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A337
File DesignComputerized and Manual
Systems4/4/2012
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Topics for the remainder of the term:
• Basic discussion of how accounting information systems have evolved from manual to computerized systems
• Normalization of data - structure of databases - taking the data as “given”
• Discussion of Microsoft Access and other DBMS systems
• REA analysis - another tool for designing the structure of databases - but not taking the data as given.
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Topics
• How do accounting systems work in a manual world– SUA
• First extension– Same basic structure, but automating the updating
process• Second extension
– Transaction entry from screen documents– ACCPAC, PeachTree, Great Plains
• Third extension– Integrated
accounting/management/finance/marketing software
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First Extension
• Automating data entry– Ledgers should not be modified directly
• (only through data entry)– There should be a “log” of all data entry– Access to data entry should be controlled
• Example - project 2b
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First Extension
• This extension essentially just took the manual system and put it on computer
• There were no REAL changes in the structure.
• The journal/ledger structure might be affected.
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Where would we go next?
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Second Extension
• Focus is still on Accounting, but the transaction data that is captured and stored is expanded.
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Traditional Accounting System
• Each customer, vendor, or other party that we engage in transactions with will probably have a file that details our interactions
• Once we engage in a transaction, the data is, of course recorded in a journal. Sometimes, even with traditional systems, we maintain additional information - but typically in a different place and there is no necessary reconciliation of the two sources of information.
How and where is the data stored
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• Event-driven system– Typically all of the document information is included
in the database (otherwise why would you have it on the document?)
• Who, What, When, Where from a document is recorded– Example from the SUA
How are databases different from traditional storage for accounting information?
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Where
Who
What
When
How are databases different from traditional storage for accounting information?
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Third Extension
• Enterprise - Resource - Planning (ERP) systems
• Sold/provided by large software vendors
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ERPsEnterprise Resource Planning
software• What it is:
– Integrative Software Tool that incorporates:• Production• Accounting• Marketing• Human Resources• Financial Management
– Modules• Programs on top of a database structure• Frequently Oracle databases are used
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Providers
• SAP – they were the leader
• Oracle – since they were the database leader they already
had the infrastructure• JDEdwards• PeopleSoft
– started as a Human Resource Mgt company and then expanded from there.
• OTHERS...
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Approaches
• In house– Large data requirements and personnel
commitment– Better control over features– Faster application
• Web driven– Lower cost– Security issues?
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Advantages of ERPs
• Coordination and business process improvement– If everyone else in your industry has better
business processes than your company, what does that mean to you?…..
• Better information– You are more aware of how efficiently you
are operating.
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Disadvantages of ERPs
• Cost– ERPs (especially In House) are quite expensive to
implement. There is also a LONG startup period (two to three years)
• People– Many people may not buy into it - and it doesn’t work
unless everyone (or most everyone) does.– Personnel to run the system are expensive and hard
to keep for In House systems• It can overwhelm your business
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What does it mean to auditors
• Should be viewed as both an opportunity and a threat to assurance services– Opportunity - consulting and
implementation services can provide additional revenues
– Threat - data security is a big question mark for ERPs
• Auditors cannot afford to be behind the technological curve here