1. Business Processes: Chapter 5 Sales, Purchasing, & Payroll Cycles
ACCOUNTING INFORMATION SYSTEMS
The Crossroads of Accounting & IT
Chapter 5
Business Processes:
Sales, Purchasing, & Payroll Cycles
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2. What company did 5 former IBM engineers form that became a leading enterprise software? Meet SAP.
SAP was founded by 5 IBM engineers when they realized that many of their clients were using the same business processes.
SAP was founded on the premise that business processes could be standardized.
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3. What was the first version of SAP? Accounting Software R/1
Why do you think the first version of SAP was accounting software? Why would SAP focus on accounting software first?
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4. How Do I Customize an Accounting System?
Perform a Gap Analysis
A Gap Analysis is the difference between the baseline system and the customization required.
So when customizing an accounting system, often the first step is to determine the gap between the available baseline systems and the customization that a particular enterprise requires.
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6. How Do I Customize an Accounting System?
Big Bang
Stages
When customizing an accounting system, either the Big Bang approach or the Stage approach can be used.
The Big Bang approach involves going live with all modules of an enterprise system at the same time.
The Stages approach typically focuses on one module at a time. One module is selected, customized, and implemented. Then the next module and so on.
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7. How Do I Customize the Accounting System?
Data Flow Diagrams (DFDs)
Who? = Agent
What? = Event
Where? = Database Table
When? & How? = Data Flow
Data Flow Diagrams can be used to document customization for an accounting system.
Flow charts and UML diagrams (discussed in the chapter 4 extension) can also be used to document customization for a system.
The advantage to using DFDs is that they require only four symbols:
1) Agent
2) Event
3) Data store
4) Data flow
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8. DFD Example Each event is numbered for identification.
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9. Baseline Accounting System & Transaction Cycles
Start with a baseline system when customizing an accounting system.
Notice the transaction cycles in the baseline system:
Purchasing cycle
Sales cycle
Payroll cycle
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10. How Do I Customize the Sales Cycle?
Each of the three items in the sales cycle will be expanded and customized using DFDs.
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11. Create Invoices DFD EspressoCoffee
For example, the Create Invoices event is customized for EspressoCoffee Company.
Notice that is a Level-0 DFD. The events are labeled 1.0, 2.0, and 3.0.
Also notice that the database tables shown in the DFD are shown in greater detail in the Database Tables section.
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12. Receive Customer Payments DFD EspressoCoffee
The Receive Customer Payment even can be expanded and customized for EspressoCoffee.
In this DFD, there are two events, 1.0 and 2.0.
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13. Make Deposits DFD EspressoCoffee
The Make Deposits DFD for EspressoCoffee has two events, 1.0 process deposits, and 2.0 update accounts.
Notice the four database tables that are used to store the date.
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14. How Do I Customize the Purchasing Cycle?
Create purchase orders
Receive items
Enter bills
Pay bills
The four events in the purchasing cycle are customized.
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15. Create Purchase Orders DFD EspressoCoffee
The DFD to customize the Create Purchase Orders event for EspressoCoffee contains four events.
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16. Receive Items DFD EspressoCoffee
The DFD to customize the Receive Items event for EspressoCoffee also contains four events.
Notice that the Employee agent is repeated twice in the DFD.
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17. Enter Items DFD EspressoCoffee
The DFD to customize the Enter Items event for EspressoCoffee contains three events.
Notice that EspressoCoffee uses a three-way match, comparing the bill received to the PO and the Receiving Report.
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18. Pay Bills DFD EspressoCoffee
The DFD to customize the Pay Bills event for EspressoCoffee contains only two events: Select Bills to Pay and Initiate EFT.
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19. How Do I Customize the Payroll?
The four events in the Payroll cycle are customized.
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20. Enter Time DFD EspressoCoffee
The Enter Time DFD for EspressoCoffee contains only two events: Collect Time Worked and Calculate Time Worked.
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21. Calculate Payroll DFD EspressoCoffee
The Calculate Payroll DFD for EspressoCoffee contains four events.
Notice that Agent labeled Schedule. The Calculate Payroll process is scheduled to start at a specific day and time, such as 8 am on the first of each month.
Also notice that the authorization of payroll is provided by the accountant.
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22. Pay Employees DFD EspressoCoffee
The Pay Employees DFD for EspressoCoffee contains three events.
Notice that after the payroll payment is processed, next it can be sent to process direct deposits OR to print paychecks.
If the employee uses direct deposit, the funds are transferred to the bank and the employee receives only the paystub.
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23. Pay Payroll Liabilities DFD EspressoCoffee
The Pay Payroll DFD for EspressoCoffee contains two events: Process Payroll Liabilities and Authorize Payroll Liabilities.
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24. How Do I Customize the Financial Cycle?
The Financial Cycle can be customized by customizing the process for adjusting entries, correcting entries, closing, and other transactions and events that do not fall under any other events in the baseline accounting system.
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25. Adjusting Entries DFD EspressoCoffee
As an example of how events for the Financial Cycle can be customized, this DFD shows the process that EspressoCoffee uses for adjusting entries.
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26. Adjusting Entries
The adjusting entries are recorded using an onscreen journal such as the one shown here. Recall from Chapter 3 that this onscreen journal is part of the accounting interface and is created using a database form.
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27. DFD Exercise
Select an authentic enterprise of your choice and describe how the enterprise processes purchasing transactions with vendors.
1. List:
Draw a level-0 data flow diagram (DFD) to document the sales transaction for the enterprise of your choice, showing agents, events, data stores, and data flow.
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28. DFD Exercise
Select a live enterprise of your choice and a business process the enterprise conducts.
Complete the following: Write a narrative summarizing what you observed.
Annotate the narrative, identifying the events with E1, E2, etc.
Construct a DFD documenting the steps.
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