The Importance of Information Technology to Accountants

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Chapter 2 Information Technology and Accounting
Information Systems
PowerPoint Presentations

• The Importance of Information Technology to
  Accountants
• Input, Processing and Output Devices
• Secondary Storage Devices
• Data Communications and Networks
• Computer Software

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THE IMPORTANCE OF INFORMATION TECHNOLOGY TO
ACCOUNTANTS

• Must be compatible and support other components
  of AIS
• Accountants often help clients make software and
  hardware decisions
• Auditors must evaluate computerized systems
• Often asked to evaluate effectiveness and
  efficiency of existing system
• IT will effect how accountants work in the future
• Understanding how IT affects accounting systems
  is vital to passing most certification exams

• All of the following are reasons why IT is
  important to accountants except
• Accountants often help clients make IT decisions
• Auditors must evaluate computerized systems
• IT questions appear on certification exams
• The costs of IT are skyrocketing

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THE IMPORTANCE OF INFORMATION TECHNOLOGY TO
ACCOUNTANTS

• The AICPAs Top 10 Information Technologies for
  2006 (Figure 2-1)
• Information Security
• SOX Assurance and Compliance Applications
• Disaster Planning and Recovery
• IT Governance
• Privacy Management
• Digital Identity and Authentication Technologies
• Wireless Technology
• Application and Data Integration
• Paperless Digital Technologies and Knowledge
  Management
• Spyware Detection and Removal

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HARDWARE

• Hardware refer to the physical devices making up
  a computer system.
• The central processing unit (CPU) is the brain
  of a computer which coordinates all of a
  computers operations.
• Move data from storage to main memory
• Execute the instructions for manipulating the
  data
• Move the results from main memory back to
  storage.
• Random access memory (RAM) is also referred to as
  primary memory or primary storage. RAM is a
  holding area for data before and after processing
  by the CPU.
• Microprocessors manipulate data or execute
  instructions.
• arithmetic-logic unit (ALU) performs arithmetic
  tasks and logical tasks
• control unit supervises the actual data
  processing, e.g., transfer data, perform tasks
• Input-output devices are the hardware components
  that allow the user to input data into the
  computer and retrieve output.
• Secondary storage devices hold data and programs
  that are not currently being used by the CPU.
  Their key features are their large capacity and
  their ability to retain data after the power is
  shut off.

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INPUT, PROCESSING, OUTPUT, AND SECONDARY STORAGE
DEVICES
Secondary Storage Devices
USB Drive/Flash Memory
CD-Rom /DVD
Hard Disk
Magnetic Disk/Tape
Keyboard /Mouse
Output Devices
Monitor
Input Devices
Scanner / Biometric
Printer
Touch Screen
Central Processing Unit (CPU)
Point-of-sale (POS) device
Audio Video Output
Magnetic Ink Character Recognition (MICR)
Multimedia
Optical Character Recognition (OCR)
Modem
Router
POS Terminal
Automated Teller Machine (ATM)
Communication Equipment

• The acronyms POS, MICR, and OCR are most closely
  associated with
• Input devices C. Output devices
• Processing devices D. Communication devices

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DATA COMMUNICATIONS AND NETWORKS

• Data communications refers to transmitting data
  to and from different locations
• Communication Channels and Protocols
• A communication channel is the physical path that
  data take in data transmissions.
• Twisted-pair wires of phone lines Coaxial
  cables Optical fibers Microwaves Radio waves
• A protocol is a set of standards for message
  transmission among the devices on the network.
  Ethernet has been the most successful protocol
  for LAN transmission.
• A LAN (local area network) connects devices
  within a single office or home or among buildings
  in an office park. It is owned entirely by a
  single organization.
• Facilitating communications
• Sharing computer equipment
• Sharing computer files
• Saving software costs
• Enabling unlike computer equipment to
  communication with one another
• A WAN (wide area network) consists of a
  conglomerate of LANs over widely separated
  locations. It can be either public or privately
  owned

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DATA COMMUNICATIONS AND NETWORKS

• Client/Server Computing
• A server is centrally located and devoted to the
  functions that are needed by all network users.
  Examples include mail server, application
  servers, file servers, internet servers, and web
  servers. The database and related software are
  stored on servers.
• A client is any device that requests services
  from a server. It can be a Palm Pilot, a desktop
  computer, a printer, or another server. The
  application software, such as a spreadsheet
  program, typically resides on the client
  computer.
• A client/server system may be viewed as a set of
  three interacting components
• Presentation component the users view of the
  system
• Application-logic component the processing
  logic of a specific application, e.g., the logic
  involved in preparing payroll checks
• Data-management component databases and the
  ways the system stores data in them
• Client/server computing differs from simple
  host/terminal computing in the users ability to
• Query or manipulate the warehoused data on the
  server
• Ask what-if questions of the servers data
• Process a transaction that may affect data stored
  on both client and server computers
• Alter data stored elsewhere on the network

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DATA COMMUNICATIONS AND NETWORKS

• Advantages of Client/Server Computing
• Flexibility of distributing hardware, software,
  data, and processing capabilities throughout a
  computer network.
• Reduced telecommunications costs.
• Ability to install thin-client systems which use
  inexpensive or diskless microcomputers.

• Disadvantages
• Requires developers to create multiple copies of
  the same file, making backup and recovery
  procedures more difficult.
• Changing from one version of an application
  program to another is more difficult.
• Greater need for user training.

• Wireless Data Communications
• The Wi-Fi family of protocols supports client
  devices within a radius of about 300 feet around
  a wireless router. Thus useable are is called a
  hotspot.
• The Bluetooth standard operates over a much
  smaller radius than Wi-Fi, about 30 feet. This
  distance permits the creation of the personal
  area network (PAN).
• RFID (radio frequency identification) enables
  business to identify pallets and even individual
  items without unpacking them from shipping crates.

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COMPUTER SOFTWARE

• Operating Systems
• The traffic cop of any computer system that
  negotiates the conversation between the
  computers hardware, the application the user is
  running, and the data that the application is
  working with.
• Test critical components on boot-up
• Allocate primary memory among competing
  applications
• Manage system directory and files
• Maintain system security
• Gather system performance statistics
• Utility programs that often come with operating
  systems performs tasks such as copying files,
  converting files from one format to another,
  compressing files, performing system diagnostics,
  and building disk directories
• Application Software
• Programs that tell the computer what steps the
  user wants carried out.
• Personal productivity software, e.g., word
  processors, spreadsheets, graphics, and database.
• Commercial use productivity software, e.g.,
  project management software, CASE, presentation
  graphics software
• Accounting software
• Communications software, e.g., web browsers,
  email software
• Enterprise resource planning (ERP) software

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COMPUTER SOFTWARE

• Programming Languages
• First generation languages (machine languages)
  are written in binary code unique to each type of
  computer. They are understood directly by the
  computer and require no translation process.
• Second generation languages (assembly languages)
  use mnemonic symbols to represent groups of
  binary ones and zeros. They must be converted to
  machine languages in order for the computer to
  understand them.
• Third generation languages (procedural languages)
  consists of English-like words and phrases. They
  must be either compiled or interpreted to machine
  language. FORTRAN, COBOL, BASIC and C are the
  better-known ones.
• C and JAVA are object-oriented third generation
  programming languages. They encourage programmers
  to develop code in reusable modules called
  objects, which are easier to develop, debug, and
  modify
• Fourth generation languages (problem-oriented or
  nonprocedural languages) are interactive,
  English-like languages permit a non-specialized
  user to describe the problem to, and receive
  guidance from, the computer instead of specifying
  a procedure. The best known nonprocedural
  language is Structured Query Language (SQL).
  Others include generalized audit software (GAS),
  also know as computer-assisted audit techniques
  (CAAT), hypertext markup language (HTML),
  extensible markup language (XML), and extensible
  business reporting language (XBRL).