Accounting Information Systems: The Processes and Controls, 2nd Edition

INTRODUCTION TO ADMINISTRATIVE PROCESSES (STUDY OBJECTIVE 1)

The previous chapters described many processes that occur within an organization, including sales of products and services, cash collections, purchases of materials and fixed assets, payroll, cash disbursements, and conversion processes. While these are all different processes, they do have several things in common. Each of these processes involves a regular transaction process that occurs daily or at another recurring interval. These processes usually generate a large number of transactions that must be recorded in the accounting system. In addition, top management has usually established procedures and controls that allow these processes to occur without intervention or specific authorization by management. For example, a salesperson does not have to wait for specific approval for each sale she negotiates.

The previous chapters described the processes that collect data within these business processes, record the transaction data, and trigger subsequent events to occur. This chapter will focus on two different sets of remaining processes. Both are administrative processes and are depicted in Exhibit 12-2.

The first set of processes presented in this chapter is shown in the lower left-hand box of Exhibit 12-2. These processes are unlike those described in the previous chapters, because they are not regular, recurring, or high-volume processes. Examples of such processes are the sale of stocks or bonds; the initiation ...