AIS Exam 2

give the user a "big picture" look at an information system. Consider, for example, the process you use to register for classes each term.You use certain documents and types of information technology to select and register for classes; a systems flowchart would combine all of those resources with their related business processes

show the logic associated with a computer program. As an accountant, you probably wont have much to do with program flowcharts

as you might expect, show the various documents involved in a system; they also portray the procedures performed on those documents. So, for example, a document flowchart might show your federal income tax return from the time you receive a blank form through its eventual disposition with the Internal Revenue Service.

will probably be a minor concern in your accounting career as well. They show the computers, printers, monitors, input devices, and other hardware elements associated with an information system

is part of the Microsoft Office Suite, so it interfaces fairly well with other programs such as Word, PowerPoint, and Excel

is an independent software program, but it also does a good job with designing all kinds of flowcharts; generally, they also can be read by Office software package that has some graphics capability to design a flowchart-even something as simple as PowerPoint

.  A flowchart is one form of systems documentation used in accounting information systems.  Flowcharts come in at least four varieties:  systems (give a “big picture” look at a business process), document (show the flow of a document through a system), hardware (map the hardware components of a system along with their relationships to one another) and program (describe the rules and logic of a specific computer program).  Systems flowcharts are widely used in AIS, with document and hardware flowcharts being used occasionally.  Program flowcharts are rarely used in AIS work.

The conventions associated with flowcharting are meant to facilitate reading and interpretation.  Flowcharts should be read from top to bottom and left to right; they should not be crowded.  They should be organized in columns based on areas of responsibility, and should always have a complete title.  Documents in a flowchart should always have clear points of origin and termination.

Flowcharts can be used to understand how a business process works.  They can also be used to spot internal control deficiencies and to recommend business process improvements.

A data flow diagram is a form of systems documentation occasionally used in AIS work.  DFDs focus on the flow of data in a process; compared to flowcharts, they are less concerned about who performs tasks and more concerned about what those tasks are and what data they require.  They can be used in AIS work to gain a clearer understanding of a business process and / or as the basis for creating relational database tables.

A circle in a DFD symbolizes a process, such as “check customer credit.”  A rectangle symbolizes an external entity, such as “customer.”  Arrows in DFDs represent data flows, such as “customer credit information.” Finally, a set of parallel lines represents a database or data store, such as “customer file.”

DFDs should be clear and easy to read.  Data flows should be labeled with noun phrases, while processes are labeled with verb phrases.  In addition, DFDs must be balanced; that is, items should not disappear or appear between levels.  Additional DFD conventions are discussed in the chapter.

• A relational database is a collection of objects designed to collect data, analyze it and report information to decision makers.  A table is the primary object in a relational database.  Tables contain fields (columns) and records (rows), and should be normalized for efficiency and effectiveness.  A primary key is a field in a table that uniquely identifies each record in the table, such as a transaction number.  A foreign key is a primary key posted in another table; for example, a customer number would be a primary key in the customer table and a foreign key in the sales table.  A query is a well-structured question designed to extract information from a database.  Queries store instructions, not results; each time a query is run, it looks at the current data in the database.

The sales / collection process accounts for activities associated with selling goods and services to clients, along with the related cash collections.

The process comprises seven steps:  (1) Take a customer order.  (2) Approve customer credit.  (3) Fill the order based on approved credit.  (4) Ship the product (if necessary).  (5) Bill the customer.  (6) Collect payment.  (7) Process uncollectible receivables as necessary.

Inputs to the sales / collection process include customer orders.  Processes include both the steps identified in (b) above, along with transaction processing steps in the accounting cycle.  Outputs of the sales / collection process include invoices, accounts receivable aging reports and others.  Data in the sales / collection process are stored in customer files, transaction files, inventory files and junction files.

Common transactions include:  sales of inventory on account (debit accounts receivable and cost of goods sold, credit sales and inventory), cash collections on account (debit cash and credit accounts receivable), bad debt write-offs (debit allowance for bad debts, credit accounts receivable) and others.

Risks and related internal controls for the process include:  granting credit to customers who are not creditworthy (separation of duties, established credit check procedures), inventory stock-outs (maintaining adequate inventory) and billing the customer incorrectly (document matching).

• The acquisition / payment process focuses on the activities an organization uses to acquire and pay for needed resources.  Although its generalized process can apply to virtually any asset, it is most often used for inventory; other assets (such as cash) may be considered in separate business processes (such as the financing process).

The acquisition / payment process comprises six steps:  (1) Request goods and services based on monitored need.  (2) Authorize a purchase.  (3) Purchase goods / services.  (4) Receive goods and services.  (5) Disburse cash.  (6) Process purchase returns as necessary.

At least five documents are typically used to complete the steps in the acquisition / payment process:  purchase requisition, purchase order, receiving report, vendor invoice and check.

Process risks (and related controls) include the following:  ordering unneeded goods (inventory monitoring), purchasing from inappropriate vendors (conflict of interest policy), receiving defective goods (inspection prior to acceptance) and theft of inventory (internal audit).

RFID stands for Radio Frequency Identification.  It is a technology used to quickly and efficiently account for inventory.  Inventory items are tagged with a radio sensor; the sensor is scanned to determine the amount and type of inventory.