Accounting information systems controls and process 2nd tunnwe weickgenannt chapter 13

Chapter 13-6 SO 1 The need for data collection and storage The Need for Data Collection and Storage The Need for Data Collection and Storage Typical storage and processing techniques: 1

Chapter

13-1

Prepared by Coby Harmon University of California, Santa Barbara Westmont College

Prepared by Coby Harmon University of California, Santa Barbara

Westmont College

SECOND EDITION

Chapter

13-2

Data and Databases

Chapter

13-3

1 The need for data collection and storage

2 Methods of storing data and the interrelationship between storage and

processing

3 The differences between batch processing and real-time processing

4 The importance of databases and the historical progression from flat-file

databases to relational databases

5 The need for normalization of data in a relational database

6 Data warehouse and the use of a data warehouse to analyze data

7 The use of OLAP and data mining as analysis tools

8 Distributed databases and advantages of the use of distributed data

9 Controls for data and databases

10 Ethical issues related to data collection and storage, and their use in IT

systems

Study Objectives

Study Objectives

Chapter

13-4

Real World

Real World Think about the volume of sales transactions

that occur on the Websites of large Internet retailers such

as L.L Bean, Lands’ End, and J.Crew These companies each process an average of approximately 120,000 transactions each day on their Websites For each of these transactions, important data must be collected about the customer, location, payment, and the items sold.

Even more overwhelming is the volume of sales transactions that are processed

by Wal-Mart on any given day In addition to its Web-based sales, consider Wal-Mart’s thousands of retail centers with several check-out lines at each location and long hours

of operation Think about the number of accountants and computers that might be

required to manage all of the related records It is no wonder that Wal-Mart has one of the largest databases of any business organization in the world.

The Wal-Mart database continually grows with new transactions Some estimate that Wal-Mart adds 1 billion rows of data per day In addition to the size of the

database, it is also growing faster The company attaches RFID chips to merchandise

so that inventory purchases, movement to stores, and sales are tracked in real time Since the data for these events get added to the database so quickly, the database grows and becomes more useful for immediate analysis This allows Wal-Mart to more quickly analyze and forecast inventory needs.

Chapter

13-5 SO 1 The need for data collection and storage

The Need for Data Collection and Storage

The Need for Data Collection and Storage

Data are the set of facts collected from transactions,

whereas information is the interpretation of data that have

been processed

Main reasons to store transaction data:

1 To complete transactions from beginning to end

2 To follow up with customers or vendors and to expedite

future transactions.

3 To create accounting reports and financial statements.

4 To provide feedback to management.

Chapter

13-6 SO 1 The need for data collection and storage

The Need for Data Collection and Storage

The Need for Data Collection and Storage

Typical storage and processing techniques:

1 The storage media types for data: sequential and random

access

2 Methods of processing data: batch and real time

3 Databases and relational databases

4 Data warehouses, data mining, and OLAP

5 Distributed data processing and distributed databases

Chapter

13-7

Which of the following best describes the relationship

between data and information?

making

SO 1 The need for data collection and storage

The Need for Data Collection and Storage

The Need for Data Collection and Storage

Concept Check

Chapter

13-8 SO 2 Methods of storing data and the interrelationship

between storage and processing

Storing and Accessing Data

Storing and Accessing Data

Data Storage Terminology

Chapter

13-9 SO 2 Methods of storing data and the interrelationship

between storage and processing

Storing and Accessing Data

Storing and Accessing Data

Data Storage Media

Early Days of Mainframe Computers

Systems

Chapter

13-10 SO 2 Methods of storing data and the interrelationship

between storage and processing

Storing and Accessing Data

Storing and Accessing Data

Chapter

13-11

Magnetic tape is a form of

SO 2 Methods of storing data and the interrelationship

between storage and processing

Storing and Accessing Data

Storing and Accessing Data

Concept Check

Chapter

13-12 SO 3 The differences between batch processing and real-time processing

Data Processing Techniques

Data Processing Techniques

Exhibit 13-2

Comparison of Batch and Real-Time Processing

Batch Processing

Real-time Processing

Chapter

13-13

Which of the following is not an advantage of using real-time data processing?

and customer satisfaction

transactions

SO 3 The differences between batch processing and real-time processing

Data Processing Techniques

Data Processing Techniques

Concept Check

Chapter

13-14 SO 4 The importance of databases and the historical progression

from flat-file databases to relational databases

Databases

Databases

Data stored in a form that allows the data to be easily

accessed, retrieved, manipulated, and stored

Exhibit 13-3

Traditional Oriented Approach

File- Data

redundancy

 Concurrency

Chapter

13-15 SO 4 The importance of databases and the historical progression

from flat-file databases to relational databases

Databases

Databases

Database Management System (DBMS) is

software that manages the database and

controls the access and use of data by

individual users and applications

Chapter

The History of Databases

The History of Databases

Chapter

13-17

The History of Databases

The History of Databases

Hierarchical Database Model

► Inverted tree structure

► Parent–child, represent one-to-many relationships

Linkages in a Hierarchical Database

SO 4

Chapter

13-18 SO 4 The importance of databases and the historical progression

from flat-file databases to relational databases

The History of Databases

The History of Databases

Network Database Model

► Inverted tree structure

► More complex relationship linkages by use of shared

branches

► Not very popular, rarely used

Chapter

13-19 SO 4 The importance of databases and the historical progression

from flat-file databases to relational databases

The History of Databases

The History of Databases

Relational Database Model

► Developed in 1969

► Stores data in two-dimensional tables

► Most widely used database structure today

► Examples include; IBM DB2, Oracle Database, and

Microsoft Access®

Chapter

13-20 SO 4 The importance of databases and the historical progression

from flat-file databases to relational databases

Databases

Databases

Concept Check

If a company stores data in separate files in its different

departmental locations and is able to update all files

simultaneously, it would not have problems with

c.industrial espionage

d.concurrency

Chapter

13-21 SO 4 The importance of databases and the historical progression

from flat-file databases to relational databases

Databases

Databases

Concept Check

When the data contained in a database are stored in large,

two-dimensional tables, the database is referred to as a

Chapter

13-22 SO 4 The importance of databases and the historical progression

from flat-file databases to relational databases

Chapter

13-23

The Need for Normalized Data

The Need for Normalized Data

Relational databases consist of several small tables Small

tables can be joined in ways that represent relationships

among the data

SO 5 The need for normalization of data in a relational database

Bolded field is the

primary key.

Exhibit 13-6

Relational Database in Microsoft Access

Chapter

13-24

The Need for Normalized Data

The Need for Normalized Data

Relational database has flexibility in

retrieving data Structured query language (SQL) has become the

industry standard.

SO 5

Exhibit 13-7

Relational Database in Microsoft Access

SELECT Customers.CustomerID, Customers.CompanyName,

Orders.OrderID, Orders.ShippedDate FROM Customers INNER

JOIN Orders ON Customers.CustomerID Orders.CustomerID;

Chapter

13-25

The Need for Normalized Data

The Need for Normalized Data

The process of converting data into tables that meet the

definition of a relational database is called data

normalization

► Seven rules of data normalization, additive.

► Most relational databases are in third normal form.

► First three rules of data normalization are:

1 Eliminate repeating groups

2 Eliminate redundant data

3 Eliminate columns not dependent on primary key.

SO 5 The need for normalization of data in a relational database

► Most organizations are willing to accept less

transaction processing efficiency for better query

opportunities.

The Need for Normalized Data

The Need for Normalized Data

SO 5 The need for normalization of data in a relational database

Chapter

13-27

The Need for Normalized Data

The Need for Normalized Data

SO 5 The need for normalization of data in a relational database

c It stores data in a tree formation

Chapter

13-28

Use of a Data Warehouse to Analyze Data

Use of a Data Warehouse to Analyze Data

SO 6 Data warehouse and the use of a data warehouse to analyze data

Exhibit 13-8

The Data Warehouse and

Operational Databases

Management often needs data from several fiscal periods

from across the whole organization

Chapter

13-29

Management often needs data from several fiscal periods

from across the whole organization

► Build the data warehouse

► Identify the data

► Standardize the data

► Cleanse, or scrub, the data

► Upload the data

Use of a Data Warehouse to Analyze Data

Use of a Data Warehouse to Analyze Data

SO 6 Data warehouse and the use of a data warehouse to analyze data

Chapter

13-30

Use of a Data Warehouse to Analyze Data

Use of a Data Warehouse to Analyze Data

SO 6 Data warehouse and the use of a data warehouse to analyze data

Concept Check

A collection of several years’ nonvolatile data used to

support strategic decision-making is a(n)

Chapter

13-31

Data mining is the process of searching for identifiable

patterns in data that can be used to predict future behavior

Online Analytical Processing (OLAP) is a set of software

tools that allow online analysis of the data within a data

warehouse Analytical methods in OLAP usually include:

Data Analysis Tools

Data Analysis Tools

SO 7 The use of OLAP and data mining as analysis tools

Chapter

13-32

Data Analysis Tools

Data Analysis Tools

SO 7 The use of OLAP and data mining as analysis tools

Distributed Data Processing

Distributed Data Processing

SO 8 Distributed databases and advantages of the use of distributed data

Today’s IT Environment

 Distributed data processing (DDP)

 Distributed databases (DDB)

Chapter

13-34

Real World

Real World McDonald’s has restaurants, warehouses, and

offices located throughout the world; yet its corporate headquarters is in Oakbrook, Illinois If McDonald’s management

decided that all data, including prices, must be stored in a database at

corporate headquarters, what would have to happen when you order a

cheeseburger at a McDonald’s in Los Angeles? The cash register system

would have to read pricing data from the database in Oakbrook, Illinois This would be inefficient for several reasons First, each McDonald’s restaurant

would be trying to read the same database simultaneously in order to fill

customer orders all around the world Each of the McDonald’s restaurants

would need to be networked to that data in Illinois and would need to be able

to read price data quickly in order to process the sale This would generate

so much network traffic that it would very likely overwhelm the network and

computer system In addition, if prices are stored only at corporate

headquarters, it would become more difficult for each location to set its own

prices Certainly, it would be much more efficient for McDonald’s to maintain

pricing data at the local restaurants or in regional centers.

SO 8

Chapter

13-35

Distributed Data Processing

Distributed Data Processing

SO 8 Distributed databases and advantages of the use of distributed data

Distributing the processing and data offers the following

advantages:

1 Reduced hardware cost

2 Improved responsiveness

3 Easier incremental growth

4 Increased user control and user involvement

5 Automatic integrated backup

The most popular type of distributed system is a

client/server system

Chapter

13-36

Distributed Data Processing

Distributed Data Processing

SO 8 Distributed databases and advantages of the use of distributed data

Concept Check

A set of small databases where data are collected,

processed, and stored on multiple computers within a

Smart-Cloud)

 A company can buy data storage from these providers

 Arrangement is Database as a Service (DaaS)

 Cloud provider generally provides

► data storage space and

► software tools to manage and control the database.

Chapter

13-38

Real World

Real World

The best-selling jet airplane of the Boeing Corporation is the 737 In

2011, Boeing rolled out a new function called “737 Explained,” a

cloud-based database and application using Microsoft Azure cloud

storage This cloud database stores 20,000 high-resolution photos of the Boeing 737, which are accessible by the Boeing salespeople who may be traveling to any location in the world to seek customers 737

Explained can show 360-degree tours of the airplane, as well as

individual parts and features The director of marketing at Boeing

said, “737 Explained is one of the best marketing tools I’ve seen

because it allows us to show prospective customers the new features and improvements without bringing them to an airport.”

SO 10 Controls for data and databases

Chapter

13-39

IT Controls for Data and Databases

IT Controls for Data and Databases

SO 10 Controls for data and databases

To ensure integrity (completeness and accuracy) of data in

the database, IT application controls should be used These controls are

► input,

► processing, and

► output controls such as

1 data validation,

2 control totals and reconciliation, and

3 reports that are analyzed by managers.

Chapter

13-40

Ethical Issues Related to Data Collection

Ethical Issues Related to Data Collection

SO 11 Ethical issues related to data collection and

storage, and their use in IT systems

Ethical Responsibilities of the Company

Data collected and stored in databases in many instances

consist of information that is private between the company and its customer

Ten privacy practices for online companies:

7 Disclosure to third parties

8 Security for privacy

9 Quality

10 Monitoring and enforcement

Chapter

13-41

Real World

Real World

No matter how extensive the controls in place, it is never possible to

completely eliminate unauthorized access In April of 2011, Netflix

disclosed that it had fired an unnamed call center employee for

stealing credit card information from customers he had spoken with

on the phone The company declined to disclose the number of

customers affected The “monitoring and enforcement” mention

above is intended to help discover problems such as this and to fix

them quickly In this case, a Netflix spokesperson said, “We do

everything we can to safeguard our members’ personal data and

privacy, and when there’s an issue like this, we deal with it swiftly and decisively.”

SO 11 Ethical issues related to data collection and

storage, and their use in IT systems