Supplement E

1. Supplement E T he Changing Nature of Journals and Ledgers

2. To assess whether an alternative system architecture is viable to meet the needs of information customers, it is important to focus not on whether the alternative emulates the traditional mode of processing and data storage, but whether it is able to accomplish the desired objective of the traditional architecture and much more. • Accounting wants to report several things: customer owe more money; sales revenue has increased; expenses associated with generating revenue have increased and the organization has less inventory. • The events-driven architecture provides an alternative for achieving more efficiency and less data duplication rather than automating traditional manual processes. • Separate general ledger system, similar to the statement information is reported. GAAP does not specify the methods for data collection, storage or processing. Where are my Debits and Credits

3. Event 1: Marketing Sales call Event 2: Take customer order Event 3: Marketing Sales call Event 4: Ship the Goods Event 5: Collect Payment traditional AIS tends to control and collect data at the point of revenue recognition and the collection of payment. The limited data collected in journals are then reprocessed and duplicated in subsidiary and general ledgers. Details data about the business events are outside the accounting system. An Event-driven system will document comprehensive, Multidimensional data describing each event and control both business and information risk throughout the Business process. EXHIBIT E-1 Event-driven architectures defined by actual business

4. In the events-driven architecture, control and information processing is accomplished by creating a logical view of the physical data, which usually corresponds to accessing the event and corresponding resource, agent, and location data-so once again the REAL acronym guides the logic of the process. How Data Can Be Stored and Derived in an Events Architecture

5. Journals and ledgers events architecture? became logical output views rather than physical files. • Subsidiary ledger and general ledger account balances are also summaries of event data. Report summarizing the account receivable subsidiary ledger is required, formatting the output to list the same information by customer is easily accomplished. • Income statement figures measure activity over a period of time, you would total the sales data recorded in the sales Event tables between a specified beginning and ending date. • The events architecture maintains detail data for relevant organization activities and the outputs and other reports are generated from the detail data. Where are My Journals and Ledgers

6. Implications of changing to an alternative architecture such as an event-driven design. • A primary benefit of an events-driven architecture is the simplicity of data storage and processing. Other Differences In The Events Architecture

7. Event source data Documents, file etc Event source data Input data Input data Exception reporting Exception reporting Edit and Store data Access resource, Agent and locations tables needed to control and edit Record events Data in appropriate Event tables Control events Edit and Record data Subsid iary ledger Tran saction file General reports as needed Open file Subsid iary ledger May print Multiple Update files Use stored data to generate reports source document, or ad hoc queries Opehistory n file General ledger May print Multiple Source document Open file Summary data May print Multiple EXHIBIT E-2 The processing Steps to Produce the View

8. An events-driven architecture requires only one process: Step one in both environments is similar. The critical difference between the two environments is the elimination of the intermediate processing steps of the traditional architecture. Step two replaced by reporting information processes in the events architecture. The two architectures also create different versions of the audit trail. Audit trail in an environment. Because the related events, resources agents and locations are incorporated into the REAL model, the auditor can click on any sale, and the system can use the data table links to retrieve the corresponding shipment and/or order information for each selected sale. The events system allows additional flexibility not possible in a traditional architecture.

9. An events-driven system also provides the flexibility to compare cash basis versus accrual-basis accounting using the same data. • This architecture enables accountants to change their focus from clerical tasks to more value added, real time control and decision support. The events structure provides increased opportunities for accountants to perform analyses that support decision that impact the bottom line.