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Session+2Aug4 - 8/4/2011 Documentation covers the who,...

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8/4/2011 1 Accounting Information Systems: An Overview August 4, 2011 Summer 2010 UC Irvine MGMT 136: Accounting Information Systems 2 } Questions to be addressed in this chapter include: What documentation techniques are used in accounting systems? What are data flow diagrams and flowcharts? Why are databases important? What are the fundamental concepts of database systems such as DBMS, schemas, the data dictionary, and DBMS languages? What is a relational database, and how does it organize data? How are tables structured to properly store data in a relational database? Summer 2010 UC Irvine MGMT 136: Accounting Information Systems 3 } Documentation includes the following types of tools: Narratives (written descriptions) Flowcharts Diagrams Other written material Summer 2010 UC Irvine MGMT 136: Accounting Information Systems 4 } Documentation covers the who, what, when, where, why, and how of: Data entry Processing Storage Information output System controls Summer 2010 UC Irvine MGMT 136: Accounting Information Systems 5 } How do accountants use documentation? At a minimum, they have to read documentation to understand how a system works. They may need to evaluate the strengths and weaknesses of an entity’s internal controls. Requires heavy reliance on documentation They may peruse documentation to determine if a proposed system meets the needs of its users. They may prepare documentation to: Demonstrate how a proposed system would work Demonstrate their understanding of a system of internal controls Summer 2010 UC Irvine MGMT 136: Accounting Information Systems 6 } In this chapter, we discuss two of the most common documentation tools: Data flow diagrams Flowcharts
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8/4/2011 2 Summer 2010 UC Irvine MGMT 136: Accounting Information Systems 7 } Documentation techniques are necessary tools for accountants: SAS-94 requires that auditors understand the automated and manual procedures an entity uses. This understanding can be gleaned through documenting the internal control system—a process that effectively exposes strengths and weaknesses of the system. SOX (2002) effectively requires that publicly- traded corporations and their auditors document and test the company’s internal controls. Auditing Standard No. 5 promulgated by the PCAOB requires that the external auditor express an opinion on the client’s system of internal controls. Summer 2010 UC Irvine MGMT 136: Accounting Information Systems 8 } Documentation tools help accountants by: Organizing very complicated systems into a form that can be more readily understood. Helping new team members understand a pre- existing system. Summer 2010 UC Irvine MGMT 136: Accounting Information Systems 9 } Which method should you use—flowcharts or DFDs?
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Session+2Aug4 - 8/4/2011 Documentation covers the who,...

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