Information system and control audit – lecture i

G
Y
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A
Information Systems Control
N and Audit – Lecture # 1
A
C CA Vikram S. Mathur
BA (Eco) Hons, FCA, DISA (ICAI)
A
Cell: +91-9998090111
D Email: ahmedabadfca@live.in
E Website: http://www.vsmathur.co.in
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Y

Introduction & Definition
G • The term system is defined as an orderly
Y arrangement of a set of interrelated and
A
A
interdependant elements that operate
N collectively to accomplish some common
purpose or goal. Eg. Human Body – head, heart,
A
C
hands, legs, etc.
A • System can be described by specifying it’s parts,
D the way in which they are related and the goals
E which they are expected to achieve
M
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ISCA Lectures (Number 1) CA Vikram S. Mathur (+91-9998090111) (ahmedabadfc
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Types of System
G
Y
A
A
N
A
C Conceptual System or Model
E.g. Theology : Ideas of God
Interacts freely with its
environment by taking input
Data collection, manipulation,
maintenance and final
Operates in a predicable
manner and intereaction

A and Relationship with
humans
and returning output E.g.
Business Organisations
reporting are absolutely by
human efforts
between parts is lnown with
certainlity. E.g. A correct
computer program.
D
E Tangible elements operate
together to accomplish an
No interaction with
environment and no changes
Computers or
microprocessors carry out all
Operates in probabilistic
manner and degree of error is
above tasks. No business is
M objective. E.G. Circulatory
System, Computer System
due to change in invironment.
E.g. Digital Watch System
ever 100% automated, some
parts are necessarily manual.
always attached to prediction
of what “the system will do”

Y
3

Closed System vs Open System
G
Y
A
A
N
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C
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D
E
M
Y
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Closed System vs Open System
Example
G
Y
A
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N
A
C
A
D
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Entropy
G
Y
A
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N
A
C
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D
E
M Presenting or offsetting an increase in entropy
Y requires inputs of matter and energy to repair,
replenish and maintain the system : Negative Entropy

6

Manual & Automated Systems
G • Manual Systems: Data Collection,
Y manipulation, maintenance and final reporting
A done by human efforts.
A • Automated Systems: Computers or
N microprocessors carry out all the tasks
mentioned above.
A
• Why use computers?
C – Handling huge volumes
A – Storing enormous data
D – Quick and Accurate processing
E – Quick retrieval of information
M – Quick transportation of info to distant places
– Availability of software tools for quick decision making
Y
7

Deterministic & Probabilistic
Systems
G • Deterministic: Operates in predictable
Y
A manner – interaction among parts known
A with certainity. E.g. Correct computer
N program performing exactly according to
A instructions.
C
A • Probabilistic: Probable behaviour –
D degree of error always attached to
E
M
prediction of what system will do.
Y
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Example of Deterministic &
Probabilistic
G
Y
A
A
N
A
C
A
D
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General model of a System
G
Y
A
A
N
A
C • Input is the data flowing into the system from outside.
A • Processing is the action of manipulating the input into a more
D useful form.
• Output is the information flowing out of a system.
E
• Storage is the means of holding the information.
M
• Feedback occurs when the outcome has an influence on the input.
Y
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System Environment
G
Y
A
A
N
A
C
A
D
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Subsystem
G
Y
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N
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C
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D
E
M • Subsystem is a part of a larger system – delineated by
Y it’s boundaries.
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Characteristics of Subsystems
G • Decomposition Complex system is easier to
Y understand when broken into subsystems.
A •
Simplification Organizing subsystems to
A
reduce number of interconnections.
N
• Decoupling Close coordination between tightly
A connected subsystems, e.g. inventory and
C production.
A
– Inventories, buffer or waiting lines
D
– Slack and flexible resources
E
M – Standards
Y
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Supra-System
G
Y
A
A
N
A
C
A
D
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M
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System Stress & Change
G • Living or artificial systems like organizational
Y systems, information systems change because
A
A
they undergo stress.
N • Supra-System exerts stress on system which
A changes to accommodate, else it becomes
C pathological – it will decay and terminate.
A • Supra-System enforces compliances through
D control over supply of resources and information
E
M
input to system
Y
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Information Life-Cycle Example
G
Y
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N
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C
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D
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What is Information?
G • Information David • Attributes:
– Availability
Y and Olson: – Purpose
A “Information is data – Mode and Format
A that has been –
–
Decay
Rate
N processed into a – Frequency
A
form that is – Completeness

C
meaningful to the –
–
Reliability
Cost benefit analysis
A
recipient and is of – Validity
D
real or perceived – Quality

E
value in current or – Transparency
– Value of Information
M
progressive – Adequacy
Y
decision.”
17

Types of Information
G
Y
A
A
N
A
C • Internal Information: Generated from the operations of the
organization at various functional areas. Always pertains to various
A operational units within organization, e.g. Production figures, Sales
D figures.
E • External Information: Collected from external environment of
business organization e.g Government policies, competition,
M economic status, market share.
Y
18

Factors on which Information
depends
G • Operational Function: grouping or clustering of several functional
units on the basis of related activities into sub-systems.
Y • Types of Decision-making:
A – Programmed Decisions: decisions made on problems and situations
by reference to predetermined set of precedents, techniques and rules.
A – Non-Programmed Decisions: decisions made on situations and
N problems which are novel and non-repititive about which there is not
much knowledge and information is available.
A • Level of management Activity
– Strategic or Top level: Concerned with developing of organizational mission,
C objectives and strategies – Strategic Decisions
A – Tactical or Middle level: Managers plan, organize, lead and control activities of
other managers. Tactical Decisions
D – Operational or Supervisory level: Lowest level where managers coordinate the
E work of others who are not themselves managers. Operational Decisions

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Components of Computer Based
Information Systems (CBIS)
G • Hardware: Machinery including the computer
Y itself and all it’s support devices.
A • Software: Computer programs and the manuals
A (if any).
N • Data: Facts used by programs to produce useful
A information
C • Procedures: Policies that govern the operation
A of a computer system.
D • People:People are probably the main
E components that influence the success or failure
M of information systems the most.
Y
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CBIS - Hardware
G
Y
A
A
N
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C
A
D
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CBIS - Areas of Applications
G • Finance and Accounting: Ensure financial viability of
Y the organization, enforce financial discipline and plan
A and monitor the financial budget.
A • Marketing and Sales: To maximize sales and ensure
N customer satisfaction.
• Production or Manufacturing: Optimally deploy man,
A machine and material to maximize production or service.
C • Inventory / Stores Management: Keeping track of
A material at stores. Regulate minimum and maximum
D levels of stock, optimize re-order quantity, facilitate
E queries about stock like ABC Analysis, Total Inventory
M Value.
Y
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Types of Information Systems
G
Y
A
A
N
A
C • Operational Support Systems (OSS)
A
• Management Support Systems (MSS)
D
E • Office Automation Systems (OAS)
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Operations Support Systems (OSS)
G • Object is to improve the operational
Y
A efficiency of the enterprise.
A • Consists of three components
N
– Transaction Processing Systems
A
C
– Management Information Systems
A – Enterprise Resource Planning Systems
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Transaction Processing System
(TPS)
G• Information system that manipulates data from
Y business transactions. E.g. Sales, purchase,
A production, delivery, payments or receipts – to
A be organized and manipulated to generate
N various products for external use.
A
C
A
D
E
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Y
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Management Information Systems
(MIS)
G • To assist managers in decision making and
Y problem solving. Uses results produced by TPS
A in addition to other sources, if need be. Can be
A developed further as understanding of recurring
N decisions improves.
A
C
A
D
E
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Characteristics of an effective MIS
• Management Oriented: Starts from an appraisal of management needs
G and overall business objectives.
Y • Management Directed: Management should actively direct system’s
development efforts.
A • Integrated: All functional and operational information sub-system should be
A tied together into one entity.
• Common Data Flows: Use of common input, processing and output
N procedures and media whenever required.
• Heavy Planning Element: MIS usually takes 3-5 years and sometimes
A longer to be established.
C • Sub-System Concept: Should be broken down into digestible sub-systems
that can be implemented one at a time.
A • Common Database: Database is the mortar that holds the functional
D systems together. It is a “Super-File” that consolidates and integrates data
records formerly stored in many seperate data files.
E • Computerized: Can be implemented without the use of computers, but
computers increase the effectiveness of the system.
M
Y
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MIS Misconceptions
G • Use of Computers: Not true, MIS computer
Y based, but computer is just a tool.
A
A • More Data = More Information: It is not the
N quantity of data, but it’s relevance that is
A important.
C • Accuracy of vital importance: Accuracy is
A relevant, but not an absolute ideal for decision
D making. Estimation should be fairly correct.
E
M
Y
28

Enterprise Resource Planning
(ERP)
G • One of the latest high end solutions that seek to
Y streamline and integrate operation processes
A and information flows in an organization to
A synergize MEN, MONEY, MACHINE,
N MATERIALS and MARKET.
A
C
A
D
E
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ERP Features
G
Y
A
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N
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C
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D
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ERP Benefits
G
Y
A
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N
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C
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D
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ERP – Pros & Cons
G
Y
A
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N
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C
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D
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Y
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Management Support Systems
(MSS)
G
Y
A
A
N
A
C
A
D
E
M
Y
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Decision Support System (DSS)
G
Y
A
A
N
A
C
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D
E
M
Y
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Executive Information System (EIS)
G
Y
A
A
N
A
C
A
D
E
M
Y
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Office Automation Systems (OAS)
G
Y
A
A
N
A
C
A
D
E
M
Y
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