Accounting Systems Technology for the 21 st Century

1. Accounting Systems Technology for the 21st Century Presented by Liv A. Watson LWatson@GaitherCPA.com

2. Today’s Agenda • Accounting systems technologies and future trends • There will be two 10 minutes breaks and a 1 hour lunch • XBRL • Questions and comments are always welcome

3. Scalable Architecture Accounting as a System Functionality Professional Analyst Casual Viewer Internet Browser Field Unit

4. The Traditional Accounting Information Systems Architecture

7. Multi-tier Computing

8. “2-tier,” “3-tier,” and “n-tier” • “A Tier” describes how the computing workload is distributed in a client/server system • When you separate the application logic from the presentation and data storage layers, you create a third layer: the application logic later. So 2-tier becomes 3-tier. • “n-tier” is used describe those architectures in which there is more than one application logic layer

9. What is Governments role in the development and operation of the Net? • Should (and if so, how) states be able to tax activity on the Net passing through their jurisdiction? • Can we effectively eliminate or limit access to offensive material, especially by young people? • How can we I improve the security of data traveling on the Net?

10. Enterprise Resource Planning (ERP) Systems • MRP (Material Requirement Planning) • MRP-II (Manufacturing Resource Planning). • ERP • Human Resources • Finance • Customer Service • Engineering • Institute of Management Accountants (IMA) provides a course, “Benchmarking ERP Systems”

11. Applying Information Technology to the Accounting Cycle

12. The operating system (O/S) is the most important program that runs on a computer: • Recognizing input from the keyboard • Sending output to the display screen • Keeping track of files and directories on the disk • Controlling peripheral devices such as disk drives and printers

13. Operating systems can be classified as follows: • Single-tasking • Generally supports only one a process at a time • Multi-user • Allows two or more users to run a program at the same time       • Multi-processing • Supports running a program on more than one CPU • Multi-tasking • Allows more than one program to run concurrently    • Multi-threading • Allows different parts of a single program to run concurrently • Real time • Responds to input instantly. General-purpose operating systems, such as DOS and UNIX, are not real-time.

14. Introduction and History • 1945 -- 1955 • Bare machines -- vacuum tubes and plug boards • Designed by J.W.Mauchly and J.P.Eckert of the University of Pennsylvania in 1945 • No operating system • 1956 -- 1965 • Transistors and batch systems • Clear distinction between designers, builders, operators, programmers, and maintenance personnel • 1965 -- 1980 • Multiprogramming • 1980 to present • Personal computers and workstations • Network operating systems

15. Network Operating Systems (NOS) • Single User DOS Applications: • Local workstation only: not written to work on network. • Network-Aware Applications • Will work on a network, but only for a single user. • Multi-user Applications • Applications specifically written for networks. • Email, Scheduling, Groupware

17. Peer-to-Peer NOS Characteristics • Each machine sends, receives, and processes data files (Client and Server). • Simplistic in design and maintenance. • Used for smaller number of users (10 to 50). • Used when users are in same area. • Used when network growth is not an issue. • Less expensive (no dedicated server). • Slower and less secure than File Server

18. Security

19. Firewalls

20. Packet Filters

22. CERTIFICATE AUTHORITIES • There are four principal types of certificates: • Certification Authority • Server • Personal • Software Publisher

23. VIRUSES, BUGS AND WORMS • A virus is a program that attaches itself to other files. • Viruses can be funny, irritable or destructive. • A bug is a flaw in a browser that can be used by a hacker to circumvent a browser’s security functions. • A worm is similar to a virus in that it can be destructive or irritating. • Makes copies of itself and send them to other users

24. ProtectionVIRUSES, BUGS AND WORMS There are steps that a user can use to protect themselves from these dangers. They include: • Know your source of files and messages • Use a virus monitoring software to scan incoming files or set the software to continuously monitor activity on your computer or server • Only open files after they have been scanned • Maintain frequent backups so that you can recover from a crash or other problem

25. THIRD PARTY ASSURANCE SERVICES • WebTrust • Better Business Bureau

27. e-Insurance Policies • For example, if your company unwittingly spread a virus that wiped out customers’ database. • ACE USA • AIG • Lloyd’s of London • Marsh • St. Paul • Zurich

28. Relational Database Management Systems

29. Relational Database Management Systems (RDBMS) • A type of database management system that stores data in the form of related tables. • The data is integrated into a single conceptual model and a single location • The data is independent from the application programs • The data is shared • Today, most leading accounting software manages data almost exclusively on RDBMS technology

31. Data Marts • Data marts are workgroups or departmental warehouses, which are small in size, typically less than 10GB • Meta Data • 1.The technical data • contains a description of the operational database and a description of the data warehouse • 2.The business data • contains a description of the operational database and a description of the data warehouse

32. Relational Accounting and Transaction Triggers • A trigger is a piece of code stored in the database. • Row-level triggers can be executed BEFORE or AFTER each row is modified by the triggering insert, update, or delete operation. • Statement-level triggers execute after the entire operation is performed

33. Why would accountants benefit from triggers? • Recording the name of user who tried to change an account code • Recording the data and time a transaction occurred • Ensuring that a transaction is in balance before it is posted to the ledger • Alerting the accountant to a budget overrun by sending an e-mail • Printing out an audit trail • Warning a user of unposted transactions before a report is to be run • Checking that codes added to one table exist in other related code tables • Deleting data from an address table when its customer owner is deleted

35. Benefits of RDBMS • Scalability • Transaction integrity • Centralized business rules • Centralized data allows real-time accuracy in transaction processing since the single data occurrence is always updated • Shared data eliminates inconsistencies when data is stored in several places and not updated in all locations     • Shared data means that all application programs use the same data    • More informed decision making, based on one corporate database • Improved cost efficiencies • Higher level of customer service • Enhanced asset/liability management 

36. Data Warehousing Bill Inmon coined the term "data warehouse" in 1990. His definition is: "A (data) warehouse is a subject-oriented, integrated, time-variant and non-volatile collection of data in support of management's decision making process."

37. Information is stored in files or tables. • The emerging problem is not how to retrieve data, but how to manage, utilize and optimize the mountains of data our increasingly efficient information systems are collecting. Within this explosion, the challenge of data warehousing has become evident. • Terminology: • A file is made up of a number of records. • A record is made up of a number of fields, each of which has a specific identified name.

38. What, Then, Is a Data Warehouse? • Data warehouses assemble the data from heterogeneous databases so that users query only a single point • Internet and World Wide Web technologies have had a major impact on data management. Many vendors now have interfaced their data warehouses to the Web • Intelligent agent technology will play a major role in locating and integrating various data sources on the Web • A data warehouse brings together the essential data from the heterogeneous databases, so that users need to query only the warehouse

39. Data warehouse applications include: • Sales and marketing analysis across all industries • Inventory turn and product tracking in manufacturing • Category management, vendor analysis, and marketing program effectiveness analysis in retail • Profitability analysis or risk assessment in banking • Claim analysis or fraud detection in insurance

40. Business Intelligence Tools

41. What is Business Intelligence Tools? • Business Intelligence Tools is a kind of software that gives users the ability to access and analyze information that resides in databases throughout an enterprise. • IT Systems that are designed specifically to meet the needs of the knowledge workers.

42. Built to enable exploration analysis, and presentation of information Relatively few inquires which are often wide in scope Designed to get data out Used to automat routine, predictable tasks Large volume of small transactions that are limited in scope Designed to get data in BIT v. OP

43. The following are three types of Business Intelligence Tools • Multi-Dimensional Analysis Software - Also known as Multi Software or OLAP (On-Line Analytical Processing) - Software that gives the user the opportunity to look at the data from a variety of different dimensions.   • Query Tools - Software that allows the user to ask questions about patterns or details in the data. • Data Mining Tools - Software that automatically searches for significant patterns or correlations in the data.

44. Data Query and Reporting Tools • Multi-Dimensional Analysis Software • Also known as: OLAP (On-Line Analytical Processing) • Is the process of analysis that involves organizing and summarizing data in a multiple number of dimensions.

45. OLAP “Value Added Decision Support” • "Think of an OLAP data structure as a Rubik's Cube of data that users can twist and twirl in different ways to work through what-if and what-happened scenarios." – Lee, The Editor, Datamation (May 1995)

46. New Analytical Approach • One of the most prominent and pervasive alternative approaches to managing analytical data lies in the relationship between knowledge management (KM) and decision support. • The ability of any user, anywhere, to ask any questions of any database, at anytime.

47. Data Mining Concept and Useful TerminologyI • Data Mining is the process of finding hidden patterns and relationships in the data • Data Mart is a database that has the same characteristics as a data warehouse, but is usually smaller and is focused on the data for one division or one workgroup within an enterprise.

48. Data Mining Concept and Useful TerminologyII • Data Migration is the movement of data from one environment to another. • This happens when data is brought from a legacy system into a data warehouse. • Data Mining is the process of finding hidden patterns and relationships in the data.

49. Drill Down and Drill Up

50. Benefits of BI • Supply chain management • Fraud management • Risk management • Product management • Financial controls