Accounting Information Systems: Essential Concepts
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Transcript Accounting Information Systems: Essential Concepts
Accounting Information Systems:
Essential Concepts and Applications
Fourth Edition by Wilkinson, Cerullo, Raval,
and Wong-On-Wing
Chapter 3: AIS
Enhancements Through
Information Technology and
Networks
Slides Authored by Somnath Bhattacharya, Ph.D.
Florida Atlantic University
Importance of IT and Computer
Networks to Accountants
To use, evaluate, and develop a modern
AIS, accountants must be familiar with IT
Computers enable accountants to perform
their duties more quickly, accurately, and
consistently than by manual methods
Software such as electronic spreadsheets
aid accountants in analyzing financial
statements and in developing budgets
IT Components of Interest
to Accountants
Devices for data entry
Data Processing
Data Communication
Information Generation
Data Bases
Data Modeling concepts
Evaluation of internal controls in AIS
Variety of software packages
Computer Networks
Networks & Accountants
Because they transmit data and information,
networks are an integral part of AIS
Networks are vulnerable to high level risk thus
requiring special controls and security measures.
Need to prevent loss of accounting records &
information
Need to ensure accuracy of data
Networks may be used to consolidate data into
financial information
Gains from IT for Accountants
Faster processing of transactions and other data
Greater accuracy in computations of and
comparisons with data
Lower cost of processing each transaction
More timely preparation of reports and other
outputs
More concise storage of data, with greater
accessibility when needed
Wider range of choices for entering data and
providing outputs
Higher productivity for employees and managers,
who learn to use computers effectively in their
routine and decision-making responsibilities
Task Matching to Computers
Manual
Exceptional/infrequent
transactions
Setting objectives and policymaking judgments
New problems
Supervising employees
Social communications
Making complex strategic
decisions
Figure 3-1
Computerized
Collecting and processing large
volumes of routine
transactions
Storing large quantities of data
and information
Monitoring and controlling
continuous processes
Answering specific inquiries
based on stored data
Preparing complex analyses
and extensive reports
Helping gather data and
understanding the
relationships between all types
of decisions
Limitations of Infoage’s
Legacy AIS
Large portion of personnel time and effort spent
on systems maintenance
Little time & effort for value-added services
Little flexibility to changing business conditions
Financial and Operational data not integrated
Difficult to generate data with both financial and non-financial
components
The transaction processing systems focus on
chart of accounts classification
Ignore the multidimensional aspects of transactions
Files related to applications are not integrated
Inefficiencies of the manual system remodeled in
automated form
Business processes and accounting procedures not analyzed and
improved upon prior to conversion to automated form
System not geared to generate timely decisionsupport information
Computer programmers required to write new programs for ad hoc
queries
Types of Network
Architectures
Wide-Area Networks
Formed among computers and interconnected devices that are geographically
distant from one another
Local-Area Networks
A type of distributed network created when
two or more linked computers are grouped
within a limited geographical area
Centralized WANs - I
Concentrates all application processing at one
geographical location
Consists essentially of one (or a cluster of) central
mainframe computer(s) and one or more physically
remote terminals
Typically all hardware, software, and data processing
personnel are located at corporate headquarters
Advantages include:
the concentrated computing power of a large processor
low operating costs per transaction leading to economies of
scale
can facilitate the use of a database approach
facilitate better security provisions
allow for greater standardization and professional planning and
control of information-related activities
Centralized WANs - II
Best suited for
Firms with centralized organizational structures
Firms with homogeneous operations
Firms with low processing activity at remote sites
Examples include
Savings and loan institutions
Banks with many ATMs and branches
Merchandizing chains
Motels
Airlines
Drawbacks include
Inflexibility
Expensive and complicated software needed
Vulnerable to disasters as a result of complete dependence on
central computer
Not user-friendly
Distributed WANs - I
This links fully functional computers in different
geographical locations.
Each remote site processes its own applications.
However, users may not have easy access to
centralized data or be able to transmit data and
information rapidly.
Computers may be interconnected by data
communications hardware and software to other
remote sites and to a central computer facility to
form an “enterprise-wide” network.
Distributed WANs - II
Distributed databases are useful when:
Large volumes of data need to be processed at remote locations
Managers and employees need very fast access to data on a
frequent basis
Databases may be distributed by replication or partition.
Replication: Copies of files from the main data base are stored
at remote locations
Partition: Segments of files are allocated to various locations
within the network
This avoids data redundancy, but increases the complexity of
transmitting data throughout the network
Likely to become the dominant approach as technology improves
At present most data bases are a hybrid of the two approaches
Benefits of Distributed
WANs
Can be responsive to diverse needs of users
Enable network facilities to be used efficiently
since processing jobs can be routed to unused
computer systems in the network
Are robust against individual computer failures
Flexible and adaptable to change
Best suited for firms with:
Decentralized organizational structures
Diverse operations or user groups
Clustered functions at various locations
Multiple products
Manufacturing operations
A variety of services
Drawbacks of Distributed
WANs
Difficulty in maintaining adequate control and
security
Each distributed processing location needs its own
set of controls and security measures
Given the smallness of each location,
organizational independence is not easily
achieved
Managers may sacrifice control and security for
greater productivity
Difficulty and cost of coordinating the relatively
independent and sometimes incompatible
computer systems
Added costs for multiple computers, other system
components, and communication services
LANs
A LAN may be connected to other LANs
and/or WANs via hardware devices known
as gateways or bridges
At the heart of a LAN is the workstation
Microcomputer-based workstation
Traditional workstation
Super workstation
Peer-to-Peer LANs
In smaller LANs, every workstation
functions as both a client and a server
This allows all users to share data and files on
all workstations
Called peer-to-peer network since no
workstations are dedicated to perform only
server functions
Compared to a server network, peer-to-peer
networks are less costly, easier to install, and
compare well against server networks of
similar size
Number expected to significantly increase in
the near future
Server Networks
May interconnect hundreds of workstations
More difficult to manage and interpret than peer-to-peer
networks
Provide greater security than peer-to-peer networks
At least one workstation is dedicated to performing
specific server tasks
Examples include:
Servers
Database servers
Print servers
Communications servers
Transaction processing servers
Large server networks often contain multiple servers
The Network Operating
System
In peer-to-peer networks, the Network Operating
Software (NOS) is installed in each user workstation
In a server network, most of the NOS is installed in the
file server and a portion also resides in each workstation
To run centralized LAN applications, the NOS installed in
the file server interacts with the NOS and the local
operating system installed in the workstation. The client
workstation NOS initiates a request to the file server
NOS to load files and programs into the client
workstation’s RAM
In a peer-to-peer network, a client NOS initiates a
request to another client NOS, which also functions as a
server, to load the requested files and/or programs into
RAM
More Networks
Examples of pre-developed network
configurations resident in Network Interface
Cards include: Ethernet, Token Ring, and ARCnet
The International Standards Organization has
issued the Open Systems Interconnection (OSI)
model
Open Systems Architecture
Seamless exchange of data, files, and software
between LANs and WANs built with multiple vendors’
hardware, software, and networking components
Client/Server Networks
This model splits data processing between
a user workstation (client) and one or
more servers
Majority of servers are dedicated database
servers, thereby enabling client to share
data and files, conduct database searches,
and update the database
One of the fastest growing segments of
IT
Cooperative Client/
Server Computing
Most commonly implemented mode of
client/server architecture
Facilitates the optimal sharing of
computer resources since the client(s) and
server(s) jointly process the data
Clients typically employ Graphical User
Interfaces (GUIs)
Data-processing locale is transparent to
the user
Network Topologies
The STAR and RING topologies apply to
both distributed WANs and LANs
The BUS topology applies only to LANs
All three found in client/server networks
All three may be combined to form hybrid
configurations
The STAR Configuration
Figure 3-3a
The RING Configuration
Figure 3-3b
The BUS Configuration
Figure 3-3c
Enterprise-wide Processing
and Data Systems
Enterprise-wide on-line transaction processing systems
collect and process mission-critical accounting and
operational applications
Enterprise Resource Planning Systems (ERP) such as
SAP R/3 overcome the limitations of legacy applications
Firms typically develop two types of On-line Analytical
Processing (OLAP) systems that supplement ERP or
legacy systems
A firm can model the relevant aspects of business events
contained within the business processes allowing for the use of
relational database-related query language commands
Firms can create a data mart or data warehouse to generate
predefined reports for executives and other managers
Data Marts and Data
Warehouses
Both Data Marts and Data Warehouses organize and
store copies of “informational” or decision support data
A Data Mart stores copies of decision support data in a
data base for a portion of a company
A Data Warehouse stores copies of decision support
data in an integrated data base for an entire enterprise
As opposed to applications-oriented data in legacy
systems, data in a data mart or warehouse are stored by
subject areas (e.g., customers)
Data may be stored in both summarized or “raw” form
Both have “drill down” and “data mining” features
Specialized Inter-organizational
Systems/Networks
Internet Commerce and Electronic Commerce
Point-of-Sale Systems/Networks
Electronic Funds Transfer (EFT) Systems
Electronic Data Interchange (EDI) Systems
Value Added Networks (VANs)
The Internet (TCP/IP)
The World Wide Web (WWW)
Hypertext information retrieval system
Intranets
Extranets
Accounting Information Systems:
Essential Concepts and Applications
Fourth Edition by Wilkinson, Cerullo,
Raval, and Wong-On-Wing
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