ACC2400 Topics 4,6,7,10,11,12

Why do good people do bad things? (3 factors)

Globalization complexity, pressure, and rationalization

APES 110 - 5 fundamental principles

Integrity, Objectivity, Professional Competence & Due Care, Confidentiality, Professional Behaviour

7-Step Ethical Decision Framework (in order)

1. Facts, 2. Issue, 3. Principles, 4. Actions & Stakeholders, 5. Compare, 6. Choose, 7. Implement

Consequentialist theory

Focuses on outcomes/results - 'the end justifies the means'

Utilitarianism

A consequentialist theory: choose the action that produces the greatest good for the greatest number

Non-consequentialist theory

Focuses on the means/process - 'the means justifies the end'

Kantianism

A non-consequentialist theory based on duty, with two tests: the Categorical Imperative and the Humanity Principle

Kant: Categorical Imperative

Would everyone do this? Act only in ways you would want to become a universal rule

Kant: Humanity Principle

People are not tools - treat people as ends in themselves, never merely as a means

Rights-based ethics

People are entitled to certain rights (e.g. privacy), and actions are judged by whether they respect those rights

Example of rights-based ethics in Australia

Australian Privacy Principles (APPs)

Internal control (definition)

Processes implemented to provide reasonable assurance that control objectives will be achieved

Controls classified by threat - 3 types

Preventive (stop it), Detective (discover it), Corrective (fix it)

Controls classified by scope - 2 types

General (organisational-wide) controls and Application (specific process/transaction) controls

Limitations of internal control (3)

Provide reasonable (not absolute) assurance; cost-benefit trade-offs; collusion can circumvent controls (separation of duties)

COSO Internal Control Framework (ICF) - 3 goals

1. Effective & efficient operations, 2. Reliable financial reporting, 3. Compliance with laws

COSO ICF - 5 components

1. Control Environment, 2. Risk Assessment, 3. Control Activities, 4. Information & Communication, 5. Monitoring

Control activities - examples

Proper authorisation, segregation of duties, safeguarding assets, independent checks

Segregation of duties - 3 functions to separate

Authorisation, Recording, Custody

Risk response options (4)

Reduce, Accept, Transfer, Avoid

Data entry controls: Field check

checks that data in a field is the correct type (e.g. numbers vs. letters)

Data entry controls: Sign check

checks that the data has the appropriate sign (+ or -)

Data entry controls: Limit check

tests a value against a fixed maximum (or minimum)

Data entry controls: Range check

tests that a value falls between upper and lower bounds

Data entry controls: Size check

ensures the data fits in the field (number of digits/characters)

Data entry controls: Completeness check

verifies all required data items have been entered

Data entry controls: Validity check

compares data to master data to confirm it exists (e.g. valid customer number)

Reasonableness check

Input control: tests whether data makes sense logically (e.g. relationship between fields)

Data entry controls: Check digit

an extra digit calculated by an algorithm from the other digits to detect keying errors

Data entry controls: Sequence check

tests whether a batch of input data is in the proper numerical or alphabetical order

Batch totals - 3 types

Financial total, Hash total, Record count

Data matching (processing control)

Two or more items must be matched before an action takes place (e.g. PO, receiving report and invoice)

File labels (processing control)

Ensure the correct and most current file is being updated

Recalculation of batch totals (processing control)

Processing control: recompute batch totals after processing and compare with input totals

Cross-footing (processing control)

Processing control: checks that the sum of row totals equals the sum of column totals

Zero-balance test (processing control)

Processing control: checks that debits = credits (balance should equal zero)

Write-protection (processing control)

Processing control: protects files from being overwritten or erased

Output controls - examples

User review of output; reconciliation

Availability controls - purpose

Minimise system downtime

Availability controls - examples

Preventive maintenance, fault tolerance, Uninterruptable Power Supply, patch management

Incremental vs differential backup

Incremental = changes since last incremental; Differential = all changes since last full

Disaster Recovery Planning (DRP)

Plan to restore IT capability after a disaster

DRP options for restoring IT (examples)

Cold site, Hot site, Real-time mirroring

Business Continuity Planning (BCP)

Broader plan to resume ALL business processes after a disruption (not just IT)

DRP vs BCP

DRP restores IT capability; BCP is broader and covers resuming all business processes

The Analytics Mindset

1. Ask the right questions (SMART)

2. ETL relevant data

3. Apply appropriate data analysis techniques

4. Data visualisation techniques

Big Data - 4 V's

Volume, Velocity, Variety, Veracity

Analytics types - 4

Descriptive, Diagnostic, Predictive, Prescriptive

ETL stands for

Extract, Transform, Load

ETL: Extract

Obtain data from source systems (data types and data storage)

ETL Extract Data Types

Structured	Highly organised; fits into fixed fields
Semi-structured	Some organisation, not fully relational
Unstructured	No uniform structure

ETL Extract Data Storage

Data warehouse	Stores structured data from multiple sources; supports organisation-wide analysis
Data marts	Smaller subsets of structured data; organised by function or region; faster access, stronger access control
Data Lake	Stores structured, semi-structured, and unstructured data; centralised repository for all data

ETL: Transform

1. Understand the data and the desired outcome

2. Standardise, structure, and clean the data

3. Validate data quality and ensure requirements are met

4. Document the transformation process

ETL: Load

Store the data in the target system (e.g. data warehouse)

Steps in ETL:

1. Understand data needs and the data available

2. Perform the data extraction

3. Verify the data extraction quality and document what you have done

Data quality - 5 characteristics

Accurate, Complete, Consistent, Timely, Valid

Data structuring - 3 techniques

Aggregation, joining, pivoting

Data standardisation:

Data parsing	Splits one field into multiple fields
Data concatenation	Combines multiple fields into one
Cryptic data values	Codes without obvious meaning
Misfielded data	Correctly formatted but not in correct field
Data formatting/consistency	Data stored the same way everywhere

Data cleaning - 4 tasks

Remove duplicates, fix missing values, fix threshold violations, standardise formatting

Data validation techniques:

1. Visual inspection

2. Basic statistical tests

3. Auditing

4. Advanced testing

Data visualisation - how to choose a chart

Choose based on the question: Comparison, Correlation, Distribution, Trend, Part-to-whole

Revenue cycle - 4 activities

1. Sales order entry, 2. Shipping, 3. Billing, 4. Cash collections

Expenditure cycle - 4 activities

1. Ordering, 2. Receiving, 3. Approve supplier invoices, 4. Cash disbursements

Key RC/EC documents (list)

Sales order, Packing slip, Bill of lading, Sales invoice, Credit memo, Purchase requisition, Purchase order (PO), Receiving report, Debit memo, Voucher package

Revenue cycle documents

Sales order, Packing slip, Bill of lading, Sales invoice, Credit memo

Expenditure cycle documents

Purchase requisition, Purchase order, Receiving report, Debit memo, Voucher package

RC/EC threat: Incomplete/inaccurate orders

Control: Data entry edit controls

RC/EC threat: Uncollectible sales

Control: Credit approval (segregated from sales)

RC/EC threat: Stockouts

Control: Perpetual inventory, RFID

RC/EC threat: Theft of inventory

Control: Restrict physical access

RC/EC threat: Failure to bill

Control: Separate shipping and billing

RC/EC threat: Kickbacks

Controls: Prohibit gifts, job rotation, supplier audits

RC/EC threat: Duplicate payments

Controls: Complete voucher package, cancel documents when paid

RC/EC threat: Theft of cash

Controls: Segregation of duties, lockboxes, daily deposits

Control for uncollectible sales?

Credit approval, segregated from the sales function

Control for failure to bill?

Separate shipping and billing functions

Control for kickbacks?

Prohibit gifts, job rotation, supplier audits

Control for duplicate payments?

Complete voucher package; cancel supporting documents when paid

Control for theft of cash?

Segregation of duties, lockboxes, daily deposits

System Development Life Cycle - 5 phases (in order)

1. Systems analysis, 2. Conceptual design, 3. Physical design, 4. Implementation & conversion, 5. Operations & maintenance

Feasibility study - 5 dimensions

Economic, Technical, Legal, Scheduling, Operational

Conversion strategies - 4

Direct, Parallel, Phase-in, Pilot

Make vs. Buy: Make

Build custom software - for competitive advantage

Make vs. Buy: Buy

Off-the-shelf software - faster and proven

Outsourcing (definition)

Hiring an outside company to handle data processing/IT functions

Outsourcing - pros

Focus on core competencies; lower costs

Outsourcing - cons

Loss of control; inflexibility