Download Accounting Systems Technology for the 21st Century

Accounting Systems Technology
for the 21st Century
Presented by
Liv A. Watson
[email protected]
Today’s Agenda

Accounting systems technologies and future
trends

There will be two 10 minutes breaks and a 1
hour lunch

XBRL

Questions and comments are always welcome
Scalable Architecture Accounting as a System
Functionality
Professional
Analyst
Casual
Viewer
Internet
Browser
Field
Unit
The Traditional Accounting
Information Systems
Architecture
Multi-tier Computing
“2-tier,” “3-tier,” and “n-tier”



“A Tier” describes how the computing
workload is distributed in a client/server
system
When you separate the application logic from
the presentation and data storage layers, you
create a third layer: the application logic later.
So 2-tier becomes 3-tier.
“n-tier” is used describe those architectures
in which there is more than one application
logic layer
• What is Governments role in the development and operation of the Net?
• Should (and if so, how) states be able to tax activity on the Net passing through their jurisdiction?
• Can we effectively eliminate or limit access to offensive material, especially by young people?
• How can we I improve the security of data traveling on the Net?
Enterprise Resource
Planning (ERP) Systems

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MRP (Material Requirement Planning)
MRP-II (Manufacturing Resource Planning).
ERP
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Human Resources
Finance
Customer Service
Engineering
Institute of Management Accountants (IMA)
provides a course, “Benchmarking ERP
Systems”
Applying Information
Technology to the
Accounting Cycle

The operating system
(O/S) is the most
important program that
runs on a computer:

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Recognizing input from
the keyboard
Sending output to the
display screen
Keeping track of files and
directories on the disk
Controlling peripheral
devices such as disk
drives and printers
Operating systems can be
classified as follows:

Single-tasking


Multi-user


Allows more than one program to run concurrently
Multi-threading


Supports running a program on more than one CPU
Multi-tasking


Allows two or more users to run a program at the same time
Multi-processing


Generally supports only one a process at a time
Allows different parts of a single program to run concurrently
Real time

Responds to input instantly. General-purpose operating systems,
such as DOS and UNIX, are not real-time.
Introduction and History

1945 -- 1955

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1956 -- 1965

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Transistors and batch systems
Clear distinction between designers, builders, operators,
programmers, and maintenance personnel
1965 -- 1980


Bare machines -- vacuum tubes and plug boards
Designed by J.W.Mauchly and J.P.Eckert of the University of
Pennsylvania in 1945
No operating system
Multiprogramming
1980 to present

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Personal computers and workstations
Network operating systems
Network Operating Systems
(NOS)

Single User DOS Applications:

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Network-Aware Applications


Local workstation only: not written to work on
network.
Will work on a network, but only for a single user.
Multi-user Applications

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Applications specifically written for networks.
Email, Scheduling, Groupware
Peer-to-Peer NOS
Characteristics

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Each machine sends, receives, and processes
data files (Client and Server).
Simplistic in design and maintenance.
Used for smaller number of users (10 to 50).
Used when users are in same area.
Used when network growth is not an issue.
Less expensive (no dedicated server).
Slower and less secure than File Server
Security
Firewalls
Packet Filters
CERTIFICATE AUTHORITIES
There are four principal types of
certificates:

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Certification Authority
Server
Personal
Software Publisher
VIRUSES, BUGS AND
WORMS



A virus is a program that attaches itself to other
files.
 Viruses can be funny, irritable or destructive.
A bug is a flaw in a browser that can be used by a
hacker to circumvent a browser’s security functions.
A worm is similar to a virus in that it can be
destructive or irritating.

Makes copies of itself and send them to other users
Protection
VIRUSES, BUGS AND WORMS
There are steps that a user can use to protect
themselves from these dangers. They include:
 Know your source of files and messages
 Use a virus monitoring software to scan incoming
files or set the software to continuously monitor
activity on your computer or server

Only open files after they have been scanned
 Maintain frequent backups so that you can recover
from a crash or other problem
THIRD PARTY
ASSURANCE SERVICES


WebTrust
Better Business Bureau
e-Insurance Policies

For example, if your company unwittingly
spread a virus that wiped out customers’
database.
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ACE USA
AIG
Lloyd’s of London
Marsh
St. Paul
Zurich
Relational Database
Management Systems
Relational Database Management
Systems (RDBMS)

A type of database management system that
stores data in the form of related tables.

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The data is integrated into a single conceptual
model and a single location
The data is independent from the application
programs
The data is shared
Today, most leading accounting software
manages data almost exclusively on RDBMS
technology
Data Marts



Data marts are workgroups or departmental
warehouses, which are small in size, typically
less than 10GB
Meta Data
1.
The technical data


2.

contains a description of the operational database
and a description of the data warehouse
The business data
contains a description of the operational database
and a description of the data warehouse
Relational Accounting and
Transaction Triggers

A trigger is a piece of code stored in the
database.


Row-level triggers can be executed
BEFORE or AFTER each row is modified by
the triggering insert, update, or delete
operation.
Statement-level triggers execute after
the entire operation is performed
Why would accountants
benefit from triggers?
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Recording the name of user who tried to change an account
code
Recording the data and time a transaction occurred
Ensuring that a transaction is in balance before it is posted to
the ledger
Alerting the accountant to a budget overrun by sending an email
Printing out an audit trail
Warning a user of unposted transactions before a report is to be
run
Checking that codes added to one table exist in other related
code tables
Deleting data from an address table when its customer owner is
deleted
Benefits of RDBMS

Scalability
Transaction integrity
Centralized business rules
Centralized data allows real-time accuracy in transaction
processing since the single data occurrence is always updated
Shared data eliminates inconsistencies when data is stored in
several places and not updated in all locations
Shared data means that all application programs use the same
data
More informed decision making, based on one corporate
database
Improved cost efficiencies
Higher level of customer service

Enhanced asset/liability management
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Data Warehousing
Bill Inmon coined the term "data
warehouse" in 1990. His definition is:
"A (data) warehouse is a subject-oriented,
integrated, time-variant and non-volatile
collection of data in support of
management's decision making
process."
Information is stored in
files or tables.


The emerging problem is not how to retrieve
data, but how to manage, utilize and optimize
the mountains of data our increasingly
efficient information systems are collecting.
Within this explosion, the challenge of data
warehousing has become evident.
Terminology:


A file is made up of a number of records.
A record is made up of a number of fields, each of
which has a specific identified name.
What, Then, Is a Data
Warehouse?

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Data warehouses assemble the data from
heterogeneous databases so that users query only a
single point
Internet and World Wide Web technologies have had
a major impact on data management. Many vendors
now have interfaced their data warehouses to the
Web
Intelligent agent technology will play a major role in
locating and integrating various data sources on the
Web
A data warehouse brings together the essential data
from the heterogeneous databases, so that users
need to query only the warehouse
Data warehouse applications include:

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Sales and marketing analysis across all
industries
Inventory turn and product tracking in
manufacturing
Category management, vendor analysis, and
marketing program effectiveness analysis in
retail
Profitability analysis or risk assessment in
banking
Claim analysis or fraud detection in insurance
Business Intelligence Tools
What is
Business Intelligence Tools?


Business Intelligence Tools is a kind of
software that gives users the ability to
access and analyze information that
resides in databases throughout an
enterprise.
IT Systems that are designed
specifically to meet the needs of the
knowledge workers.
BIT v. OP


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Built to enable
exploration analysis,
and presentation of
information
Relatively few
inquires which are
often wide in scope
Designed to get
data out


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Used to automat
routine, predictable
tasks
Large volume of
small transactions
that are limited in
scope
Designed to get
data in
The following are three types
of Business Intelligence Tools

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Multi-Dimensional Analysis Software - Also
known as Multi Software or OLAP (On-Line
Analytical Processing) - Software that gives
the user the opportunity to look at the data
from a variety of different dimensions.
Query Tools - Software that allows the user
to ask questions about patterns or details in
the data.
Data Mining Tools - Software that
automatically searches for significant patterns
or correlations in the data.
Data Query and Reporting
Tools

Multi-Dimensional Analysis
Software


Also known as: OLAP (On-Line
Analytical Processing)
Is the process of analysis that involves
organizing and summarizing data in a
multiple number of dimensions.
OLAP
“Value Added Decision Support”

"Think of an OLAP data structure as a
Rubik's Cube of data that users can
twist and twirl in different ways to work
through what-if and what-happened
scenarios."
– Lee, The Editor, Datamation (May 1995)
New Analytical Approach


One of the most prominent and pervasive
alternative approaches to managing
analytical data lies in the relationship
between knowledge management (KM) and
decision support.
The ability of any user, anywhere, to ask any
questions of any database, at anytime.
Data Mining Concept and
Useful Terminology I


Data Mining is the process of finding
hidden patterns and relationships in the
data
Data Mart is a database that has the
same characteristics as a data
warehouse, but is usually smaller and is
focused on the data for one division or
one workgroup within an enterprise.
Data Mining Concept and
Useful Terminology II

Data Migration is the movement of
data from one environment to another.


This happens when data is brought from a
legacy system into a data warehouse.
Data Mining is the process of finding
hidden patterns and relationships in the
data.
Drill Down and Drill Up
Benefits of BI

Supply chain management

Fraud management
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Risk management
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Product management
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Financial controls
Transaction Processing
Transaction Processing

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Transaction processing means that
master files are updated as soon as
transactions are entered at terminals or
received over communication lines.
Batch Processing Versus Transaction
Processing
Characteristics of Transaction
Processing Systems

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Provide fast, efficient processing to handle large
amount of input and output
Perform rigorous data editing to ensure that records
are accurate and up to date
Are audited to ensure that all input data, processing,
procedures, and output are complete, accurate, and
valid
Involves a high potential for security-related problems
Support work processes of large number of people;
loss of the system can cause a severe and negative
impact on the organization
Transaction Process
Monitors


TP Monitor makes sure that groups of
updates take place together or not at all
This also supports the four TP
requirements:
1.
2.
3.
4.
Atomicity
Consistency
Isolation
Durability
1. Atomicity

All transactions are either performed
completely - committed, or are not
done at all; a partial transaction that is
aborted must be rolled back.
2. Consistency

The effects of a transaction must
preserve required system properties.
For instance, if funds are transferred
between accounts, a deposit and
withdrawal must both be committed to
the database, so that the accounting
system does not fall out of balance.
3. Isolation

Intermediate stages must not be made
visible to other transactions. Thus, in
the case of a transfer of funds between
accounts, both sides of the doubleentry bookkeeping system must change
together. This means that transactions
appear to execute serially (e.g. in
order) even if the work is done
concurrently.
4. Durability

Once a transaction is committed, the
change must persist, except in the face
of a catastrophic failure.
Elements of the Transaction
Processing
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Accounting cycle
Ledgers
Journals
Trial balances
Coding
Reports
Source documents
Transaction Processing Cycle
Document Image
Processing
Imaging Processing is the
automated technology of:

Image processing systems automate and streamline
the flow of paper through an organization. Imaging is
the automated technology of:

Document Storage

Document Management

Document Retrieval

Document Communication.
Processing systems are good for:
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
Scanning large amounts of paper-based
documents into a computer system and
indexing them for quick and easy retrieval.
Processing
all
types
of
documented
information either graphical, full-text of
combinations of both.
Converts images into a digital format via the
document scanner and then stores these
images onto a mass storage device, usually a
"write-once" optical mechanism.
Document Image Processing
Within the Accounting Office
Application Module
Type of Image
General Ledger
Cash transfer and deposit slips,
wire transfer request
Accounts Receivable
Sales invoices, checks paid,
expense reports
Accounts Payable
Invoices, canceled checks, expense
time sheets
Purchasing
Purchase orders, price lists and
brochures, agreements
Inventory
Pictures of items, copies of
insurance or title contracts
Fixed assets
Pictures of assets, copies of
insurance or title contracts
Human resources
Pictures of employees/applicants,
resumes, and
professional/educational
certificates.
Benefits
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Saves time by retrieving documents quickly
and efficiently at your terminal.
Saves time by allowing documents to be
shared electronically.
Saves money by releasing valuable filing
space.
Saves money by using electronic forwarding
instead of photocopying.
Saves money by increasing staff productivity.
Enhances customer service by timely and
accurate retrieval of information.
GroupWare and Workflow
GroupWare and Workflow
Components and Concepts

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Describe a rapidly evolving collection of
software tools that have been developed to
enable more efficient human collaboration.
Groupware aids in the:
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Creation
Sharing
And tracking of unstructured
information within and between
organizations in support of collaborative
activity
The Major Vendors are:

Lotus Notes/Domino,
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Microsoft Exchange,
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Novell Groupwise, and
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Netscape SuiteSpot/Collabra
Groupware can be said to encompass at
least six core technologies:

Multimedia electronic document management
systems (EDMS)
Electronic conferencing systems
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Electronic scheduling systems
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Electronic mail systems
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Telephony

Workflow systems
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Pitfalls in implementing a
groupware system
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As the system become functionally
broader, they become more difficult to
implement in an ordered, logical fashion
Expectations of the system
Training
On-screen graphical flowchart of the
module
Document
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The basic instrument of storage in a
groupware system is the document.
A document is the abstract “box” that holds
all of the unstructured data you will use in
the groupware system.
A document is the equivalent of the table in
SQL databases, except that it holds
unstructured (or “semi-structured”) data
instead of highly structured relational data.
Document Databases.
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Research notes
Blueprints
Financial statements
Vacation photos
Videos
Voicemails
Bulletin boards
Faxes
E-mails.
Electronic Conferencing

Asynchronous Versus Real-time

Text-based
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Teleconferencing
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Electronic whiteboards

Data conferencing
Internet Relay Chat (IRC) and
‘Usenet’
The tools at the disposal of the
viewer/participant will usually include:
 A mechanism to create a new topic or a
new thread
 A mechanism for responding to an
existing thread
 A user/topic/date search utility.
Real-Time Conferences

Allow team members to collaborate on a
project using near-instantaneously refreshed
document replicas, electronic
whiteboards, and audio/video
communication tools such as
teleconferencing systems
Electronic Scheduling

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Electronic scheduling is a means of sharing
information about meetings, deadlines, and
“To Do” lists between personnel and project
members.
A project member wanting to schedule a
meeting would simply:

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View the calendars of the desired participants
Choose the best time, date, and location for the
meeting
Write the meeting information directly to the
calendars of meeting participants
Send reminder notifications via e-mail.
E-Mail Features
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Address Books
Automation
Document Attachments
Group Broadcasting
Carbon Copies
Security
Notification
Ad Hoc and Process-Oriented
Workflows

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Ad hoc (or unstructured) workflows
are those that give workers maximum
freedom in completing their work.
Process-oriented workflows (or
structured workflows), on the other
hand, are used to automate processes
that are long-lived, repetitive, and well
defined
Benefits for Future

Unified messaging systems

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Computer-telephony integration (CTI)
Interactive voice response (IVR.)
This is a relatively new area of technology
convergence, so we will probably see many
new and innovative applications within the
next few years as new CTI/IVR applications
make their way onto the groupware playing
field.
Distributing Computing
Introduction to the Distributing
Computing Concepts



The trend toward integrated decision
support for the extended enterprise .
Use databases on meaning rather than
just structure.
A focus on asset management, cellular
design, self-managing applications, and
collaborative commerce, to take us
beyond ERP systems.
Distributing Computing
Concept
The Internet and the
World Wide Web
Hypertext Markup Language
(HTML)
Hypertext Transfer Protocol
(HTTP)


Hypertext Transfer Protocol or HTTP is
a set of rules for exchanging files on
the WWW.
This represents the application protocol
for other protocols (principally TCP/IP)
used for the exchange of information on
the Internet
Common Gateway Interface
(CGI)
Servlets
Advanced Hypertext Markup
Specifications

1.
2.
3.
The language has three important
functions, to provide direction as to:
What markup codes are allowed
What markup codes are required
How the codes will be recognized as
not being part of the basic text
Extensible Markup
Language (XML)
Cascading Style Sheets
(CSS)
E-Commerce and EDI


The term E-Commerce (Electronic
Commerce) brings different things to mind
depending upon your prospective or the
context in which it is used.
EDI (Electronic Data Interchange) is a subset
of E-Commerce. EDI forms the basis for
information to flow between two organizations
without paper (or less of it) using a predefined
set of parameters
E-Commerce and EDI Functions



Virtual Stores and the Online Gold Rush
Customer Relationship Management
Self Service Accounting and Human Resource
Applications
 Customers could check their accounts receivable
status.
 Vendors could check their account payable status.
 Outside sales people could enter and monitor
customer orders.
 Employees could review their employee benefit
accounts – and in some cases make changes in
their preferences or elections.
 Employees could schedule vacation or other time
away from the work-site.
Online Banking and Tax
Payment Systems

Some of the types of transactions that might
be included are:

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
Transfer of funds between deposit accounts.
Transfer of funds between deposit and loan
account (and vice versa).
Initiate electronic payment to vendors.
Query their accounts for activity and to aid in
reconciliation.
Send messages to customer service
representatives and receive replies.
Creating a
Technology Plan
Creating a
Technology Plan
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Get top management committed to the project
Do research, make a plan, and create a budget and
timeline
Need assessment
Contact vendors and gather your resources
Set up the prototype and choose vendor product
Establish policies and best practices
Educate the employees on what is coming
Roll out the hardware and software
Install accounting applications
Establish maintenance system, audit test
Evaluate and continuous improvement
Projected Goals and Objectives

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What problem will the new accounting
system solve – Where is the pain?
Top management needs to understand
and endorse the project? How will you
achieve that?
How technically adept are the
participants?
Project Manager – who is that person?
Benefits vs. Coasts



Is top management aware of the hard
and soft benefits and costs of the
project?
What method will you use to determine
the ROI of your project?
Will the pilot project be able to
demonstrate ROI clearly?
Budget for Each
Implementation Phase

Break project into phases


60 days to 6 months
Construct a budget for each phase of
the project
Database and Legacy System
Integration



Identify all of your company’s legacy
systems and databases.
Have legacy security issues been
addressed?
Are the candidate legacy system
interfaces clearly defined?
Performance Issues?


Have hardware and software platforms
been defined?
Have you planned for different growth
scenarios?
Server Locations, Hosting, and
Maintenance:


Will you company have a dedicated
server to host, or will host the content
on a shared server?
Who will maintain the accounting
application?
Implementation Time and
Milestones.


Have reporting requirements been fully
defined by management?
Are there meeting scheduled to review
the findings with top management?
Staffing/Resources to Maintain
and Support the Project

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Is there a clear policy in place to resolve
problems?
Are there clear maintenance procedures in
place?
Are there clear guidelines for implementing
upgrades?
Have backup procedures been developed?
Does an emergency plan exist for system
failure?
How will ongoing training be managed?
The Future of Accounting,
Information, Technology,
and Business Solutions
Technology Projections



Computer systems will be on-line and virtually
connected.
Distributing intelligence to handle screen layouts,
data entry validation and other processing steps
Computers sites will harbor intelligent agents.



An intelligent agent is a software that waits in the
background and performs an action if a specific event
occurs.
Monitoring systems will focus on exception reporting
and will place emphasis on fund transfer systems.
Often called “audit by exception” as opposed to
auditing actual reporting.
Viruses and Hackers will continue to be a growing
concern.
Future Benefits of Relational
Accounting Systems


Parallel Processing is
an architecture within a
single computer that
performs more than one
operation at the same
time.
The advent of parallel
processing leads to
dramatic performance
and improvements in
accounting systems.
Distributing Processing


Is the distribution of
multiple computers
throughout an
organization.
This structure lets a
single transaction span
multiple databases by
ensuring that the
process completes in
either all databases or
none.
Replication Functionality


The ability to keep
distributed databases
synchronized by routinely
copying the entire
database or subset of the
database to other server
in the network.
Replication Functionality
can be used to publish
reports and other
accounting data to
subscribing servers for
dissemination to users
via e-mail or the
Internet.
Object-Oriented DBMS



Provides more flexibility
than systems designed for
relational databases.
Object-oriented databases
allow for many to many
relationships.
The ultimate goal of
object accounting systems
is that it should not matter
which source language
they were programmed in
or in which computer in
the network they are
running on.
Other Trends

Graphical Accounting

Refers to the use of a Graphical User Interface
(GUI) to present the accounting systems functions
and data users. Today practically all major
accounting system vendor has released their
accounting software with the same standard GUI
interfaces.
Other Trends
Spread Sheet Accounting

The integration of spreadsheets software with
your accounting system.

Most client/server accounting packages include
direct transfer of data to and from spreadsheets
without the need for messy data file export and
imports.
Other Trends

Adaptable Accounting refers to accounting software that can
be easily adapted or customized to fit most business processes.
Users often see the need for accounting software to adapt to:
 The different computing platforms used throughout the
organization
 The specific terminology and data capture needs of local
business units
 A variety of business rules in place by governmental bodies
and regulatory entities
 Differences in the implementation of specific business
processes
 The demand for add-on functionality not provided by the
software vendor
Other Trends

Adaptable Accounting refers to accounting software that can
be easily adapted or customized to fit most business processes.
Users often see the need for accounting software to adapt to:
 The different computing platforms used throughout the
organization
 The specific terminology and data capture needs of local
business units
 A variety of business rules in place by governmental bodies
and regulatory entities
 Differences in the implementation of specific business
processes
 The demand for add-on functionality not provided by the
software vendor
Internet Accounting
(Client/Browser Architecture)


Allows the users access
to accounting related
information from any
Internet connection via
platform-independent
desktop Web browser.
For example, initiate a
transaction, participate
in a transaction
workflow, run a query,
or request a report
without having any
accounting software on
their own PC.
www.netledger.com
Workflow Accounting Trends
The automatic routing of accounting related
data to the users responsible for working on
them.

System setup workflow

Message-based workflow

Form-based workflow

Transaction-based workflow

Web workflow

Even-driven workflow
Component Accounting

Refers to accounting
software that works
together and
cooperate with each
other.



Voice
Video
Images
OLAP Accounting


OLAP is fast becoming
another technology and
functional differentiator
between accounting
systems.
The OLAP functionality
may be built in to the
accounting suite or
delivered via integration
with third-party
products.
?
Questions and Answers
Liv Watson – Senior Director of Information Technology
[email protected]
http://www.GaitherTech.com