Documenting AIS: Importance, Flowcharts, & DFDs

School: University of Nevada, Las Vegas - Course: ACC 409 - Subject: Accounting

Why do we need to document AIS?-Sarbanes-Oxley Act of 2002-required to document accounting systems and controls -provide a basis for creating, reviewing, and evaluating system design -communicate ethical values, job descriptions, and scope of authority -provide a basis for training -reduce costly misunderstandings, mistakes, and fraudWho uses flowcharts? Accountants=use flowcharts to design and monitor the accounting system - Auditors=use flowcharts to understand how a client's system works and to evaluate the effectiveness of the internal control structure - System users=employ flowcharts to understand a process and learn how a system works What are dataflow diagrams (DFDs)? a visual depiction that focuses on the flow of information through the system. How do you create a DFD?-determine the nature of the process -determine what data elements flow in and out of the data stores -go from a logical left to right as you begin your diagram -have the right level of detail for your audience and do not make one diagram too complex -it is better to have sub diagramsWhat are the symbols used in DFD and what do they represent? Square=source or destination data - Circle=process -Rectangle=data store -Line/Arrow=data flowWhat is a flowchart and why do we prefer them over DFDs? a visual diagram depicting the procedures and document flows of an accounting system- flowcharts delineate between manual and computerized, but DFDs don't.System flowcharts=visually depicts manual and computerized accounting systems documenting inputs, processes, and outputsProgram flowcharts=focused on a single platform within the systemDocument flowcharts=a part of a system flowchart used to describe the flow of information and documents throughout the responsibility areas of an organization.entity-relationship diagram which is a visual representation of how the entities (tables) are related to one-another.REA modeling a visual representation for AIS- RESOURCE=things of economic value to an organization and are the objects of exchanges with agents -EVENT=activities that increase or decrease resources directly or, planning, control, and management activities that indirectly relate to economic events but do not change the resources -AGENT=the people inside and outside the organization who are involved in the eventsMinimum and Maximum Cardinalities -Minimum: 1=if relationship is mandatory - 0=if relationship is optional - Maximum: N=if potentially many instances - 1=if at most one instanceOne to one for customer sales order - sales products - one sales order to one product shipment; no backorders and no bundling of two or more sales ordersOne to one for give products - get cash - similar to point of sale or cash on delivery, no deposits from customer and no payment plans.One to one for order goods - receive goods from vendor - same as others (no back orders or bundles and not deposit)One to many for customer sales order - give products. - one sales order to many give products (allows you to ship to customer as items become available; arrive in multiple shipments)One to many for-give products - receive cash - one invoice is related to many cash receipts (requires customer to put down a deposit for the order or the organization allows the customer to make payments on the order) Many to one for customer sales order - give products - many sales orders can be bundled into one shipment Many to one for give products - receive cash - many invoices are related to one cash receipt (customer places orders throughout the month and then pays for all orders at once at the end of the month) Many to many for customer sales order - give products - many customer orders can be related to many give orders (ships the goods as they become available in the warehouse and bundles the orders together)Many to many for give products - receive cash the organization requires a deposit, and the organization also has a policy for extending credit, allowing customers to make payments