is shared by other users

an accounting framework for modeling an organizations critical resources, events and agents (REA) and the relationships between them

• an information system model that enables an organization to automate and integrate its key business processes.
• 1) allows data sharing, information flows, common business practices

• 1) revenue
• 2) expenditure
• 3) conversion

• A) the acquisition of materials, property, and labor in exchange of cash
• 1) accounts payable system
• 2) cash disbursements system
• 3) payroll system
• 4) fixed asset system

• a) raw materials to finsihed products
• 1) production system-planning, scheduling, and control
• 2) cost accounting system-monitors the flow of cost information related to production

• A) processing cash sales, credit sales and the receipt of cash
• 1) sales order processing-credits
• 2) cash receipts

are used to capture and formalize transaction data that the transaction cycle needs for processing

are the result of transaction processing rather than the triggering mechanism for the process

are product documents of one system that become source documents for another system

• 1) master file
• 2) transaction file
• 3) reference file
• 4) archive file

generally contains account data. updated from transactions

is a temporary file of transaction records used to change or update data in a master file

stores data that are used as standards for processing transactions

contains records of past transactions that are retained for future reference

uses symbols to represent the entities, processes, data flows and data stores that pertain to a system

is a documentation technique used to represent the relationship between entities

is the graphical representation of the physical relationships among key elements of a system

is a group of similar transactions that are accumulated over time and then processed together

• 1) improve operational efficiency
• 2) provides control over the transaction process

assemble transactions into groups for processing. there is always a time lag

process transactions individually at the moment the event occurs

• 1) sequential codes
• 2) block codes
• 3) group codes
• 4) alphabetic codes
• 5) alphanumeric codes
• 6) mnemonic codes

• represent items in some sequential order
• 1) advantages-gaps in numbers alerts management
• 2) disadvantages-carry no info beyond the order

• is a variation on sequential coding that partly remedies. includes a chart of accounts
• 1) advantages-insertion of new codes
• 2) content not readily apparent

• used to represent complex items or events involving two or more pieces of related data
• 1) advantages
• a) facilitate the representation of large amounts of data
• b) allow complex data structures to be represented in hierarchal form
• c) detailed analysis
• 2) disadvantages-over used

• can be the same as numeric codes
• 1) advantages- capacity to represent large numbers of items increases dramatically
• 2) disadvantages-difficulty rationaling the meaning

• alphabetic characters in the form of acronyms anf other combinations to convey meaning
• 1) advantages-does not require the user to memorize meaning
• 2) disadvantages-limited ability to represent items within a class

the benefits of the decision should be distributed fairly to those who share the risks

the analysis of the nature and social impact of computer technology and hte corresponding formulation and justification of policies for the ethical use of such technology

• 1) pop
• 2) para
• 3) theoretical

simply the exposure to stories and reports found in the popular media regarding the good and bad of computer tech

involves taking a real interest in computer ethics cases and acquiring some level of skill and knowledge in the field

apply the theories of philosophym sociaolog, and psychology to computer science with the goal of bringing some new understanding

• 1) privacy
• 2) security
• 3) ownership of property
• 4) equity in access
• 5) environmental issues
• 6) A.I.
• 7) unemployment and displacement

denotes a false representation of a material fact made by one party with the intent to deceive and induce the other party to justifiably rely on the fact to his or her detriment

• 1) flase representation
• 2) material fact
• 3) intent
• 4) justifiable reliance
• 5) injury or loss

• generally designed to directly convert cash or other assets to the employees personal benefit
• 1) steal something of value
• 2) convert asset to cash (or other usable form)
• 3) conceal the crime

more insiduous than employee fraud because it often escapes detection until the organization has suffered irreparable damage

• 1) perpetrated at levels of maangement above the one to which internal control structures relate
• 2) involves using the financial statements to create an illusion
• 3) if the fraud involves missapropriation of assets, it frequently is shrouded in a maze of complex business transactions

• 1) situational pressure-personal or job related stresses
• 2) opportunity-direct access to assets and/or access to information that controls assets
• 3) ethics-pertains to one's character and degree of moral opposition

when individuals in critical positions collude, they create opportunities to control or gain access to assets that otherwise would not exisit

• 1) lack of auditor independence
• 2) lack of director independence
• 3) questionable executive compensation schemes
• 4) innapropriate accounting practices

• 1) creation of the PCAOB
• 2) auditor independence
• 3) corporate governance and responsiblity
• 4) issuer and management disclosure
• 5) fraud and criminal penalties

involves an executive. manager or employee of the organization in collution with an outsider

giving, offering, soliciting, or receiving thing of value to influence an official in the performance of his or her lawful duties

giving, receiving, offering or soliciting something of value because of an official act that has been taken

occurs when an employee acts on behalf of a third party during the discharge of his or her suties or has self interest in the activity being performed

is the use (or threat) of force (including economic sanctions) by an individual or organiation to obtain something of value

involves stealing cash from an organization before it is recorded on the organizations books and records

an employee opening the mail steals a customers check and destroys the associated remittance advice

involes schemes in which cash receipts are stolen from an organization after they have been reocrded in the organizations books and records

the cash receipts clerk first steals and cashes a check from customer A, then uses customer B's check towards A to conceal

perpratrated by employees who causes their employer to ussie a payment to a false supplier by submitting invoices for fictitious goods or services, inflated invoices or for personal purchases

requires that the perpratrator establish a false supplier on the books of the victim company

similiar to shell company fraud but a transaction actually takes place

involves a clerk with check writing authoriy who pays a vendor twice for the same products. the vendor then returns the check and the clerk intercepts

involves forging or changing in some material way a check that the organization has written to a legitimiate payee

the distribution of fraudulent paychecks to existent and/or nonexistent employees

are schemes in which an employee makes a claim for reimbursement of ficticious or inflated business expenses

• 1) safeguard the assets of the firm
• 2) ensure the accuracy and reliability of accounting records and info
• 3) promote efficiency in the firms operations
• 4) measure the compliance with managements prescribed policies and procedures

the internal control objectives are met in a cost effective way

absence or meakness of a control

• 1) preventive controls-passive techniques that reduce fraud frequency
• 2) detective controls-identify and expose undesired events
• 3) corrective controls-reverse the effects of errors

PCAOB and SEC endorsed the framework created by this committee

• 1) identify and record all valid financial transactions
• 2) provide timely information about transactions in sufficient detail to permit proper classification and financial reporting
• 3) accuratley measure the financial vlaue of transactions so their effects can be recorded in financial statements
• 4) accurately reocrd transactions in the time period in which they occured

is the process by which the quality of internal control design and operation can be assessed

are the policies and procedures used to ensure that appropriate actions are taken to deal with the organizations identifed risks

pertain to entity-wide concerns such as controls over the data center, organization databases, system development and program maintenance

ensure the integrity of specific systems such as sales order processing, accounts payable and payroll applications

ensure that all material transactions processed by the information system are valid and in accordance with managements objectives

can take many forms, but segregates duties

• often called a compensating control
• - used when there is a lack of segregation fo duties

• - consist of source documents, journals and ledgers
• - creates a stronger audit trail

ensure that only authorized personnel ahve access to the firms assets

• - are independent checks of the accounting system to identify errors and misrepresentations.
• - takes place after the fact