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Contents Part I Conceptual Foundations of Accounting Information Systems Chapter 1 Accounting Information Systems: An Overview INTRODUCTION SYSTEMS, DATA, AND INFORMATION WHAT IS AN AIS? WHY STUDY ACCOUNTING INFORMATION SYSTEMS? AIS Topics Are Tested on the New CPA Exam THE ROLE OF THE AIS IN THE VALUE CHAIN PROVIDING INFORMATION FOR DECISION MAKING Decision Structure. THE AIS AND CORPORATE STRATEGY SUMMARY AND CASE CONCLUSION AIS IN ACTION CHAPTER QUIZ DISCUSSION QUESTIONS PROBLEMS Case 1-1 AnyCompany, Inc.: An Ongoing Comprehensive Case Case 1-2 Ackoff's Management Misinformation Systems Case 1-3 The Howard Leasing Company AIS IN ACTION SOLUTIONS Quiz Key Chapter 2 Overview of Business Processes INTRODUCTION INFORMATION NEEDS AND BUSINESS ACTIVITIES INFORMATION NEEDS. INTERACTION WITH EXTERNAL AND INTERNAL PARTIES. BUSINESS CYCLES. TRANSACTION PROCESSING: THE DATA PROCESSING CYCLE DATA INPUT DATA STORAGE Coding Techniques. Chart Of Accounts. Audit Trail. DATA PROCESSING INFORMATION OUTPUT ROLE OF THE AIS Key Terms AIS IN ACTION Chapter Quiz DISCUSSION QUESTIONS Problems Case 2-1 Any Company, Inc.: An Ongoing Comprehensive Case Case 2-2 S&S, Inc. Case 2-3 Bar Harbor Blueberry Farm AIS IN ACTION SOLUTIONS Quiz Key Chapter 3 Systems Development and Documentation Techniques Learning Objectives INTRODUCTION DATA FLOW DIAGRAMS Elements in a Data Flow Diagram Data sources and destinations Data flows Processes Data stores Data Dictionary Subdividing the DFD FLOWCHARTS Flowchart Symbols Document Flowcharts System Flowcharts SUMMARY AND CASE CONCLUSION KEY TERMS CHAPTER QUIZ DISCUSSION QUESTIONS Problems Case 3-1 Any Company, Inc.: An Ongoing Comprehensive Case .Case 3-2 Dub 5 Chapter 4 Relational Databases Learning Objectives INTRODUCTION Files Versus Databases The Importance and Advantages of Database Systems DATABASE SYSTEMS Logical and Physical Views of Data The Data Dictionary DBMS Languages RELATIONAL DATABASES Types of Attributes Case Study: Designing a Relational Data Base for S&L Basic Requirements of a Relational Database Two Approaches to Database Design Query 1. Query 2 Query 3 Query 4 DATABASE SYSTEMS AND THE FUTURE OF ACCOUNTING Summary and Case Conclusion Key Terms AIS IN ACTION Chapter Quiz COMPREHENSIVE PROBLEM Table 4-14 Butler Financing Company Spreadsheet DISCUSSION QUESTIONS PROBLEMS .Case 4-1 AnyCompany, Inc.: An Ongoing Comprehensive Case Case 4-2 Research Projects AIS IN ACTION CHAPTER QUIZ COMPREHENSIVE CASE SOLUTION Part II Control and Audit of Accounting Information Systems Chapter 5 Computer Fraud and Security Learning Objectives Introduction AIS THREATS INTRODUCTION TO FRAUD Misappropriation of Assets Fraudulent Financial Reporting SAS No. 99: The Auditor's Responsibility to Detect Fraud WHO PERPETRATES FRAUD AND WHY IT OCCURS Pressures Heavy losses or high, undiversified risk Opportunities Rationalizations COMPUTER FRAUD Computer Fraud Classifications Processor Computer instructions Data Output COMPUTER FRAUD AND ABUSE TECHNIQUES PREVENTING AND DETECTING COMPUTER FRAUD Summary and Case Conclusion Key Terms AIS IN ACTION CHAPTER QUIZ Discussion Questions. PROBLEMS Case 5-1 David L. Miller: Portrait of a White-collar Criminal Case 5-2 Lexsteel Corporation CHAPTER QUIZ Chapter 6 Control and Accounting Information Systems Learning Objectives INTRODUCTION Why AIS Threats Are Increasing Why Control and Security Are Important OVERVIEW OF CONTROL CONCEPTS CONTROL FRAMEWORKS COBIT Framework COSO's Enterprise Risk Management Framework The ERM Framework versus the Internal Control Framework THE INTERNAL ENVIRONMENT Management's Philosophy, Operating Style, and Risk Appetite The Board of Directors Commitment to Integrity, Ethical Values, and Competence Organizational Structure Methods of Assigning Authority and Responsibility Human Resources Standards External Influences OBJECTIVE SETTING EVENT IDENTIFICATION RISK ASSESSMENT and RISK RESPONSE Estimate Likelihood and Impact Identify Controls Estimate Costs and Benefits Determine Cost-Benefit Effectiveness Implement Control or Avoid, Share or Accept the Risk CONTROL ACTIVITIES Proper Authorization of Transactions and Activities Segregation of Duties Change Management Controls Design and Use of Adequate Documents and Records Safeguard Assets, Records and Data Independent Checks on Performance Information and Communication MONITORING Perform ERM Evaluations Implement Effective Supervision Use Responsibility Accounting Monitor System Activities Track Purchased Software Conduct Periodic Audits Employ a Computer Security Officer and Computer Consultants Engage Forensic Specialists Install Fraud Detection Software Implement a Fraud Hot Line. SUMMARY AND CASE CONCLUSION KEY TERMS AIS IN ACTION CHAPTER QUIZ DISCUSSION QUESTIONS . PROBLEMS Case 6-1 AnyCompany, Inc.: An Ongoing Comprehensive Case Case 6-2 The Greater Providence Deposit & Trust Embezzlement CASE 6-3 EXCEL INSURANCE COMPANY AIS IN ACTION CHAPTER 7: INFORMATION SYSTEMS CONTROLS FOR SYSTEMS RELIABILITY - PART 1: INFORMATION SECURITY Learning Objective Introduction 3 Fundamental Information Security Concepts Policy Development Effective Communication of Policies Design and Employ Appropriate Control Procedures Monitor and Take Remedial Action Perimeter Defense: Routers, Firewalls, and Intrusion Prevention Systems Dial-up Connections Wireless Access 1. Host Configuration 2. Managing User Accounts and Privileges 3. Software Design Encryption Strength Types of Encryption Systems Hashing Digital signatures Digital Certificates and Public Key Infrastructure Effects of Encryption on Other Layers of Defense Detective Controls Corrective Controls Summary and Case Conclusion Key Terms AIS in Action Chapter Quiz Discussion Questions Case 7-1 AnyCompany, Inc.: An Ongoing Comprehensive Case 7-2 Developing A Computer Security Checklist AIS in Action Solutions Quiz Key CHAPTER 8: INFORMATION SYSTEMS CONTROLS FOR SYSTEM RELIABILITY- PART 2: CONFIDENTIALITY, PRIVACY, PROCESSING INTEGRITY, AND AVAILABILITY Learning Objectives Introduction. Confidentiality Privacy Processing Integrity Additional Batch Processing Data Entry Controls Additional Online Data Entry Controls Processing Controls Parity checking Message acknowledgment techniques Batch Processing Integrity Controls Online Processing Integrity Controls Availability Data Backup Procedures Documentation Testing Change Management Controls Summary and Case Conclusion Key Terms AIS in Action Chapter Quiz Problems Case 8-1 AnyCompany, Inc.: An Ongoing Comprehensive Case. Case 8-2 The State Department of Taxation AIS in Action Solutions Quiz Key Chapter 9 Auditing Computer-Based Information Systems Learning Objectives INTRODUCTION THE NATURE OF AUDITING Internal Auditing Standards Types of Internal Auditing Work An Overview of the Auditing Process Audit planning Collection of audit evidence Evaluation of audit evidence Communication of audit results INFORMATION SYSTEMS AUDITS Objective 1: Overall Security Objective 2: Program Development and Acquisition Objective 3: Program Modification Objective 4: Computer Processing Concurrent audit techniques Analysis of program logic Objective 5: Source Data . Objective 6: Data Files COMPUTER SOFTWARE OPERATIONAL AUDITS OF AN AIS . SUMMARY AND CASE CONCLUSION KEY TERMS CHAPTER QUIZ DISCUSSION QUESTIONS PROBLEMS Case 9-1 AnyCompany, Inc.: An Ongoing Comprehensive Case Case 9-2 Preston Manufacturing Company AIS IN ACTION QUIZ SOLUTIONS Part III Accounting Information Systems Applications Chapter 10 The Revenue Cycle: Sales and Cash Collections Learning Objectives Introduction Revenue Cycle Business Activities Sales Order Entry Shipping Billing Cash Collections Information Processing Procedures Control: Objectives, Threats, And Procedures Sales Order Entry Shipping Billing and Accounts Receivable Cash Collections General Control Issues Revenue cycle information needs Summary and Case Conclusion Key Terms AIS In Action Chapter Quiz Chapter Case - National Electronics Discussion Questions Problems Case 10-1 AnyCompany, Inc.: An Ongoing Comprehensive Case Case 10-2 Elite Publishing Company Case 10-3 Frontier Floors Appendix AOE's Legacy Revenue Cycle System Sales Order Entry Shipping Billing and Accounts Receivable Cash Collections AIS In Action Solutions Quiz Key Chapter Case - Suggested Solution Chapter 11 The Expenditure Cycle: Purchasing and Cash Disbursements Learning Objectives Introduction Expenditure Cycle Business Activities Pay for Goods and Services Information Processing Procedures Control Objectives, Threats, and Procedures Order Goods Receive and Store Goods Approve and Pay Vendor Invoices General Control Issues Expenditure Cycle Information Needs Summary and Case Conclusion The basic business activities performed in the expenditure cycle include the following: Key Terms AIS In Action Chapter Quiz Discussion Questions Problems Case 11-1 AnyCompany, Inc.: An Ongoing Comprehensive Case Case 11-2 Blackwell Industries Case 11-3 Boone Company Appendix AOE's Legacy Expenditure Cycle System Order Goods (Purchasing) Receive and Store Goods Approve Vendor Invoices and Pay Suppliers Ais in action solutions Quiz Key. Chapter 12 The Production Cycle Learning Objectives Introduction Production Cycle Activities Product Design Planning and Scheduling Production Operations Cost Accounting Information processing procedures Raw Materials Usage Data Direct Labor Costs Machinery and Equipment Usage Manufacturing Overhead Costs Control Objectives, Threats, and Procedures Product Design . Planning and Scheduling Production Operations Cost Accounting General Threats Production Cycle Information Needs Criticism 1: Inappropriate Allocation of Overhead Costs Criticism 2: Misleading Reports Summary and Case Conclusion Key Terms AIS In Action Chapter Quiz Discussion Questions Problems Case 12-1 - AnyCompany, Inc.: An Ongoing Comprehensive Case Case 12-2 - The Accountant and cim ais in action solutions Quiz Key Chapter 13 The Human Resources Management and Payroll CycleLearning Objectives IIntroduction Overview Payroll Cycle Activities Update Payroll Master File Update Tax Rates and Deductions Validate Time and Attendance Data Prepare Payroll Disburse Payroll Calculate Employer-Paid Benefits and Taxes Disburse Payroll Taxes and Miscellaneous Deductions Outsourcing Options: Payroll Service Bureaus and Professional Employer Organizations Control Objectives, Threats, and Procedures Employment Practices General Control Issues Threat 8: Poor Performance Key Decisions and Information Needs Summary and Case Conclusion Key Terms AIS In Action Chapter Quiz Discussion Questions Problems Case 13-1 AnyCompany, Inc.: An Ongoing Comprehensive Case Case 13-2 Payroll Service Bureaus and Professional Employer Organizations Case 13-3 Fargo Publishing ais in action solutions Quiz Key Chapter 14 General Ledger and Reporting System Learning Objectives Introduction General Ledger and Reporting system Activities Update General Ledger Post Adjusting Entries Prepare Financial Statements Produce Managerial Reports XBRL: Revolutionizing the Reporting Process Control Objectives, Threats, and Procedures Threat 1: Errors in Updating the General Ledger and Generating Reports Threat 2: Loss or unauthorized disclosure or alteration of financial data Threat 3: Poor Performance supporting management's information needs The Balanced Scorecard Using Data Warehouses for Business Intelligence Principles of Graph Design Summary and Case Conclusion Key Terms AIS In ACTION Chapter Quiz Discussion Questions Problems Case 14-1 AnyCompany, Inc.: An Ongoing Comprehensive Case Case 14-2 Evaluating a General Ledger Package AIS IN ACTION SOLUTIONS QUIZ KEY Chapter 15 Database Design using the REA Data Model Learning Objectives Introduction Database Design Process ENTITY-RELATIONSHIP DIAGRAMS1 THE REA DATA MODEL2 Structuring Relationships: The Basic REA Template Developing an REA Diagram Step 1: Identify Relevant Events Step 2: Identify Resources and Agents summary and case conclusion Key Terms ais in action Chapter Quiz Comprehensive Review Problem- Expenditure Cycle for Fred's Train Shop Discussion Questions Problems Case 15-1 AnyCompany, Inc.: An Ongoing Comprehensive Case Case 15-2 REA Data Modeling Extension ais in action solutions Quiz Key Comprehensive Review Problem Solution- REA Diagram of Expenditure Cycle for Fred's Train Shop Chapter 16 Implementing an REA Model in a Relational Database Learning Objectives Introduction Integrating REA Diagrams across Cycles Rules for Combining REA Diagrams Merging Redundant Resource Entities Merging Redundant Event Entities Validating the Accuracy of Integrated REA Diagrams Implementing an REA Diagram in a Relational Database Step 1: Create Tables for Each Entity and M:N Relationship Step 2: Assign Attributes to Each Table1 Step 3: Use Foreign Keys to Implement 1:1 and 1:N Relationships Completeness Check Using REA Diagrams to retrieve information from a database Creating Journals and Ledgers Summary and Case Conclusion Key Terms ais in action Chapter Quiz Comprehensive Review Problem Discussion Questions Problems Case 16-1 AnyCompany, Inc.: An Ongoing Comprehensive Case Case 16-2 Practical Database Design ais in action solutions Quiz Key Case Solution Chapter 17 Special Topics in REA Modeling Learning Objectives Introduction additional revenue cycle modeling topics Additional Events Attribute Placement New REA Feature - Employee Roles Sale of Services Digital Assets Rental Transactions additional expenditure cycle modeling topics Additional Events Attribute Placement New REA Feature - M:N Agent-Event Relationships New REA Feature - Locations New REA Feature - Relationships between resources and agents Acquisition of Intangible Services Rental Transactions Production cycle Rea model Additional Entities Production Cycle Events New REA Feature - Relationships Between Agents Combined HR/Payroll data model HR Cycle Entities Tracking Employees' Time financing activities Data model Summary and Case Conclusion ais in action Chapter Quiz Discussion Questions Problems Case 17-1 AnyCompany, Inc.: An Ongoing Comprehensive Case Case 17-2 Practical Database Assignment ais in action solutions Quiz Key Part IV The Systems Development Process Chapter 18 Introduction to Systems Development and Systems Analysis Learning Objectives INTRODUCTION SYSTEMS DEVELOPMENT The Players PLANNING SYSTEMS DEVELOPMENT FEASIBILITY ANALYSIS . BEHAVIORAL ASPECTS OF CHANGE Why Behavioral Problems Occur How People Resist AIS Changes Preventing Behavioral Problems SYSTEMS ANALYSIS Initial Investigation Systems Survey Systems Analysis Report SUMMARY AND CASE CONCLUSION KEY TERMS AIS IN ACTION CHAPTER QUIZ COMPREHENSIVE PROBLEM DISCUSSION QUESTIONS Problems Case 18-1 AnyCompany, Inc.: An Ongoing Comprehensive Case Case 18-2 Audio Visual Corporation Case 18-3 Fighting Crime with IT - How to get Cops to use the system? Case 18-4 Clinical Trials at Big Pharma AIS in ACTION SOLUTIONS CHAPTER QUIZ KEY COMPREHENSIVE PROBLEM - SOLUTION Chapter 19 AIS Development Strategies Learning Objectives INTRODUCTION PURCHASE SOFTWARE Purchasing Software and the SDLC Selecting a Vendor Evaluating Proposals and Selecting a System DEVELOPMENT BY IN-HOUSE IS DEPARTMENTS Appropriate End-User Development and Use Benefits of End-User Computing Risks of End-User Computing OUTSOURCE THE SYSTEM The Benefits of Outsourcing Risks of Outsourcing BUSINESS PROCESS REENGINEERING PROTOTYPING Steps in Developing a Prototype When to Use Prototyping COMPUTER-AIDED SOFTWARE ENGINEERING . Advantages and Disadvantages of CASE Technology SUMMARY AND CASE CONCLUSION Key Terms AIS IN ACTION CHAPTER QUIZ Chapter Case: Freedom from Telemarketers - The Do Not Call List: DISCUSSION QUESTIONS PROBLEMS Case 19-1 AnyCompany, Inc.: An Ongoing Comprehensive Case Case 19-2 Professional Salon Concepts Case 19.3 No Help at the DMV Case 19.4 Blue Cross AIS IN ACTION SOLUTIONS CHAPTER QUIZ CHAPTER CASE - SOLUTION Chapter 20 Systems Design, Implementation, and Operation Learning Objectives INTRODUCTION CONCEPTUAL SYSTEMS DESIGN Evaluate Design Alternatives Prepare Design Specifications PHYSICAL SYSTEMS DESIGN Output Design File and Database Design Input Design Forms design Designing computer screens Program Design Procedures Design Physical Systems Design Report . SYSTEMS IMPLEMENTATION Implementation Planning Site Preparation Select and Train Personnel Complete Documentation Test the System SYSTEMS CONVERSION Data Conversion OPERATION AND MAINTENANCE SUMMARY AND CASE CONCLUSION KEY TERMS AIS IN ACTION CHAPTER QUIZ CHAPTER CASE: Hershey's Big Bang ERP DISCUSSION QUESTIONS PROBLEMS Case 20-1 AnyCompany, Inc.: An Ongoing Comprehensive Case Case 20-2 Citizen's Gas Company Case 20-3 Payroll Problems Case 20-4 Signal Enterprises Implementation Woes AIS IN ACTION SOLUTIONS ANSWERS TO CHAPTER QUIZ CHAPTER QUIZ Hershey's Big Bang ERP
Library of Congress Subject Headings for this publication:
Accounting -- Data processing.
Information storage and retrieval systems -- Accounting.