Accounting Systems & Business Processes Chapter 4 ACCOUNTING INFORMATION SYSTEMS The Crossroads of Accounting & IT 2nd Ed Chapter 4 Accounting Systems & Business Processes © Copyright 2014 Pearson Education. All Rights Reserved.

Imagine tracking activity you perform today on sticky notes that you post online and share with your friends... What if together with your friends you analyze and rearrange the stickies so that tomorrow you are more efficient? Business Process Management Meet Social Business © Copyright 2014 Pearson Education. All Rights Reserved.

Business Processes & the Accounting System Accounting spans business processes in the value chain. © Copyright 2014 Pearson Education. All Rights Reserved.

Transaction Cycles Each transaction cycle is expanded to show the transactions in the cycle. © Copyright 2014 Pearson Education. All Rights Reserved.

So you can get a head start by using a baseline accounting system with modules and transactions that are common to most enterprises. © Copyright 2014 Pearson Education. All Rights Reserved.

Baseline Accounting System ABCs of Accounting Accounting System = Baseline Accounting System + Customization The baseline accounting system is a generic accounting system that includes the workflow and business processes frequently used by most enterprises. To create a customized accounting system, we configure or customize the baseline accounting system to accommodate the unique needs of the specific enterprise. The baseline accounting system, such as the one shown here, can be customized to meet an enterprise’s specific needs. This customization is done by customization of the baseline’s processes. © Copyright 2014 Pearson Education. All Rights Reserved.

Accounting System Customization Using Business Process Mapping Business Process Map Notations Flowcharts Data Flow Diagrams (DFD) Unified Modeling Language (UML) Business Process Model and Notation (BPMN) A business process map can be drawn using different types of symbols and notations. Some of the standard notations are flowcharts, data flow diagrams, unified modeling language, and business process model and notation. © Copyright 2014 Pearson Education. All Rights Reserved.

Receive Customer Payments Sales Cycle Processes Receive Customer Payments Create Invoices Make Deposits The Sales Cycle processes and the tasks shown on QuickBooks Home page for customer section. © Copyright 2014 Pearson Education. All Rights Reserved.

Flowchart Diagram for the Sales Cycle Processes © Copyright 2014 Pearson Education. All Rights Reserved.

Data Flow Diagram for the Sales Cycle Processes © Copyright 2014 Pearson Education. All Rights Reserved.

BPMN Diagram for the Sales Cycle Processes © Copyright 2014 Pearson Education. All Rights Reserved.

Flowchart Decision Process Document Process Flow Flowchart Diagrams use five symbols: Start/End Decision There are only five symbols (shown here) used in building flowchart diagrams. When learning how to document business processes, flowcharts are a nice place to start. Then you can transition to UML or BPMN after you become more familiar with business process documentation. Process Document Process Flow © Copyright 2014 Pearson Education. All Rights Reserved.

Customer Module: Create Invoices Flowchart Example © Copyright 2014 Pearson Education. All Rights Reserved.

BPMN 2.0 Some documentation tools, such as UML Diagrams may use over 100 different symbols. Introduced in 2011, BPMN 2.0 provides a business process mapping standard for bridging the gap between IT professionals and business users, such as accountants. BPMN 2.0 doesn’t require extensive training to use, making it a better choice for accounting professionals to understand and use to communicate with IT professionals. On the other hand, BPMN 2.0 provides greater detail than flowcharting to meet the needs of IT professionals for successful system implementation. So BPMN provides a balance between simplicity and complexity to facilitate communication between the accounting and IT professionals. © Copyright 2014 Pearson Education. All Rights Reserved.

Customer Module: Create Invoices BPMN 2.0 Example © Copyright 2014 Pearson Education. All Rights Reserved.

Reading a BPMN 2.0 Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Who does What, When, Where & How? Step 1 Identify the Start event that triggers the process. Step 2 Identify the activities. Step 3 Identify gateways where forking or merging data flows occur. Step 4 Identify data objects. Step 5 Identify data stores. Step 6 Trace data flows. Step 7 Identify the End event. When reading a BPMN 2.0 you are basically attempting to answer the question: Who does What, When, Where & How? To do this, there are 7 steps: 1) Identify the Start event that triggers the process. 2) Identify the activities. 3) Identify gateways where forking or merging data flows occur. 4) Identify data objects 5) Identify data stores. 6) Trace the data flows. 7) Identify the End event. © Copyright 2014 Pearson Education. All Rights Reserved.

BPMN 2.0 Exercise For a bank ATM transaction, identify the following: Swimlanes (major participants) 2. Activities 3. Gateways 4. Data Stores 5. Data Objects © Copyright 2014 Pearson Education. All Rights Reserved.

Guidelines for Well-Designed Business Process Map: Avoid Black Holes, Miracles, and Gray Holes When building a business process map, there are some general guidelines to follow. Notice that there should not be data flow between two data stores, two data objects, a data stores and a data object. © Copyright 2014 Pearson Education. All Rights Reserved.

BPMN 2.0 Exercise Identify and list the errors that you see in this BPMN 2.0. How many errors can you identify in this DFD? © Copyright 2014 Pearson Education. All Rights Reserved.

Building a Business Process Map EspressoCoffee customers place an online order. EspressoCoffee processes the customer order by verifying the customer identity, verifying the items are available, and sending a request to the credit card company to verify the customer’s good credit standing. The shipment authorization is sent to the warehouse. The warehouse picks the items from stock. The items are shipped to the customer with a pick list enclosed. The warehouse notifies accounting that the items have shipped. Accounting generates an invoice from the sales information and emails the invoice to the customer. The corresponding database tables are updated. After learning how to read a business process map, the next step is to learn how to build one. There are five steps to build a business process map Step 1 is to write a narrative for the business activity. The narrative is just a brief description of the steps and actions taken. © Copyright 2014 Pearson Education. All Rights Reserved.

Building a Business Process Map EspressoCoffee customers place an online order. EspressoCoffee processes the customer order by verifying the customer identity, verifying the items are available, and sending a request to the credit card company to verify the customer’s good credit standing. The shipment authorization is sent to the warehouse. The warehouse picks the items from stock. The items are shipped to the customer with a pick list enclosed. The warehouse notifies accounting that the items have shipped. Accounting generates an invoice from the sales information and emails the invoice to the customer. The corresponding database tables are updated. After the narrative is written to describe the process, the next step is to annotate the narrative to identify the activities. Also notice that activities typically start with an action verb, such as process or generate. © Copyright 2014 Pearson Education. All Rights Reserved.

How Do I Build a DFD (Level 0)? Step 3. Create a business process map organizer to organize activities Step 3 is to create a table to summarize the information about activities, participants, gateways, data objects, and database tables needed. © Copyright 2014 Pearson Education. All Rights Reserved.

Building a Business Process Map Step 4. Develop a business process map using information in the business process map organizer Step 4 is to select one event from the EAD table and build a DFD for that one event. This can be referred to as a DFD fragment. © Copyright 2014 Pearson Education. All Rights Reserved.

Process Customer Order Building a Business Process Map Step 5. Repeat steps 1 through 4 for subprocesses as needed Process Customer Order Step 5 is to select one activity from the business process map organizer and build a business process map for that one activity. © Copyright 2014 Pearson Education. All Rights Reserved.

Process Map Exercise Select an authentic enterprise of your choice and describe how the enterprise processes sales transactions with customers. 1. List: Participants Activities Gateways Data Objects Data stores Draw a flowchart and a BPMN 2.0 to document the sales transaction for the enterprise of your choice, showing activities, participants, data objects, data stores, and data flows. © Copyright 2014 Pearson Education. All Rights Reserved.