Accounting information systems

Cover......Page 1
Title Page......Page 4
Copyright Page......Page 5
Brief Contents......Page 6
Contents......Page 8
Preface......Page 20
Acknowledgments......Page 25
Part I: Conceptual Foundations of Accounting Information Systems......Page 28
 Chapter 1: Accounting Information Systems: An Overview......Page 29
  Introduction......Page 30
  Information Needs and Business Processes......Page 31
   Information Needs......Page 32
   Business Processes......Page 33
  Accounting Information Systems......Page 37
   How an AIS Can Add Value to an Organization......Page 38
   The Role of the AIS in the Value Chain......Page 40
  Summary and Case Conclusion......Page 42
  AIS in Action: Chapter Quiz......Page 43
  Discussion Questions......Page 44
  Problems......Page 45
  Case 1-1: Ackoff’s Management Misinformation Systems......Page 48
  AIS in Action Solutions: Quiz Key......Page 49
 Chapter 2: Overview of Transaction Processing and Enterprise  Resource Planning Systems......Page 51
  Introduction......Page 52
   Data Input......Page 53
   Data Storage......Page 54
   Information Output......Page 60
  Enterprise Resource Planning (ERP) Systems......Page 62
  AIS in Action: Chapter Quiz......Page 65
  Discussion Questions......Page 66
  Problems......Page 67
  Case 2-1: Bar Harbor Blueberry Farm......Page 73
  AIS in Action Solutions: Quiz Key......Page 74
 Chapter 3: Systems Documentation Techniques......Page 77
  Introduction......Page 78
  Data Flow Diagrams......Page 79
   Subdividing the DFD......Page 81
   Types of Flowcharts......Page 85
  Business Process Diagrams......Page 90
  Summary and Case Conclusion......Page 92
  AIS in Action: Chapter Quiz......Page 93
  Discussion Questions......Page 94
  Problems......Page 95
  Case 3-1: Dub 5......Page 102
  AIS in Action Solutions: Quiz Key......Page 103
  Comprehensive Problem Solution......Page 105
  Introduction......Page 111
  Databases and Files......Page 112
   Using Data Warehouses for Business Intelligence......Page 113
   The Importance of Good Data......Page 114
   Schemas......Page 115
   Types of Attributes......Page 117
   Designing a Relational Database for S&S, Inc.......Page 119
   Basic Requirements of a Relational Database......Page 121
   Creating Relational Database Queries......Page 122
   Query 1......Page 124
   Query 2......Page 126
   Query 4......Page 127
   Database Systems and the Future of Accounting......Page 129
  Summary and Case Conclusion......Page 130
  AIS in Action: Chapter Quiz......Page 131
  Comprehensive Problem......Page 132
  Problems......Page 133
  Case 4-1: Research Project......Page 140
  AIS in Action Solutions: Quiz Key......Page 141
  Comprehensive Problem Solution......Page 142
  Appendix: Data Normalization......Page 145
  Second Normalization Example......Page 148
Part II: Control and Audit of Accounting Information Systems......Page 152
 Chapter 5: Fraud......Page 153
  Introduction......Page 154
  AIS Threats......Page 155
  Introduction to Fraud......Page 157
   Misappropriation of Assets......Page 158
   Fraudulent Financial Reporting......Page 159
  Who Perpetrates Fraud and Why......Page 160
   The Fraud Triangle......Page 161
   The Rise in Computer Fraud......Page 165
   Computer Fraud Classifications......Page 167
  Preventing and Detecting Fraud and Abuse......Page 169
  Summary and Case Conclusion......Page 170
  AIS in Action: Chapter Quiz......Page 171
  Discussion Questions......Page 172
  Problems......Page 173
  Case 5-1: David L. Miller: Portrait of a White-Collar Criminal......Page 177
  Case 5-2: Heirloom Photo Plans......Page 179
  AIS in Action Solutions: Quiz Key......Page 180
  Introduction......Page 183
  Computer Attacks and Abuse......Page 184
  Social Engineering......Page 192
  Malware......Page 197
  Summary and Case Conclusion......Page 206
  Key Terms......Page 207
  AIS in Action: Chapter Quiz......Page 208
  Problems......Page 209
  Case 6-1: Shadowcrew......Page 219
  AIS in Action Solutions: Quiz Key......Page 220
 Chapter 7: Control and Accounting Information Systems......Page 223
   Why Threats to Accounting Information Systems are Increasing......Page 224
  Overview of Control Concepts......Page 225
   The Foreign Corrupt Practices and Sarbanes–Oxley Acts......Page 226
   COBIT Framework......Page 227
   COSO’S Enterprise Risk Management Framework......Page 229
  The Internal Environment......Page 231
   Commitment to Integrity, Ethical Values, and Competence......Page 232
   Human Resources Standards that Attract, Develop, and Retain Competent Individuals......Page 233
   Objective Setting......Page 235
  Risk Assessment and Risk Response......Page 236
   Estimate Likelihood and Impact......Page 237
   Implement Control or Accept, Share, or Avoid the Risk......Page 238
   Proper Authorization of Transactions and Activities......Page 239
   Segregation of Duties......Page 240
   Project Development and Acquisition Controls......Page 242
   Safeguard Assets, Records, and Data......Page 243
   Independent Checks on Performance......Page 244
   Monitoring......Page 245
  Summary and Case Conclusion......Page 248
  AIS in Action: Chapter Quiz......Page 249
  Problems......Page 251
  Case 7-1: The Greater Providence Deposit & Trust Embezzlement......Page 259
  AIS in Action Solutions: Quiz Key......Page 260
 Chapter 8: Controls for Information Security......Page 263
  Introduction......Page 264
   1. Security Is a Management Issue, Not Just a Technology Issue......Page 265
   2. The Time-Based Model of Information Security......Page 266
  Understanding Targeted Attacks......Page 267
  Protecting Information Resources......Page 268
   People: Training......Page 269
   Process: User Access Controls......Page 270
   Process: Penetration Testing......Page 273
   IT Solutions: Network Access Controls......Page 274
   IT Solutions: Device and Software Hardening Controls......Page 278
   Physical Security: Access Controls......Page 281
   Log Analysis......Page 282
   Continuous Monitoring......Page 283
   Chief Information Security Officer (CISO)......Page 284
  Security Implications of Virtualization, Cloud Computing, and the Internet of Things......Page 285
  Summary and Case Conclusion......Page 286
  AIS in Action: Chapter Quiz......Page 287
  Discussion Questions......Page 288
  Problems......Page 289
  Case 8-1: Assessing Change Control and Change Management......Page 293
  AIS in Action Solutions: Quiz Key......Page 294
 Chapter 9: Confidentiality and Privacy Controls......Page 297
  Preserving Confidentiality......Page 298
   Controlling Access to Sensitive Information......Page 299
   Privacy Controls......Page 301
   Privacy Concerns......Page 302
   Privacy Regulations and Generally Accepted Privacy Principles......Page 304
  Encryption......Page 305
   Factors That Influence Encryption Strength......Page 306
   Types of Encryption Systems......Page 307
   Digital Signatures......Page 309
   Digital Certificates and Public Key Infrastructure......Page 311
  Summary and Case Conclusion......Page 312
  AIS in Action: Chapter Quiz......Page 313
  Problems......Page 315
  Case 9-1: Protecting Privacy of Tax Returns......Page 319
  AIS in Action Solutions: Quiz Key......Page 320
  Introduction......Page 323
   Input Controls......Page 324
   Processing Controls......Page 326
   Output Controls......Page 327
   Illustrative Example: Credit Sales Processing......Page 328
   Processing Integrity Controls in Spreadsheets......Page 329
   Minimizing Risk of System Downtime......Page 330
   Recovery and Resumption of Normal Operations......Page 331
  Summary and Case Conclusion......Page 335
  AIS in Action: Chapter Quiz......Page 336
  Discussion Questions......Page 337
  Problems......Page 338
  Case 10-1: Ensuring Systems Availability......Page 345
  Case 10-2: Ensuring Process Integrity in Spreadsheets......Page 346
  AIS in Action Solutions: Quiz Key......Page 347
 Chapter 11: Auditing Computer-Based Information Systems......Page 349
  Introduction......Page 350
   Overview of the Audit Process......Page 351
   The Risk-Based Audit Approach......Page 353
   Objective 1: Overall Security......Page 354
   Objective 2: Program Development and Acquisition......Page 356
   Objective 3: Program Modification......Page 357
   Objective 4: Computer Processing......Page 358
   Objective 5: Source Data......Page 361
   Objective 6: Data Files......Page 362
  Audit Software......Page 363
  Summary and Case Conclusion......Page 365
  AIS in Action: Chapter Quiz......Page 366
  Discussion Questions......Page 367
  Problems......Page 368
  AIS in Action Solutions: Quiz Key......Page 375
Part III: Accounting Information Systems Applications......Page 378
 Chapter 12: The Revenue Cycle: Sales to Cash Collections......Page 379
  Introduction......Page 381
   Threats and Controls......Page 383
   Taking Customer Orders......Page 386
   Credit Approval......Page 389
   Checking Inventory Availability......Page 391
   Responding to Customer Inquiries......Page 392
  Shipping......Page 393
   Pick and Pack the Order......Page 394
   Ship the Order......Page 395
   Invoicing......Page 398
   Maintain Accounts Receivable......Page 400
   Process......Page 404
   Threats and Controls......Page 405
  Summary and Case Conclusion......Page 407
  AIS in Action: Chapter Quiz......Page 408
  Problems......Page 409
  AIS in Action Solutions: Quiz Key......Page 418
 Chapter 13: The Expenditure Cycle: Purchasing to Cash  Disbursements......Page 421
  Introduction......Page 422
   Process......Page 423
   Threats and Controls......Page 426
   Identifying What, When, and How Much to Purchase......Page 429
   Choosing Suppliers......Page 432
   Process......Page 436
   Threats and Controls......Page 437
   Process......Page 438
   Threats and Controls......Page 440
   Threats and Controls......Page 442
  Summary and Case Conclusion......Page 444
  AIS in Action: Chapter Quiz......Page 445
  Discussion Questions......Page 446
  Problems......Page 447
  AIS in Action Solutions: Quiz Key......Page 456
 Chapter 14: The Production Cycle......Page 459
  Introduction......Page 460
  Production Cycle Information System......Page 462
   Threats and Controls......Page 463
   Process......Page 464
   Key Documents and Forms......Page 466
   Threats and Controls......Page 470
   Threats and Controls......Page 471
   Process......Page 473
   Threats and Controls......Page 474
  Summary and Case Conclusion......Page 479
  AIS in Action: Chapter Quiz......Page 480
  Discussion Questions......Page 481
  Problems......Page 482
  AIS in Action Solutions: Quiz Key......Page 486
 Chapter 15: The Human Resources Management and Payroll  Cycle......Page 489
  Introduction......Page 490
   Overview of HRM Process and Information Needs......Page 491
   Threats and Controls......Page 493
  Payroll Cycle Activities......Page 496
   Update Payroll Master Database......Page 497
   Validate Time and Attendance Data......Page 498
   Prepare Payroll......Page 501
   Disburse Payroll......Page 504
  Outsourcing Options: Payroll Service Bureaus and Professional Employer Organizations......Page 506
  Summary and Case Conclusion......Page 507
  AIS in Action: Chapter Quiz......Page 508
  Discussion Questions......Page 509
  Problems......Page 510
  AIS in Action Solutions: Quiz Key......Page 516
 Chapter 16: General Ledger and Reporting System......Page 519
  Introduction......Page 520
  General Ledger and Reporting System......Page 521
   Threats and Controls......Page 522
   Threats and Controls......Page 524
   Process......Page 528
   Process......Page 529
   Threats and Controls......Page 534
   Threats and Controls......Page 535
  Summary and Case Conclusion......Page 540
  AIS in Action: Chapter Quiz......Page 541
  Problems......Page 542
  Case 16-1: Exploring XBRL Tools......Page 547
  AIS in Action Solutions: Quiz Key......Page 548
Part IV: The REA Data Model......Page 552
  Introduction......Page 553
  Database Design Process......Page 554
  Entity-Relationship Diagrams......Page 555
  The REA Data Model......Page 556
   Structuring Relationships: The Basic REA Template......Page 557
   Step 1: Identify Relevant Events......Page 560
   Step 2: Identify Resources and Agents......Page 562
   Step 3: Determine Cardinalities of Relationships......Page 563
   Business Meaning of Cardinalities......Page 567
   Uniqueness of REA Diagrams......Page 568
  Summary and Case Conclusion......Page 569
  AIS in Action: Chapter Quiz......Page 570
  Discussion Questions......Page 573
  Problems......Page 574
  Case 17-1: REA Data Modeling Extension......Page 578
  AIS in Action Solutions: Quiz Key......Page 579
  Comprehensive Problem Solution......Page 583
 Chapter 18: Implementing an REA Model in a Relational Database......Page 587
  Integrating REA Diagrams Across Cycles......Page 588
   Merging Redundant Resource Entities......Page 591
   Merging Redundant Event Entities......Page 592
   Step 1: Create Tables for Each Distinct Entity and M:N Relationship......Page 593
   Step 2: Assign Attributes to Each Table......Page 595
   Step 3: Use Foreign Keys to Implement 1:1 and 1:N Relationships......Page 596
   Completeness Check......Page 597
   Creating Journals and Ledgers......Page 598
   Generating Financial Statements......Page 599
  Summary and Case Conclusion......Page 600
  AIS in Action: Chapter Quiz......Page 601
  Discussion Questions......Page 602
  Problems......Page 603
  Case 18-1: Practical Database Design......Page 605
  AIS in Action Solutions: Quiz Key......Page 606
  Comprehensive Problem Solution......Page 608
 Chapter 19: Special Topics in REA Modeling......Page 611
   Additional Revenue Cycle Events and Attribute Placement......Page 612
   Additional Expenditure Cycle Events and Attribute Placement......Page 614
   Acquisition of Intangible Services......Page 617
   Rental Transactions......Page 618
   Relationships Between Resources and Agents......Page 620
   Additional Entities—Intellectual Property......Page 621
   New REA Feature......Page 623
   HR Cycle Entities......Page 624
   Tracking Employees’ Time......Page 625
  Financing Activities Data Model......Page 626
  Summary and Case Conclusion......Page 627
  AIS in Action: Chapter Quiz......Page 630
  Discussion Questions......Page 631
  Problems......Page 632
  AIS in Action Solutions: Quiz Key......Page 637
  Appendix: Extending the REA Model to Include Information About Policies......Page 641
Part V: The Systems Development Process......Page 644
 Chapter 20: Introduction to Systems Development and Systems  Analysis......Page 645
  Introduction......Page 646
   The Systems Development Life Cycle......Page 648
   The Players......Page 649
   Planning Techniques......Page 650
  Feasibility Analysis......Page 652
   Capital Budgeting: Calculating Economic Feasibility......Page 653
   How People Resist Change......Page 655
   Preventing Behavioral Problems......Page 656
   Initial Investigation......Page 657
   Systems Survey......Page 658
   Information Needs and Systems Requirements......Page 660
   Systems Analysis Report......Page 662
  Summary and Case Conclusion......Page 663
  Key Terms......Page 664
  AIS in Action: Chapter Quiz......Page 665
  Discussion Questions......Page 666
  Problems......Page 667
  Case 20-1: Audio Visual Corporation......Page 675
  AIS in Action Solutions: Quiz Key......Page 676
  Comprehensive Problem Solution......Page 679
 Chapter 21: AIS Development Strategies......Page 681
  Purchasing Software......Page 682
   Acquiring Hardware and Software......Page 683
   Evaluating Proposals and Selecting a System......Page 684
   End-User-Developed Software......Page 686
   Advantages and Disadvantages of End-User Computing......Page 687
   Managing and Controlling End-User Computing......Page 688
   Advantages and Disadvantages of Outsourcing......Page 689
  Methods for Improving Systems Development......Page 690
   Business Process Management......Page 691
   Prototyping......Page 692
   Agile Methodologies......Page 694
   Computer-Aided Software Engineering......Page 697
  Key Terms......Page 698
  AIS in Action: Chapter Quiz......Page 699
  Discussion Questions......Page 700
  Problems......Page 701
  Case 21-1: Wong Engineering Corp.......Page 705
  AIS in Action Solutions: Quiz Key......Page 706
  Comprehensive Problem Solution......Page 708
 Chapter 22: Systems Design, Implementation, and Operation......Page 709
   Evaluate Design Alternatives......Page 710
  Physical Systems Design......Page 712
   File and Database Design......Page 713
   Input Design......Page 714
   Program Design......Page 715
   Procedures and Controls Design......Page 716
   Implementation Planning and Site Preparation......Page 717
   Selecting and Training Personnel......Page 718
   Testing the System......Page 719
  Systems Conversion......Page 720
  Operation and Maintenance......Page 721
  Summary and Case Conclusion......Page 722
  AIS in Action: Chapter Quiz......Page 723
  Comprehensive Problem Hershey’s Big Bang ERP......Page 724
  Discussion Questions......Page 725
  Problems......Page 726
  Case 22-1: Citizen’s Gas Company......Page 731
  AIS in Action Solutions: Quiz Key......Page 732
  Comprehensive Problem Solution......Page 734
Glossary......Page 735
Index......Page 756
Back Cover......Page 770