1. Computerized and Manual Systems

2. 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 (GP), etc
Third extension
Integrated accounting/management/finance/marketing software

3. Let’s look at the SUA

4. Let’s look at the SUA

6. First Extension Automating data entry
Ledgers should not be modified directly
(only through a data entry “screen”)
There should be a “log” of all data entry
Access to data entry should be controlled

8. 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.

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

10. Traditional Accounting System Journals (where data is recorded)
What information is recorded??
etcetera

11. Traditional Accounting System
No information can be in the ledgers that was not recorded in the journals
the ledgers are a direct transcription (posting) of the journals
The accounting system ONLY contains transaction information (an exchange has occurred)

12. Event-Driven Database Approach
Many events lead up to what ultimately becomes a transaction
Example - sale
Receipt of Purchase Order
Preparation of Sales Order Header
Accepting credit / approving transaction
Shipping the goods
Preparation of the invoice
Information is added at each event. If we record events we have a more complete tracing of the transaction

13. Traditional Accounting System
Who has ownership/access to the data
With a traditional system, data entry of accounting information is maintained by the bookkeeper or accountant.
Sales data is maintained in the sales department
Accounts receivable information is maintained in Accounts receivable perhaps.
There are varying degrees of DBMS approaches
One transaction cycle might involve interaction with all business cells, while others may not.

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. ERPs Enterprise 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. Application Layer Functions
ERP
Presentation logic
Presentation of info to user and acceptance of user commands
Application logic
Business logic such as word processors, spreadsheets
Data access logic
Processing required to access stored data (e.g., SQL)
Data storage
Storing of data generated by programs (e.g., files, records)
DBMS/Database

18. Client-Server Architectures
Network
Servers (ERP, DBMS, DB)
Application Logic (most)
e.g., Business Processes
Data Access Logic
Data Storage
Clients (ERP)
Presentation Logic
Application Logic (some)
e.g., Error Checking

19. Approaches In house Web driven (hosted/ASP/MSP)
Large data requirements and personnel commitment
Better control over features
Faster application
Web driven (hosted/ASP/MSP)
Lower cost
Security issues?

20. 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.

21. Disadvantages of ERPs Cost People It can overwhelm your business
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

22. 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