A337
Computerized and Manual Systems
TOPICS

How do accounting systems work in a manual world


First extension


Same basic structure, but automating the updating process
Second extension



SUA
Transaction entry from screen documents
ACCPAC, PeachTree, Great Plains (GP), etc
Third extension

Integrated accounting/management/finance/marketing software
LET’S LOOK AT THE SUA
LET’S LOOK AT THE SUA
FIRST EXTENSION

Automating data entry
 Ledgers
 (only
 There
should not be modified directly
through a data entry “screen”)
should be a “log” of all data entry
 Access
to data entry should be controlled
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.

SECOND EXTENSION

Focus is still on Accounting, but the transaction
data that is captured and stored is expanded.
TRADITIONAL ACCOUNTING SYSTEM
JOURNALS (WHERE DATA IS RECORDED)
What information is recorded??
SALES JOURNAL
Date
Customer
Dec.
4 Bertram Appliance
Dec.
5 Hanover Hardware
Dec.
11 Bertram Appliance
Dec.
13 Hanover Hardware
Inv. or
Cr. Memo
Number
726
727
728
729
Subs.
Acct.
No.
406
408
406
408
DECEMBER
Subs.
Post
PURCHASES JOURNAL
Date
Dec.
11
Dec.
22
Vendor
Chicago Office Supply
Super Electric Co.
Vendor
Invoice
No.
2179
18719




Debit
Acct. Rec.
Sales Returns
G/L 10200
G/L 30200
13,500.00
6,700.00
9,850.00
1,716.00
DECEMBER
Debit
Purchases
G/L 30500
19,795.00
Credit
Sales
G/L 30100
13,500.00
6,700.00
9,850.00
1,716.00
Acc#
10800
Other G/L
Amount
8,268.00
Post
Subs. A/C#
253
252
Credit
A/P - G/L 20100
Amount
Post
8,268.00

19,795.00

etcetera
Purch. Ret.
G/L 30600
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)
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
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.
HOW ARE DATABASES DIFFERENT FROM TRADITIONAL STORAGE
FOR ACCOUNTING INFORMATION?
Who
What
When
Where
THIRD EXTENSION
Enterprise - Resource - Planning (ERP) systems
 Sold/provided by large software vendors

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
APPLICATION LAYER FUNCTIONS
• Presentation logic
– Presentation of info to user and acceptance of user
commands
ERP
• Application logic
– Business logic such as word processors, spreadsheets
• Data access logic
– Processing required to access stored data (e.g., SQL)
• Data storage
DBMS/Database
– Storing of data generated by programs (e.g., files, records)
CLIENT-SERVER ARCHITECTURES
Clients (ERP)
•Presentation Logic
•Application Logic (some)
• e.g., Error Checking
Servers (ERP, DBMS, DB)
•Application Logic (most)
•e.g., Business Processes
•Data Access Logic
•Data Storage
APPROACHES

In house
 Large
data requirements and personnel
commitment
 Better control over features
 Faster application

Web driven (hosted/ASP/MSP)
 Lower
cost
 Security issues?
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.
DISADVANTAGES OF ERPS

Cost


People



ERPs (especially In House) are quite expensive to implement. There is
also a LONG startup period (two to three years)
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
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