AIS Simkin Discussion Questions

Accounting Information Systems – Discussion Questions

Chapter 1

1-1. Take a survey of the students in your class to find out what their parents hold. How many are employed in manufacturing? How many are employed in service industries? How many can be classified as knowledge workers?

1-2. Hiring an employee and taking a sales order are business activities but are not accounting transactions requiring journal entries. Make a list of some other business activities that would not be captured as journal entries in a traditional AIS. Do you think managers would be interested in knowing about these activities? Why or why not?

1-3. Advances in IT are likely to have a continuing impact on financial accounting. What are some changes you think will occur in the way financial information is gathered, processed, and communicated as a result of increasingly sophisticated IT?

1-4. XBRL is emerging as the language that will be used to create interactive data that financial managers can use in communication. How do you think the use of interactive data might enhance the value of a company’s financial statements?

1-5. Discuss suspicious activity reporting. For example, do you think that such reporting should be a legal requirement, or should it be just an ethical matter? Do you think that the majority of SAR activity is illegal, or are these mostly false alarms?

1-6. Managerial accounting is impacted by IT in many ways, including enhancing CPM. How do you think a university might be able to use a scorecard or dashboard approach to operate more effectively?

1-7. Look again at the list of assurance services shown in Figure 1-9. Can you think of other assurance services that CPAs could offer which would take advantage of their AIS expertise?

1-8. Interview a sample of auditors from professional service firms in your area. Ask them whether they plan to offer any of the assurance services suggested by the AICPA. Also, find out if they offer services other than financial auditing and taxation. Discuss your findings in class.

1-9. This chapter described several career opportunities available to students who combine a study of accounting with course work in AIS, information systems, and/or computer science. Can you think of other jobs where these skill sets would be desirable?

1-10. This chapter stressed the importance of information technology for understanding how AISs operate. But is this the only skill valued by employers? How important do you think analytical thinking skills or writing skills are? Discuss.


Chapter 2

2-1. Why is it important to view an AIS as a combination of hardware, software, people, data, and procedures?

2-2. Why is information technology important to accountants?

2-3. Why do most AISs try to avoid data transcription?

2-4. Name several types of computer input devices, and explain in general terms how each one functions.

2-5. How do you feel about red-light cameras? Should cities be allowed to use them? Why or why not?

2-6. Identify the three sections of a CPU, and describe the functions of each component. How are microprocessor speeds measured? Why are such speeds rarely important to AISs?

2-7. Identify several types of printers. What are the advantages and disadvantages of each type?

2-8. What is the function of secondary storage? Describe three types of secondary storage media, and describe the advantages and disadvantages of each type.

2-9. What is image processing? How is image processing used in AISs?

2-10. What are data communication protocols? Why are they important?

2-11. What are local area networks? What advantages do LANs offer accounting applications?

2-12. What is client/server computing? How does it differ from host/mainframe computing? What are some of the advantages and disadvantages of client/server systems?

2-13. What are the names of some current cloud computing vendors other than those discussed in the text? Do you think that all firms should use cloud vendors, or are there some reasons why they should be avoided?

2-14. What are windowing operating systems, multitasking operating systems, and graphical user interfaces? Why are they useful to AISs?

2-15. Name some general classes of application software. What tasks do each of the software classes perform?

2-16. What are computer programming languages? Name some specific languages and describe briefly an advantage of each.


Chapter 3

3-1. Why are databases important to accounting information systems? Describe some concerns and explain why each one is important.

3-2. What is the hierarchy of data in databases? Provide an example for a particular accounting information.

3-3. What are primary keys in accounting databases and what purpose do they serve?

3-4. Name some specific accounting files and a potential primary key for each one.

3-5. Describe each of the following database issues that are relevant to accounting systems, and give an example of each: (1) data integrity, (2) transaction accuracy and completeness, (3) concurrency processing, and (4) security.

3-6. What is the REA model? How does REA differ from more traditional accounting views of data collection and storage? Hint: would a traditional accounting database store data about personnel matters?

3-7. What are database cardinalities? Give some examples of cardinalities for an accounting application other than sales.

3-8. What is an entity-relationship diagram? What can you determine about an organization from examining an E-R diagram?

3-9. Suppose that a data modeler creates a database that includes a Sales table ad a Salesperson table. Would you be likely to need a relationship table to link these two entities? Why or why not?

3-10. what is the process of normalization? What levels are there, and why do database developers seek to normalize data?


Chapter 4

4-1. This chapter described how to create tables and records in Microsoft Access. What other database management are available? Use the internet to learn more about these systems.

4-2. Identify the different data types available for creating data fields in Microsoft Access. Similarly, identify the different types of numbers (e.g., long integer) you can use if you define a field as a data type.

4-3. Create a Salesperson table and a Customer Order table using the data in Figure 3-11. Create records for each table using the data provided. Add one more Salesperson record with your own name and an employee number of your own choosing. Also add at least one customer order with your number as the salesperson. Finally, create a relationship for the two tables. Create a hard-copy documentation of your work.

4-4. What are database management systems? Are they the same as databases? Why are DBMSs classified as software and not hardware?

4-5. What are data definition languages (DDLs)? How are they related to DBMS?

4-6. Why do database developers link tables together? How is this done using Access?

4-7. What is data validation? Why is it important? Give some examples of how to validate data inputs using Access.

4-8. What are data manipulation languages? How are these languages related to database management systems? How are these languages related to databases?

4-9. What is SQL? How is SQL like an Access query? How is it different?

4-10. What is online analytical processing? How is OLAP related to databases? What is a pivot table and how are pivot tables and OLAP related?

4-11. What is the difference between sorting records and indexing records in a database?

4-12. What is data mining? How is data mining useful to profit-seeking companies? What are some accounting uses of data mining?

4-13. What is cloud computing? How will it influence accounting systems?

4-14. What are data warehouses? How are they like databases? How do they differ from databases?

4-15. Why would a company be interested in creating a data warehouse? Why would a company not be interested in creating a data warehouse.


Chapter 5

5-1. What are some of the advantages and disadvantages of database forms?

5-2. Would you rather use a form or a datasheet for entering data into a database table? Why?

5-3. To create a form, would you rather use the Form Wizard in Access or create the form from scratch? Why?

5-4. What is a subform? Why do forms have subforms? How do you create subforms in Access?

5-5. Why do database developers customize forms? Why isn’t it sufficient to use the form as initially created by the Form Wizard?

5-6. What is the purpose of a database report? What information do such reports contain?

5-7. The chapter suggested that it is important to design the format of a report before creating the report itself. Do you agree with this suggestion? Why or why not?

5-8. Do you think that we will still use hardcopy reports in the future, or will they be replaced with softcopy ones? Defend your answer.

5-9. Would you rather use the Report Wizard to create the format of a report or design one yourself from scratch? Why?

5-10. What is a calculated field in a report? Provide some examples. Why do reports contain calculated fields?

5-11. Why don’t databases store calculated fields as normal fields in database tables? Do you think they should?

5-12. Why are calculated fields created with database queries? Why not create them directly with reports?


Chapter 6

6-1. Why is documentation important to accounting information systems? Why should accountants be interested in AIS documentation?

6-2. Distinguish between document flowcharts, system flowcharts, data flow diagrams, and program flowcharts. How are they similar? How are they different?

6-3. What are document flowcharts? How does a document flowcharts assist each of the following individuals: (1) a systems analyst, (2) a systems designer, (3) a computer programmer, (4) an auditor, and (5) a data security expert?

6-4. flowcharting is both an art and a science. Guidelines can be used to make better flowcharts. What are these guidelines for document, system, and data flow diagram flowcharts?

6-5. What are the four symbols used in data flow diagrams? What does each mean?

6-6. Why are data flow diagrams developed in a hierarchy? What are the names of some levels in the hierarchy?

6-7. Look at the process map in Figure 6-5. Trace the steps in the order fulfillment process.Do you think this figure is more helpful than a narrative would be in understanding the flow of events in the process?

6-8. What is the purpose of a decision table? How might decision tables be useful to accountants?

6-9. What are CASE tools? How are they used? How do CASE tools create documentation for AISs? If you were a systems analyst, would you use a CASE tool?

6-10. What is end-user computing? Why is documentation important to end-user computing? What guidelines should companies develop to control end-user computing?


Chapter 7

7-1. As you might imagine, the chart of accounts for a manufacturing firm would be different from that of a service firm. Not surprisingly, service firms differ so much that software now exists for almost any type of firm that you could name. Think of yourself as an entrepreneur who is going to start up your own business. Now, go to an Office Depot, Staples, or a similar office supply store (or search online) to find at least two different software packages that you might use for the type of firm you are going to start up. What does the Chart of Accounts include? Are both software packages the same? What are the differences between the packages?

7-2. What are the purposes of accounting codes? How are they used? Bring to class some examples of codes used by manufacturing firms, accounting firms, and merchandising firms.

7-3. What are some typical outputs of an AIS? Why do system analysts concentrate on managerial reports when they start to design an effective AIS? Why not start with the inputs to the system instead?

7-4. What are some criteria that systems designers should consider when developing managerial reports for an AIS? How do system designers know what to include on reports?

7-5. Visit a local business and collect some examples of source documents used in an AIS. For each source document you collect, discuss its purpose(s). Are different source documents required for manufacturing firms versus merchandising organizations? Are all the business’ source documents paper based?

7-6. This chapter discussed many inputs to an organization’s sales process. What are the specific data items needed to add a new customer and record a sales order?

7-7. How does a data flow diagram for the sales process differ from a system flowchart describing that process?

7-8. How are the inputs and outputs of the purchasing process likely to be different for a restaurant versus an automobile manufacturer?

7-9. Explain the term business without boundaries. How is this changing the nature of organizations and who accomplishes various business processes?

7-10. What do we mean when we say companies are offshoring business processes?

7-11. Some businesses choose offshoring to solve the issue of expertise, especially for IT personnel. These companies claim they simply cannot find enough qualified employees in the United States to do certain technology jobs. Do you agree with this assessment? Why or why not?

7-12. Search the Web for unusual and interesting uses of RFID tags. Find at least two that are unusual and share those with your classmates.


7-13. Discuss the privacy issues created by the use of RFID tags. Do you support the use of RFID tags for personal ID, customer relationship management, and inventory tracking? Why or why not?


Chapter 8

8-1. The resource management process includes events associated with both personnel and payroll functions. Describe four data items that could be used by both functions. Describe two data items for each function that would not necessarily be needed by the other (e.g., spouse name for personnel but not payroll).

8-2. Why are accounting transactions associated with payroll processing so repetitive in nature?Why do some companies choose to have payroll processed by external service bureaus rather than do it themselves?

8-3. In this chapter, we discussed many data inputs to an organization’s production process.What are the specific data items to input to a system when adding a new raw materials inventory item? What specific data items need to be input when a worker records time spent on the production line?

8-4. What nonfinancial information would be important for an AIS to capture about a manufacturing firm’s production process?

8-5. What are the basic concepts of lean manufacturing? What concepts are the root of lean production and lean manufacturing?

8-6. Find an example of a firm that is using lean manufacturing concepts. Has the company realized any improvements? What are they?

8-7. Can you find an example of a firm that is using lean production concepts that are supported by lean accounting? How are they doing?

8-8. Are the inputs and outputs of a production process likely to be different for a home builder than for a cement company? How?

8-9. There are many vertical market industries with special accounting information needs apart from the industries discussed in this chapter. Identify three additional vertical market industries. What are the unique characteristics of these industries that affect their AISs?

8-10. Discuss specific steps you would take as a manager to ensure that a business process reengineering effort is successful.


Chapter 9

9-1. What are the primary provisions of the 1992 COSO Report? The 2004 COSO Report?

9-2. What are the primary provisions of COBIT?

9-3. Why are the COSO and COBIT frameworks so important?

9-4. Briefly discuss the interrelated components that should exist within an internal control system. In your opinion, which component is the most important and why?

9-5. Why are accountants so concerned about their organization having an efficient and effective internal control system?

9-6. Discuss what you consider to be the major differences between preventive, detective, and corrective control procedures. Give two examples of each type of control.

9-7. Why are competent employees important to an organization’s internal control system?

9-8. How can separation of duties reduce the risk of undetected errors and irregularities?

9-9. Discuss some of the advantages to an organization from using a voucher system and pre-numbered checks for its cash disbursement transactions.

9-10. What role does cost-benefit analysis play in an organization’s internal control system?

9-11. Why is it important for managers to evaluate internal controls?

9-12. Why did COSO think it was so important to issue the 2009 Report on monitoring?


Chapter 10

10-1. What is a security policy? What do we mean when we say organizations should have an integrated security plan?

10-2. What do we mean when we talk about convergence of physical and logical security? Why might this be important to an organization?

10-3. What guidance or framework would you use to establish IT governance if you were a senior executive in a firm? If you were a midlevel IT manager who was designing IT general controls? A manager who was responsible for identifying the appropriate application controls?

10-4. What controls must be used to protect data that is transmitted across wireless networks?

10-5. Why is business continuity planning so important? Identify several reasons why testing the plan is a good idea.

10-6. What is backup and why is it important when operating an accounting system?

10-7. Discuss some of the unique control risks associated with the use of PCs and laptop computers compared to using mainframes. List what you consider to be three of the most important control procedures that should be implemented for PCs. For each control procedure, give your reason for including this procedure as an important control.

10-8. Jean & Joan Cosmetics has a complete line of beauty products for women and maintains a computerized inventory system. An eight-digit product number identifies inventory items, of which the first four digits classify the beauty product by major category (hair, face, skin, eyes, etc.) and the last four digits identify the product itself. Identify as many controls as you can that the company might use to ensure accuracy in this eight-digit number when updating its inventory-balance file.

10-9. Explain how each of the following can be used to control the input, processing, or outputof accounting data: (a) edit tests, (b) check digits, (c) passwords, (d) activity listings, and (e) control totals.

10-10. What is the difference between logical access to the computer and physical access to the computer? Why is the security of both important?

10-11. Discuss the following statement: ‘‘The separation of duties control is very difficult in computerized accounting information systems because computers often integrate functions when performing data processing tasks. Therefore, such a control is not advisable for those organizations using computers to perform their accounting functions.’’

10-12. Discuss the role of the hash total in accounting information systems.


Chapter 11

11-1. The cases of computer crime that we know about have been described as just ‘‘the tip of the iceberg.’’ Do you consider this description accurate? Why or why not?

11-2. Most computer crimes are not reported. Give as many reasons as you can why much of this crime is purposely downplayed. Do you consider these reasons valid?

11-3. Why have most computer experts suggested that computer crime is growing despite the fact that so little is known about it?

11-4. Does a company have the right to collect, store, and disseminate information about your purchasing activities without your permission?

11-5. What enabled the employees at TRW to get away with their crime? What controls mighthave prevented the crime from occurring?

11-6. What is hacking? What can be done to prevent hacking?

11-7. What is a computer virus?

11-8. How can educating employees help stop computer crime?

11-9. What computer crimes are committed on the Internet? What assets are involved? What can be done to safeguard these assets?

11-10. How would you define “ethics”? What types of ethical issues are involved in computerized accounting information systems? How can organizations encourage their employees to act ethically?

11-11. The Rivera Regional Bank uses a computerized data processing system to maintain both its checking accounts and its savings accounts. During the last three years, several customers have complained that their balances have been in error. Randy Allen, the information systems bank manager, has always treated these customers very courteously and has personally seen to it that the problems have been rectified quickly, sometimes by putting in extra hours after normal quitting time to make the necessary changes. This extra effort has been so helpful to the bank that this year, the bank’s top management is planning to select Mr. Allen for the Employee-of-the-Year Award. Mr. Allen has never taken a vacation. Comment.


Chapter 12

12-1. Distinguish between the roles of an internal and an external auditor. Cite at least two examples of auditing procedures that might reasonably be expected of an internal auditor but not an external auditor. Which type of auditor would you rather be? Why?

12-2. How does information technology auditing differ from financial auditing? Make a list of the skills you think are important for financial auditors and for IT auditors. Do you think all auditors should have all the skills on both lists? Why or why not?

12-3. Describe the differences between general-use software and generalized audit software. How might you use spreadsheet software, database software, and word processing software in conducting an audit of fixed assets?

12-4. IT auditors need people skills as well as technical skills. One such skill is the ability to interview effectively. Discuss some techniques or tools that might help an interviewer get the best information from an interviewee, including sensitive information.

12-5. Describe how an auditor might use through-the-computer techniques such as test data, an integrated test facility, parallel simulation, or validation of computer programs to accomplish audit objectives relative to accounts payable.

12-6. Jose Rodriguez was the only internal auditor of a medium-sized communications firm. The company used a computer for most of its accounting applications, and recently, several new software packages had been implemented to handle the increased volume of the company’s business. To evaluate the packages’ control capabilities, Jose performed a cost-benefit analysis and found that many of the control procedures were potentially useful but not clearly cost-effective. The problem, therefore, was what to say in his report to management. After pondering this question for some time, he decided to recommend almost all the controls based on the idea that a company was “better to be safe than sorry.” Comment on the wisdom of this idea.

12-7. This chapter described several third party assurance seals, including CPA WebTrust, BBB-Online, and TRUSTe. Explain the differences among them. Identify at least one other third-party assurance seal available for companies that allows them to demonstrate to their customers that they may be trusted in business transactions.


Chapter 13

13-1. Discuss the major differences between the planning, analysis, and design phase of a systems study.

13-2. What is a steering committee? Discuss its role in a systems study performed by a consulting firm. 13-3. A systems study team should understand three levels of corporate goals: general systems goals, top management systems goals, and operating management systems goals. If you had to select one of these categories of systems goals as the most important to the effective operation of an organization’s information system, which one would you choose? Explain the reasons for your choice.

13-4. What is the purpose of a systems feasibility evaluation? Should this activity precede or follow the preparation of a systems specifications report for computer vendor evaluation? Explain.

13-5. Discuss some of the annual cash benefits and annual cash costs that a company might have when it creates an online ordering system on the World Wide Web.

13-6. What is prototyping? Under what circumstances should prototyping be used? Under what circumstances should it not be used?

13-7. What is the purpose of a systems specifications report? In what ways, if any, do the data included in this report differ from the data accumulated by the design team during their feasibility evaluation work?

13-8. When implementing a new computer system, two required activities are (1) establishing controls and (2) convert data files. What is the rationale for performing activity 1 before activity 2?

13-9. Three methods for implementing a new system in an organization are direct conversion, parallel conversion, and modular conversion. Discuss the advantages and disadvantages of using each of these three systems implementation methods.

13-10. What is a PERT chart? What is a Gantt chart? Discuss the advantages and disadvantages of using PERT network diagrams versus Gantt charts for planning and controlling the activities involved in implementing an information system.

13-11. What is the purpose of follow-up in a systems study? Describe some of the specific activities that the management implementation team would perform in their follow-up work.

13-12. Discuss the two major ways that a company’s software can be acquired. Which of these ways for acquiring software do you recommend? Explain your reasoning.


13-13. What is the difference between business process outsourcing (BPO) and knowledge process outsourcing (KPO)? Why do firms outsource their IT function?


Chapter 14

14-1. What are intranets? What are extranets? Why are intranets and extranets important to accountants?

14-2. What are blogs? How are they used? Who is using them?

14-3. What is hypertext markup language? How does it differ from XML and XBRL? (Note: for a more comprehensive description of the differences, you may want to search the Internet.)

14-4. How does XBRL compare to the IDEA database?

14-5. Describe some important uses of e-commerce and explain why it is important to accountants.

14-6. What are electronic payments? How are they different from credit card payments?

14-7. What is electronic data interchange? Why do companies use EDI?

14-8. Most retail sales Web sites require customers to use their credit cards to make purchases online. How comfortable are you in providing your credit card number in such applications? Why do you feel this way?

14-9. What is click fraud? Who benefits and who loses when click fraud occurs?

14-10. What is spamming? How is spam related to accounting information systems? Should all spamming be illegal? Why or why not?

14-11. What are Internet firewalls and proxy servers? How are they created? How do businesses use them for Internet security?

14-12. What is data encryption? What techniques are used for data encryption?

14-13. Describe and contrast the three types of authentication. Can you think of a business situation where someone would need to use a combination of all three levels to gain access to information?

14-14. What are digital signatures? Why do businesses use them? How can businesses use a digital certificate for Internet security?

15-15. Analysts claim that businesses can increase sales on the Internet, but not profits. What evidence does this chapter provide to support or refute this claim? Discuss.


Chapter 15

15-1. Which accounting software features are likely to be the most important for the following businesses? Search the Internet for an example of an AIS that you would recommend for each of these owners and include your rationale for that product.

a. A boutique shop that sells trendy ladies clothingb. A small business specializing in custom golf clubs, replacement shafts for clubs,

replacement grips for clubs, and similar repairsc. A local CPA firm with three partners, five associates, and two administrative employeesd. A pet breeder that specializes in Burmese kittense. A business that sells and rents Segways in Washington, DC, that is located on

Constitution Avenue, near the Lincoln Memorialf. A high-end men’s clothing business that has four stores that are all located in the same

large metropolitan city (56 employees), and the owner is contemplating additional locations for stores in nearby cities

15-2. The difference between the price tag for middle-market accounting software versus an ERP system can be millions of dollars. What can these high-end systems do that the less expensive enterprise accounting packages cannot?

15-3. Discuss the differences between traditional ERP and extended enterprise systems.

15-4. Discuss some of the basic features of an ERP. How do these features distinguish an ERP from an integrated accounting software program?

15-5. What are some of the benefits of a centralized database architecture? What are some of the difficulties in moving from multiple databases or files to a centralized database structure?

15-6. A new company will have no business processes in place. How would the owner go about selecting an appropriate AIS for the new company? Should the owner consider acquiring an ERP package immediately?

15-7. Find an article about a company that has adopted a business application suite. Identify the company and its basic characteristics (such as location, products, and number of employees). What are some cost savings realized by the company? Were there specific efficiencies identified as a result of the ERP implementation? Were there problems implementing the system? How long did it take for the company to complete the implementation? Were there cost or time over-runs?

15-8. While you are likely to purchase a middle-end accounting software package from a value-added reseller (VAR), why should you be cautious about hiring one to recommend a software package for your business?

15-9. What are some of the consequences to a company that makes a poor decision in selecting a new AIS?


15-10. Why do businesses typically need to engage in business process reengineering when they adopt an ERP? Identify at least four key aspects of a successful BPR project.

AIS Simkin Discussion Questions

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