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

SUMMARY OF STUDY OBJECTIVES

An introduction to administrative processes. There are three types of administrative processes: source of capital processes, investment processes, and general ledger processes. Source of capital and investment processes are nonroutine, lowtransaction-volume processes that occur only as needed. The general ledger processes record data from all other business processes into the general ledger, and involve monthly closing and reporting.

Source of capital processes. Organizations undertake processes to raise capital only when necessary. These processes require specific approval by upper management, a determination of the type of capital source, executing the issuance of debt or equity, collecting the proceeds, and properly accounting for these processes.

Investment processes. Organizations undertake investment processes when there are excess funds that are not immediately needed in operations. Upper management must determine when to invest excess funds, decide whether to invest in marketable securities or treasury stock, execute the investment, and properly account for the investment processes.

Risks and controls in capital and investment processes. Raising capital is specifically authorized by upper management and closely supervised by management. In addition, employees do not usually handle cash or assets in these processes. Therefore, the most important controls are the proper management authorization and supervision of capital and investment processes. ...