D217 Accounting Information Systems Flashcards

Transaction

An event that affects or is of interest to the organization and is processed by its information system as a unit of work.

Financial transaction

An economic event that affects the assets and equities of the organization, is reflected in its accounts, and is measured in monetary terms.

Accounting Information System (AIS) Subsystems

General Ledger/Financial Reporting System (GL/FRS), Transaction Processing System (TPS), and Management Reporting System (MRS).

Transaction Processing System (TPS) Cycles

Expenditure Cycle, Conversion Cycle, and Revenue Cycle.

Expenditure Cycle Subsystems

Purchasing System, Cash Disbursement System, Payroll Processing System, and Fixed Asset System.

Conversion Cycle Subsystems

Cost Accounting System and Production Planning and Control System.

Revenue Cycle Subsystems

Sales Processing System and Cash Receipts System.

Role of Management under the Sarbanes-Oxley Act (SOX)

Assess the effectiveness of internal controls over financial reporting and implement controls designed to prevent and detect fraud that could lead to material misstatements.

Qualified Opinion on Internal Controls

An external auditor finding that implies the auditor identified at least one material weakness in internal controls.

COSO Framework: Information and Communication

The internal control component evaluated when tracing a single transaction from source documents through the accounting information system to the financial statements.

COSO Framework: Risk Assessment

The component considered when an auditor compares an organization chart to the prior year's chart to identify new personnel responsible for internal controls.

Most Common Access Point for Computer Fraud

Data collection.

Database Management Fraud

Fraud involving the manipulation or destruction of an organization's databases, such as a disgruntled employee using a logic bomb to erase a supplier list.

Reasonable Assurance

A modifying assumption that keeps management from implementing costly internal control upgrades when the added benefit of error detection does not justify the cost.

Black Box Testing

An audit approach applied to computer applications where inputs and outputs are easily reconciled without needing to remove the application from service to test it directly.

Parallel Simulation

A technique used to reprocess the same transactions that the production application previously processed for reconciliation purposes.

Access Tests

Tests that verify that individuals or programs are valid.

Operating System Control Objectives

Protecting the computer's control program from itself to ensure that no module is allowed to destroy or corrupt another module.

Critical IT Segregation of Duties

Separating systems development from computer operations (including separating the programmer from the computer operator).

Control Risk

The likelihood that the control structure is flawed because controls are either absent or inadequate to prevent or detect errors in the accounts.

Grandfather-Father-Son

A sequential file backup technique.

Proportionality Principle

An ethical principle stating that the benefit from a decision must outweigh the risks, and that no alternative decision provides the same or greater benefit with less risk.

Turnkey Systems

Commercial software systems that are completely finished and tested systems ready for implementation.

Backbone Systems

Systems that come with all primary processing modules programmed and provide a basic system structure on which to build.

Statement on Auditing Standards No. 109

The standard requiring that applications emerging from the systems development life cycle (SDLC) possess adequate controls, including accountant involvement at both detailed design and implementation phases.