Midterm Exam 300 Points

Midterm Exam – 300 Points

ACCT4540/5540 Jim Marlatt Accounting Information Systems Fall 2010

Sample Solution

I will assess your answers against a key and the quality of the work of your peers. Unnecessary and/or redundant information will negatively impact your score. Strive to be CLEAR, CONCISE AND COMPLETE.

Make sure to provide a specific example to support each answer.

Use only the space provided to answer each question. Do not write in the margins, make sure your font is big enough to read easily (the font used for the exam questions is a good reference).

Use the back of page five as scratch paper, this information will not be reviewed or graded.

1 Not following the above instructions will negatively impact your score.Question 1 (50 points): What role do accountant’s play in today’s information intensive organizations?

It is the accountant’s role to help make sure the organization is capturing, processing and reporting relevant, reliable, complete, timely, understandable, and verifiable information from/to internal and external users to help them make better decisions.

By starting with business objectives, performing risk assessments, modeling relevant business processes and modeling the database, accountants (with help from others) can identify what information to collect, how to store it and who to share it with.

The accountants help make sure this information has value by being aligned with the organization’s goals (to help the organization achieve these goals).

In today’s information intensive organizations, it’s not about capturing more information, it’s about capturing the right information and sharing it with the right people at the right time. An overload of information often results in the quality of decisions declining.

Example: An accountant might draw a process map for an important process like accounts receivable to help identify ways to reduce their average age, identify customers who consistently pay late, etc.

Question 2 (50 points): How can an accounting information system provide management with information for better decision-making?

An accounting information system captures data at the source using a set of interrelated components (supply- chain, manufacturing, accounts payable, general ledger, human resources, etc.) which collects financial and non-financial information from internal and external sources.

An accounting information system automates a set of interrelated business processes which capture data via a transaction (e.g. customer order), processes, stores and reports the transaction(s) in detail and summary based on a set of rules that have been pre-defined in the system.

By using a variety of insight/tools including business objectives/KPIs, risk assessments, process maps and data models, accountants can help ensure the accounting information system is capturing, processing, storing and reporting information that has value to the organization.

Example: Using today’s modern accounting information systems, rather than defining specific reports for users, users can be provided with access to the information stored there based on their role and responsibilities in the organization. The users can then utilize various query/reporting tools to produce reports that answer their own questions as needed.

2 Question 3 (70 points): How do you determine what processes to map and what to include in those process maps?

In order to make improvements to work being done in the business, you must first understand what is being done (as-is processes) and identify ways to improve it (to-be processes). Process maps help identify non-value added work. The processes to map are determined by the scope of the project. What to include in the process map is determined by the scope of the process.

Process maps describe events which are important to the business (as defined by business objectives/KPIs), the resources affected by these events and the agents who participate in these events. These process maps also help identify risks and the corresponding controls to address these risks.

Example: A customer purchases gas using the payment processing function at the pump. The current process accepts the credit card as long as it was not flagged by the credit card processing company (over credit limit, stolen, etc.). Unfortunately more than 1% of all transactions are later contested by credit card holders, reducing profits by a significant amount. The existing process is modeled and it is determined that thieves are able to create physical cards using stolen credit card information, but in most cases don’t have access to the cardholder’s address. A new process is created which requires the credit cardholder to enter a zip code as part of the payment approval process, which reduces the percent of contested charges by more than 80%.

Question 4 (70 points): How is a relational database used to collect and analyze information?

A relational database is comprised of the following components:

 Entities – anything about which the organization wants to collect and report information (e.g. customers)  Attributes – represent information about the entity (e.g. customer name, address, etc. Together these attributes form records.  Relationships – identify how entities relate to one another. For example, the entity customer relates to another entity customer orders (answers the question, which orders are from which customer?)  Primary key – each record must be unique in order to maintain data integrity. For example in the customer table, a specific customer should only be represented once using a primary key to control this (customer id).  Foreign key - is used to connect related entities to one another. For example, the primary key customer id is placed in the order table for each order from that customer.

The relational database allows for many benefits including:

 Data integrity – by storing information in separate entities and making sure data is represented only once in the system, this allows data to be inserted, updated and deleted with minimal redundancy and inconsistencies.  Data sharing – it is easier to share data with multiple applications and users.  Data reporting and flexibility – the database can be searched easily to answer business questions, produce reports, etc. These queries and reports can be reused or revised as needed by users.

Question 5: Using the data model on page 5, answer the following questions:

3 a. (30 points) Write the SQL query to answer the question – For each date, list the orders received on that date.

Select Orders.orderdate, Orders.orderid

From Orders

Group by orders.orderdate, orders.orderid;

b. (30 points) Which tables would need to be queried in order to answer the question - List the supplier’s company name for all products that customers have ordered during the last two weeks.

Suppliers

Suppliers_Products

Products

Order_Details

Orders