The Crossroads of Accounting & IT

Transcription

1 The Crossroads of Accounting & IT Donna Kay, MBA, PhD, CPA, CITP Maryville University of Saint Louis Ali Ovlia, MS, DM Webster University Pearson Boston Columbus- Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo

2 <*W*t3S%sfiL..?5» r<3s*^*^< Contents IV Preface ix Acknowledgements xvi About the Authors xviii Part 1 Enterprise Accounting Systems: People, Processes, and Technology 2 Chapter 1 Accounting System Insights 2 How Do I Navigate the Crossroads of Accounting and IT?, 3 How Is the Accounting System Related to the Enterprise System? 4 Business Processes 6 Transaction Cycles 8 Accounting System Insights: What Are the Secrets of My Success at the Crossroads of Accounting and IT? 8 What Are Three Keys to Opportunity at the Crossroads of Accounting and IT? 21 People, Processes, and Technology 21 System Development Life Cycle (SDLC) 22 Your GPS for Navigating the Crossroads of Accounting and IT 23 Chapter 2 Accounting Databases 36 What Role Does the Database Play in an Accounting System? 37 Accounting Databases: Behind the Screen 38 What Is the Role of the Database in an Enterprise? 40 Internal Databases 40 External Databases 40 Database Structures 41 How Do I Build an Accounting Database? 42 Database Essentials Revisited 42 Accounting Databases: People, Things, and Transactions 43 Illustration: EspressoCoffee Accounting Database 46 Accounting Databases and SDLC 53 What Is Database Integrity? 53 What Would You Do? 53 Database Anomalies 54 Database Normalization 54 Database Integrity Rules 55 What Are the Differences between a Manual Accounting System and a Database Accounting System? 56 Chapter 3 Accounting Interface: Database Forms, Queries, and Reports 66 What Is the Role of the Accounting Interface in the Accounting System? 67 User Interface Components 68 User-Friendly Interface 70 User Interface Tools 70 What Is the Role of Database Forms in the Accounting Interface? 71 Database Form Design 72 Accounting Data Entry Forms 73 Building Database Forms 73 What Would You Do? 75 Accounting Interface Forms Mapped to the Accounting Database 75 What Is the Role of Database Reports in the Accounting Interface? 76 Accounting Reports 76 Accounting Database Report Design 77 Building Database Reports 78 What Would You Do? 78 What Is the Role of Database Queries in the Accounting Interface? 79 Query Builder Tools 80 Structured Query Language (SQL) 82 What Would You Do? 83 Illustration: MS SQL Server Database Query Builder 83 Chapter 4 Accounting Systems and Business Processes 96 What Is the Role of Business Processes in the Accounting System? 97 What Are the Business Processes in a Baseline Accounting System? 99 Vendors Module 100 Customers Module 101 Employees Module 101 Banking Module 102 Financial Module 103 Reports Module 104 How Is an Accounting System Customized Using Data Flow Diagrams (DFDs)? 105 How Do I Read a DFD? 107 Agents: Square 108 Events: Rounded Rectangle 108

3 CONTENTS Data Store: Open Rectangle 108 Data Flow: Lines and Arrows 109 DFD: Who Does What, When Where, and How? 109 What Would You Do? 109 How Do I Build a DFD? 110 Ten Steps to Build a DFD 110 How Do You Collect Information to Build a DFD? 116 What Are the Secrets of a Well-Designed DFD? 119 Three Common DFD Errors: Black Hole, Miracle, and Gray Hole 120 Chapter Extension 4A: Flowcharts and UML Activity Diagrams 121 Chapter 5 Business Processes: Purchasing, Sales, and Payroll Cycles 132 How Do I Customize an Accounting System? 133 Big Bang vs. Stages Customization 133 Workflow Management System 134 Customize or Not? 134 How Do I Customize the Sales Cycle? 134 Receive Customer Payments DFD 135 Make Deposits DFD 135 How Do I Customize the Purchasing Cycle? 138 Create Purchase Orders DFD 139 Receive Items DFD 141 Enter Bills DFD 142 ' Pay Bills DFD 142 How Do I Customize the Payroll Cycle? 143 Enter Time DFD 144 Calculate Payroll DFD 145 Pay Employees DFD 146 Pay Payroll Liabilities DFD 147 How Do I Customize the Financial Cycle? 148 Chapter 6 Integrated Enterprise Systems 158 What Is an Integrated Enterprise System and How Did We Get Here? 159 Integrated Enterprise Systems: How Did We Get Here? 160 What Are the Benefits and Challenges of an Integrated Enterprise System? 164 Integrated Enterprise System Benefits 164 Integrated Enterprise System Challenges 164. What IT Architecture Does an Integrated Enterprise System Use? 165 Integrated Enterprise Systems: Three-Tier Architecture 165 Integrated Enterprise Systems: A Modular Approach 166 What Do I Need to Know about SAP? 167 SAP for Small and Midsize Companies 168 Integrated Sales Module: Order-to-Cash 168 Integrated Purchasing Module: Procure-to-Pay 173 Integrated Employee Module 175 Integrated Financial Module 176 Integrated Reports Module 178 Part 2 Accounting and Intelligence Systems 192 Chapter 7 Accounting and Business Intelligence 192 How Is Business Intelligence Used for Decision Making in Today's Business Environment? 193 Decision Models 195 What Is the Integrative Decision Model (IDM)? 195 Decisions in Seven Steps 196 Illustration: EspressoCoffee Integrative Decision Model (IDM) 197 What Makes an Enterprise System Intelligent? 199 Intelligent System Components 199 Can Shadow Data Create Business Intelligence (Bl)? 201 What Would You Do? 201 Shadow Data and Intelligent Components 201 Illustration: STAR for Autism Shadow Data 205 Illustration: STAR for Autism Integrative Decision Model (IDM) 208 Shadow Data Advantages and Disadvantages 208 Shadow Data Global Spreadsheet Analysis 209 How Are Bl Technologies Used to Create Business Intelligence? 210 Bl Technologies and Intelligent Components 213 Bl Technologies Advantages and Disadvantages 218 How Do Shadow Data and Bl Technologies Compare? 218 Chapter 8 Accounting and Sustainability Intelligence 226 What's the Triple Bottom Line? 227 What Is Sustainability Accounting? And How Will It Impact My Accounting System? 227 Three Keys to Sustainability Accounting 229 How Is Sustainability Accounting Used in Decision Making? 232 Sustainability IDa Model 232 Sustainability and Decision Making: Creating Value 237 How Is Sustainability Accounting Used for Reporting Performance? 239 Sustainability Reporting Frameworks 239 Sustainability Reporting Criteria 240

4 VI CONTENTS Chapter 9 XBRL: Intelligent Business Reporting 252 What Is XBRL? 253 Who Uses XBRL? 255 Where Is XBRL Used? 255 Asia and XBRL 255 Europe and XBRL 255 The Americas and XBRL 255 Why Use XBRL? 256 When Is XBRL Used? 256 XBRL Bolt-on Tagging 258 XBRL Integrated Tagging 258 How Does XBRL Work? 260 XBRL Essentials 260 XBRL behind the Screen 262 Part 3 Security, Controls, and Risk 270 Chapter 10 Fraud and Internal Control 270 Fraud: What Will I Tell My MOM? 271 What Is SOX? 273 SOX Requirements 274 Audit and Internal Control 274 What Is the COSO Internal Control Integrated Framework? 275 Control Environment 276 Risk Assessment 276 Control Activities 276 Information and Communication 277 Monitoring 277 What Is COBfT? 278 IT Resources 278 IT Processes 278 Information Criteria 279 COSO and COBIT Mapping 279 What's the Bottom Line on IT Controls? 283 IT and Internal Control 283 How Do I Document Control HotSpots? 290 Build a DFD 291 Document Controls 293 Document Control HotSpots 295 Chapter Extension 10A: Institute of Internal Auditors Code of Ethics 296 Chapter 11 Cybersecurity 304 What Are the 10 Domains of Cybersecurity? 305 What Is the Legal, Regulations, Compliance, and Investigations Domain? 306 Cybercrime 307 Cyberlaw 308 Cyber Forensics 308 What Is the Information Security and Risk Management Domain? 309 Security Management Principles 309 Information Classification 309 Information Security Management 309 Systems Development Life Cycle (SDLC) Security 310 Security Frameworks 310 What Is the Security Architecture and Design Domain? 310 IT Architecture 310 Computer Architecture 310 Network Architecture 312 Security Architecture 316 What Is the Telecommunications, Network, and Internet Security Domain? 317 Telecommunications Security 317 Network Security 318 Internet Security 319 What Is the Control Access Domain? 321 Access Control Security Principles 321 Password Management 322 Biometric Access 322 Intrusion Prevention Systems 322 What Is the Operations Security Domain? 322 IT Security Management Responsibilities 322 IT Security Operational Responsibilities 322 What Is the Physical and Environmental Security Domain? 323 Physical Security Framework 323 Information Asset Protection 323 What Is the Application Security Domain? 323 Application Security and Software Development 324 Database Applications Security 324 Web Applications Security 324 Malware 324 What Is the Business Continuity and Disaster Recovery Domain? 326 Disaster Recovery Priorities 326 Backup Methods 326 Backup Facilities 326 What Is the Cryptography Domain? 327 Encryption Keys 328. Substitution Cipher 328 Encryption Methods 328 Why Does Cybersecurity for Accounting Require Prudence? 329 Chapter 12 The Risk Intelligent Enterprise: Enterprise Risk Management 342 Beyond Security and Control, What Is Risk Intelligence? 343 Risk Intelligence 343 IT Controls, Internal Controls, and ERM 344

5 CONTENTS VII What Is Enterprise Risk Management (ERM)? 346 ERM Units 347 ERM Objectives 347 ERM Components 347 ERM Limitations 347 What Do I Need to Know about the Eight ERM Components? 348 Internal Environment 348 Objective Setting 348 Event Identification 349 Risk Assessment 349 Risk Response 350 Control Activities 350 Information and Communication 351 Monitoring 351 How Can Sustainability Improve Risk Intelligence? 351 What Are the Top 10 Tips for Spreadsheet Risk Management? 353 Top 10 Tips 353 Part 4 Designing and Developing Accounting Systems 362 Chapter 13 Accounting System Development 362 What Are the Three Keys to a Successful Accounting System? 363 People 363 Processes 364 Technology 365 What Is SDLC? 365 SDLC Phases 365 What Is a System Development Methodology? 367 Waterfall Methodology 367 Prototyping Methodology 367 ABC Methodology 368 Illustration: Waterfall and Prototyping Methodologies 369 Illustration: ABC Methodology 369 Is the ABC Methodology the Best Fit for Developing Accounting Systems? 370 ABC Methodology Phases 370 Illustration: EspressoCoffee ABC Methodology 375 Why Is Baseline Plus Customization Widely Used in Practice Today? 378 Chapter 14 Database Design: ERD, REA, and SQL 386 What Do I Need to Know about Databases? 387 Databases Types 387 Databases Structure 388 RDBMS 388 Databases Essentials Revisited 388 Database Integrity 388 Database Anomalies 389 Database Modeling 390 What Is ERD (Entity Relationship Diagram)? 391 Entity Relationships 392 How to Build an ERD 394 Database Normalization 403 What Is REA (Resources, Events, and Agents)? 405 Accounting Database Semantic Modeling 405 REA Modeling 405 How Is SQL Used in Database Queries? 408 SQL Statements: Data Definition Language (DDL) 409 SQL Statements: Data Manipulation Language (DML) 410 Part 5 Enterprise Accounting Systems: Capstone Chapter 15 Emerging Trends and Technologies (Online Chapter) Chapter 16 Accounting Systems in Action: Live Projects (Online Chapter) Appendix A Online Materials A-1 Appendix B Novus International Sustainability Report B-1 Appendix C Accounting Insights C-1 Appendix D Acronyms D-1 Glossary G-1 References R-1 Index 1-1