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Evolution of Accounting Information Systems: From Manual to Computerized

Learn about the evolution of accounting information systems from manual to computerized systems, including topics such as normalization of data, Microsoft Access and other DBMS systems, and REA analysis. Explore the SUA, extensions, and integrated accounting/management/finance/marketing software.

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Evolution of Accounting Information Systems: From Manual to Computerized

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  1. A337 File Design Computerized and Manual Systems 11/10/2009

  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 (REAL) 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. Let’s look at the SUA

  5. Let’s look at the SUA

  6. Let’s look at the SUA

  7. Let’s look at the SUA

  8. 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

  9. 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.

  10. Where would we go next?

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

  12. 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.

  13. 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

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

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

  16. 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

  17. 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...

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

  19. 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.

  20. 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

  21. 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

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