Data Coding Schemes

Data Coding
- involves creating simple numeric or alphabetic codes to represent complex
economic phenomena that facilitate efficient data processing
- example includes Primary and Secondary Keys of Transaction files

/insert sample of system with and w/o codes/

A SYSTEM WITHOUT CODES

- Uncoded entry takes a great deal of recording space, is time-consuming to record,
and is obviously prone to many types of errors.

Negative Effects may been seen in:

1. Sales staff - Apart from the time and effort involved, this tends to promote
clerical errors
and incorrect shipments
2. Warehouse personnel - Locating and picking goods for shipment are impeded and
shipping errors will likely result.
3. Accounting personnel - Postings to ledger accounts will require searching
through the subsidiary files using lengthy descriptions as the key. This will be
painfully slow, and postings to the wrong accounts will be common.

A SYSTEM WITH CODES

- Coded version of a system without codes can now be simplified.
- Detailed information such as information about the inventory and the supplier is
kept in reference files.

Other uses of data coding in AIS are to:

1. Concisely represent large amounts of complex information that would otherwise be

unmanageable.
2. Provide a means of accountability over the completeness of the transactions
processed.
3. Identify unique transactions and accounts within a file.
4. Support the audit function by providing an effective audit trail.

Commonly Used Coding Techniques

NUMERIC AND ALPHABETIC CODING SCHEMES

1. Sequential Codes
- represent items in some sequential order (ascending or descending)
- common application of numeric sequential codes is the prenumbering of source
documents

ADVANTAGES
- If the transaction processing system detects any gaps in the sequence
of transaction numbers, it alerts management to the possibility of a missing or
misplaced transaction.

DISADVANTAGES.
- Sequential codes carry no information content beyond their order in the sequence.
- Sequential coding schemes are difficult to change.
- In applications where record types must be grouped together logically and where
additions and deletions occur regularly, this coding scheme is inappropriate.

2. Block Codes
- A numeric block code is a variation on sequential coding that partly remedies the
disadvantages just described.
- A common application of block coding is the construction of a
chart of accounts.

/ insert figure 2-33 /

ADVANTAGES
- Block coding allows for the insertion of new codes within a block without having
to reorganize the entire coding structure.

DISADVANTAGES
- Information content of the block code is not readily apparent.

3. Group Codes
- Numeric group codes are used to represent complex items or events involving two
or more pieces of related data.
- The code consists of zones or fields that possess specific meaning.
- /insert sample/

ADVANTAGES.
1. They facilitate the representation of large amounts of diverse data.
2. They allow complex data structures to be represented in a hierarchical form that
is logical and more easily remembered by humans.
3. They permit detailed analysis and reporting both within an item class and across
different classes of items.

DISADVANTAGES
1. Because group codes can effectively present diverse information, they tend to be
overused. This can lead to unnecessarily complex group codes that cannot be easily
interpreted.
2. Overuse can increase storage costs, promote clerical errors, and increase
processing time and effort.

4. Alphabetic Codes
- Alphabetic codes are used for many of the same purposes as numeric codes.
- Alphabetic characters maybe assigned sequentially (in alphabetic order) or may be
used in block and group coding techniques.

ADVANTAGES.
- The capacity to represent large numbers of items is increased dramatically
through the
use of pure alphabetic codes or alphabetic characters embedded within numeric codes
(alphanumeric
codes).

DISADVANTAGES.
- as with numeric codes,
there is difficulty rationalizing the meaning of codes that have been sequentially
assigned
- users
tend to have difficulty sorting records that are coded alphabetically

5. Mnemonic Codes
- Mnemonic codes are alphabetic characters in the form of acronyms and other
combinations that convey
meaning.
- / insert sample/

ADVANTAGES
- The mnemonic coding scheme does not require the user to memorize meaning; the
code itself conveys a high degree of information about the item that is being
represented.

DISADVANTAGES.
- Although mnemonic codes are useful for representing classes of items, they have
limited ability to represent items within a class.

------------------------------------------

Ethical Issues in Business

Ethical standards are derived from societal mores and deep-rooted personal beliefs
about issues of right
and wrong that are not universally agreed upon.

Ethical Issues VS. Legal Issues

A thorough treatment of ethics issues is impossible within this chapter section.

Instead, the objective
of this section is to heighten the reader’s awareness of ethical concerns relating
to business, information
systems, and computer technology

BUSSNESS ETHICS

Ethics
- pertains to the principles of conduct that individuals use in making choices and
guiding their
behavior in situations that involve the concepts of right and wrong

Business Ethics
- involves finding the answers to two questions:
(1) How do managers decide what is right in conducting
their business?
(2) Once managers have recognized what is right, how do they achieve it?

Four Areas of Ethical Issues in Business

1. equity
2.rights
3. honesty
4. the exercise of
5. corporate power

/inser table 3-1/

Making Ethical Decisions

- Business organizations juggle conflicting responsibilities to employees,

shareholders, customers, and the public.
- Major decisions, like implementing new systems, have mixed consequences, such as
job losses and improved working conditions.
- Managers bear an ethical responsibility to balance these consequences and
consider the interests of all stakeholders.
The following
ethical principles provide some guidance in the discharge of this responsibility
1. PROPORTIONALITY
- The benefit from a decision must outweigh the risks.
- there must
be no alternative decision that provides the same or greater benefit with less risk
- Justice. The benefits of the decision should be distributed fairly to those
who share the risks. Those
who do not benefit should not carry the burden of risk.
- Minimize risk. Even if judged acceptable by the principles, the decision
should be implemented so as
to minimize all of the risks and avoid any unnecessary risks

COMPUTER ETHICS
- analysis of the nature and social impact of computer technology and the
corresponding formulation and justification of policies for the ethical use of such
technology.

Three Levels of Computer Ethics

1. Pop Computer Ethics
- exposure to stories and reports found in the popular media regarding the good or
bad ramifications of computer technology
2. Para Computer Ethics
- involves taking a real interest in computer ethics cases and acquiring some level
of skill and knowledge in the field.
3. Theoretical Computer Ethics
- interest to multidisciplinary researchers who apply the theories of philosophy,
sociology, and psychology to computer science with the goal of bringing some new
understanding to the field.

A New Problem or Just a New Twist on an Old Problem?

" Although computer programs are a new type of asset, many believe that these
programs should be considered no differently from other forms of property"

"However, a large contingent vociferously disagree with the premise that computers
are no different from other technology. For example, many reject the notion of
intellectual property being
the same as real property."

ISSUES IN AIS IN TERMS OF COMPUTER ETHICS

1. Privacy
- The creation and maintenance of huge,
shared databases make it necessary to protect people from the potential misuse of
data.
- This raises the
issue of ownership in the personal information industry

2. Security (Accuracy and Confidentiality)

Computer security
- an attempt to avoid such undesirable events as a loss of confidentiality or
data integrity.

"Which is most important: security, accuracy, or confidentiality?"

3. Ownership of Property
- Laws designed to preserve real property rights have been extended to cover what
is referred to as intellectual property, that is, software.
- Does software fit with the current categories and conventions regarding
ownership?

4. Equity in Access
- Some barriers to access are intrinsic to the technology of information systems,
but some are avoidable
through careful system design.
- Factors which limits access
- Economic Status
- Culture

5. Environmental Issues
- Computers with high-speed printers allow for the production of printed documents
faster than ever
before.
-It is probably easier just to print a document than to consider whether it should
be printed and
how many copies really need to be made.

6. Artificial Intelligence
- Who is responsible for the completeness and appropriateness of the knowledge
base?
- Who is responsible for a decision made by an
expert system that causes harm when implemented?
- Who owns the expertise once it is coded into a
knowledge base?

7. Unemployment and Displacement

8. Misuse of Computers

SARBANES-OXLEY ACT AND ETHICAL ISSUES

- American Competitiveness and Corporate Accountability Act of 2002
- the most significant securities law since the Securities and
Exchange Commission (SEC) Acts of 1933 and 1934
- has many provisions designed to deal with
specific problems relating to capital markets, corporate governance, and the
auditing profession

Section 406—Code of Ethics for Senior Financial Officers

- requires public companies to disclose to the SEC whether they have adopted a code
of ethics that applies to the organization’s chief executive officer (CEO), CFO,
controller, or persons per#forming similar functions.
- Several Ways to Disclose its code of ethics
1. included as an exhibit to its annual report
2. as a posting to its Web site
3. by agreeing to provide copies of the code upon request

Required Ethical Issues Addressed in SEC's Section 406 Compliance:

1. CONFLICTS OF INTEREST - The company’s code of ethics should outline procedures

for dealing
with actual or apparent conflicts of interest between personal and professional
relationships
2. FULL AND FAIR DISCLOSURES - This provision states that the organization should
provide full, fair,
accurate, timely, and understandable disclosures in the documents, reports, and
financial statements that it
submits to the SEC and to the public
3. LEGAL COMPLIANCE - Codes of ethics should require employees to follow applicable
governmental
laws, rules, and regulations
4. INTERNAL REPORTING OF CODE VIOLATIONS - The code of ethics must provide a
mechanism
to permit prompt internal reporting of ethics violations.
5. ACCOUNTABILITY - Section 301 directs the organization’s audit committee to
establish procedures for receiving, retaining, and treating such complaints about
accounting procedures and
internal control violations