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Accounting Information Systems: Definitions and Characteristics. Purchasing agent uses various sources of information to determine when and how much to order Requisitions are received from supervisors indicating when specific supplies are needed and how much of them - PowerPoint PPT Presentation
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Accounting Information Systems: Definitions and Characteristics
Purchasing agent uses various sources of information to determine when and how much to order
Requisitions are received from supervisors indicating when specific supplies are needed and how much of them
Weekly open sales order and finished goods reports are used to evaluate current and future production plans in conjunction with a review of raw materials on hand
Purchasing agent reviews the card file of stock on hand to ascertain use history and vendor lead times.
When large and unusual orders are received by the sales manager, the purchasing agent is notified to evaluate related raw materials requirements
Purchasing agent prepares three-part purchase order, review it with the office manager, and obtains signature before distributing it– Copy 1 goes to vendor– Copy 2 goes to warehouse– Copy 3 retained
Purchase order log controls numerically all orders issued and to assure they are subsequently received and reported on receiving reports
When material received– Receiving dock personnel count the material and
prepare three-part pre-numbered receiving form Copy 1 goes to purchasing agent Copy 2 goes to cost accountant Copy 3 retained and filed in numerical order
– If material received is finished product Copy 1 routed through sales manager, who makes copy to
update finished goods inventory.– If order is complete, receiving personnel send copy of
purchase order to purchasing agent, who denotes receipt of material on purchase order log
Cost accountant uses copy of receiving report to post quantities receive to raw material cards
Production schedule and control based on:– Review of weekly report of finished goods on hand
and on order– Walk-through review of work in progress
Production supervisor verifies availability of necessary raw materials with warehouse supervisor
Raw materials issued from stock on request of production supervisor– Signatures obtained from production personnel on
material transfer forms– Transfer forms used to update raw material inventory
files Actual unit cost obtained from card records Transfer sheets extended and summarized for recording the
monthly journal entry to credit raw materials and charge work in process
Production begins when materials received– Occasional quantity checks to verify piece counts– No formal production control over work-in-process
Time sheets– Piecework quantities produced and payment rates per
100 units– Amounts extended and summarized for entry into
payroll– Total piecework dollars charged to work-in-process
Non-piecework wages charged to overhead
As work completed, quantities and descriptions are recorded onto prenumbered merchandise transfer sheets– Shipping department personnel are responsible for
accuracy of sheets – Each item initialed as verification
With shipping department approval, transfer sheet forwarded to sales manager– Enters catalog numbers and quantities into computer
to update finished goods-on-hand Inventory summary report repaired at month-end
– Quantities and extended standard costs for all transfers from work-in-process to finished goods
Hourly production workers– Paid on piece-rate basis– Each employee accounts for own units of production
and hours worked on each job– Recorded on weekly time sheets– Requires approval of department supervisor
Clock cards and time sheets sent to payroll clerk– Verifies extensions, calculates makeup hours and pay,
calculates day work hours and pay– Reviews clock cards to determine if time sheets
missing– Time sheets sent to service bureau to prepare checks
and payroll journal
Checks prepared by bank and sent to office manager who separates by department– Checks and journals given to controller for review– If error, check cancelled, new check typed for
corrected amount, payroll records corrected in following period
Office manager distributes checks to employees
Relies on annual physical count of items to determine on-hand quantities– Not directly reconciled to perpetual inventory records
Review
Chapters 1, 4 and 12– Introduction– Internal Control– Data file management
Discussion QuestionsNormalization
What is normalization and why is it important to normalize a database?
Distinguish between First, Second and Third normal forms.
What are the characteristics of a “primary key”? What does it mean when there is a “one to many”
relationship? What is a "foreign key"?
Discussion QuestionsIntro to AIS
Distinguish between data, information and knowledge.
Describe the major types of computer-based information systems.
What are the major components in a transaction processing cycle?
What is internal control, and why is it an important part of an information system?
Discussion QuestionsData Management
Distinguish the traditional file approach from the database approach. What are the primary differences in terms of how they store data?
What are the advantages and disadvantages of the following types of database models: hierarchical, network, relational
What alternative file-access methods are available to implement a database at the physical level? What factors should you consider when choosing among these alternative methods?
What is a DBMS and what are some of the key components of a DBMS?
Discussion QuestionsInternal Control
What are the common exposures within a computer-based information system? How would you ascertain the likelihood that a given exposure will exist?
How do you determine whether the impact of an exposure will be material? What is the COSO framework? Discuss the extent to which each layer
within the COSO framework is implemented within the Coffee Roasting Company.
Which of the General and Application Transaction Processing Controls should be applied to the AOPS of the Coffee Roasting Company? What are the common exposures within a computer-based information system? How would you ascertain the likelihood that a given exposure will exist?
How do you determine whether the impact of an exposure will be material? What is the COSO framework? Discuss the extent to which each layer
within the COSO framework is implemented within the Coffee Roasting Company.
Which of the General and Application Transaction Processing Controls should be applied to the AOPS of the Coffee Roasting Company?
Discussion Question 24, pg 25
Good internal control?a) Purchase requisitions made verbally by
departments to purchasing agentb) Clerk responsible for raw material inventory records
does not have access to storeroom where materials are kept
c) Receiving operation related to shipments handled by clerks responsible for managing storeroom where material are kept
d) Purchase orders prepared by clerks responsible for managing storeroom where materials are kept
Discussion Question 24, pg 25
Good internal control?e) Employees who count goods received do not know
how many were orderedf) Periodic physical inventory conducted by clerks
responsible for managing storeroom where materials are kept
g) Purchase orders compared to receiving reports before vendors are paid
Discussion Question 25, pg 25-6Applicable Control Objectives (to CRC?)
The following should be authorized in accordance with management’s criteria– Vendors– Prices and terms– Customers– Production plan– Access to payroll, personnel and disbursement
records Shipment of goods should result in billing
Discussion Question 25, pg 25-6Applicable Control Objectives (to CRC?)
The following should be accurately and promptly classified, summarized and reported– Amounts due to vendors– Cost of good manufactured– Billings to customers
Question 52, pg 144
Identify controls that would detect:– Clerks steal percentage of cash sent as donation
to non-profit– Employees mail personal letters at company
expense– Clerk posts payment as 53 instead of 35
Unintentional Intentional (to friends account)
– Bill customer for item never shipped– Duplicate payment of invoice– Customer not billed for item shipped
Exam
Normalization problems “Definitions” – matching or fill-in-the-blank Multiple choice