AIN2601 Exam Notes

8/15/2019 AIN2601 Exam Notes

1/24

AIN2601 S1 2016

Topic 1 SU1Data management and utilizationData and the computerised information processing system

• a) Activities b) input of datac) processinge) output/ information f)make decisions d)store raw data and information

• Input of dataData captured on manual documents (hard copy) as well as data entered in the CIS and not yet processedis called raw data.ecause information is obtained by processing raw data, it is essential that the raw datacaptured in the CIS should be accurate, complete, reliable and verifiable A source document is the first documented record of an activity that took place

o Input types

atch inputinvolves similar source documents being grouped together (batch) and then entered in the CISperiodically! eg" daily! weekly or monthly"

#nline inputinvolves data being immediately captured into the CIS at the point where the activity occurs"

• $rocessing datao Processing methods:

Classifying data % arranged into different groups (categories) credit sales & cash sales $erforming calculations % arithmetic or logical calculations eg" 'A Sorting data % purchase orders in numerical seuence Summarising data % transactions for a specific supplier for a particular month

ransforming data % accounting data graphs* audio written te+to Processing types:

atch processing % processing transaction files to update master files periodically ,eal-time processing % immediate update of transaction files to the master files (as the

transaction occurs)o Output information:

atch output occurs when all reuests for information (ie reports! ueries! etc) are batchedtogether and periodically e+tracted from the CIS"

Interactive output occurs when users are directly connected to the CIS and can reuest certaininformation and receive it immediately"

Processing

o Typical processing systems

atch input! batch processing! batch outputhe processing of claims at a medical aid is an e+ample of such a system" .embers submitclaims! which are batched together and then entered in the CIS" All the entered batches areupdated at the end of each day" ,outine claim reports! indicating the claims of the previousweek!are e+tracted and distributed every .onday morning"

atch input! batch processing! interactive outputor e+ample! twice a week! the gym partner of a medical aid provides the medical aid withbatch of electronic source documents in one file" his file contains the number of times eachmember of the medical aid visited the gym" he batch source documents contained in theelectronic file are imported when received" he transaction files containing the gym data areupdated every Saturday" he members can view their information on the medical aid0s securewebsite as soon as the transaction file has been updated"

#nline input! batch processing! interactive outputor e+ample! each branch of the organisation enters its reuest for inventory online as needed"he transaction file containing the different branches0 reuests is updated to the master fileevery two days" he branch manager can e+tract order information directly from theoperational system"

#nline input! real-time processing! interactive output An e+ample of such a system is the processing of a transaction at a bank0s automatic teller machine (A.)" he customer enters the transaction at the A." he transaction isimmediately updated to the master file and the customer receives a receipt with the transaction

details and his or her new updated balance" Storage of data and information

1


2/24

AIN2601 S1 2016

o lat file files* not related" 1sers each keep their own data and information"o Database information

Topic 1 SU2Database enironmenthe database environment consists of three components! namely• the users of the database

• database management systems (DBMS) and• the physical database, which includes both the hardware it runs on and the data in the physical

database

!dantages

• Reduce data redundancy. his is because all data is stored in only one place"

• Reduced costs for data entry and data storage. Data is only entered once! which createsa data capturing cost saving" he effect of reduced data redundancy is that less storagespace is needed on storage devices! creating a data storage cost saving"

• Data integrity is maintained and improved. his is because changes and updates to dataoccur in one place"

• Improved data and information security. Since access to the database and therefore access

to the data and information in the database is centrally controlled and managed! this increasessecurity for the organisation0s data and information"

• Application software independence. Data is stored separately from the application software"Changes to the database will therefore not always reuire an automatic rewriting or updating ofthe application software! or vice versa

Standardisation of data structures, data access, system software and file formats.

• his makes it easier to maintain data files" he standardisation creates a consistent structure onwhich all application software are based! which makes it easier to update e+isting or develop newapplication software"

• Improved data access. Data can be made available to different users at the same time as usersshare the data in the database" Database management software also makes it easy for users toaccess and retrieve data"

Disadantages

• Start-up and operating costs. It can be e+pensive to acuire the hardware and softwareneeded to set up a database environment" urthermore! an organisation will need to hireadditional employees! such as a database administrator! to manage the databaseenvironment"

Database systems are complex to design and use.

• ecause databases are comple+! it is very time-consuming to design a proper database"

• Database or database management software failure will affect all application softwarelinked to that specific database" his can make recovery from such a failure more difficult" Afailure can shut down a whole organisation or department(s) in the organisation! making theorganisation unable to run its daily operations and provide adeuate customer service

Database users• nd-users capture data in the database and e+tract information from the database using

database management system software" #wing to their computer skill level! most end-users willinteract with the database management system (D.S) through application software" D.S ise+plained in section 2"

• Application programmers are responsible for creating! maintaining! updating and managing theapplication and D.S software which the end-users use to interact with the physical database"

• he database administrator is responsible for managing and controlling the organisation0sdatabases

• he data administrator ! also called a database analyst! is responsible for managing andcontrolling the data in the organisation0s databases"

2


3/24

AIN2601 S1 2016

Database management systems "D#$S% A D!"S is an integrated set of software that provides a user-friendly interface to the users for all data interactions between the user and the physical database % in other words! it enablesthe users to operate and interact with the databaseD#$S functions

• design! create and maintain the database structure and the database

• control the organisation! storage and retrieval of data in the database• capture! maintain (delete! insert and amend) and manipulate the data in the database

• share data between multiple users simultaneously

• e+ecute ueries and generate outputs

• control the movement of the data between authorised users and the database

• control and monitor access to the database

• analyse and monitor database performance

Three&leel database architecture

• he external level, also called the user view ' is the individual end-user0s view of the data and thedatabase

• he conceptual level is a complete view of the entire database! that is! a view of all the data from

which the user views can be derived"• he internal level ! also called the physical view! is the low-level view of how the data is physically

stored on a storage device such as a magnetic hard drive disk"

D#$S (ey componentshe key components of the D.S are the data dictionary and database languages"• A data dictionary is a centralised file containing detailed information about the database and the

data contained in the database" he data dictionary is a very import tool for all database

Database languages

• he database users (end-users! application programmers and database administrator) usedifferent database languages to interact with the database" hese languages included a datadefinition language, data control language, data manipulation language and a data query

language.o As the name implies! data definition language is used to define a database and includescommands to (3) create! modify and delete the database and database ob4ects! (5) define anddescribe the data structure of the database according to the database model used! and (6)create the data dictionary"

o Data control language #D$%& controls the security and user access to the database ob4ectsand data in the database"

o Data manipulation language #D"%& is used in the routine operation of the database toinsert! delete! modify and maintain the data stored in the database""

o Data 'uery language is used to retrieve data from the database"

Physical database A database can be defined as an organised collection of related data that is managed and stored

electronically and can provide data to different application software in the organisation"

!dantages of )elational databases • Data can be accessed! inserted and/or deleted without changing the database structure"

• he database structure can be easily customised for most types of data storage"

• Data does not need to be duplicated"

• .ost users easily understand the structure"

• It is easy to search for and e+tract data from the databaseDisadantage of )elational databases• it is slower than the network and hierarchical models* it uses more processing power to uery data

3


4/24

AIN2601 S1 2016

Database modelsDatabases can be classified according to the theoretical data structure! referred to as a datamodel ! on which it is based"• he hierarchical model was used in early databases and! as the name indicates! the data is

structured in a hierarchical (upside down tree-like) structure"• he networ( model supports many-to-many relationships! that is! data may be accessed by

following several paths"• In a relational model ! data is stored in two-dimensional rows and columns (ie tables)

• In an ob)ect-oriented model ! the data and the operations to be performed on the data are bothstored in the database" his database model can furthermore store and process a wider range ofdata types than only te+t and numerical data % it also stores and processes images! audio andvideo data" his model is used for more specialised databases such as multimedia web-basedapplications! molecular biology databases and defence industries" #b4ect-oriented databasemodels are not as widely used as relational databases because they are e+pensive to implement!and many organisations do not need to process other data types other than numerical and te+tdata"

• A multidimensional model is similar to a relational model! but whereas a relational model storesdata in a two dimensional table! a multidimensional model stores data in a three- or more

dimensional table! creating a cube-like data structure" Data can be viewed in a spreadsheet-likeformat! which make it easier to understand where data with many interrelationships are stored andprocessed" #wing to the spreadsheet like format! this data structure is easy to maintain" hismodel type is mainly used for datawarehouses and makes online analytical processing (#7A$) and business intelligence software(IS) possible"

*entralised and distributed databaseshe physical location of an organisation0s databases will depend on its specific business needs and

reuirements" 8e can classify a database according to its physical storage location as either a

centralised or a distributed database"

• 8hen using a centralised database! the database is physically stored in one central location (ie it

is on one server)" All users interact with this single database in the single location through thecomputer network"he benefit9 the database is always up to date with the latest information if online input and real-time processing are used"

• 8hen using a distributed database! there are several interlinked databases stored in severalcomputers in the same (eg headuarters) or different locations (eg branches)"8hen properly managed! users will not know that each person may be interacting with a databasein a different location because they will all have the same view of the database"Distributed databases are either a partitioned or a replicated database"o A partitioned database is split into smaller portions (partitions)

the part applicable to the user is made available on the location closest to the user"$artitioned databases are generally used when minimal data sharing is necessary betweenusers at the different locations" or e+ample! an organisation with branches may use apartitioned database when its customers always only interact with that specific branchthere is thus no need for the branches to view each other0s customer databases"

o In a replicated database! the whole original database is copied to the different locationsthe database is replicated at each location"or e+ample! a pharmacy with countrywide branches at which customers can obtain new andrepeat prescriptions at any of the branches may use a replicated database for customers" hiswill enable the customer to obtain a repeat prescription at any of the pharmacy0s brancheswithout the branch needing to see the original prescription"

4


5/24

AIN2601 S1 2016

• In duplication! the master (original) database is copied to the other locations! normally at aspecific freuency and time! and will overwrite the database at the distributed locations" hedatabase at the different locations can only be updated by updating the master database"

• Synchronisation is more comple+ and time consuminginvolves a two-way updating of the master database and the distributed databases (ie the master

database can update the distributed database and the distributed database can update the master database)"his synchronisation process normally also happens at a pre-set freuency and time"Data conflicts (ie the same data must be updated by both databases and the software needs todetermine which database has the latest or correct data) are usually resolved throughpredetermined rulesbut in some instances can also be resolved manually! that is! the user determines which is thelatest version of the data"

5


6/24

AIN2601 S1 2016

)elational database terminologymost commonly used database model for business and financial databases!See S+ 1 p 1,- . 1/0

• A data value is a character (a single number! letter or special character) or a group of relatedcharacters used to populate the data field"

• A data field contains a data value and is the smallest unit of data that can be accessed in a

database"• An attribute! commonly known as a column! represents one uniue characteristic of a single

database file"• All attributes have a uniue name known as a field name! which labels the data stored in the

attribute"• A data record is a set of logically related data fields about a single member or item"

• :ach file has a uniue data field (known as the primary data field ) that can be used to uniuelyidentify each data record in a database file" A primary data field is also known as a primary key"

• 8hen a primary data field of a database file is entered into another database file to create arelation between the two database files! the primary data field in the other database file is knownas a foreign (ey "

• A database file! also known as a database table! is an organised collection of related data

records"• A master file contains data records of a relative permanent nature (ie they do not change

regularly) about the organisation0s resources and sub4ects (ie customers! suppliers! inventory!employees! etc)"

• A transaction file contains data records relating to the daily individual activities of theorganisation (eg the organisation0s sales

• A reference file is a semi-permanent file containing data records referenced to by the transactionfile in order to complete a transaction"

• A history file contains data records about transactions completed in the past"

actors to consider hen choosing a D#$S and database:ach factor should not be considered in isolation

factors will influence one another and some factors! such as costs! may also be a constraint for allother factors"• he database model type used should support the reuirements of the organisation % that is! a

financial system might only reuire a relational database! but an organisation that reuires onlineanalytical processing (#7A$) needs to use a multidimensional model"

• he acuired D.S and database should closely match the reuirements of the organisation"

• he D.S and database should be able to evolve to meet future organisational needs"

• he performance (ie reaction time) of the D.S and database" ;ow fast can records be updatedor ueried in the database<

• he cost of the D.S and database should be considered" Can the organisation afford the D.Sand database<

• Different D.S and databases will reuire different levels of specialised staff skills" Are there

specialised skills available in the organisation or can the organisation acuire the skills reuired<• he hardware needed to run the D.S and database should be considered" he organisation

may need to acuire hardware if it is not already available" his will have further cost implications"• Can the D.S and database be integrated with the rest of the organisation0s information

systems<• he database si=e (amount of data the database can manage) must be adeuate for the

organisation0s future data reuirements and the database should easily be e+pandable"• he number of concurrent users (the number of users who can assess the database at the same

time) the D.S and database can handle should be taken into account"• he D.S and database vendor should be a reputable organisation and financially stable

because this vendor will need to provide future support for the solution"

6


7/24

AIN2601 S1 2016

Topic 1 SU2Utilizing Databases• A data warehouse is a database populated with current and historical data e+tracted from the

organisation0s various databases" It may also contain data from e+ternal sources and/or databases"• A data mart is a smaller data warehouse e+tracted from the main data warehouse and contains

specific related data e+tracted for a specific organisational user group such as the finance department

or the marketing department• Data mining software is used to analyse data sets in order to uncover previously unknown trends!

patterns and relationships between data"• *nline analytical processing #*%A+& software enables users to interactively and rapidly analyse

large data sets from various viewpoints (ie #7A$ can handle multidimensional ueries)"

Similarities and differences beteen O3!P and data mining#7A$ and data mining are similar! but technically different"oth are business intelligence tools that complement each other! and they are used in con4unction witheach other"#7A$ and data mining operate differently on data"#7A$ is mainly used to summarise data! say! per month and per region! the number of smart phones soldto persons aged 5> to 6> years"

Data mining is used to break down data in order to uncover trends! patterns and relationships"#7A$ and data mining are therefore used to answer different uestions"Data mining will answer uestions such as the following9

8hy have sales increased in .pumalanga< A person with what characteristics would be more likely to buy our product<8hat factors resulted in the increase in smart phone sales in ?auteng during September<

#7A$ is used to answer the following kind of uestions98hat is the value of motor accident claims for women driving green motorcars in @wa=ulu-atal bymonth<8hat are the average sales of electric drills by month and by region<

7


8/24

AIN2601 S1 2016

Topic 2 45cel 6 Spreadsheet

! formula in $icrosoft Office 45cel alays start ith an 7 sign8

*ommon errors hen using formulas and functions#nce an error shows up in a cell! you have to find the cause of the error and edit the worksheet in

order to correct the error" elow are common error displays found in .icrosoft #ffice :+cel and thereasons for it99DI;0<his error occurs when the formula calls for division by a cell that either contains the value > or! as ismore often the case! is empty" Division by =ero is not possible according to mathematical principles"9=!$4>his error occurs when .icrosoft #ffice :+cel does not recognise te+t in a formula"9=U33<his error occurs most often when you insert a space where you should have used a comma toseparate cell references used as arguments for functions"9=U$<his error occurs when .icrosoft #ffice :+cel encounters a problem with a number in the formula!such as the wrong type of argument in a .icrosoft #ffice :+cel function or a calculation that produces

a number too large or too small to be represented in the worksheet"9)4<his error occurs when .icrosoft #ffice :+cel encounters an invalid cell reference! such as when youdelete a cell referred to in a formula or paste cells over cells referred to in a formula"9!3U4<his appears when you use the wrong type of argument in a function! the wrong type of operator orwhen you try to do a mathematical operation that refers to cells containing te+t entries"9=;!< his error occurs when a value is not available to a function or formula"

8


9/24

AIN2601 S1 2016

$athematical functions

SU$

his function adds values in individual cells or cell ranges together"ormula format for adding whole range is 7SU$"cell1:cell2%

ormula format for adding specific values within in a specified range of cells is9

7SU$"cell11'cell12'cell1?%

)OU=D

his function rounds the value in the specified cell to the specified number of digits"ormula format is B,#1D(cell3!numberofdigits)

$ell refers to cell that will be rounded" =umber@of@digits refers to the number of digitsthe answer should be rounded to"

!4)!+4

his function calculates the average value for the specified cells or ranges"ormula format for calculating average value of whole range is B!4)!+4"cell1:cell2%

ormula format for calculating the average value within a specific range of cells isB ARA#cell,cell/,cell0&

$!AI$U$

his function is used to identify the ma+imum value in a range of cells or in specifiedcells"ormula format for calculating/identifying ma+imum value within the of whole range isB$!A"cell1:cell2%

ormula format for calculating/identifying the ma+imum value within a specific range of cells isB"A1#cell,cell/,cell0

$I=I$U$his function is used to identify the minimum value in a range of cells or in specifiedcells"B$I="cell1:cell2% determines the smallest value in a specified range of cells"

B$I="cell11'cell12'cell1?% determines the smallest value for specified cells"

9


10/24

AIN2601 S1 2016

*!3*U3!TIO= O P!B$4=TS

BP$T"rate'nper'p'f'type%Calculates the payment for a loan based on constant payments and a constant interest rate"1se the BP$T function and calculate the monthly payment you need tomake to the bank at the end of each month"

% :nter the following formula in cell 9 BP$T"#C;12'#,12'#?'0'0%

Structure The formula 45planation

egins with B sign 7unction (f+) name $.

#pening parenthesis (

rate E/35 he interest rate is an annual (yearly)

rate and needs to be divided by 35 to

make it a monthly rate because the

payment value reuired is a monthlypayment"

nper 2F35 he period is a term in years and needs

to be multiplied by 35 to make it a period

in months because the payment value

reuired is a monthly payment"pv 6 he present value of the loan amount"

his is the amount you want to borrow

from the bank to finance the vehicle"fv > he future value of the loan" Since the

loan will be fully paid by the end of the

period! the future value of the loan is >"type > he instalment is paid at the end of each

month (paid in arrears)"3 he instalment is paid at the beginning

of each month (paid in advance)"Closing parenthesis )

10


11/24

AIN2601 S1 2016

*!3*U3!TIO= O UTU)4 !3U4S

B"rate'nper'pmt'p'type%

,eturns the future value of an investment based on constant payments and a constant interest rate"Gou want to save ,2>> at the end of each month for 2 years and the bank is prepared to give you aconstant interest rate of 3EH per annum" :nter the investment amount (,2>>) in cell 6! the

investment rate (3EH) in cell E and the period (2) in cell 2" 1se the B function and calculate what the value of your savings will be after five years" % :nter the following formula in cell 9 B"#C;12'#,12'#?'0'0%


egins with B sign 7unction (f+) name '



rate and needs to be divided by 35 tomake it a monthly rate because the

payment value reuired is a monthly

payment"nper 2F35 he period is a term in years and needs

to be multiplied by 35 to make it a period

in months because the payment value

reuired is a monthly payment"pmt 6 he payment amount you want to save

each month" =ote that the amount is

negatie "&),00% because it is an outflow

of cash to an investment"pv > The present value of your investment.

Since you have not saved anything yet,

the current value (present value) of your

investment is 0.

type > You save at the end of each month.

3 You save at the beginning of each month

Closing parenthesis )

11


12/24

AIN2601 S1 2016

*!3*U3!TIO= O P)4S4=T !3U4S

BP"rate'nper'pmt'f'type%returns the present value of an investment % the total amount that a series of total payments is worthtoday at a constant interest rate and over a constant period" At the end of each month! you have ,2>> that you can use to pay off a loan to the bank" he bankoffers you a constant interest rate of 3EH per annum over J> months" :nter the payment in cell 6!

the interest rate in cell E and the period in cell 2" 1se the BP function and calculate what amount you can borrow from the bank" % :nter the following formula in cell 9 BP"#C;12'#,12'#?'0'0)


egins with B sign 7unction (f+) name $'



rate and needs to be divided by 35 tomake it a monthly rate because the

payment value reuired is a monthly

payment"nper 2 he period is a term in months

o ad4ustment because already in

monthspmt 6 The payment amount you can make each

month. Note that the amount is negative

(-R500) because it is an outflow of cash

to an investment.

fv > The future value of the loan. Because the

loan will be fully paid by the end of the

period, the future value of the loan is R0.

type > The instalment is paid at theend of

the month (paid in arrears).

3 The instalment is paid at the beginningof

the month (paid in advance).

Closing parenthesis )

3O+I*!3 U*TIO=S

BI"logical@test'alue@if@true'alue@if@false%returns one value if the specified logical test evaluates to be ,1: and another value if the specifiedlogical test evaluates to be A7S:"BI(KBLAdultM!NE!N2)

*OU=TI

B*OU=TI"range'criteria%his function counts the number of cells within a range that meet a single criteria as specified by you"or e+ample! you can count all the cells with a certain number or word contained in it")ange: A continuous range of cells for which you want to count the data" he range will have a start cellreference and an end cell reference ie cell39cell2"

*riteria: A condition that must be met in order for the cell to be counted eg Le+t AM or 2>>

12


13/24

AIN2601 S1 2016

T4AT U=*TIO=S 34T U=*TIO=

B34T"cell'num@chars%his function returns a specified number of characters "num@chars% from the start (lefthandside) of the te+t"

$ID U=*TIO="ID#cell,start2num,num2chars&his function returns a specified number of characters from the middle of a te+t string givena starting position "start@num% and the length specified "num@chars%8

)I+ET U=*TIO=

RI34#cell,num2chars&his function returns a specified number of characters "num@chars% from the end (righthandside) of the te+t"

3OOFUP U=*TIO=S ertical loo(up: 73OOFUP"loo(up@alue'table@array'col@inde5@num'range@loo(up%

his function searches for a value in the leftmost (first) column of a range of cells! andreturns a value in the same row from a column you specify"3oo(up@aluehis is the value you want to search in the first column of the tablearray (see table arraybelow)" 7ookupvalue can be a value! a cell reference or te+t" '7##@1$ returns the O/Aerror value where the lookupvalue is smaller than the smallest value in the first columnof tablearray"Table@arrayhis range of cells (two or more columns) contains the data you want to look up" helookupvalue searches the values in the first column of the tablearray" he valuesin the first column of tablearray can be te+t! numbers or values % upper-case andlower-case te+t are euivalent" If the range lookup is set as ,1: then the tablearray must be sorted in ascending

order based on the first column" See section 2"3 in this study unit on how to sort data" If rangelookup is set as A7S:! the tablearray lookup value should be uniue (primary key)" he data in the first column of tablearray should not contain leading spaces! trailingspaces! inconsistent use of uotation marks or non-printing characters because vlookupmay return an incorrect or une+pected value" 8hen searching for number or data values make sure the data in the first column of tablearray is not stored as te+t but as values"*ol@inde5@numhis is the column number in tablearray (refer to tablearray above) from which thematching value should be returned" he number 3 will return the value in the first columnof the tablearray! while 5 will return the value in the second column of the tablearray" '7##@1$ will return a O'A71:P error if the colinde+num is less than 3"

'7##@1$ will return a O,:P error if the colinde+num is greater than the number of columns in tablearray")ange@loo(uphis specifies whether you want '7##@1$ to find an e+act or an appro+imate match" 8hen set as ,1:! an e+act or appro+imate match is returned % that is! if an e+actmatch is not found! the ne+t largest value that is less than lookupvalue is returned" 8hen set as A7S:! an e+act match is found and the error value O/A is returned if no match is found" If there is more than 3 value in the first tablearray that matchesthe lookupvalue! then the first value that is found is used" Always use A7S: unless you have a good reason to do otherwise"

VLOOKUP means that Microsoft Office Excel will go verticallydown a list until it

finds the value it is looking for, then jump right to the appropriate column and return

that information.

13


14/24

AIN2601 S1 2016

Topic ? !ccounting *ycles SUG• Transaction processing system "TPS% A transaction processing system is a

specialised type of computerised information system" A TPS collects an organisation0s daily business transactions! processes theminto valuable information and stores and retriees the data and information whenreuired"

• !ccounting transaction processing system "!TPS%

An A$S is also most commonly known as an accounting information system"!IS%" An AIS collects an organisation0s day-to-day financial and nonfinancialtransactions' processes them into valuable financial information and stores andretriees the data and financial information"

• A financial transaction is a business activity that generates or modifies financial data and canusually be e+pressed in monetary terms (eg a sales transaction will generate a sales ta+ invoice)"

A nonfinancial transaction is a business activity that generates or modifies nonfinancial data but

which is of such a nature that it will directly influence the processing of financial transactions" Although the nonfinancial data will not be directly used in a transaction! it provides vital information

that will be used during the transaction processing! such as updating a supplier0s details or addinga new supplier"

• he accounting transaction processing system can be divided into five accounting/auditing cycles!o revenue and receipts cycleo acuisition and payments cycleo inventory and production cycleo payroll and personnel cycleo finance and investment cycle

!IS

o Setup data

his data will be available in the ne+t step and will therefore limit the data that we will need toenter for each individual customer! supplier! inventory item and general ledger account!although we can still customise it for each one individually"If we specify the information that remains the same upfront! we will not be reuired to retypethat same information each time"

o Capturing of transactions takes place as follows9 inventory purchases from suppliers through the purchases 4ournal

sales to customers through the sales 4ournal payments to suppliers for inventory and general e+penses and receipts from customers

through the cash booko certain controls will be performed at month&end

a bank reconciliation (comparison of your cash book information against the bank

statement received from the bank) several supplier reconciliations (against the customer statements sent by the suppliers to

the organisation % remember that the organisation is its supplier0s customer) a comparison of the physical cash counted in the petty cash against the calculated petty

cash balance in the general ledger (petty cas! reconciliation) reconciliations of all other material balance sheet accounts and! if reuired! certain income

statement accounts an analytical review of all material income statement accounts

o reports usually printed at month- and/or year-end include the following9 the trial balance used in! say! reconciliations

customer age analysis used to identify overdue customers! processing errors! etc customer statements, which are sent to all customers either via post or email

supplier age analysis used to identify processing errors! also used in supplierreconciliations! etc a bank reconciliation

14


15/24

AIN2601 S1 2016

the individual departmental, divisional and organisational financial management accountsused by the different management levels for decision making and reporting

o At year&end' in addition to performing the normal month-end controls (h)! procedures (i) andprinting month-end reports (4) for the last accounting period in the financial year! we will alsoperform special procedures8 hese procedures include the following9 updating all open batches

printing detailed ledger reports (transaction reports) for the full financial year printing all other reports which are deemed necessary (the organisation0s management!

auditors! and/or regulatory bodies might have specific reports they reuire to be printed atyear-end)

revaluating foreign currencies (if used by the organisation) processing the reuired I,Ss ad4ustments making an e+tra year-end backup running the AIS0s official year-end procedure" his official year-end procedure includes the

following9 "eneral ledger income statement account totals. "eneral ledger balance s!eet account balances.

#ustomer and supplier balances.

"eneral ledger, customer and supplier transactions. $nventory. Costs! sales and uantity %eriods. In the period table! the financial year is increased by one year and! if

applicable! the period-end dates are ad4usted for a leap year" he transactions in the inventory !istory file and matc!ed open item !istory file are not

deleted or consolidated" After running the organisation0s AIS official year-end procedure! the software will now

be ready to capture the transactions for the new financial year"

15


16/24

AIN2601 S1 2016

Topic ? SU 11Payroll and personnel cyclehe management of personnel and the recording of their activities are not part of an AIS"$ersonnel information systems! referred to as human resource management #3R"&systems, is a specialised information system used for the management of personnel and therecording of their activities"

functions E)$ programs;modules:

• maintaining personal information9 each employee0s full name! surname! identity number! address!ne+t of kin! race! gender! income ta+ number! etc

• recruitment9 4ob descriptions! vacancies! offers made! etc

• employee compensation9 salary scales! structures! market salaries! etc

• performance management9 key performance indicators! performance contract and reviews!promotions! disciplinary actions! etc

• talent management9 employee education! training received and reuired! awards! worke+perience! etc

• absence management9 vacation leave! sick leave! unpaid leave! etc

reports and analytics % budget reports! timing before vacancies are filled! staff turnover! top

performers! bottom performers! employment euity reports! etc

Payroll softare functionalities: the creation and distribution (print or electronic format) of payslips the calculation of annual leave pay the calculation of income ta+! based on different ta+ methods (ie monthly! ta+ directives! directors0ta+! etc) the creation of statutory returns for ta+! SD7! 1I and so on the creation and distribution (print or electronic format) of I,$2 certificates managing different types of contributions such as medical aid and provident and pension funds the management of different deduction types such as loan repayments and garnishee orders"

Source documents

8here the ;,. and payroll system are linked! the source documents will flow from the ;,. system"Some of the source documents used include employment contracts stipulating salary! garnisheeorders! ta+ directives received and so on"Source documents relating to the physical payment of the payroll will include : reports or cheuestubs"

Accounting transactions8e can divide the accounting transactions into two parts9• the recording of the costs and related liabilities due

• the physical payment of the salaries and related liabilities"

AIS database files

he database files accessed! updated or modified will be as follows9 % several general ledger master files& storing new general ledger account balances % the general ledger transaction files& details of each transaction recorded in the general ledger % the payments cas!book transaction file& reference number! date! bank amount! general ledgeraccount number! etc

AIS reportsSome of the reports that can be used are as follows9 % the payment cas!book detail report showing the cashbook payment transactions for a selectedperiod % the general ledger account details showing the accounting entries for the selected general ledgeraccount

16


17/24

AIN2601 S1 2016

Topic ? SU 12inance and inestment cycleInvestments - AIS database filesDatabase files accessed! updated or modified to record investments in the AIS include the following9 % the payments cas!book transaction file& reference number! date! bank amount! general ledgeraccount number! etc

% several general ledger master files& storing new general ledger account balances % the general ledger transaction files& details of each transaction recorded in the general ledger

inance - AIS database filesDatabase files accessed! updated or modified in the AIS include the following9 % several general ledger master files& storing new general ledger account balances % the general ledger transaction files& details of each transaction recorded in the general ledger

AIS reportshe general ledger accounts details report shows the accounting entries for the applicable general

ledger accounts" hese listings should be used to perform reconciliations with third-party statements

(eg a loan statement)"

17


18/24

AIN2601 S1 2016

Topic C SU 1?inancial reporting structureactors influencing the staffing leel reHuirements of the organisation0s finance team9the si=e and structure of the organisation• the comple+ity and volume of transactions processed

• the comple+ity and volume of reporting reuired

• the integration of the AIS with the operational information systems

• the number of manual interventions needed

the AIS software used"

(ey controls hen relating the finance team structure to the !IS:

• Segregation of duties #SoD&. he responsibility to perform related tasks is allocated to differentpeople or departments! and is a vital internal control to help reduce the risk of fraud and mistakes"he AIS will be set up so that each specific user will only have access to the tasks in the AISdirectly linked to his or her role and responsibilities"

• Supervisor. :ach AIS will have a role that has access to all functions in the AIS"his person is usually referred to as the supervisor or administrator" A senior member of thefinance team! usually the financial manager! will fulfil the role of supervisor" A trustworthy! honest

and ethical person must fulfil this role because he or she will have the authorisation to overwritemost computerised controls and will be able to perform all the functions in the AIS! thereby SoDcontrols will be overridden"

• Reconciliations. ,econciliations should be performed at least monthly! no matter what the si=e of the team! and these must be reviewed and signed off by a person other than the personperforming the reconciliation" :+amples of typical reconciliations are bank and creditors0reconciliations" Audit trail. :ach user0s access (including that of the supervisor) to the AIS and actions performedon the AIS must be logged on the AIS audit trail" An AIS audit trail tracks user activity on the AISby recording the user name and access date and time as well as the actions performed by thatuser" he level of detail recorded on the AIS audit trail will depend on the AIS used"

18


19/24

AIN2601 S1 2016

*hart of accounts "*o!% As you know from your accounting studies! a $oA is a list of accounts usedin the organisation0s general ledger"he CoA in an AIS includes for each general ledger (?7) account a description of the account and auniue account number (primary key) by which it can be identified"he CoA reflects the comple+ity of the organisation0s structure and reuirements" 7arge organisations0CoAs can contain thousands of ?7 accounts and smaller organisations0 CoAs hundreds of ?7

accounts"

+eneric *o! categories:

• Assets

• 7iabilities

• :uity

• Income

• :+penses

hen planning for a ne;adJusted *o!' the folloing should be ta(en into account: 4he organisation5s business operations and industry.ruity ruit sells fruit and vegetables! but the CoA includes ?7 accounts for L3>>>/6E2 Service %

ConsultationM and L3>>>/6EJ Service % .edicineM" hese accounts do not relate to ruity ruit0sbusiness operations and should therefore not be included in the CoA" 4he organisation5s structure. 1se an organogram to visualise and plan for this structure Reporting detail re'uired..anagement reuires management accounts split between shop and individual transactions" hesales transactions is all recorded in one ?7 account namely L3>>>/>>> Sales % ShopsM and individualand not in two separate accounts as reuired for reporting purposes" his also does not match thecost of sales accounts which have separate accounts for LCost of sales % IndividualsM and LCost ofsales % ShopsM" +lan for the future. here should be gaps between account numbers so that it is possible to insert new ?7 accounts andcategories in future" In ruity ruit0s CoA there are no such gaps as can be seen where the deliveryfees main account number (L5>>5M) immediately follows the cost of sales main account number

(L5>>3M)" Also! the interest paid main account number (L3>>3M) immediately follows the sales mainaccount number (L3>>>M)"%ogical. he categories! subcategories and the related ?7 accounts will not be mi+ed! but follow eachother logically" A logical flow should not have balance sheet and income statement ma4or categories mi+ed together"Do not have an income statement0s income and e+pense accounts 4umbled together" $onsistent. he account number structure and format must be consistent between the accountsused" Account description. he account description should clearly e+plain the nature of the ?7 account" Draft. Create a draft structure on paper first before implementing it in the AIS" It is easier to changethe draft than the implemented CoA" 6eedbac(. #btain feedback from the different role players on the draft CoA" hey may have insightsyou have not yet considered and which could influence the CoA materially"

Sign-off. #btain sign-off from applicable management on the final CoA before implementing it"

19


20/24

AIN2601 S1 2016

Topic , SU1CSelecting an appropriate account information system "!IS%!IS segments An entry-level AIS includes basic features! usually has one-user access and generally does notprovide for segregation of duties" hese software are purchased off the shelf and only allow for basicset-up information" :ntry-level software will have the least number of reports available and will not

include advanced security controls"

#ne step up from entry-level software is the small to medium organisation0s AIS" his software allowsfor more users (usually between 6 and 2)! and will also include more features such as more standardreports! setting of user permissions and passwords"

A wide range of AISs are available for medium to large organisations" hese programs usually allowbetween 5> and 2> users! and again have more features than the AIS for small to mediumorganisations! but fewer features than the enterprise-level software

An AIS focusing on enterprise level organisations is usually a module in an :,$ system" hissoftware seamlessly integrates with the organisation0s other information systems and reduces theinteractions needed from users to transfer data and information between the different information

systems" It provides a large number of features such as multiple currencies and multiple users" heseaccounting systems are highly customisable and can be tailored to suit the organisation0s specificneeds" he implementation period can be e+tensive because this AIS must be customised andintegrated before it can be used" he purchase and especially implementation costs can be e+tremelye+pensive for these products"

Selecting an appropriate !IS 6 determine:

• ,euirements analysis

• udget

• Implementation period

Investigate individual accounting information systems – consider:

• ,euirement matching• :ase of use

• Integration

• le+ibility

• Country suitability"

• Scalability

• Support and training

• Costs

• ;ardware reuirements

• Implementation

• Documentation uality

• 1pgrades

• Software vendor

20


21/24

AIN2601 S1 2016

Topic G$anagement reporting systems*haracteristics of aluable information Accurate Information should be without any errors" Inaccurate data

used in the decision-making process will provide inaccurateinformation" he use of controls (eg the review of

information)!will ensure accurate information"

Complete Complete information contains all the important facts" If vitalinformation is e+cluded! management could end up makingthe wrong decision"

Simple Information should include all the important facts! but not toomuch detail" 1sers should not waste time on unnecessarydetail" he information should be presented in the formatreuired by the user"

:conomical he benefit of obtaining information should always outweigh

the cost of producing the information"

le+ible Information must be fle+ible enough to be adapted to meetthe uniue needs of different users"

,elevant acts should be relevant and meaningful to users in makingdecisions" If this is not the case! users may become confusedor their time could be wasted"

,eliable Decision makers must be able to depend on the source" he

method used to collect the information should be reliable"1sers cannot rely on information generated from anunreliable data source"

Secure Information should be protected from unauthorised access"

imely Information must be available when users need it" Informationthat is delivered too late is meaningless" Current events andtransactions should be taken into account when presentinginformation because outdated information may no longer berelevant to the decision being made"

'erifiable Information is verifiable if it can be traced and agreed tovarious sources"

he management information system "$IS% serves to fulfil this purpose" he .IS can provide bothfinancial and nonfinancial information to users! according to their needs' by e5tractinginformation from the appropriate TPS' including the accounting information system "!IS%8Purpose of an $IShe purpose of an .IS is to generate both financial and nonfinancial reports about operationalactivities"!n $IS has the ability to proide user&friendly reports by generating reports in hard copy (a physical printout) or soft copy (a virtual printout) generating standard and/or tailored reports integrating financial and nonfinancial information from various internal and e+ternal sources into asingle report

21


22/24

AIN2601 S1 2016

MIS in usiness scenarios• inancial .IS

financial .IS reports include % payment summaries % budget and capital budget setting and control % comparison and analysis of historical and current financial information

% summaries of cash-flow information % reporting on e+ceptions and deviations

• .anufacturing .ISmanufacturing .IS reports include % inventory information (eg cost allocation) % warehouse management (eg delivery and production scheduling) % throughput rates % order backlogs % bottlenecks

• .arketing .ISmarketing .IS reports include % market analysis and research

% promotional strategies % pricing decisions % development of new products % sales information (eg analysis per product or branch or commission summaries)

• ;, .IS;, .IS reports include % absence management % ;, allocation % payroll administration

$IS inputsData is mainly obtained from internal sources! but can also be obtained from e+ternal sources• Internal sources include the organisation0s $S! enterprise resource planning system! strategic

planning! databases and data warehouse" In certain instances where the organisation reuiresspecialised data! the data will be sourced from specific functional areas in the organisation"

• 45ternal sources refer to all data not already recorded in the organisation" :+amples of e+ternalsources include supplier and customer feedback! information on competitors! publicly availableinformation and census data"

$IS outputs.IS converts data collected from internal and e+ternal sources into various reports disseminated tomanagement"he following types of output are generated by the .IS9• Scheduled reports

Scheduled reports are generated at scheduled points in time! say! daily! weekly or monthly" :gsales volumes! production activity

• Demand reports

A demand report is produced at the specific reuest of a user" An e+ample a report of a specificemployee0s sick leave because suspect that the employee is absent from work too often"

• 45ception reports

:+ception reports highlight unusual situations that reuire investigation" An e+ample9 when anunauthorised staff member attempting to process a 4ournal"

• Drill&don reports

he purpose of a drill-down report is to provide increasingly detailed data on a matter" Informationcan first be analysed at a strategic level (such as inventory levels for the company as a whole)!then at a more detailed level (such as the inventory levels per region) and then at a highly detailedlevel (such as the inventory levels per branch)" If even more detail is reuired! it is possible to drilldown into information about every individual inventory item as well"

#IS serves this purpose" Special softare combines information obtained from a data arehouse(cube structure)! from all functional areas in the organisation and e+ternal sources to a lesser e+tentto generate reports reHuired by top management8

22


23/24

AIN2601 S1 2016

Topic G SU 2045tensible business reporting language

A#)3 stands for 45tensible #usiness )eporting 3anguage and is used when financialinformation is e+changed in A$3 format and can broadly be defined as the electroniccommunication of financial and business information to all sta(eholders8

!dvantages of "#$LIncrease in accuracyof reporting

Computers can identify &,7 identification tags! and employeestherefore no longer need to manually recapture data in softwareapplications like :+cel or $astel! say! for consolidation or comparisonpurposes" 1sing &,7 saves a lot of labour time and costs andensures more accurate information"

.eeting I,Sreuirements

&,7 has been designed in such a way that specifications meet thereuirements of 1S ?AA$ and I,S" 1sers of the financial statementscan therefore rest assured that the published financial statementscomply with I,S"

Cost and time efficient &,7 is more accurate and uicker to audit than reporting in ;ypere+t.arkup 7anguage (;.7)! spreadsheets or $ortable Documentormat ($D)! resulting in savings in auditing costs" &,7 furtherallows for automated machine- to-machine communication! whichenables accountants! auditors! data capturers and stock e+changes toaccess the data and work with it more uickly! leaving more time fordata analysis" All these cost and time savings add up! leading to anincrease in shareholder wealth"

Crossing the languagebarrier

Different reporting languages are no longer a challenge because tagsare allocated to numbers! making the comparison of financial resultsmuch easier"

Data analysis Data received via &,7 can be validated and analysed by usingspecific software" his analysis will highlight risk and problem areasthat accountants and auditors need to focus on" inancial institutionswill also be able to use this analysis in the case of loan applications"inancial records will be accessed more uickly and accurately!resulting in a decrease in the granting of loans to high-risk borrowers"

Disadantages of A#)3Ine+perienced users Since &,7 is still a fairly new concept! not all users or accountants

are familiar with it yet! resulting in many errors" hese errors may resultin a decrease in investor confidence! which may lead to managementdeciding to outsource the &,7 function" his! in turn! leads to

unnecessary costs"

Security &,7 data is available all the time! creating great potential for securitybreaches" Security measures need to be implemented to ensureintegrity of information at all times"

Cost he initial cost of tagging &,7 data is high because it reuires highlabour input! and organisations may find it difficult to 4ustify the initialcapital outlay"

1nauthorisedaccess/alterations

Information is transferred to and from different financial informationsystems electronically on a regular basis! resulting in the risk that datamay be lost! altered or stolen"

Compatibility A concern at this stage is that not all $Ss can e+port to&,7"

23


24/24

AIN2601 S1 2016

AIN2601 Exam Notes

Documents

Transcript of AIN2601 Exam Notes