A337

1. A337 File Design Computerized and Manual Systems 4/4/2012

2. 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.

3. 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

4. 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

5. 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.

6. Where would we go next?

7. Second Extension • Focus is still on Accounting, but the transaction data that is captured and stored is expanded.

8. Traditional Accounting System How and where is the data stored • 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.

9. How are databases different from traditional storage for accounting information? • 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

10. How are databases different from traditional storage for accounting information? Who What When Where

11. Third Extension • Enterprise - Resource - Planning (ERP) systems • Sold/provided by large software vendors

12. 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

13. 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...

14. Approaches • In house • Large data requirements and personnel commitment • Better control over features • Faster application • Web driven • Lower cost • Security issues?

15. 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.

16. 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

17. 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