Accounting Information Systems (AIS)
Business Process Diagram (BPD)
A BPD shows the di erent steps or activities in a business process (e.g. revenue and expenditure
cycle). Activities such as checking customer credit, verifying inventory availability can be shown
on a BPD to easily illustrate to reader how the business process is set up.
Chapter 7 Control and Accounting Information Systems
Control is to have clear objectives and information on actual situation. And to have the ability to
in uence the actual situation. Further to reduce any unnecessary risks and this does not imply
that you do not take any risks.
The de nition of internal control is a process, e ected by an entity’s board of directors,
management and other personnel, designed to provide reasonable assurance of objectives that
they are met in the following categories:
I. Safeguard assets - prevent or detect their unauthorised acquisition, use, or disposition.
II. Maintain records in su cient detail to report company assets accurately and fairly.
III. Provide accurate and reliable information.
IV. Prepare nancial reports in accordance with established criteria.
V. Promote and improve operational e ciency.
VI. Encourage adherence to prescribed managerial policies.
VII. Comply with applicable laws and regulations.
Internal controls perform three important functions:
1. Preventive controls deter problems before they arise. For example, SOD, hiring quali ed
personnel, and controlling physical access to assets and information.
2. Detective controls discover problems that are not prevented. For example, duplicate
checking of calculations and preparing bank reconciliations and monthly trial balances.
3. Corrective controls identify and correct problems as well as correct and recover from the
resulting errors. For example, maintaining back up copies of les, correcting data entry
errors, and resubmitting transactions for subsequent processing.
Internal controls are often segregated in two categories:
1. General controls make sure an organisations’ control environment is stable and well
managed. This includes security; IT infrastructure; and software acquisition, development,
and maintenance controls.
2. Application controls prevent, detect, and correct transaction errors and fraud in
application programs. They are concerned with the accuracy, completeness, validity, and
authorisation of the data captured, entered, processed, stored, transmitted to other
systems, and reported.
Control Activities
- Proper authorisation of transactions and activities
- Segregation of duties (see page 17)
- Project development and acquisition controls
- Change management controls
- Design and use documents and records
- Safeguarding assets, records, and data
- Independent checks and performance
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Business Process Diagram (BPD)
A BPD shows the di erent steps or activities in a business process (e.g. revenue and expenditure
cycle). Activities such as checking customer credit, verifying inventory availability can be shown
on a BPD to easily illustrate to reader how the business process is set up.
Chapter 7 Control and Accounting Information Systems
Control is to have clear objectives and information on actual situation. And to have the ability to
in uence the actual situation. Further to reduce any unnecessary risks and this does not imply
that you do not take any risks.
The de nition of internal control is a process, e ected by an entity’s board of directors,
management and other personnel, designed to provide reasonable assurance of objectives that
they are met in the following categories:
I. Safeguard assets - prevent or detect their unauthorised acquisition, use, or disposition.
II. Maintain records in su cient detail to report company assets accurately and fairly.
III. Provide accurate and reliable information.
IV. Prepare nancial reports in accordance with established criteria.
V. Promote and improve operational e ciency.
VI. Encourage adherence to prescribed managerial policies.
VII. Comply with applicable laws and regulations.
Internal controls perform three important functions:
1. Preventive controls deter problems before they arise. For example, SOD, hiring quali ed
personnel, and controlling physical access to assets and information.
2. Detective controls discover problems that are not prevented. For example, duplicate
checking of calculations and preparing bank reconciliations and monthly trial balances.
3. Corrective controls identify and correct problems as well as correct and recover from the
resulting errors. For example, maintaining back up copies of les, correcting data entry
errors, and resubmitting transactions for subsequent processing.
Internal controls are often segregated in two categories:
1. General controls make sure an organisations’ control environment is stable and well
managed. This includes security; IT infrastructure; and software acquisition, development,
and maintenance controls.
2. Application controls prevent, detect, and correct transaction errors and fraud in
application programs. They are concerned with the accuracy, completeness, validity, and
authorisation of the data captured, entered, processed, stored, transmitted to other
systems, and reported.
Control Activities
- Proper authorisation of transactions and activities
- Segregation of duties (see page 17)
- Project development and acquisition controls
- Change management controls
- Design and use documents and records
- Safeguarding assets, records, and data
- Independent checks and performance
Page 12 of 25
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