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11e
ULRIC J. GELINAS, JR.
Bentley University
RICHARD B. DULL
West Virginia University
PATRICK R. WHEELER
University of South Florida
MARY CALLAHAN HILL

Kennesaw State University
Australia • Brazil • Mexico • Singapore • United Kingdom • United States
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-202
Accounting Information Systems, © 2018, 2015 Cengage Learning®
Eleventh Edition ALL RIGHTS RESERVED. No part of this work covered by the copyright
Ulric J. Gelinas, Jr., Richard B. Dull, herein may be reproduced or distributed in any form or by any means,
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We dedicate this eleventh edition
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BRIEF CONTENTS
PART 1 UNDERSTANDING INFORMATION SYSTEMS

1 Introduction to Accounting Information Systems 2
2 Enterprise Systems 33
3 Electronic Business (E-Business) Systems 62
PART 2 ORGANIZING AND MANAGING INFORMATION

4 Documenting Information Systems 102
5 Database Management Systems 144
6 Relational Databases and SQL 193
PART 3 ENTERPRISE RISK MANAGEMENT

7 Controlling Information Systems: Introduction to
Enterprise Risk Management and Internal Control 226
8 Controlling Information Systems: Introduction to Pervasive
Controls 268
9 Controlling Information Systems: Business Process and
Application Controls 312
PART 4 BUSINESS PROCESSES

10 The Order Entry/Sales (OE/S) Process 356
11 The Billing/Accounts Receivable/Cash Receipts
(B/AR/CR) Process 405
12 The Purchasing Process 453
13 The Accounts Payable/Cash Disbursements (AP/CD)
Process 499
14 The Human Resources (HR) Management and Payroll
Processes 539
15 Integrated Production Processes (IPPs) 578
PART 5 REPORTING
16 The General Ledger and Business Reporting (GL/BR)
Process 618
PART 6 ACQUIRING AN AIS

17 Acquiring and Implementing Accounting Information
Systems 646
Glossary 688
Index 705
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-202 v
CONTENTS
PART 1 Human Capital Management 52

UNDERSTANDING INFORMATION SYSTEMS Enterprise Systems Support for Major Business
Event Processes 53
Order-to-Cash 53
1 Introduction to Accounting Information Purchase-to-Pay 54
Systems 2 Summary 58
Synopsis 3 Key Terms 59
Introduction 4 Review Questions 59
The Textbook’s Three Themes 4 Discussion Questions 60
Beyond Debits and Credits 5 Short Problems 60
Legal Issues Impacting Accountants 6 Problems 61
Components of the Study of AIS 9
What Is an Accounting Information System? 12
Systems and Subsystems 12
3 Electronic Business (E-Business) Systems 62
The Information System (IS) 13 Synopsis 63
The Accounting Information System (AIS) 14 Introduction 64
Logical Components of a Business Process 15 Applying E-Business to the Value Chain 65
Management Uses of Information 17 The Changing World of Business Processing 66
Data Versus Information 18 A Comparison of Manual and Automated Accounting
Qualities of Information 18 Information Systems 67
Management Decision Making 23 Automating an Accounting Information System 71
The Accountant’s Role in the Current Business Online Transaction Entry (OLTE) 73
Environment 27 Online Real-Time (OLRT) Processing 75
Summary 28 Methods for Conducting E-Business 77
Key Terms 29 Commerce through E-Mail 77
Electronic Document Management (EDM) 79
Review Questions 29
Electronic Data Interchange (EDI) 80
Discussion Questions 30
EDI over the Internet 84
Short Problems 31 EDI and Business Event Data Processing 84
Problems 31 Internet Commerce 88
Summary 94
2 Enterprise Systems 33 Key Terms 95
Synopsis 34 Review Questions 96
Introduction 34 Discussion Questions 97
Enterprise Resource Planning (ERP) Systems 36 Short Problems 97
Enterprise Systems Value Chain 42 Problems 98
The Value of Systems Integration 44
The Problem 44
The Solution 45 PART 2
Additional Value 46
ORGANIZING AND MANAGING INFORMATION
Enterprise Systems Support for Organizational
Processes 46
Capturing Data During Business Events 46 4 Documenting Information Systems 102
Enterprise Systems Data Facilitate Functioning of the Synopsis 103
Organization’s Operations 47 Introduction 104
Enterprise Systems Record That Business Events Reading Systems Documentation 104
Have Occurred 49 Reading Data Flow Diagrams 104
Enterprise Systems Store Data for Decision Reading Systems Flowcharts 108
Making 50 Preparing Systems Documentation 116
Major ERP Modules 51 Preparing Data Flow Diagrams 116
Sales and Distribution 51 Drawing the Context Diagram 118
Materials Management 51 Drawing the Current Logical Data Flow
Financial Accounting 52 Diagram 124
Controlling and Profitability Analysis 52 Preparing Systems Flowcharts 128
vii
viii Contents
Drawing Systems Flowcharts 129 REA Data Models and E-R Diagrams 204
Summary of Systems Flowcharting 133 Relational Databases 206
Documenting Enterprise Systems 133 Relational Database Concepts 206
Summary 135 Mapping an REA Model to a Relational
Key Terms 135 DBMS 209
Review Questions 135 SQL: A Relational Database Query
Discussion Questions 136 Language 213
Short Problems 136 Constructing Relational Databases 214
Populating the Database 215
Problems 138
Basic Querying Commands 217
Summary 219
5 Database Management Systems 144 Key Terms 220
Two Approaches to Business Event Short Problems 221
Processing 146 Problems 223
The Applications Approach to Business Event
Processing 146
The Centralized Database Approach to Business Event PART 3
Processing 149 ENTERPRISE RISK MANAGEMENT
Databases and Business Events 149
Database Management Systems (DBMSs) 150 7 Controlling Information Systems: Introduction to
Logical Versus Physical Database Models 150 Enterprise Risk Management and Internal
Overcoming the Limitations of the Applications
Approach 153
Control 226
Database Essentials 154 Synopsis 227
Logical Database Models 154 Organizational Governance 228
Elements of Relational Databases 157 Enterprise Risk Management 229
Normalization in Relational Databases 158 The Sarbanes-Oxley Act of 2002 233
Using Entity-Relationship Models 164 Defining Internal Control 236
Using Databases and Intelligent Systems to Aid The COSO 1992 Definition of Internal
Decision Makers 170 Control 236
Decision Aids: Decision Support Systems, Executive Working Definition of Internal Control 240
Information Systems, and Group Support Fraud and Its Relationship to Control 242
Systems 171 Implications of Computer Fraud and Abuse 246
Expert Systems 173 Ethical Considerations and the Control
Intelligent Agents 175 Environment 247
Data Warehouses 178 A Framework for Assessing the Design of a System
Control and Audit Implications 179 of Internal Control 249
Knowledge Management Systems 180 Control Goals of Operations Processes 252
Dashboards 180 Control Goals of Information Processes 253
Summary 183 Control Plans 257
Key Terms 183 Summary 259
Review Questions 184 Key Terms 260
Discussion Questions 185 Review Questions 260
Short Problems 186 Discussion Questions 261
Problems 186 Short Problems 262
Problems 263
6 Relational Databases and SQL 193
Synopsis 194 8 Controlling Information Systems: Introduction
Introduction 195 to Pervasive Controls 268
Business Intelligence (BI) 195 Synopsis 270
BI in the Era of Big Data 196 Introduction 270
REA Modeling 198 Organizational Design Control Plans 270
Entities and Attributes 198 The Segregation of Duties Control Plan 271
Relationships 199 Personnel Policy Control Plans 274
Model Constraints 202 Selection and Hiring Control Plans 274
Contents ix
Retention Control Plans 275 A Horizontal Perspective 359

Personnel Development Control Plans 276 A Vertical Perspective 361
Personnel Management Control Plans 276 Managing the OE/S Process: Satisfying Customer
Personnel Termination Control Plans 276 Needs 362
Monitoring Control Plans 277 Connecting with Customers with Web 2.0 and Cloud
IT General Controls and the COBIT Computing 362
Framework 278 Decision Making and Kinds of Decisions 365
A Hypothetical Computer System 278 Using Data Mining to Support Marketing 365
Information Systems Organizational Design 278 Mastering Global E-Business 366
The COBIT Framework 297 Customer Relationship Management Systems 367
Logical Description of the OE/S Process 368
COBIT 5 297
Logical Data Flow Diagrams 369
COBIT 5’s Five GEIT Principles and Seven
Logical Data Descriptions 376
Enablers 298
Logical Database Design 376
COBIT 5’s Domains and the Governance Processes
within Each Domain 299
Physical Description of the OE/S Process 380
Electronic Data Capture 380
Summary 301
Digital Image Processing 380
Key Terms 301
The OE/S Process 381
Review Questions 302 Management Reporting 383
Discussion Questions 303 Application of the Control Framework 384
Short Problems 304 Control Goals 384
Problems 307 Recommended Control Plans 385
Summary 391
Key Terms 392
9 Controlling Information Systems: Business
Review Questions 393
Process and Application Controls 312 Discussion Questions 394
Synopsis 313 Short Problems 394
Introduction 313 Problems 396
Implementing the Control Framework 314
The Control Matrix 314 11 The Billing/Accounts Receivable/Cash Receipts
Steps in Preparing the Control Matrix 314 (B/AR/CR) Process 405
Sample Control Plans for Data Input 322 Synopsis 406
Control Plans for Manual and Automated Data Introduction 406
Entry 322 Organizational Setting 407
System Description and Flowchart 323
Using Technology to Optimize Cash
Applying the Control Framework 324
Resources 410
Control Plans for Data Entry with Batches 330
The Fraud Connection 413
System Description and Flowchart 331
Applying the Control Framework 333
Logical Process Description 414
Logical Data Flow Diagrams 414
Summary 339
Logical Data Descriptions 421
Key Terms 340 Logical Database Design 423
Appendix 9: Public Key Cryptography and Digital Types of Billing Systems 426
Signatures 341 Physical Description of the Billing Process 426
Review Questions 344 The Billing Process 426
Discussion Questions 344 Selected Process Outputs 428
Short Problems 345 Application of the Control Framework for the Billing
Problems 347 Process 428
Control Goals 428
Recommended Control Plans 430
PART 4 Physical Description of the Cash Receipts
Process 432
BUSINESS PROCESSES
Application of the Control Framework for the Cash
Receipts Process 434
10 The Order Entry/Sales (OE/S) Process 356 Control Goals 434
Synopsis 357 Recommended Control Plans 436
Introduction 357 Summary 439
Process Definition and Functions 358 Key Terms 440
Organizational Setting 358 Review Questions 440
x Contents
Discussion Questions 441 Application of the Control Framework 523

Short Problems 442 Control Goals 523
Problems 444 Recommended Control Plans 525
Summary 528
12 The Purchasing Process 453 Key Terms 529
Process Definition and Functions 454 Short Problems 531
Organizational Setting 455 Problems 533
An Internal Perspective 455
Organizational Setting and Possible Goal 14 The Human Resources (HR) Management
Conflicts 457 and Payroll Processes 539
An External Perspective 457
Supply Chain Management 458
Synopsis 540
Logical Process Description 462 Introduction 540
Discussion and Illustration 463 Process Definition and Functions 541
Determine Requirements 463 Definition of the HR Management Process 541
Logical Data Descriptions 471 Definition of the Payroll Process 541
Logical Database Design 471 Integration of the HR Management and Payroll
Processes 542
Technology Trends and Developments 474
Organizational Setting and Managerial Decision
Physical Process Description 477
Making 543
Discussion and Illustration 477
The Fraud Connection 480 The HR Management Process 544
Implementing the HR Management Process 546
Application of the Control Framework
Processing Inputs 546
to Purchasing 481 Processing Logic and Process Outputs 548
Control Goals 484 Key Data Tables 549
Recommended Control Plans 485
The Payroll Process 550
Summary 488
Logical Description of the Payroll Process 550
Key Terms 488 Technology Trends and Developments 555
Review Questions 489 Physical Process Description 558
Discussion Questions 490 The Fraud Connection 560
Short Problems 491 Application of the Control Framework 562
Problems 493 Summary 567
Key Terms 567
13 The Accounts Payable/Cash Disbursements Review Questions 568
(AP/CD) Process 499 Discussion Questions 568
Synopsis 500 Short Problems 569
Introduction 500 Problems 572
Process Definition and Functions 501
Organizational Setting 501 15 Integrated Production Processes (IPPs) 578
A Horizontal Perspective 501 Synopsis 579
A Vertical Perspective 503 Competing in a Global Manufacturing
Logical Process Description 504 Environment 579
Discussion and Illustration 504 Product Innovation 581
Processing Noninvoiced Disbursements 508 Production Process Innovation 583
Logical Data Descriptions 510 Supply Chain Management (SCM) 583
Logical Database Design 510 Management Accounting Systems 584
Technology Trends and Developments 512 Integrated Production Processes (IPPs) 586
Physical Process Description 516 Design Product and Production Processes 586
Discussion and Illustration 516 Generate Master Production Schedule 589
Record Accounts Payable 516 Determine Needs for Materials 592
Make Payments 519 Develop Detailed Production Instructions 594
Exception Routines 519 Manufacturing (Production Work Centers) 596
The Fraud Connection 520 Record Manufacturing Events 598
Nonfraudulent Losses 522 Generate Managerial Information 599
Contents xi
Cost Accounting: Variance Analysis 601 PART 6

Record Standard Costs 601 ACQUIRING AN AIS
Compute Raw Material Quantity Variance 603
Compute Direct Labor Variances 603
Close Manufacturing Orders 604 17 Acquiring and Implementing Accounting
Compute Manufacturing Overhead Variances 604 Information Systems 646
Inventory Management 604 Synopsis 648
Decision Makers and Types of Decisions 605 Introduction 649
The Fraud Connection 606 Acquiring an AIS from External Parties 649
Inventory Process Controls 607 Managing the Systems Development
Summary 609 Process 651
Key Terms 610 Systems Development Methodology 651
Review Questions 611 Step 1: Systems Survey 653
Discussion Questions 612 Step 2: Structured Systems Analysis 656
Short Problems 613 Systems Analysis Definition and Tasks 656
Problems 614 The Analysis Deliverable: The Approved Systems
Analysis Report 657
Cost/Effectiveness Study 659
PART 5
Complete and Package the Approved Systems Analysis
REPORTING Report 660
Step 3: Systems Selection 661
16 The General Ledger and Business Reporting The Systems Selection Deliverable: The Approved
(GL/BR) Process 618 Configuration Plan 662
Hardware Acquisition Alternatives 662
Synopsis 619
The Intermediate Steps in Systems Selection 663
System Definition and Functions 619
Step 4: Structured Systems Design 667
Organizational Setting 620 Definition and Goals 668
Horizontal Perspective of the General Ledger
The Systems Design Deliverable: The Approved
and Business Reporting Process 620
Systems Design Document 668
Horizontal and Vertical Information Flows 623
Step 5: Systems Implementation 669
Logical System Description 625 The Systems Implementation Deliverable: The Project
Discussion and Illustration 625
Completion Report 670
The General Ledger Master Data 627
Approaches to Implementation 670
Coding the General Ledger Chart of Accounts 629
The Intermediate Steps in Systems
Limitations of the Hierarchical Chart of Accounts
Implementation 672
Approach 630
Test the System 673
Technology-Enabled Initiatives and the Reporting Conduct Conversion 674
Environment 631 Step 6: Post-Implementation Review 674
ERP Financial Module Capability 632
Step 7: Systems Maintenance 675
Balanced Scorecard 633
Accountant Involvement in AIS Acquisition/
Business Intelligence 634
eXtensible Business Reporting Language (XBRL) 634 Development and Implementation 676
Financial Reporting Fraud 637 Summary 678
The Sarbanes-Oxley Act 638 Key Terms 678
The Impact of U.S. GAAP and IFRS Review Questions 679
Convergence 638 Discussion Questions 680
Summary 639 Short Problems 681
Key Terms 640 Problems 682
Review Questions 640
Discussion Questions 641 Glossary 688
Short Problems 641 Index 705
Problems 642
PREFACE
Welcome to the beginning of a journey through the dynamic field of accounting
information systems. We are very pleased that you have chosen to become another
member of our international community of students, accounting professionals, and
educators who make this book an integral part of their library as a text and refer-
ence tool. We are committed to making the journey through this challenging,
exciting, and sometimes complex topic as straightforward and pleasant as possible.
These challenging topics are approached in a conversational and relaxed tone,
rather than pretentious, technical language. At the same time, the text fully explores
the integrated nature of the topic with its foundations in information technology,
business processes, strategic management, security, and internal control. Thank
you for the opportunity to serve as your guide on this journey. To get started,
let’s discuss two key ideas that inspire the story in the text. First, the accountant is
defined as an information management and business measurement professional.
Second, information systems consist of integral parts working together to enable
the organization to progress and move forward. These two philosophies are briefly
described before addressing the most frequently asked questions (FAQs) by users of
this book.
Accountant as an Information Management

and Business Measurement Professional
There is no doubt that the long-standing image of the accountant as a nonsocial,
conservative, green eye shaded employee who is tucked in the back room of an orga-
nization has been forever shattered. Today’s accounting professional is relied on by
owners and managers to perform fraud examinations, identify and monitor enterprise
risks (events that may cause an entity to fail to achieve its objectives); assure the reli-
ability of information systems used to gather, store, and disseminate key information
for decision making; and possess the essential general business knowledge, coupled
with business process measurement and assessment skills, needed to evaluate
the state of the business enterprise and its supporting operations. In a post-
Enron/post-WorldCom era, a primary focus of organizations is on governance
(both organizational and information technology (IT)) and enterprise risk manage-
ment (ERM). The accounting professional (as external auditor, forensic accountant,
internal auditor, corporate accountant, or manager) is increasingly expected to take
the leadership role in enhancing organizational governance and identifying and miti-
gating enterprise risks.
Accordingly, the accounting professional must arrive on the job equipped with a
solid understanding of (1) key information qualities, (2) technologies that drive the
information systems, (3) business processes that allow an organization to operate
effectively and efficiently, (4) common documentation tools used to describe and
assess business processes, and (5) internal control concepts that can be applied to mit-
igate risks for the organization and the IT systems. Each of these fundamental
knowledge requirements is addressed throughout this book.
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-202 xiii
xiv Preface
Information Systems: Integrated Elements Moving

the Organization Forward
In today’s IT-centric world, organizations clearly can neither operate nor survive—
much less thrive—without information systems. The quality of the information sys-
tems and the reliability of the information available through such systems support
the effectiveness of decision making within the organization. Without good informa-
tion, managers cannot make sound decisions. It is imperative that all pieces of the
information system be in sync and operating effectively if the enterprise as a whole
is to operate effectively and efficiently and move forward in a positive direction.
Figure P.1 shows the integrated nature of information systems components. These
elements must be sound across all dimensions for the organization to safely, yet
quickly, move forward. Any weakness in these elements puts successful outcomes at
risk. The enterprise depends on safe and secure information systems that allow the
organization to move forward in a controlled, yet competitive, manner.
Following are the five integral components of the information system:
• An enterprise database stores data related to an enterprise’s activities and
resources. This includes views of the database for each business process that sup-
ports effective decision making and allows the processes to operate effectively.
• Database controls that safeguard data in an enterprise database from illicit access,
destruction, and corruption.
FIGURE P.1 Information Systems-Integrated Elements
sive controls
Perva
co ntrols and applic

ess atio
roc n co
sp nt
es
P/AP/CD
ro
sin
ls
Bu
PU /P
R HR
ase contr
ab
t
ols
se dat
Da
abase
nterpri
/C R E IPP
B/AR
GL
/S
/B
OE
Preface xv
• Business processes (e.g., OE/S, B/AR/CR) that reflect the core activities undertaken
by an organization in achieving its business objectives. These processes include
such activities as selling goods or services, collecting payment, purchasing mate-
rials or inventory, paying for those items, hiring and retaining a quality set of
employees, and producing goods or services for sale. All of the processes both
use and generate data that is stored in the enterprise database.
• Business process controls and application controls are the procedures put in place
within each business process to identify specific business risks, prevent identified
risks from disrupting operations or corrupting data, detect failures that get past
preventive measures, and correct detected errors and irregularities that slip past
the control boundary.
• Pervasive controls represent the overall organizational governance structure and
related control procedures that are designed to create a regulated organization
that can face the challenges of the external business environment, keep the enter-
prise on track and moving forward in a controlled manner, as well as outper-
forming its competitors.
Each of these components is explored in detail throughout the book. After com-
pleting the study of the concepts presented in this text, you should have a strong
grounding in the critical knowledge necessary to help an organization create and
manage effective information systems that minimize related enterprise risks.
Frequently Asked Questions (FAQs)

When examining a book and considering how to best acquire the information in
which you are particularly interested, several questions may arise. In the FAQ section
of the preface, we will answer the questions most frequently asked by previous read-
ers of this book. Hopefully, the answers to your most pressing questions can be
found in the following paragraphs.
FAQ #1: What Are the Core Themes of This Book?

The book’s focus is on providing the skills necessary for a foundation in enterprise
risk management (ERM)—particularly as these risks pertain to business processes
and their information systems components. Fundamental to an ERM orientation,
from an information systems perspective, are the underlying enterprise systems,
e-business systems, and controls for monitoring the operation of these systems. The
emphasis on these core themes is apparent even by reviewing the table of contents.
Chapters 2 and 3 immediately focus on enterprise systems and e-business in the
introductory section of the text. Controls are the focus of Chapters 7, 8, and 9.
More importantly, however, these themes are carried throughout the remainder of
the text in the integrative fashion for which the previous nine editions have been
written. Icons are included in the margins throughout the book to help emphasize
the coverage of these core themes in their integrated state and to facilitate absorption
of the material by the reader. Given the critical nature of these three themes, the fol-
lowing paragraphs provide brief explanations for each.
Enterprise Systems Enterprise systems integrate the business process functionality
and information from all of an organization’s functional areas, such as marketing and
sales, cash receipts, purchasing, cash disbursements, human resources, production and
logistics, and business reporting (including financial reporting). They enable the coor-
dinated operation of these functions and provide a central information resource for the
xvi Preface
organization. The concept of enterprise systems can be realized in various ways. For
instance, an organization might develop its own separate business process systems and
tie them together in an integrated manner. Or an organization could purchase an
enterprise system from a vendor. Such externally acquired systems are commonly
called enterprise resource planning (ERP) systems—software packages that can be the
core systems necessary to support enterprise systems. A number of ERP systems are
commercially available, with SAP® and Oracle® dominating the large- and medium-
sized enterprise markets. The Microsoft® Dynamics™ line of products is a major
player in the small- and medium-sized enterprise markets. Many organizations use a
combination of ERP systems, externally purchased subsystems, and internally devel-
oped subsystems to create an overall enterprise system that best fits their needs.
E-Business E-business (electronic business) is the application of electronic networks
(including the Internet) to exchange information and link business processes among
organizations and individuals. These processes include interaction between back-office
(i.e., internal) processes, such as distribution, manufacturing, and accounting, and front-
office (i.e., external) processes, such as those that connect an organization to its custo-
mers and suppliers. Traditionally, e-business has been driven in business-to-business
(B2B) environments through electronic data interchange (EDI). The most familiar
form of e-business is the business-to-consumer (B2C) model where interactions are
largely driven by browser-based applications on the Internet (for example, accessing
amazon.com through the company’s web-site). This communication medium has
spilled over into the B2B arena, replacing EDI in some cases, while also providing
opportunities for new B2B interaction in this rapidly changing environment.
Controls Internal control is a process—effected by an entity’s board of directors,
management, and other personnel—designed to provide reasonable assurance regard-
ing the achievement of objectives in the following categories: effectiveness and effi-
ciency of operations, reliability of reporting, and compliance with applicable laws
and regulations. A strong system of internal controls is required for effective ERM,
and is of great interest to top management, auditors, and external stakeholders.
FAQ #2: How Does This Book Present Accounting

Information Systems?
This book is organized into six parts. The following paragraphs discuss briefly each
of the components of this book.
Part 1: Understanding Information Systems consists of three chapters. Chap-
ter 1 provides an overview of basic information systems concepts and explores the
critical characteristics of information that must be considered in systems design and
evaluation. Chapter 2 introduces the concept of enterprise systems and the key role
that these systems play in the successful and timely operation of contemporary
enterprises. Chapter 3 addresses the extended enterprise environment, the
e-business relationships that an organization forms when linking its organization
with the individuals or other organizations that represent their customers and ven-
dors, as well as other stakeholders.
Part 2: Organizing and Managing Information includes three chapters.
Chapter 4 provides the basic tools necessary for diagrammatically documenting organi-
zational data flows (data flow diagrams—DFDs) and business processes (systems flow-
charts). This chapter is divided into sections focusing first on reading documentation
and then on creating documentation to meet the varied needs of our readers. Chapter 5
provides a more comprehensive exploration of data storage methods, the role of
Preface xvii
databases in data management, and the various business intelligence tools that are avail-
able for making sense out of the vast enterprise databases to enhance strategic decision
making. Chapter 5 also includes sections on reading and understanding entity relation-
ship (E-R) diagrams (used to model database structures). Chapter 6 takes a deeper look at
modeling information systems and considers the Resources-Events-Agents (REA)
method, creating E-R diagrams, mapping these diagrams to relational databases, and
using SQL to manipulate and retrieve data from relational databases.
Part 3: Enterprise Risk Management consists of three chapters exploring the
various dimensions of organizational governance and associated effective internal
control systems. Chapter 7 contains an overview of internal control frameworks,
including the new framework Enterprise Risk Management—Integrated Framework;
general organizational governance guidelines; and the changes effected by the
Sarbanes-Oxley Act of 2002. Chapter 8 begins with a discussion of pervasive controls
that apply to both manual and IT environments. This is followed by sections
designed around COBIT, an internationally recognized framework for IT control
that focuses on the controls that address risks emanating from information systems
and can put an enterprise in a condition of acute risk if not properly monitored and
controlled. Chapter 9 focuses on the control procedures applicable to minimize such
risks and presents a methodology for comprehensively evaluating the risks and con-
trols within a defined business process. This framework is subsequently demonstrated
and applied across the business processes presented in Chapters 10 through 14.
Part 4: Business Processes examines the various processes that are necessary
for an enterprise to successfully operate. These six chapters focus on applications
supported by ERP system implementations (including exhibits of screens from
SAP® and Microsoft Dynamics GP® software), the key controls for maintaining suc-
cessful business processes, and the application of the methodology for evaluating risks
and controls within a given business process. The order-to-cash (revenue) flows are
captured in Chapter 10 and 11. The purchase-to-pay (expense) flows are captured in
Chapter 12 and 13. We round out coverage of the core business processes with
Chapter 14, “The Human Resources (HR) Management and Payroll Processes,”
and Chapter 15, “Integrated Production Processes (IPP).”
Part 5: Reporting includes Chapter 16, which deals with the reporting process,
in which information from core business processes is developed into financial reports
for internal and external usage. This chapter includes basics, such as information
flows related to the process, as well current technologies, such as ERPs and XBRL.
Part 6: Acquiring an AIS consists of Chapter 17, which provides an overview
of the selection of accounting information systems, including the choices related
to the buy-versus-build decision. With extensive use of off-the-shelf software, includ-
ing ERP software that can be configured to fit the business needs of an enterprise,
Chapter 17 provides information that should be considered when selecting the
appropriate software. The chapter also provides information to help interpret the
proper use of internal and external sources. The chapter includes topics such as AIS
acquisitions from third parties and the systems development life cycle (analysis, selec-
tion and design, implementation, and operation phases).
FAQ #3: Where Can I Find Information About the Sarbanes-Oxley

(SOX) Act of 2002, Especially SOX Section 404?
To help you find information regarding the Sarbanes-Oxley Act of 2002, we have
added SOX icons in the margins where the topic is covered. Chapter 1 provides an
overview of Sections 404 and 409 of SOX, including the overall implications for the
xviii Preface
accountant as an information management and business measurement professional.

Chapter 4 discusses preparing documentation of business processes, a first step in a
SOX 404 review. Chapter 7 includes an in depth discussion of several SOX Sections
related to organizational governance, IT governance, and ERM. Chapters 7 through
9 describe the requirements of SOX 404 and PCAOB Auditing Standard No. 5
regarding the “effectiveness of design of internal controls” (leaving the “effectiveness
of operations of internal controls” for the auditing courses and texts). Chapters 7
through 14 also introduce and use the control matrix, a tool used by systems
designers and auditors to assess the effectiveness of control design and by auditors
to design tests for effectiveness of operations of internal control. Finally, Chapter 16
discusses the effect on internal control reporting and financial reporting with respect
to the requirements in SOX Sections 302, 401, 404, and 409.
FAQ #4: How Can This Book Be Adapted to Meet a User’s Desired
Content Coverage?
Learning from an enterprise risk management (ERM) approach,1 a user should focus on
three key components of the text: (1) documentation tools for diagramming and ana-
lyzing business processes, (2) ERM and component internal control concepts, and (3)
core business processes enabling enterprises to successfully complete order-to-cash
(revenue) and purchase-to-pay (expenditure) activities. An ERM focus also necessi-
tates the consideration of enterprise systems and e-business concepts. But, given
that these are fundamental threads running throughout the text, they should be cov-
ered with any approach. Coverage of ancillary topics related to database management
systems and other key business processes is recommended (e.g., human resources
management and payroll processes, integrated production processes, and the general
ledger and business reporting process). Depending on a user’s interests, exploring
relational databases in detail or covering only the foundations of the systems de-
velopment process may be necessary. Recommendations and options are depicted in
Figure P.2 to assist in the decision process.
Learning from a database or REA approach, a user would want to focus on two key
components of the text: (1) documentation and modeling skills for relational data-
bases and (2) core business processes that must be integrated in enterprise-level data-
bases. Additionally, the user would want to confer with appropriate external support
specifically focused on REA modeling techniques if extended coverage is desired. A
database approach can be used with the text without these additional materials if
REA models are not necessarily a preference. Again, a database approach also would
necessitate the consideration of enterprise systems concepts, which are fundamental
threads running throughout the text. A database approach may focus on only a
limited core set of chapters combined with an outside database software text or may
be supplemented with other key AIS topics, additional business processes, corporate
governance, and IT controls. Our recommendations and options are depicted in
Figure P.2 to assist in the decision process.
Learning from a systems development approach, a user would want to focus on three
key components of the text: (1) documentation tools for diagramming and analyzing
business processes, (2) structured systems analysis and design (Chapter 17), and (3)
core business processes enabling enterprises to successfully complete order-to-cash
(revenue) and purchase-to-pay (expenditure) activities. A systems development
1
This approach also might be called the business process approach, the accounting applications approach, or the
accounting cycles approach.
Preface xix
FIGURE P.2 Selecting Chapters to Meet Selected Pedagogical Objectives
Entering AIS
Require core coverage

Chapters 1–3
Enterprise Risk Management/

Database and/or REA Approach Systems Development Approach
Business Process Approach
Require Chapter 4 on reading Require Chapter 4 on reading Require Chapter 4 on reading

documentation—Recommend documentation—Recommend and creating documentation
remainder of Chapter 4 remainder of Chapter 4 on creating of business processes
on creating documentation documentation
Recommend Chapters 5 and 6

Recommend Chapter 5 Require Chapters 5 and 6 on on DBMS principles and
on DBMS principles DBMS principles and relational relational database development
database development
Consider Chapter 6 Require Chapter 17

on relational database Consider adding external on acquiring and
development readings on REA database implementing on AIS
construction, if desired
Require Chapters 7–9 Recommend Chapters 7–9

on enterprise risk Require Chapters 10 and 11 on enterprise risk
management to cover the business management
processes in the
order-to-cash process
Require Chapters 10 and 11 Recommend Chapters 10 and 11
to cover the business to cover the business
processes in the Require Chapters 12 and 13 processes in the
order-to-cash process to cover the business order-to-cash process
processes in the
purchase-to-pay process
Require Chapters 12 and 13 Recommend Chapters 12 and 13
to cover the business to cover the business
processes in the Recommend Chapters 14 and processes in the
purchase-to-pay process 15 on human resources purchase-to-pay process
management, payroll, and
integrated production processes
Recommend Chapters 14–16 on Consider Chapters 14 and 15
human resources management, to cover human resources
payroll, integrated production, and Require Chapter 16 on management, payroll, and
general ledger and business general ledger and integrated production processes
reporting processes business reporting process
Require Chapter 16 on
Consider Chapter 17 for an Consider Chapters 7 and 8 general ledger and
overview of the systems on corporate governance business reporting process
development process and IT controls
Recommend Chapter 9
on business process
control framework
xx Preface
approach also necessitates the consideration of enterprise systems—a fundamental

thread running throughout the text. Coverage is recommended of ancillary topics
related to database management systems, ERM, and general ledger and business
reporting. Depending on a user’s interests, it may be necessary to explore relational
databases in detail and to cover human resources management and payroll and inte-
grated production processes. Recommendations and options for this approach are
also depicted in Figure P.2.
FAQ #5: Does the Book Fit the Core Competencies Guidelines
of the AICPA Vision Project?
Several professional bodies across the globe have undertaken projects to better
understand how the environment of professional accounting is changing and how
these changes impact the required competencies for skilled professionals. Although
responding to all of the reports around the globe is not possible in this preface, we
will briefly review how the text facilitates the preparation of new professionals based
on the results of one such report—the American Institute of Certified Public
Accountants (AICPA) CPA Vision Project. Let’s take a look at how this book sup-
ports the knowledge prerequisites for attaining each of the AICPA CPA Vision Pro-
ject’s five identified core competencies:
• Communication and Leadership Skills: Development of communication and leader-
ship comes largely through practice. The study of AIS provides great opportu-
nities for students to participate in written and oral presentations about the
analysis of problems. Throughout the text, a host of documentation tools are
covered and applied, including flowcharts, data flow diagrams, narratives, entity-
relationship diagrams, and control matrices. Chapter 17 describes a variety of
reports used in the systems analysis and design process. Mastery of these tools
can facilitate effective synthesis and communication of complex information in
an easily explained form.
• Strategic and Critical Thinking Skills: The documentation tools noted under the
communication section further enhance a student’s ability to link data, knowledge,
and insight related to information technology, internal control, and business pro-
cesses to solve complex problems. Numerous short and long cases along with con-
cise problems are presented throughout the book to provide ample opportunity to
practice the critical and strategic skills necessary to relate to business environments.
• Focus on the Customer, Client, and Market: The early segments of the book are ori-
ented toward assembling a set of foundational skills related to documentation, sys-
tems environments, enterprise systems, e-business, and internal control assessment.
The later chapters bring all the information together to analyze the business
processes of an entity. This analysis integrates the information for management
decision making; the aggregation and processing of information, key controls,
and business process objectives allows a student to better understand the full
scope of an organization’s business processes, not just the accounting aspects.
This prepares students for entering different business environments, analyzing
business activities, and identifying areas for strategic improvement.
• Interpretation of Converging Information: As noted under the prior competency
statement on customers, clients, and markets, the core chapters of this text
address the integration of financial and nonfinancial information to solve pro-
blems. Consideration of nonfinancial information is usually the weakest point
for accounting graduates, and the strategies used in the text should help counter-
act this weakness.
Preface xxi
• Technologically Adept: Throughout the text, emerging technologies that are

reshaping the business environment are described and demonstrated within the
context of a business process. The focus on emerging technologies helps the stu-
dent to understand how new technologies can be used to improve business effi-
ciency and effectiveness and to leverage competitive advantage.
FAQ #6: How Does the Text Help Prepare Students

for the U.S. CPA Exam?
In the United States, the CPA Examination is of interest for those about to enter the
accounting profession. Recent changes in the exam have not significantly affected this
book because the philosophy has long been consistent with the exam’s evolving content.
Students need to have a broad understanding of the business environment, how informa-
tion is used by business decision makers, and the organizational control structures that
should be in place to minimize risk to the enterprise. Thus, this book continues to be
an excellent source for helping students prepare for the testing methods and exam con-
tent. The exam testing methods require the use of certain software tools but also use a
host of case studies, called “simulations,” to provide information that must be critically
examined and synthesized. The extensive use of small and large cases in this book should
help students prepare for these simulation problems. The book’s approach emphasizes
several skills being tested by the current exam (as well as recently announced changes
to the exam): communication, research, analysis, judgments, and comprehension.
As for content on the exam, this book is also well positioned to help. The audit-
ing and attestation section of the exam requires examinees to have an understanding
of enterprise-level controls and the technology-based environments in which auditing
is conducted. This book emphasizes enterprise systems, e-business, database environ-
ments, control frameworks, IT controls, and business process environments—all of
which will be helpful in the exam environment. Technology concepts are even more
critical in preparing for the business environment and concepts portion of the exam.
That section of the exam not only includes technology but also covers business struc-
ture (an item addressed within the context of each business process in the text), mea-
surement (i.e., managerial), and general business environments and concepts. As to
this latter section, the detailed business process chapters (Chapters 10 through 16)
describe the overall business context and how information flows from the transaction
side through to be used by key management decision makers. This presentation
should aid in understanding how contemporary organizations operate. The focus in
the book on enterprise systems and e-business should further aid in preparing for
exam coverage of state-of-the-art technologically enabled business environments.
FAQ #7: Does the Book Provide a Foundation

for ISACA’s CISA Exam?
Another question that frequently arises is whether the foundation-level skills for the
Information Systems Audit and Control Association’s (ISACA) Certified Information
Systems Auditor (CISA) Exam are covered. Foundation-level skills are also com-
monly required for several other global accounting organizations’ certification pro-
cesses for IT specialization.
Let’s take a brief look at the six content areas covered by the CISA Exam (as of
the June 2016 exam):
• Domain 1—The Process of Auditing Information Systems (21% of the exam): Chap-
ters 7 through 9 provide the foundation for understanding how to assess the
xxii Preface
risks that must be considered in contemporary risk-based audit approaches.

Chapters 7 through 14 describe control objectives and controls related to infor-
mation systems.
• Domain 2—Governance and Management of IT (16%): Chapters 7 and 8 introduce
organizational and IT governance frameworks and discuss related issues such as IT
organizational structures, IT strategy, and risk management. Chapters 7 and 8 also
give extensive coverage to the COSO, ERM, and COBIT control frameworks.
• Domain 3—Information Systems Acquisition, Development and Implementation (18%):
Chapters 8 and 17 describe best practices for project governance and systems
development, including requirements analysis, systems acquisition, and change
controls. Chapters 9 through 14 give extensive coverage to control objectives and
techniques for IT systems applications/business processes. Finally, Chapters 2 and
3 describe enterprise architectures for data, applications, and technology, including
enterprise systems, Web services, and Web-based applications. These are further
discussed in the context of specific business processes in Chapters 10 through 14.
• Domain 4—Information Systems Operations, Maintenance and Service Management
(20%): Chapters 2 and 3 introduce IT infrastructures and discuss how these can sup-
port organization objectives. These issues are further discussed in the context of spe-
cific business processes in Chapters 10 through 14. Chapter 8 introduces best
practices for the management of IT operations. Chapters 5 and 6 describe database
management systems. Chapter 17 considers the delivery and maintenance of systems.
• Domain 5—Protection of Information Assets (25%): Chapters 7 through 9 focus on
the control structures that should be in place at the environmental, physical, and
logical levels to provide both pervasive and specific controls over IT systems.
These controls include logical and physical access to IT assets, encryption and
public-key cryptography, and environmental protection.
Instructors may also assign end-of-chapter questions and problems that are tar-
geted to specific content areas of the CISA exam.
Instructional Supplements
This book includes the following supplemental materials to assist the instructor:2
• The Test Bank presents a variety of questions, including true/false, multiple-
choice, completion, problems, and essays. The Test Bank can be found on the
text Web site at www.cengagebrain.com.
• The Solutions Manual (available on the text Web site), provides answers to Dis-
cussion Questions, Short Problems, and Problems in the text’s end-of-chapter
material. Note to Instructors: The Solutions Manual provides instructors with ways
to tailor how problems are assigned and how solutions are provided to students,
for a more engaging learning experience. For example, instructors can provide a
partially completed control matrix, asking students to complete the problem
based on their studies. Alternatively, based on a completed flowchart, students
can analyze the system to recommend improvements or generate a control
matrix. PowerPoint slides (available on the text Web site) cover all major con-
cepts and key terms and are presented in an appealing way designed to hold the
student’s interest and effectively communicate lecture material.
2
Many text adopters use these materials for graded assignments and exams. In consideration of these
adopters, we ask that you not post any of these materials to an open Web site.
Preface xxiii
• The Bentley Term Project, (available on the text Web site) is an updated version
of a term project that has been used for more than 25 years with this text at
Bentley University. The term project is designed to incorporate the concepts
taught in the text into a comprehensive, cohesive project. The learning objectives
of the project are to help the student examine an actual business process, docu-
ment the process, analyze process controls, and recommend changes to improve
operational and information process effectiveness.
Student Supplements
This book includes the following supplemental materials to assist students:
• A student Web site is available for the 11th edition of Accounting Information Sys-
tems which houses ample study resources that are free to students. Visit www.
cengagebrain.com to access the Web site. Here you will have access to all stu-
dent resources, including chapter-by-chapter quizzes, flashcards, crossword puz-
zles and a list of key terms.
• Many chapters of the text include Microsoft Access®, Excel®, and new Microsoft
Visio® exercises, enabling students to develop greater database and spreadsheet
software skills. These exercises can be found in the Short Problems or Problems
at the end of each chapter and are identified with Access, Excel, and Visio icons.
Accessing CengageBrain
• Use your browser to go to www.cengagebrain.com.
• The first time you go to the site, you will need to register. It’s free. Click on
“Sign Up” in the top right corner of the page and fill out the registration infor-
mation. (After you have signed in once, whenever you return to CengageBrain,
you will enter the user name and password you have chosen and you will be
taken directly to the companion site for your book.)
• Once you have registered and logged in for the first time, go to the Search bar
and enter the author or ISBN for your textbook. When the title of your text
appears, click on it and you will be taken to the companion site. NOTE: If you
are currently using more than one Cengage textbook, the same user name and
password will give you access to all the companion sites for your Cengage titles.
After you have entered the information for each title, all the titles you are using
will appear listed in the pull-down menu after you log in.
New to this Edition

• Continued revisions to simplify and clarify wording to make the book more
appealing to today’s students’ reading and study styles.
• Updated many of the chapter introducing vignettes, as well as technology appli-
cations and other examples.
• In Chapter 4 we simplified and expanded the figure that demonstrated common
flowcharting routines to include all flowchart symbols.
• Chapter 5 has a new section on Dashboards and their use in Big Data analytics.
Chapter 7 has been updated to include COSO’s 2013 Internal Control-Integrated
Framework including its seventeen principles of control components.
xxiv Preface
• Chapter 8 includes a significant revision of material to accommodate move to

COBIT 5. We also reorganized IT material around job positions to increase
the consistency with other chapters.
• In Chapters 12, 13, and 14 we added Microsoft Excel problems that are internal
control oriented. The problems use computational skills and sorting, as well as
functions such as vlookup(), and if(). Pivot tables are also included.
• Updated and revised Chapter 15’s reporting of the drivers of manufacturing
competiveness in a global market.
• Chapter 16 now includes a short discussion of big data, analytics, and reporting
with technical tools such as Tableau.
Acknowledgements
In closing, we must acknowledge that the pronoun “we” as used in this text extends
far beyond the four authors. Over the years, there have been countless adopters,
reviewers, students, and colleagues who have provided us with comments and sugges-
tions that have cumulatively made a positive impact on this edition. We are most
grateful to all of them for their dedication to the field of AIS and this text.
Thanks to the following reviewers and verifiers that worked on this edition:
Dan Stone Del DeVries
University of Kentucky Belmont University
Sumantra Sarkar Joann Segovia
Georgia State University Winona State University
Yibo “James” Zhang Christopher Gilbert
University of South Florida Glendale Community College
Dr. Passard C. Dean Patricia Davis
Saint Leo University Keystone College
Eric Chen Stephanie Weidman
University of Saint Joseph Rowan University
Ronald Tidd
Central Washington University
We would also like to thank the editorial staff from Cengage Learning, including
Jason Fremder, Product Director; Matt Filimonov, Product Manager; Julie Dierig,
Project Manager; Martha Conway, Sr. Content Project Manager; Emily McLellan,
Marketing Manager; and Aiyana Moore, Product Assistant.
Finally, to our families, we thank you for your infinite patience throughout this
project. Without your support and encouragement, this eleventh edition would not
have been possible.
Ulric J. Gelinas, Jr.
Richard B. Dull
Patrick R. Wheeler
Mary Callahan Hill
ABOUT THE AUTHORS
Ulric J. (Joe) Gelinas, Jr., Ph.D., is a Professor Emeritus at Bentley University, Waltham,
Massachusetts. As a consultant to PricewaterhouseCoopers he developed and taught
training programs for business processes, internal control, and IT audit. Dr. Gelinas
was Senior Consultant for MIS Training Institute teaching courses in the IT Audit
curriculum, and taught in the University of Maastricht’s International Executive Mas-
ter of Finance and Control Program. He received his AB. in Economics from St.
Michael’s College, Winooski, Vermont, and his M.B.A and Ph.D. from the University
of Massachusetts, Amherst. Professor Gelinas has also taught at the University of Ten-
nessee and at Vesalius College, Vrije Universtiteit Brussel, in Brussels, Belgium. As a
captain in the U.S. Air Force, he was Officer-in-Charge of IT Operations. Professor
Gelinas has published articles on interorganizational collaboration and coordination
infrastructures, accounting information systems, using technology in business educa-
tion, technical communications, and information privacy. These articles have appeared
in academic and practitioner journals, including the Journal of Information Systems, Issues
in Accounting Education, IS Audit & Control Journal, Government Information Quarterly,
Journal of Information Technology, International Journal of Technology Management, Inter-
national Journal of IT Standards and Standardization Research, Journal of Information Sys-
tems Education, Technical Communications Quarterly, and IEEE Transactions on Professional
Communication. In 2003, Professor Gelinas received the Innovation in Auditing and
Assurance Education Award from the American Accounting Association. In 2000, he
received the John W. Beveridge Achievement Award from the New England Chapter
of the Information Systems Audit and Control Association for outstanding contribu-
tions to the IS audit and control profession. He has made presentations and conducted
workshops at the International Conference of the Information Systems Audit and Con-
trol Association (ISACA); ISACA’s Computer Audit, Control, and Security (CACS)
conferences; as well as other professional groups. Professor Gelinas was a member of
the U.S. expert panel that reviewed Control Objectives for Information and Related Tech-
nology (COBIT) and has conducted COBIT workshops throughout the world. In his
spare time, Professor Gelinas is engaged in many outdoor activities such as scuba div-
ing, canoeing/kayaking, snowshoeing, hiking, and bird watching.
Richard (Rick) Dull, Ph.D., CPA/CFF, CISA, CFE, is the Department Chair and the
GoMart Professor in Accounting Information Systems at West Virginia University in
Morgantown, WV. He received his B.B.A. (Accounting) and B.S. (Computer Applica-
tions) from Harding University, his M.B.A. from the University of North Carolina
at Greensboro, and his Ph.D. (Business—Accounting/Information Systems) from
Virginia Tech. Professor Dull has also taught at Clemson University, Indiana
University-Indianapolis and High Point University. His professional experience
includes application programming with a manufacturing firm as well as audit and infor-
mation systems consulting experience with a national CPA firm. He was a founding
partner/owner of a CPA/Consulting firm in Greensboro, NC, where he worked until
choosing to pursue a career in academia. His experience supports his teaching and
research interest in accounting information systems, continuous assurance, forensic
accounting, and technology in accounting education. His work on a project involving
cross-departmental integration of enterprise systems earned a Microsoft Pinnacle
Award for Excellence in Education as well as a Clemson University Board of Trustees
Award for Faculty Excellence. Professor Dull has been published in academic and
practitioner journals, including the Journal of Information Systems, International Journal
of Accounting Information Systems, Journal of Emerging Technologies in Accounting,
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-202 xxv
xxvi About the Authors
Accounting Education: An International Journal, Issues in Accounting Education, Journal of

Accountancy, CPA Journal, and Personal Financial Planning. He has made frequent con-
ference and continuing education presentations in local, national, and international
venues on topics including continuous auditing and assurance, accounting information
systems, and accounting education. Since 2013, he has taught a graduate forensic/fraud
accounting course for Reykjavik University in Iceland. Professor Dull is a member of
the American Accounting Association, American Institute of CPAs, Association of Cer-
tified Fraud Examiners, AIS Educator Association and ISACA. His professional activi-
ties have included serving on the AICPA’s Assurance Services Executive Committee
and serving as the President of the AAA’s Artificial Intelligence/Emerging Technolo-
gies and Accounting Information Systems sections. He has served the AICPA as a
member of BEC Subcommittee, and has served as an Editor for Journal of Information
Systems, an Associate Editor for Accounting Education: an International Journal, and is cur-
rently an Editorial Advisor for the Journal of Accountancy. Professor Dull was a recipient
of a Fulbright Award in 2008, spending a semester lecturing and researching in Croa-
tia. In addition to his work, he enjoys spending time with his family and church, as well
as traveling and woodworking.
Patrick (Pat) Wheeler, Ph.D., CPA, CITP, is Associate Professor at the University of
South Florida in Tampa, Florida. He teaches accounting information systems at the
graduate and undergraduate levels, and has extensive training in databases and enter-
prise resource planning systems (SAP and Oracle Financials). Professor Wheeler
received his Ph.D. in Accounting from Georgia State University in 1999 and a B.A.
with honors from the University of Florida in 1979. Professor Wheeler is a CPA
with the Louisiana Society of CPAs and a Certified Information Technology Profes-
sional (CITP) with the American Institute of CPAs. His research focuses on behavioral
issues in information systems, especially in regard to the impact of computerized deci-
sion aids on business decision making. His articles, published worldwide in numerous
academic journals and magazines, can be found in The Accounting Review, Journal of
Information Systems, Behavioral Research in Accounting, Advances in Accounting Behavioral
Research, International Journal of Accounting Information Systems, International Journal of
Disclosure and Governance, Studies in Managerial and Financial Accounting, Issues in
Accounting Education, and Review of Accounting Information Systems. He received the
2007 Outstanding Research Paper Award and the 2007 Finalist Research Paper
Award from the Information Systems (IS) section of the AAA. He won the Outstand-
ing IS Dissertation Award at the 2001 AAA Annual Meeting and currently serves on
the editorial review boards of the Journal of Information Systems and International Jour-
nal of Accounting Information Systems. He received the 2006 Outstanding Service Award
from the AAA IS Section. Professor Wheeler is active in the American Accounting
Association (AAA) at both the national and regional levels, especially in the IS section,
and is a member of Beta Gamma Sigma, the business honor society. He has made
numerous local, regional, and national conference presentations on various IS and
business decision-making topics, and recently spent a semester teaching accounting in
the Republic of Georgia. He is a retired Navy officer, an active member of his church,
and a devoted husband and father who enjoys biking, jogging, and reading about
ancient history.
Mary Callahan Hill, Ph.D., is a Professor at Kennesaw State University, Kennesaw,
Georgia. She received his B.B.A. (English Literature) from the University of Califor-
nia, Los Angeles, her M.B.A. from The University of Southern California, and his
Ph.D. (Accounting Systems) from The University of Georgia. After receiving her
About the Authors xxvii
M.B.A., Professor Hill began her professional career at Exxon Chemical in Katy, Texas
where she developed her interest in accounting information systems. Pursuing that
interest, she obtained her next position as a consultant for Deloitte, Haskins & Sells a
national accounting firm where she implemented accounting information systems for a
variety of clients. She was a founding partner/owner of Strategic Consulting in Nor-
cross Georgia where she worked implementing accounting systems until choosing to
pursue a career in academia. Her experience supports her teaching and research inter-
est in accounting information systems, internal control, data analytics, and technology
in accounting education. Professor Hill has developed and taught the following
Accounting Information Systems courses: Undergraduate Accounting Information Sys-
tems, Graduate Accounting Information Systems, Undergraduate Accounting Analyt-
ics, Risk Analysis and Control, Transaction Processing and Control, Graduate
Accounting Analytics, and Graduate Advanced Systems Applications. Professor Hill
has been published in academic and practitioner journals, including the Journal of Infor-
mation Systems, Auditing: A Journal of Theory and Practice, Issues in Accounting Education,
Advances in Accounting Behavioral Research, Advances in Accounting Education, Academy of
Educational Leadership Journal, the CPA Journal, and Internal Auditing. She has made
numerous local, regional, and national conference presentations on various IS, educa-
tional and business decision-making topics. Professor Hill has been a member of the
American Accounting Association, American Institute of CPAs, and the AIS Educator
Association. Professor Hill served the AIS Educator Association as a board member
and was president of the association in 2007. In her spare time, Professor Hill plays
competitive tennis and duplicate bridge, enjoys reading, biking and walking.
PA RT
Understanding
Information Systems
CHAPTER 1
Introduction to Accounting Information Systems 2
CHAPTER 2
Enterprise Systems 33
CHAPTER 3
Electronic Business (E-Business) Systems 62
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-202 1
CHAPTER
Introduction to Accounting
Information Systems
Learning Objectives
After reading this chapter, you should be able to:
• Explain the complex, dynamic environment in which accounting is practiced.
• Recognize the relationship between the AIS and the organization’s business processes.
• Identify the attributes of information.
• Describe how information is used for different types of decisions and at various levels
in the organization.
• Summarize how the information system supports the management function.
• Recognize the accountant’s role in relation to the current environment for the AIS.
• Use this textbook effectively to learn AIS.
At the beginning of your journey to acquire knowledge about accounting information systems
(AISs), you should be aware of the importance of the topic to you personally and to your long-
term success as an accountant. Consider the following responsibilities of accountants, from the
Accountants and Auditors section of the United States Department of Labor’s Occupational
Outlook Handbook1:
• Examine financial statements to be sure that they are accurate and comply with laws and
regulations
• Compute taxes owed, prepare tax returns, and ensure that taxes are paid properly and on
time
• Inspect account books and accounting systems for efficiency and use of accepted
accounting practices
• Organize and maintain financial records
• Assess financial operations and make best-practices recommendations to management
• Suggest ways to reduce costs, enhance revenues, and improve profits
1
Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Accountants and
Auditors, on the Internet at http://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm
(Published December 17, 2015, accessed April 8, 2016). Many other countries produce documents indicating
similar expectations.
2 Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-202
These responsibilities can be expected of you whether you are an auditor,
corporate accountant, forensic accountant, consultant, business analyst, or manager.
Can you imagine doing any of these tasks without using technology? For example,
consider Apple, Walmart, or Toyota. The sizes of these companies are such that it
would be impossible to maintain the records, examine the financial statements,
compute taxes, or manage without the use of technology. Today’s businesses cannot
exist in their current form without technology.
Technology is making information available to improve decisions for all decision
makers—at the same time making the job of an accountant more interesting and
challenging, as well as providing new opportunities for you. There is little doubt that
the things you can learn from this book should help you increase your knowledge of
information systems and enable you to take advantage of these new opportunities.
This chapter introduces the concept of technology applied to accounting. The
material we present is essential to your success as an accountant. Frequently, when we
see students after they graduate and have been working for a few years, comments start
flowing that reinforce the topics covered in this text. “I use the information from your
class constantly in my job.” “I actually draw data flow diagrams as part of our systems
documentation.” “I was in a meeting with my manager and was the only person who
understood the technology concepts being discussed.” Why do you think we
repeatedly hear these and many similar comments? Technology and accounting
cannot be separated in today’s businesses. Read on to prepare for your successful
accounting career.
Synopsis
In this chapter, we introduce you to the subject of Accounting Information Systems
(AISs), describe the importance of the AIS in your future success, and lay out some
important terms and concepts that we will use throughout the text. We begin by pre-
senting a view of the practice of accounting. You will see that accountants today are
shifting their focus from being business accountants and auditors to being informa-
tion management and business measurement professionals providing value-added ser-
vices to their organizations and clients. This view, rooted in changes in information
technology and changes in a volatile business environment, reflects the practice of
accounting for those on the leading edge of their profession. Next, we define and
explain the components of studying AISs and the relationships of those components
with accountants and organizations. Then, we describe the qualities that information
must possess to drive the organization and enable the performance of key manage-
ment functions. Finally, we summarize the role of the accountant in today’s business
environment.
Throughout the text, we will present three themes to connect our discussions to
topics that are currently of great interest to accountants. These themes are enterprise
systems and enterprise resource planning (ERP) systems—such as those sold by SAP®,
Oracle®, SageTM, and Microsoft®; E-business, including retail e-businesses such as
Amazon.com®; the online segments of traditional retailers, such as Walmart.com;
and internal control—those business practices that keep an organization out of trouble
and heading toward achieving its objectives. We will explore these themes in this
chapter.
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-202 3
4 Accounting Information Systems
Introduction
At the start of this chapter, we discussed the impact of technology and how it will
affect your role as an accountant, but its impact extends well beyond accounting.
Technology improves information available for decision making—this means that all
decision makers within an organization benefit from accounting technology, not just
accountants. For example, sales managers can make better decisions because technol-
ogy based accounting systems provide more timely sales and collections information
than manual systems. The ability to embed controls within the system means that the
data should be more reliable, which is another benefit for the entire organization.
Accountants with technology skills are using technology to reduce the detailed
and boring part of their work, enabling them to be more efficient in their jobs.
This efficiency increase means these accountants have time to do more interesting
work and at the same time be more valuable to their employers. If you want to have
an interesting accounting job and be valuable to your employer, then you are at the
right place—so let’s begin exploring AIS!
This introductory chapter provides you with some basics that are used through-
out the text. We start with some background material and definitions. We then
define and describe AIS, depict it as a major part of business processes of any organi-
zation, and describe the critical functions that AIS perform within an organization.
Some of the terms in this chapter may not be familiar to you; don’t let that concern
you at this point. We will define and illustrate these terms later in the book.
The Textbook’s Three Themes

Enterprise Before digging into the material, you should understand the importance of the three
Systems themes of this book and how they will be included in the discussions throughout this
text. The three themes—enterprise systems, e-business, and internal control—were
introduced and defined in the Preface. Enterprise systems integrate the business pro-
cesses and information from all of an organization’s functional areas, such as sales,
cash receipts, purchasing, human resources, supply chain, and business reporting
(including financial reporting). Enterprise resource planning (ERP) systems are software
packages that can be used for the core systems necessary to support enterprise sys-
tems. It is critical that accountants understand these systems because at some point
in their careers, they will likely be members of teams that install and operate systems
in their organizations. To install an enterprise system, the business processes of an
organization (for example, the process to pay your bills) must be understood and
documented. Some of these processes may need to be changed and then mapped to
the enterprise system (usually it is easier and less expensive to change a process than
to change a system). A major part of the installation project is configuring the enter-
prise system to tailor it to the needs of the business. As accountants performing the
functions of consultants, business process owners, system users, or auditors, we must
understand these systems and be able to install, use, and audit the systems. Enterprise
systems are described more fully in Chapter 2 and are discussed throughout the
remainder of the book.
E-Business E-business is the use of electronic networks (including the Internet) to enable
business processes between individuals and organizations. These processes include
interaction between back-office (i.e., internal) processes, such as distribution,
manufacturing, and accounting, and front-office (i.e., external) processes—those that
connect an organization to its customers and suppliers. E-business has created
Chapter 1 – Introduction to Accounting Information Systems 5
entirely new ways of working within and across organizations. For example, organiza-
tions are buying and selling goods and services at virtual marketplaces, which changes
how organizations identify customers and select vendors. It should also change how
they determine the costs of acquiring goods from a vendor and what price(s) they
should charge their customers for their products. Obviously, accountants need to be
aware of the opportunities and risks associated with this new way of doing business.
E-business is explained more fully in Chapter 3 and is discussed throughout the
remainder of the book.
Controls Internal control is a process—initiated and put in place by an organization’s board
of directors, management, and other personnel—designed to provide confidence that
the organization is achieving its objectives in the following categories: efficiency and
effectiveness of operations, reliability of reporting, and compliance with applicable
laws and regulations. For example, inventory controls ensure that an organization’s
inventories are not stolen and that the organization does not have too much inven-
tory (perhaps a waste of resources by incurring unnecessary storage costs) or too little
inventory (leading, perhaps, to a lost opportunity to sell the product). Although top
management is responsible for an organization’s system of internal control, the
accountants and other business process owners are given the authority to implement
and operate the system of control. Therefore, it is important that all managers and
accountants know how to use controls to ensure achievement of the organization’s
goals. In Chapter 7, we introduce internal control and then apply controls through-
out the remainder of the book.
Beyond Debits and Credits

Controls Have your accounting studies convinced you that the most serious problem you may
face in your career is that your trial balance doesn’t balance? If so, here are a couple
of examples that might persuade you otherwise. It wasn’t too long ago that the
procedures used to process credit card sales were completely manual. A sales clerk
would prepare a paper credit card slip using a pen to write the amount by hand,
run it through a device to imprint your name and account number on the paper
slip, and—to reduce the possibility of credit card fraud—look up the credit card
number in a book that listed stolen credit cards. But this book was printed only peri-
odically and could never be up to date. As credit card usage increased, a procedure
was developed where clerks would call the credit card companies for approval of a
purchase. Although this took longer, the selling merchants were able to assure them-
selves that the credit card had not been reported stolen and that sufficient credit was
available on the customer’s account. The system has continued to evolve into what
we have today: Approvals are obtained automatically by connecting directly (i.e.,
online) from the checkout to the credit card company, and determining within sec-
onds if the card is stolen or if other issues exist. This method is used to ensure that
the merchant and the credit card company get paid for the sale. And, as you know
from previous accounting courses, an organization can’t record a sale unless it is
likely that they will get paid for that sale. But that is not the end of the story. The
credit card company uses this real-time data from merchants to perform sophisticated
data analytics that are used to identify fraud patterns—which helps prevent fraud, or
at least to detect it earlier, keeping the card-issuer’s costs down and profits up!
E-Business Many of you are familiar with purchasing items using credit cards on the
Internet. Using the Internet presents a different set of control issues. You can read
the statistics about individuals who do not want to buy on the Internet because they
fear that their private information, including their credit card number, is not secure.
Controls have been put in place to protect the consumer, merchant, and credit card
company (you’ll read about these controls in Chapters 3, 8, and 9). Still, fraudulent
transactions occur and millions of dollars are lost every year. Again, controls are used
to protect the assets of the organization and ensure the effectiveness of operations.
After all, if customers are not confident in the security of a merchant’s Web site
they will take their purchasing power elsewhere.
Enterprise Enterprise systems store almost all information about business events for an
Systems organization. This includes events such as sales, purchases, and paying employees—
the event list will vary based on the type of organization. The data stored within the
enterprise system goes well beyond the debit/credit/account number that you studied
in your first accounting course. Sales event data may include location of the sale,
date/time, cash register operator, items purchased, coupons used, and so on. Having
this volume of detailed data in one place can provide valuable information for
decision-makers. Consider this example from a large multinational company in the
health care industry. The company acquired a new division after having just installed
an ERP system in all of its worldwide operations. After installing the ERP system in
the new division, the data related to the previous year’s purchases and sales for the
entire company, including the new division, were exported from the ERP system
into a separate database (i.e., a data warehouse, as will be explained in Chapter 5).
The cost accountants then had the task of analyzing the costs and selling prices for
a line of products and suggesting a new pricing structure that would make sense in
light of the incorporation of the products from the new division. To accomplish
this task, they needed to know how the data were defined and stored in the ERP sys-
tems, how it had been exported, and finally how to get it out of the data warehouse in
a form that they could use. This complex task became possible only with the use of
technology!
Are you beginning to see that knowledge of traditional accounting concepts is
not enough to succeed in today’s business environment? The underlying technology
is a critical part of every accountant’s job. These examples indicate challenges for you,
while offering opportunities to those who learn to be effective information manage-
ment and business measurement professionals. We want to help you learn so you can
become one of these successful professionals!
Legal Issues Impacting Accountants

Inherent in the work of accountants, and therefore in the study of accounting and
information systems, is compliance with laws and regulations. One such law, the
Sarbanes-Oxley Act of 2002 (SOX), has dramatically changed the daily work of finan-
cial accountants, auditors, and many others as well.
The Sarbanes-Oxley Act of 2002

SOX At this point in your academic career, you have probably studied the Sarbanes-Oxley
Act (SOX) and the impact that it has had on publicly traded companies. Because you
probably have prior knowledge of SOX, our discussion is limited to Sections 404 and
409 and their applicability to the study of AIS.
Section 404 of SOX, and PCAOB Auditing Standard No. 52 have meant changes
for both auditors and the companies that they audit. To comply with SOX,
2
Auditing Standard No. 5, “An Audit of Internal Control over Financial Reporting That Is Integrated
with an Audit of Financial Statements,” PCAOB, July 12, 2007.
management must identify, document, and evaluate significant internal controls.

Auditors must, as part of an integrated audit of financial statements, report on the
effectiveness of the organization’s system of internal control. These requirements
represent significant expansions of the internal control-related roles of management
and auditors. These responsibilities are increasing at the same time that computer-
based systems are becoming more sophisticated, thus adding to the complexity of
the systems of internal control. It is important that you understand the systems in
order to comply with SOX.
Section 409 of SOX requires disclosure to the public on a “rapid and current
basis” of material changes in an organization’s financial condition. Compliance with
this section requires the application of legal, financial, and technical expertise to
ensure that the organization’s AIS is able to produce financial data in a timely and
accurate manner. Who else but the accountant, armed with the latest knowledge of
accounting and information technology, can ensure compliance with these provisions
of SOX?
Challenges and Opportunities for the Accountant. Will you be able to adapt to
advances in technology, and will you look ahead and prepare yourself to take advan-
tage of such advancements? Could you perform an analysis of cost and price data by
extracting and evaluating information from an information system? Could you help
assess the risks and benefits related to an organization’s e-business and develop the
controls necessary to ensure a secure and reliable Web presence? Could you consult
with management to help them comply with SOX Section 404 or evaluate manage-
ment’s internal control system? What do your technology abilities mean to you per-
sonally? Those abilities may mean more job opportunities, money, and job
satisfaction. We intend to help you prepare and plan for the future by helping you
grow with current and emerging technologies.
Management accountants and internal auditors find themselves buying, using, and
evaluating complex computer-based information systems. Financial accountants must be
sure that their AIS can produce financial statements to comply with SOX and other reg-
ulations. Management accountants must be sure that a new information system has the
necessary features, such as controls and the ability to access data and to trace data from
input to output. Forensic accountants must be able to use available technology to ana-
lyze information and identify problems. Information systems must also be protected
from fraud and other abuses. How effectively you use technology to perform these func-
tions will determine how well you can do your job, which may determine the very sur-
vival of your company in a competitive, international marketplace.
Technology is also influencing public accounting firms. The business-consulting
or advisory services units of large and small public accounting firms have accounted
for a significant percentage of the firms’ business and were growing faster than the
accounting, auditing, and tax portions of their businesses. While the consulting
units of many firms were split off from the accounting segments to create indepen-
dent organizations, the growth portion of the remaining accounting-focused firms
will remain in their value-added, business advising lines. For example, technology
has enabled forensic services to dramatically expand within (and outside of) tradi-
tional public accounting firms. Technology has enabled not only large firms, but
also very small firms to develop strong forensic practices that may be international
in scope. Consulting firms also actively recruit personnel with both accounting and
technology skills. If you aspire to a career in public accounting, or in a related con-
sulting area, your success will depend on your knowledge and experience in technical
areas that, at first glance, are far from the practice of accounting.
Independent auditors are faced with providing an opinion on the reasonableness of

financial statements produced from data contained in the information system. As an
auditor, you will be asked to execute your audit tasks and to provide additional value-
added service to the client. You will, for example, provide your client with advice on
improving operations and reducing risks. Successful public accounting firms provide
cost-effective audits along with broader, high-quality service to the client.
The variety of opportunities within accounting were confirmed by the report of
a project sponsored by the American Accounting Association (AAA), the American
Institute of Certified Public Accountants (AICPA), the Institute of Management
Accountants (IMA), and the Big Five (there were five at the time) public accounting
firms. Practitioners surveyed reported that accounting graduates would need to be
able to provide services in the areas of financial analysis, financial planning, financial
reporting, strategic consulting, and systems consulting.3
Historically, the auditor has performed an attest function to determine the reli-
ability of financial information presented in printed financial statements. This role is
expanding to include the following:
• Nonfinancial information, or information not measured in monetary units (e.g.,
accountants might help determine occupancy rates for hotels or apartment
complexes)
• Use of information technology to create or summarize information from
databases
• Information interpretation to determine the quality and relevance of information to
be used for decision making (e.g., evaluating information for the assessment of risk)
The Assurance Services Executive Committee (ASEC) of the AICPA identifies,
develops, and promotes non-audit assurance services that can be offered by accoun-
tants. While not specifically a technology related committee, the ASEC is heavily
involved in technology-related services because many non-audit services are technol-
ogy based, or rely heavily on technology for implementation. The ASEC has published
such documents as Trust Services Principles and Criteria providing criteria to firms and
individuals when providing consulting services to evaluating controls for information
systems. The document addresses privacy and security, among other topics.4
The ASEC currently has task forces in place to consider assurance issues related
to Continuous Assurance and Audit Data Standards. In addition to the development
of assurance services, the AICPA has been looking to the future on a broad basis,
resulting in the CPA Horizons 2025 report. Relative to technology, the report sug-
gests the following importance of technology:
1. CPAs must stay current with, embrace, and exploit technology for their benefit
for increased efficiency and expansion of services.
2. The profession must find solutions to offer investors and stakeholders up-
todate, real-time financial information and to increase transparency.
3. CPAs must embrace mobile technologies and social media to modernize and
enhance interaction and collaboration with clients and colleagues.
3
W. Steve Albrecht and Robert J. Sack, Accounting Education: Charting the Course Through a Perilous Future
(Sarasota, FL: American Accounting Association, 2000): 15.
4
For more information see http://www.cpa2biz.com/AST/Main/CPA2BIZ_Primary/Tax/PRDOVR~
PC-TSPC13/PC-PFP14EL.jsp (accessed April 13, 2016).
4. Fraud may be easier to commit and more difficult to prevent and detect. CPAs
must continue to be vigilant in ensuring data are captured and managed prop-
erly and protected from malfeasance.5
Finally, the AICPA has created a credential, the Certified Information Tech-
nology Professional (CITP), to recognize CPAs who can provide skilled advice on
using IT to implement business strategy.6 Skills necessary to obtain this accreditation
include the following (each of these are addressed in this textbook):
• An understanding of project management
• Familiarity with IT and business processes
• Competence in technology
Components of the Study of AIS

Figure 1.1 depicts the elements central to our study of AIS. Many are probably famil-
iar to you, and many have been introduced earlier in this chapter. We will briefly
discuss each element, with special emphasis on how the accountant is affected. Before
beginning, you should understand two things. First, the study of AIS is our broad
view, and the AIS itself is our narrow view. Second, you shouldn’t assign any mean-
ing to the placement of the elements in Figure 1.1. The figure just tells you that
there are 10 elements.
FIGURE 1.1 Elements in the Study of Accounting Information Systems
Technology
Accounting and
auditing Databases
principles
Communications Reporting
AIS
Systems
development Control
and operation
Management
Business
decision
operations
making
Events
processing
5
http://www.aicpa.org/research/cpahorizons2025/pages/cpahorizonsreport.aspx (accessed April 2016).
6
See http://infotech.aicpa.org/ for a description of the CITP designation.
• Technology. Your ability to plan and manage business operations depends

partly on your knowledge of the technology available. For instance, can we man-
age production without knowledge of robotics? Obviously, technological devel-
opments have a profound effect on information systems; enterprise systems,
ERP systems, e-business, databases, and intelligent systems are but a few exam-
ples. Technology provides the foundation on which AIS and business operations
rest, and knowledge of technology is critically important to your understanding
of the AIS discipline. Exhibit 1.1 describes a resource that may help you identify
technological challenges and opportunities facing professional accountants.
• Databases. Your other accounting courses have emphasized accounting as a
reporting function. The full accounting cycle, however, includes data collection
and storage, and these aspects must become part of your knowledge base. In
addition, important to a complete understanding of AIS are the variety of data-
bases, both private and public; the quantity and type of data available in these
databases; and methods of retrieving those data. To perform analysis, to prepare
information for management decision making, and to audit a firm’s financial
records, an accountant must be able to access and use data from public and pri-
vate databases. Chapter 5 and Chapter 6 explore the design and use of an orga-
nization’s own databases.
• Reporting. To design reports generated by an information system, the accoun-
tant must know what outputs are required or are desirable. Often, the user will
prepare a report on an ad hoc basis using powerful report-generating tools or a
EXHIBIT 1.1 Current Technology Issues for Accountants
To help accountants understand the technology issues facing the professional accountant, the AICPA and the
Chartered Professional Accountants of Canada (CPA Canada) recently joined together to survey members and
publish the 25th Anniversary North American Top Technology Initiatives Survey, which lists their members’
technology concerns and priorities. Because lists change from year to year, we will not go into a deep dis-
cussion of each topic, but rather provide you with the current lists at the time this text was published. We
hope you seek the current list that is relevant to you at the time of your reading of this chapter.
25th Anniversary North American Top Technology Initiatives Survey
United States Canada
1. Securing the IT environment 1. Managing and retaining data

2. Managing and retaining data 2. Securing the IT environment
3. Managing IT risk and compliance 3. Managing IT risk and compliance
4. Ensuring privacy 4. Ensuring privacy
5. Enabling decision support and analytics 5. Enabling decision support and analytics
6. Managing system implementations 6. Managing system implementations
7. Preventing and responding to computer fraud 7. Preventing and responding to computer fraud
8. Governing and managing IT investment/spending 8. Governing and managing IT investment/
9. Leveraging emerging technologies spending
10. Managing vendors and service providers 9. Leveraging emerging technologies
10. Managing vendors and service providers
Source: http://www.aicpa.org/interestareas/informationtechnology/resources/toptechnologyinitiatives/Pages/2013TTI.aspx
(accessed April 13, 2016)
database query language (discussed in Chapter 5 and Chapter 6). These reports
often support management decisions as well as fulfill certain reporting obliga-
tions. GAAP-based financial statements are but one example of reporting that
will be considered in our study of AIS.
• Control. Traditionally, accountants have been experts on controlling business
processes. As a practicing accountant, you will probably spend much of your
time providing such expertise. Consider how much more difficult it will be to
control modern, complex business processes. You must develop an understanding
of control that is specific to the situation at hand, yet is adaptable for the future.
Control—the means by which we make sure the intended actually happens—will
be introduced in Chapter 7 and explored in detail in Chapter 8 and Chapter 9,
and in the business process chapters, Chapters 10 through 16.
The next three elements—business operations, events processing, and manage-
ment decision making—comprise a major focus of this text, business processes. The log-
ical components of business processes are described later in this chapter. Knowledge
of these processes is essential for success as an accountant, consultant, business pro-
cess owner, or IT specialist.
• Business Operations. Organizations engage in activities or operations, such as
hiring employees, purchasing inventory, and collecting cash from customers. An
AIS operates in concert with these business operations. Many AIS inputs are pre-
pared by operating departments—the action or work centers of the organization—
and many AIS outputs are used to manage these operations. Therefore, we must
analyze and manage an AIS in light of the work being performed by the organiza-
tion. For example, to advise management and to prepare reports for management
decision making, a management accountant must understand the organization’s
business.
• Events Processing. As organizations undertake their business operations,
events, such as sales and purchases, occur. Data about these events must be cap-
tured and recorded to mirror and monitor the business operations. The events
have operational and AIS aspects (i.e., some do not have a direct accounting
impact, and some are accounting “transactions” that result in entries in the gen-
eral ledger). To design and use the AIS, an accountant must know what event
data are processed and how they are processed.
• Management Decision Making. The information used for a decision must be
tailored to the type of decision under consideration. Furthermore, the informa-
tion is more useful if it recognizes the personal management styles and prefer-
ences of the decision maker. For instance, the manager of department A prefers
to receive a monthly cash flow statement that groups receipts and payments into
broad categories. The manager of department B, on the other hand, wants to see
more detailed information in the form of an analysis of payments by vendors.
Beyond the information available to managers, many decision makers now use
intelligent systems to help them make decisions. Later in this chapter, we intro-
duce management decision making and then discuss management’s use of the
data collected by each business process (Chapters 10 through 16). In Chapter 5,
we examine intelligent systems.
• Systems Development and Operation. The information systems that process
business events and provide information for management decision making must
be designed, implemented, and effectively operated. An accountant often partici-
pates in systems development projects as a user or business process owner con-
tributing requests for certain functions, or as an auditor advancing controls for
the new system. Choosing the data for a report, designing that report, and con-
figuring an enterprise system are examples of systems development tasks that can
be accomplished by an accountant. In Chapter 8, we describe the controls related
to the systems development process, and in Chapter 17, we examine systems
development and operation and the accountant’s role in those processes.
• Communications. To present the results of their endeavors effectively, accoun-
tants must possess strong oral and written communication skills. Have your pro-
fessors been drumming this message into you? If not, you’ll become acutely
aware of its importance when you enter the job market. Unlike in other account-
ing courses, there are few clear-cut answers in the study of AIS. Throughout this
course, you will be required to evaluate alternatives, to choose a solution, and to
defend your choice. Technical knowledge alone won’t be enough for the last task.
• Accounting and Auditing Principles. To design and operate the accounting
system, an accountant must know the proper accounting procedures and must
understand the audits to which the accounting information will be subjected. As
an illustration, suppose you were designing an AIS for the billing function at
XYZ, Inc. Would you invoice a customer at the time the customer’s purchase
order was received, or would you wait until XYZ’s shipping department notified
you that the goods had been shipped? The answer is, it depends, and we must
have knowledge of business operations and the related accounting process to
properly synchronize the two.
What Is an Accounting Information System?

In this section, we suggest a definition for AIS (this is our narrow view of AIS) and
discuss related terms to help you understand the subject matter of this textbook.
Because these definitions establish a background for later study, you should read
this section carefully. The section begins with a definition of a system and then a dis-
cussion of an AIS. The section concludes with an explanation of how the accountant
interacts with the AIS and with the current business environment.
Systems and Subsystems

A system is a set of interdependent elements that together accomplish specific objec-
tives. A system must have organization, interrelationships, integration, and central
objectives. Figure 1.2(a) depicts a system consisting of four interrelated parts that have
come together, or have been integrated, as a single system, which we have named Sys-
tem 1.0. Each part of a system—in this case, parts 1.1, 1.2, 1.3, and 1.4—is known as
a subsystem. Within limits, any subsystem can be further divided into its component
parts or subsystems. Figure 1.2(b) depicts subsystem 1.2 as a system consisting of
three subsystems. Notice that we use the term system (versus subsystem) to describe
the area of current interest. For example, in a typical university, the College of Busi-
ness and the College of Engineering are subsystems of the university system, whereas
the School/Department of Accountancy and the Marketing Department are subsys-
tems of the College of Business system.
In Figure 1.2, parts (a) and (b) depict the interrelationships (A through H) in a sys-
tem; part (c) depicts the hierarchical organization structure inherent in any system.
Again, picture System 1.0 as a university and System 1.2 as the College of Business.
Interrelationship F might be a finance student being sent by the Finance Department
(1.2.1) to the School/Department of Accountancy (1.2.2) for a minor in accounting.
FIGURE 1.2 Systems and Subsystems
1.0
1.2 1.0
1.1 A
F
C 1.2 1.2.1
B 1.2.2 1.1 1.2 1.3 1.4

G
1.4 1.3
D 1.2.3 H
E
1.2.1 1.2.2 1.2.3
(a) System: 1.0 (b) System: 1.2 (c) System 1.0 organization
Subsystems: 1.1, 1.2, 1.3, 1.4 Subsystems: 1.2.1, 1.2.2, 1.2.3
Interrelationships: A, B, C, D, E Interrelationships: F, G, H
A system’s central objectives depend on its type—natural, biological, or man-made—and

on the particular system. For example, the human circulatory system is a biological sys-
tem (a subsystem of the human body) whose purpose is to carry blood containing oxy-
gen and carbon dioxide to and from the organs and extremities of the body.
Determining the purpose of man-made systems—such as governments, schools,
and business organizations—is a matter we must discuss and understand. Disagree-
ment over the basic functions of the government of the United States has always led
to spirited debate among political parties. For example, is the U.S. government the
“employer of last resort” and therefore responsible for providing jobs for every citi-
zen? Even when we agree on what the objectives should be, we may disagree on how
they should be attained. For example, we might all agree that the objective of a
municipal school system is to “educate the young citizens of the city.” However, if
you attend a meeting of a local school board, you probably won’t discover consensus
over how to meet that objective.
Business organizations usually have more straightforward purposes that are nor-
mally related to the “bottom line”—profitability. However, many businesses establish
goals other than financial return to the owners. For example, a business might strive
to improve the quality of life of its employees or to use its natural resources respon-
sibly. Here is the ultimate “bottom line”: You must know a business organization’s
objectives to understand that business as a system and to understand the actions and
interactions of that business’s components or subsystems. This is a central theme of
this study of AIS.
The Information System (IS)

An information system (IS) (or management information system [MIS]) is a
man-made system that generally consists of an integrated set of computer-based
components and manual components established to collect, store, and manage data
and to provide output information to users. Figure 1.3 depicts the functional compo-
nents of an IS. Imagine a simple IS used to maintain inventory balances for a shoe
store. The inputs for such a system might be receipts of new shoes or sales of
shoes; the processing might be to update (in storage) the inventory records for the
particular shoe; and the output might be a listing of all the kinds and sizes of shoes
FIGURE 1.3 Functional Model of an Information System
Storage
Input Processing Output
Users
NOTE:
System outputs result in user actions. Some actions (i.e., feedback)
in turn become subsequent system inputs.
and their respective recorded balances. That is, a simple information system is
directed at the processing of business events.
The IS facilitates these operational functions and supports management decision
making by providing information that managers can use to plan and control the
activities of the firm. The IS may have advanced elements, such as a database for
storage, and can use decision models to present output information for decision mak-
ing. For example, assume that while entering data about shoe sales, you also enter
data about who purchased the shoes, how they paid for the shoes, and why they
decided to buy their shoes at your store. You might store those data and periodically
print reports useful in making decisions about advertising effectiveness. Or you might
decide, on the basis of analysis of the sales data, to engage in joint advertising cam-
paigns with a credit card company whose cards are often used in the store.
The Accounting Information System (AIS)

The IS used in the shoe store might have components designed specifically for the
organizational function being supported. For example, the IS in the shoe store sup-
ports inventory control (a logistics function) by maintaining records for each shoe
stocked in the store. The shoe store IS also supports a sales and marketing function
by analyzing sales in a variety of ways. Other typical IS components include person-
nel, production, finance, and accounting. However, integrated IS processing, such as
Enterprise that in an enterprise system, has allowed the distinctions among these separate systems
Systems to become blurred.
So, historically, an IS incorporated a separate accounting information system
(AIS), which is a specialized subsystem of the IS. The purpose of this separate AIS
was to collect, process, and report information related to the financial aspects of busi-
ness events. For example, the input to your AIS might be a sale, such as the shoe sale
in the earlier example. You process the sale by recording the sales data in the sales
journal, classifying the data using a chart of accounts, and posting the data to the
general ledger. Periodically, the AIS will output trial balances and financial state-
ments. However, given the integrated nature of information systems today, seldom
is an AIS distinguished separately from the IS.
This textbook studies the discipline of AIS and takes the view that the AIS often
cannot be distinguished from the IS. This view is consistent with our assertion that
contemporary accountants are information management and business measurement
professionals. Our coverage of AIS is based on the 10 elements of Figure 1.1. We
cover these elements because, as an accountant, your skills must go beyond the pro-
cessing of financial data. You must understand the technology and the operating
goals of the organizational functions for which the financial data are processed. For
example, supermarket checkout scanners simultaneously collect accounting and oper-
ational sales data. Therefore, you must understand sales and marketing goals and the
technology used in operations if you are to effectively operate, analyze, or audit a
supermarket’s AIS. These skills become even more critical as organizations evolve
toward highly integrated information systems, such as enterprise systems. In summary,
a comprehensive study of the AIS should consider all 10 elements of Figure 1.1.
Finally, just as an IS can be divided into its functional components, the AIS may
be divided into components based on the operational functions supported. In the
sales example, the sales data might originate in the billing/accounts receivable/cash
receipts subsystem. We call these AIS components the AIS business processes or AIS
subsystems. In this text, we subdivide the AIS into these processes to facilitate discus-
sion and your understanding of the elements of the AIS. These business processes are
described in Chapters 10 through 16.
Logical Components of a Business Process

Figure 1.4 depicts the three logical components of a business process; the information
process is that portion of the overall IS (introduced earlier and depicted in Figure 1.3
related to a particular business process.7 In this section, we define the other two pro-
cesses, describe how the three processes work together, and emphasize the critical
role that the management information process plays.
The operations process is a system consisting of the people, equipment, organi-
zation, policies, and procedures whose objective is to accomplish the work of the
organization. Operations processes typically include production, personnel, market-
ing and sales, accounting, finance, warehousing, and distribution.
The management process is a system consisting of the people, authority, orga-
nization, policies, and procedures whose objective is to plan and control the opera-
tions of the organization. The three most prominent management activities are
planning, controlling, and decision making, which are discussed in the next section
of this chapter.
If you follow the flows connecting the three processes of Figure 1.4, you can
understand how these processes work together to accomplish the business process’s—
and therefore the organization’s—objectives. To focus the discussion, we chose a
customer order/sales event to illustrate Figure 1.4 on pg. 16. We will discuss each of
the numbered flows in the figure.
• Flow 1. Management hires personnel and establishes the means for accomplish-
ing the work of the organization. For example, management would design the
procedures used to store inventory and to ship those goods to customers.
7
Many would use the terms information process and information system interchangeably. However, we ask
you to think of an information process as the portion of the information system that is related to a par-
ticular business process.
FIGURE 1.4 A Logical Model of a Business Process
1
Policies,
procedures,
personnel hiring Operations
Management
process process 7
Goods
Sales quotas
2 and IS design 5 Shipping
specifications request 8 Shipping
Sales 10 notice
reports
9
Invoice Customer
6
Information
process Packing slip
(IS) 4
Order
acknowledgement
3
Customer order
Other
NOTE: external
In this particular example, the operations parties
process comprises warehousing and shipping.
Broken line depicts the

organization’s boundary
• Flow 2. Management establishes broad marketing objectives and assigns specific

sales quotas by which progress toward the long-run objectives can be measured.
In addition, management designs the IS’s procedures for facilitating operations,
such as the procedures used to pick and ship goods to customers.
• Flow 3. Normal operations begin with the IS receiving a customer’s order to
purchase goods.
• Flow 4. The IS acknowledges the customer’s purchase order.
• Flow 5. The IS sends a request to the warehouse to ship goods to the customer.
This request identifies the goods and their location in the warehouse.
• Flow 6. A document (i.e., a packing slip) identifying the customer and the goods
is attached to the goods.
• Flow 7. The goods are shipped to the customer.8
8
Note that flow 6 is shown as coming from the IS, whereas flow 7 comes from the operations process.
Physically, the two flows are really inseparable; logically, however, they are separate. In later chapters, we
will have more to say about the difference between logical and physical system features.
• Flow 8. The shipping department reports to the IS that the goods have been
shipped.
• Flow 9. The IS prepares an invoice and sends it to the customer.
• Flow 10. The IS sends management a report comparing actual sales to previ-
ously established sales quotas.
These 10 flows highlight several important concepts:
• The information process facilitates operations by maintaining inventory and cus-
tomer data and by providing electronic signals (such as those used in automated
warehouses) and paper documents with which to execute business events, such as
shipments to customers.
• The information process provides the means by which management monitors the
operations process. For example, management “learns” sales results only from
the sales report.
• Operations-related processes and accounting-related processes are integrated.
For example, the shipping notice triggers the accounting process of updating
the sales and accounts receivable data in conjunction with preparing the invoice,
which is an operational activity.
• Management designs the operations and information processes and implements these
processes by providing people, equipment, other physical components, and policies.
• Information process users include operations personnel, management, and peo-
ple outside the organization, such as the customer.
Our discussion of Figure 1.4 should make it clear that the IS can be crucial to an
organization’s success by facilitating the day-to-day operations processes and by provid-
ing useful information for the organization’s management. Let’s examine the attributes
that make information useful to a decision maker and how management can make use of
that information to drive the organization toward achieving its strategic objectives.
Management Uses of Information

An IS serves two important functions within an organization. First, the IS assists daily
operations. It can be used as “leverage” to improve operational effectiveness and effi-
ciency. For example, by computerizing the exact warehouse locations of inventory,
items to be sent to customers can be retrieved more quickly, making the shipping
process more efficient. The IS also mirrors and monitors actions in the operations
system by processing, recording, and reporting business events. For example, the IS
processes customer orders; records sales to customers by updating sales, accounts
receivable, and inventory data; and produces invoices and sales summaries.
The second major function of the information system is to support managerial
activities, including management decision making. How do managers use this infor-
mation? First, they monitor current operations to keep their “ship” on course. For
example, managers need to know that enough inventory is being produced or
acquired each day to meet the expected demand. Managers’ second use of informa-
tion is to help measure and report results for their stakeholders (e.g., customers,
stockholders). For example, information can measure attainment of goals regarding
product quality, timely deliveries, cash flow, and operating income. Finally, managers
use the IS to recognize and adapt in a timely manner to trends in the organization’s
environment. For example, managers need answers to such questions as: “How does
the time it takes us to introduce a new product compare to that of our competitors?”
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Plummer, Mr., i., 209
Plague, the, iii., 203
Polani, Dr., i., 352
Poujolat et Boutés, MM., ii., 150; iii., 132
Pretyman, Dr., iii., 166
Prickly Heat, ii., 285
Prince of Wales, (George IV.) ii., 99, 382
Princess Elizabeth, ii., 102, ter.
Princes, the, iii., 268
Prudoe, Lord, iii., 38, 203, 215
Puckler Muskau, Prince, i., 139; iii., 4, 37, 89, 127, 142, 170, 255,
313
Queen Victoria, ii., 228, 232, 259, 277; iii., 239
Rashéyah, iii., 274, 316

Reading aloud, iii., 128
Reasons for statesmen’s actions, ii., 29
Reichstadt, Duke of, i., 206
Religion, iii., 312
Revolutions, i., 280; ii., 168; iii., 299
Revolution in Mount Lebanon, i., 347
Rewisky, Count, iii., 183
Reynaud, Mr., ii., 356
Rice, ii., 52
Richmond, Duke of, ii., 28, 64, 94, 95
Rich, Mr.
Rings, nose, ii., 200
Risk Allah
Roberts, Mr., iii., 82
Robinson, three years’ residence, iii., 204
Romney, Lord, ii., 24, 381
Rugged Paths, i., 210
Rûm, village
Russell, Lady Wm., i., 27
Russian spy, iii., 266
Rutland, Duchess of, ii., 52, 108
Saady, maid servant, ii., 327, 344; iii., 160

Salàmy Effendi
Salisbury, Lady, ii., 105
Saunders, Admiral, iii., 178
Scenes at Mar Elias, ii., 315
Scott, Capt., i., 235
Scott, Dr. John, dedication &c., i., 59
Scott, Walter, ii., 173; iii., 172
Selim Koblàn, character of, iii., 59
Serpent, iii., 292
Serpent at Tarsûs, ii., 360
Servants, English, ii., 70; iii., 161
Servants, men, i., 24; ii., 30
Servants, Syrian, i., 290; ii., 148, 309
Servants’ Wages, ii., 122
Servants, women, i., 26; ii., 136; iii., 161, 364
Sentimentality, i., 294
Sevenoaks Common, i., 384; ii., 23
Sevigné, Madame, iii., 116
Shadwell, Col., ii., 23
Shakspeare, i., 300
Shemmaûny, iii., 219
Sheridan, ii., 58
Sherỳf Pasha, iii., 67, 75
Sheykh Beshỳr, ii., 357
Sheykh Ibrahim, iii., 242
Sheykh Mohammed Nasýb, iii., 173
Shibly el Arriàn, iii., 318
Shifts, what made of, ii., 269
Ship plundered by Greeks, i., 40
Sidmouth, Viscount, i., 216
Silver spoon stolen, ii., 272
Singers in Syria, iii., 206
Slaves, i., 226, 288, 364
Sligo, Lord
Smith, Newman, i., 63
Smith, Sir Sydney, ii., 292
Spetchingly, Mem. of a Peeress, iii., 171
Spies, iii., 78, 297
Spit in the face, iii., 52
Stammering, ii., 108
Stanhope, Charles, ii., 85; iii., 165
Stanhope, Countess, ii., 14
Stanhope, Earl, i., 296; ii., 15; iii., 165
Stanhope, James Hamilton, i., 10; ii., 85; iii., 165
Stanhope, Lady H., takes to her bed, ii., 43, 48;
her complexion, ii., 16, 166;
her opinion of women, i., 376; iii., 262;
gives away money, ii., 240, 244;
has boys in her service, iii., 195;
her estimate of herself, iii., 121;
foretells revolutions, ii., 168; iii., 265;
her personal cleanliness, i., 148;
her hatred of women, i., 166;
takes no man’s arm, i., 81;
never shakes hands, iii., 143;
is able to command an army, ii., 32;
her pension, iii., 48, 99;
furious with her maids, ii., 276;
flogging, i., 294; ii., 136; iii., 46, 51, 242;
her veracity, ii., 324;
her freedom of speech, i., 135; ii., 37; iii., 262;
the sublimity of her language, i., 135;
her fearlessness, i., 106; ii., 366; iii., 270;
refuses Mrs. M’s. company, ii., 246;
men of her time, ii., 105; iii., 128;
is neglected, ii., 211; iii., 194;
Dr. M.’s trembling legs, iii., 144;
like a Delphic priestess, ii., 175;
like Gray’s Agrippina, iii., 217;
drinks brandy, ii., 270, 276;
her severity, i., 299;
seated in an alcove, iii., 4;
has a tooth drawn, ii., 44;
her jealousy of the queen, ii., 221;
her house in Montague Square, iii., 192;
what she gave to her brother James, ii., 88;
shape of her skull, iii., 294;
will live by rules of grandeur, ii., 275;
appearance of her tongue, ii., 237;
her dislike to Swiss governesses, i., 321;
frequent in eating, ii., 48;
ever just to others, iii., 121;
her advice excellent, ii., 167, 208; iii., 120;
open to flattery, iii., 217;
“qui faisoit la pluie et le beautemps,” ii., 371;
praised by an Imàm, iii., 30;
her property, ii., 88;
is taken for a man, ii., 145;
the divine right of kings, ii., 365;
her conversational powers, i., 135;
the Emir Beshỳr annoys her, i., 55,;
her feet free from smell
her deliberate affronts, ii., 217;
her establishment, i., 272;
resolved never to return to England;
her end in blood, ii., 340; iii., 321;
her munificence, ii., 238, 244;
wishes to be buried like a dog, ii., 339;
would destroy books, iii., 52;
wields the mace, iii., 56;
persons she wrote to, iii., 62;
her school for girls, iii., 64;
signs papers for Mr. Pitt, iii., 171;
smokes, iii., 188;
rejects eulogistic verses on herself, iii., 216;
physicks everybody, iii., 242;
refuses Duke Maximilian’s portrait, iii., 254;
insists on Dr. Meryon’s leaving her, iii., 255, 298;
advises him where to settle, iii., 256;
Duc de Bordeaux to kiss her stirrups, iii., 287;
walls up her gateway, iii., 298, 319;
disliked Mr. Canning, i., 315;
her influence over people, i., 92;
her debts, i., 339
Stanhope, Lady Lucy, ii., preface
Stars, peoples, ii., 251, 262, 364
Stewart, Lord, i., 187
Stowe, ii., 57
Strangers sent away, ii., 160
Strangways, Mr., ii., 369
Stratford de Redcliffe, Lord, ii., 290
Stuart, the Misses
Sugden, Sir Edw., ii., 281
Suicide, uncommon, ii., 129
Sulyman, son of Skender, iii., 35
Sunflower Family, i., 384, Mr. M. L.
Sussex, Duke of, i., 187; ii., 104; iii., 268
Syria, climate of, i., 187; iii., 253
Sturt, Bridget
Taat-el-Dyn, i., 163

Tamarisk Pavilion, ii., 43
Tattenbach, Count, iii., 102, 110
Taylor, Colonel Thomas, iii., 277
Taylor, Thomas, i., 18, 31
Temple, Earl, i., 277
Thanet, Lord, ii., 22
Thé, Madlle. du, ii., 262
Thief lurking, iii., 292
Things clean and unclean, i., 148
Thurlow, Lord
Tickell, Mr., ii., 10, 75
Tobacco, smoking, iii., 188
Tongue, unclean, i., 28
Tooke, Horne, i., 374; ii., 31
Townsend, Mr., ii. FN[8]
Traveller, unknown, iii., 82
Travellers, why sent away, ii., 160
Tread on a toe, ii., 212
Tristram, the hermit, iii., 130
Tumblers, iii., 245
Turk, a real, i., 60
Turk, striking a, iii., 217
Turner, Mr. Wm., ii., 37
Tutors marry ladies of quality, iii., 81
Tutungi, Michael, ii., 320, 325; iii., 79
Twiss, Lady Stanhope’s maid, iii., 160
Tyr el Hakem, iii., 111
Urquhart, David, i., 245
Valentia, Viscount
Vansittart, Mr.
Verity, Dr., ii., 32
Verses on Mrs. Moore, iii., 216
Vincent, Lord St., iii., 138
Vices of the aristocracy, iii., 181
Volney, Mons., ii., 153
Voyage from Leghorn, i., 39
Wales, Prince of, (George IV.), i., 313; ii., 99, 101, 104
Wales, Princess of, i., 308
Wallace, Mr.
Walling up the gateway, iii., 319
Walmer Castle, ii., 66, 75, 214
Ward, Mr., iii., 189
Warren, Dr., ii., 34
Way, Mr., i., 137, 147
Wellesly, Lord, ii., 297
Wellington, Duke of, ii., 82, 293, 364
Wellington, the negro, iii., 254, 257, 277
Wiberforce, Mr., ii., 22
Wilbraham, clerk of the kitchen, ii., 247
Williams, Lady H. S.’s maid, i., 20, 70, 154, 158, 212; ii., 255
Wilsenheim, Count, letter to, iii., 309, 314
Wilson, Mr., Lord Chatham’s tutor, ii., 247
Witchcraft, i., 141
Woman spy, iii., 78
Women, Lady H. S.’s opinion of, i., 166, 376
World, the, heartless, iii., 194
Wraxhall, Sir Nathaniel, iii., 290, 293
Wynnes, the
Yanta, village, iii., 293, 297

York, Duke of, i., 23; ii., 105
Yorke, Captain, 4th Earl Hardwicke, i., 362; ii., 135, 373; iii., 181
Young men of Lady H. S.’s time, iii., 128
Zahly, village, iii., 286

Zeyneb, her shape, i., 288; iii., 51
Zezefûn, iii., 242
Zoave, Capt., Robert, i., 247
London: F. Shoberl, Printer, 37, Dean Street, Soho.
Transcriber’s Note:
This book was written in a period when many words had not
become standardized in their spelling. Words may have multiple
spelling variations or inconsistent hyphenation in the text. These
have been left unchanged unless indicated below. Obsolete and
alternative spellings were left unchanged.
Footnotes were renumbered sequentially and were moved to the
end of the chapter. Obvious printing errors, such as backwards,
reversed, upside down, or partially printed letters and punctuation
were corrected. Final stops missing at the end of sentences and
abbreviations were added. Duplicate words and letters at line
endings or page breaks were removed. Quote marks, accents and
parentheses were adjusted to standard usage.
In the index, there are numerous entries without corresponding
volume or page numbers. There are additional entries with volume
and page numbers that do not match the book.
The following were changed:
Hamâdy to Hamâady
Damacus to Damascus
entaining to entertaining
unconcious to unconscious
Feeky to Freeky and page number from 288 to 259
added dropped comma: at 6d., a loaf
replaced hyphen with space: hind legs, corn market
Added missing volume and page numbers to index entries:
Abu Ghosh, i., 263

Advice, iii., 271
Cheshire Gentleman, iii., 166
Cœle-Syria iii., 57, FN[32]
Flies on horses’ tails, ii., 35
Footmen’s Nosegays, iii., 128
Letters to Mr. Speaker Abercrombie, ii., 223, 239, 272;
Liverpool, Lady, ii., 76, 95, 96
Loustaunau Capt., iii., 306
Malmesbury, Lord, i., FN[43], FN[65], FN[66], FN[67], FN[68],
162, 270; ii., 26, FN[3], FN[32]; iii., FN[20]
Meryon, his salary, ii., 2;
Prickly Heat, ii., 285
Richmond, Duke of, ii., 28, 64, 94, 95
Servants’ Wages, ii., 122
Sevigné, Madame, iii., 116
Sheykh Ibrahim, iii., 242
Temple, Earl, i., 277
Townsend, Mr., ii. FN[8]
The only mention of Signor Catafago is in the Index so references

are not found on the page numbers listed. Also, page number 324
for Signor Baldassare Matteir does not exist in any of the three
volumes.
*** END OF THE PROJECT GUTENBERG EBOOK MEMOIRS OF
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(eBook PDF) Accounting Information Systems 3rd Edition

eTextbook 978-0078025884 Accounting Information Systems

Accounting Information Systems, 4e ISE 4th Edition

Management Information Systems

Intermediate Accounting 11th Edition David Spiceland

Management and Cost Accounting 11th Edition Mike Tayles

M: Information Systems 6th Edition Baltzan

Financial Accounting: Information for Decisions 9th

MARY CALLAHAN HILL

Australia • Brazil • Mexico • Singapore • United Kingdom • United States

To learn more about Cengage Learning Solutions, visit

Purchase any of our products at your local college store or at our

Printed in the United States of America

Manson with grateful appreciation for their

PART 1 UNDERSTANDING INFORMATION SYSTEMS

PART 2 ORGANIZING AND MANAGING INFORMATION

PART 3 ENTERPRISE RISK MANAGEMENT

PART 4 BUSINESS PROCESSES

PART 6 ACQUIRING AN AIS

PART 1 Human Capital Management 52

Retention Control Plans 275 A Horizontal Perspective 359

Discussion Questions 441 Application of the Control Framework 523

Cost Accounting: Variance Analysis 601 PART 6

Accountant as an Information Management

Information Systems: Integrated Elements Moving

FIGURE P.1 Information Systems-Integrated Elements

co ntrols and applic

Frequently Asked Questions (FAQs)

FAQ #1: What Are the Core Themes of This Book?

FAQ #2: How Does This Book Present Accounting

FAQ #3: Where Can I Find Information About the Sarbanes-Oxley

accountant as an information management and business measurement professional.

FIGURE P.2 Selecting Chapters to Meet Selected Pedagogical Objectives

Require core coverage

Enterprise Risk Management/

Require Chapter 4 on reading Require Chapter 4 on reading Require Chapter 4 on reading

Recommend Chapters 5 and 6

Consider Chapter 6 Require Chapter 17

Require Chapters 7–9 Recommend Chapters 7–9

approach also necessitates the consideration of enterprise systems—a fundamental

• Technologically Adept: Throughout the text, emerging technologies that are

FAQ #6: How Does the Text Help Prepare Students

FAQ #7: Does the Book Provide a Foundation

risks that must be considered in contemporary risk-based audit approaches.

New to this Edition

• Chapter 8 includes a significant revision of material to accommodate move to

Accounting Education: An International Journal, Issues in Accounting Education, Journal of

The Textbook’s Three Themes

Beyond Debits and Credits

Legal Issues Impacting Accountants

The Sarbanes-Oxley Act of 2002

management must identify, document, and evaluate significant internal controls.

Independent auditors are faced with providing an opinion on the reasonableness of

Components of the Study of AIS

FIGURE 1.1 Elements in the Study of Accounting Information Systems

• Technology. Your ability to plan and manage business operations depends

EXHIBIT 1.1 Current Technology Issues for Accountants

25th Anniversary North American Top Technology Initiatives Survey

United States Canada

1. Securing the IT environment 1. Managing and retaining data

What Is an Accounting Information System?