Tài liệu [james_a._hall]_accounting_information_systems(bookzz.org)

Accounting Information Systems SEVENTH EDITION JAMES A. HALL Peter E. Bennett Chair in Business and Economics Lehigh University http://avaxhome.ws/blogs/ChrisRedfield Accounting Information Systems, Seventh Edition James A. Hall VP/Editorial Director: Jack W. Calhoun Editor-in-Chief: Rob Dewey Sr. Acquisitions Editor: Matt Filimonov Editorial Assistant: Lauren Athmer ª 2011, 2008 Cengage Learning ALL RIGHTS RESERVED. No part of this work covered by the copyright herein may be reproduced, transmitted, stored or used in any form or by any means graphic, electronic, or mechanical, including but not limited to photocopying, recording, scanning, digitizing, taping, Web distribution, information networks, or information storage and retrieval systems, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the publisher. Developmental Editor: Maggie Kubale Marketing Manager: Natalie King Marketing Coordinator: Heather McAuliffe Associate Content Project Manager: Jana Lewis Manager of Technology, Editorial: Matt McKinney For more information about our products, contact us at: Cengage Learning Academic Resource Center, 1-800-423-0563 For permission to use material from this text or product, submit a request online at http://www.cengage.com/permissions. Media Editor: Bryan England Sr. Manufacturing Buyer: Doug Wilke Production Technology Analyst: Starratt Alexander Production House: Cadmus Communications Printer: Edwards Brothers South-Western Cengage Learning, a part of Cengage Learning. Cengage, the Star logo, and South-Western are trademarks used herein under license. Art Director: Stacy Jenkins-Shirley Library of Congress Control Number: 2009938064 Marketing Communications Manager: Libby Shipp ISBN-13: 978-1-4390-7857-0 Permissions Acquisition Manager: Roberta Broyer ISBN-10: 1-4390-7857-2 Cover Designer: Itzhack Shelomi Cover Image: iStock Photo Printed in the United States of America 1 2 3 4 5 13 12 11 10 09 Cengage Learning 5191 Natorp Boulevard Mason, OH 45040 USA Brief Contents Preface xvii Part I Overview of Accounting Information Systems 1 Chapter 1 The Information System: An Accountant’s Perspective 3 Chapter 2 Introduction to Transaction Processing 41 Chapter 3 Ethics, Fraud, and Internal Control 111 Part II Transaction Cycles and Business Processes 151 Chapter 4 The Revenue Cycle 153 Chapter 5 The Expenditure Cycle Part I: Purchases and Cash Disbursements Procedures 217 Chapter 6 The Expenditure Cycle Part II: Payroll Processing and Fixed Asset Procedures 265 Chapter 7 The Conversion Cycle 305 Chapter 8 Financial Reporting and Management Reporting Systems 349 Part III Chapter 9 Advanced Technologies in Accounting Information 395 Database Management Systems 397 Chapter 10 The REA Approach to Database Modeling 459 Chapter 11 Enterprise Resource Planning Systems 489 Chapter 12 Electronic Commerce Systems 523 iii iv Brief Contents Part IV Systems Development Activities 571 Chapter 13 Managing the Systems Development Life Cycle 573 Chapter 14 Construct, Deliver, and Maintain Systems Project 605 Part V Computer Controls and Auditing 663 Chapter 15 IT Controls Part I: Sarbanes-Oxley and IT Governance 665 Chapter 16 IT Controls Part II: Security and Access 703 Chapter 17 IT Controls Part III: Systems Development, Program Changes, and Application Controls 737 Glossary 773 Index 791 Contents Preface xvii Acknowledgments xxvi Dedication xxvii Part I Chapter 1 Overview of Accounting Information Systems 1 The Information System: An Accountant’s Perspective 3 THE INFORMATION ENVIRONMENT 4 What Is a System? 5 An Information Systems Framework 7 AIS Subsystems 9 A General Model for AIS 10 Acquisition of Information Systems 14 ORGANIZATIONAL STRUCTURE 15 Business Segments 15 Functional Segmentation 16 The Accounting Function 19 The Information Technology Function 20 THE EVOLUTION OF INFORMATION SYSTEM MODELS 24 The Manual Process Model 24 The Flat-File Model 25 The Database Model 27 The REA Model 28 Enterprise Resource Planning Systems 31 THE ROLE OF THE ACCOUNTANT 31 Accountants as Users 32 Accountants as System Designers 32 Accountants as System Auditors 32 SUMMARY 33 Chapter 2 Introduction to Transaction Processing 41 AN OVERVIEW OF TRANSACTION PROCESSING 42 Transaction Cycles 42 ACCOUNTING RECORDS 44 Manual Systems 44 The Audit Trail 50 v vi Contents Computer-Based Systems 51 DOCUMENTATION TECHNIQUES 53 Data Flow Diagrams and Entity Relationship Diagrams 53 System Flowcharts 57 Program Flowcharts 64 Record Layout Diagrams 67 COMPUTER-BASED ACCOUNTING SYSTEMS 67 Differences between Batch and Real-Time Systems 68 Alternative Data Processing Approaches 69 Batch Processing Using Real-Time Data Collection 71 Real-Time Processing 74 DATA CODING SCHEMES 74 A System without Codes 74 A System with Codes 76 Numeric and Alphabetic Coding Schemes 76 SUMMARY 79 APPENDIX 80 Chapter 3 Ethics, Fraud, and Internal Control 111 ETHICAL ISSUES IN BUSINESS 112 Business Ethics 112 Computer Ethics 112 Sarbanes-Oxley Act and Ethical Issues 116 FRAUD AND ACCOUNTANTS 117 Definitions of Fraud 117 The Fraud Triangle 118 Financial Losses from Fraud 119 The Perpetrators of Frauds 120 Fraud Schemes 122 INTERNAL CONTROL CONCEPTS AND TECHNIQUES 128 SAS 78/COSO Internal Control Framework 132 SUMMARY 137 Part II Chapter 4 Transaction Cycles and Business Processes 151 The Revenue Cycle 153 THE CONCEPTUAL SYSTEM 154 Overview of Revenue Cycle Activities 154 Sales Return Procedures 160 Cash Receipts Procedures 163 Contents Revenue Cycle Controls 166 PHYSICAL SYSTEMS 170 MANUAL SYSTEMS 171 Sales Order Processing 171 Sales Return Procedures 174 Cash Receipts Procedures 174 COMPUTER-BASED ACCOUNTING SYSTEMS 177 Automating Sales Order Processing with Batch Technology 177 Keystroke 178 Edit Run 180 Update Procedures 180 Reengineering Sales Order Processing with Real-Time Technology 180 Transaction Processing Procedures 180 General Ledger Update Procedures 182 Advantages of Real-Time Processing 183 Automated Cash Receipts Procedures 183 Reengineered Cash Receipts Procedures 185 Point-of-Sale (POS) Systems 185 Daily Procedures 185 End-of-Day Procedures 187 Reengineering Using EDI 187 Reengineering Using the Internet 188 Control Considerations for Computer-Based Systems 188 PC-BASED ACCOUNTING SYSTEMS 190 PC Control Issues 190 SUMMARY 191 APPENDIX 192 Chapter 5 The Expenditure Cycle Part I: Purchases and Cash Disbursements Procedures 217 THE CONCEPTUAL SYSTEM 218 Overview of Purchases and Cash Disbursements Activities 218 The Cash Disbursements Systems 225 Expenditure Cycle Controls 228 PHYSICAL SYSTEMS 230 A Manual System 230 The Cash Disbursements Systems 232 COMPUTER-BASED PURCHASES AND CASH DISBURSEMENTS APPLICATIONS 234 Automating Purchases Procedures Using Batch Processing Technology 234 vii viii Contents Cash Disbursements Procedures 239 Reengineering the Purchases/Cash Disbursements System 240 Control Implications 242 SUMMARY 243 Chapter 6 The Expenditure Cycle Part II: Payroll Processing and Fixed Asset Procedures 265 THE CONCEPTUAL PAYROLL SYSTEM 266 Payroll Controls 274 THE PHYSICAL PAYROLL SYSTEM 275 Manual Payroll System 275 COMPUTER-BASED PAYROLL SYSTEMS 277 Automating the Payroll System Using Batch Processing 277 Reengineering the Payroll System 279 THE CONCEPTUAL FIXED ASSET SYSTEM 281 The Logic of a Fixed Asset System 281 THE PHYSICAL FIXED ASSET SYSTEM 283 Computer-Based Fixed Asset System 283 Controlling the Fixed Asset System 286 SUMMARY 288 Chapter 7 The Conversion Cycle 305 THE TRADITIONAL MANUFACTURING ENVIRONMENT 306 Batch Processing System 307 Controls in the Traditional Environment 318 WORLD-CLASS COMPANIES AND LEAN MANUFACTURING 320 What Is a World-Class Company? 320 Principles of Lean Manufacturing 320 TECHNIQUES AND TECHNOLOGIES THAT PROMOTE LEAN MANUFACTURING 322 Physical Reorganization of the Production Facilities 322 Automation of the Manufacturing Process 323 ACCOUNTING IN A LEAN MANUFACTURING ENVIRONMENT 326 What’s Wrong with Traditional Accounting Information? 326 Activity-Based Costing (ABC) 328 Value Stream Accounting 329 INFORMATION SYSTEMS THAT SUPPORT LEAN MANUFACTURING 331 Materials Requirement Planning (MRP) 331 Contents Manufacturing Resource Planning (MRP II) 331 Enterprise Resource Planning (ERP) Systems 333 SUMMARY 334 Chapter 8 Financial Reporting and Management Reporting Systems 349 THE GENERAL LEDGER SYSTEM 349 The Journal Voucher 350 The GLS Database 350 GLS Procedures 352 THE FINANCIAL REPORTING SYSTEM 352 Sophisticated Users with Homogeneous Information Needs 352 Financial Reporting Procedures 352 XBRL—REENGINEERING FINANCIAL REPORTING 355 XML 355 XBRL 356 The Current State of XBRL Reporting 361 CONTROLLING THE FRS 362 SAS 78/COSO Control Issues 362 Internal Control Implications of XBRL 364 THE MANAGEMENT REPORTING SYSTEM 365 FACTORS THAT INFLUENCE THE MRS 365 Management Principles 365 Management Function, Level, and Decision Type 368 Problem Structure 370 Types of Management Reports 371 Responsibility Accounting 374 Behavioral Considerations 378 SUMMARY 380 Part III Chapter 9 Advanced Technologies in Accounting Information 395 Database Management Systems 397 OVERVIEW OF THE FLAT-FILE VERSUS DATABASE APPROACH 398 Data Storage 398 Data Updating 398 Currency of Information 399 Task-Data Dependency 399 The Database Approach 399 Flat-File Problems Solved 400 ix x Contents Controlling Access to the Database 400 The Database Management System 400 Three Conceptual Models 401 ELEMENTS OF THE DATABASE ENVIRONMENT 401 Users 401 Database Management System 401 Database Administrator 404 The Physical Database 407 THE RELATIONAL DATABASE MODEL 407 Relational Database Concepts 408 Anomalies, Structural Dependencies, and Data Normalization 412 DESIGNING RELATIONAL DATABASES 419 Identify Entities 419 Construct a Data Model Showing Entity Associations 421 Add Primary Keys and Attributes to the Model 422 Normalize Data Model and Add Foreign Keys 422 Construct the Physical Database 423 Prepare the User Views 424 Global View Integration 427 DATABASES IN A DISTRIBUTED ENVIRONMENT 427 Centralized Databases 428 Distributed Databases 429 SUMMARY 433 APPENDIX 433 Chapter 10 The REA Approach to Database Modeling 459 THE REA APPROACH 460 The REA Model 460 DEVELOPING AN REA MODEL 462 Differences between ER and REA Diagrams 463 View Modeling: Creating an Individual REA Diagram 463 VIEW INTEGRATION: CREATING AN ENTERPRISE-WIDE REA MODEL 470 Step 1. Consolidate the Individual Models 470 Step 2. Define Primary Keys, Foreign Keys, and Attributes 475 Step 3. Construct Physical Database and Produce User Views 477 REA and Value Chain Analysis 481 REA Compromises in Practice 482 SUMMARY 482 Contents Chapter 11 Enterprise Resource Planning Systems 489 WHAT IS AN ERP? 490 ERP Core Applications 491 Online Analytical Processing 492 ERP SYSTEM CONFIGURATIONS 492 Server Configurations 492 OLTP Versus OLAP Servers 493 Database Configuration 496 Bolt-on Software 496 DATA WAREHOUSING 497 Modeling Data for the Data Warehouse 497 Extracting Data from Operational Databases 498 Cleansing Extracted Data 498 Transforming Data into the Warehouse Model 500 Loading the Data into the Data Warehouse Database 501 Decisions Supported by the Data Warehouse 501 Supporting Supply Chain Decisions from the Data Warehouse 502 RISKS ASSOCIATED WITH ERP IMPLEMENTATION 503 Big Bang Versus Phased-in Implementation 503 Opposition to Changes in the Business’s Culture 504 Choosing the Wrong ERP 504 Choosing the Wrong Consultant 505 High Cost and Cost Overruns 506 Disruptions to Operations 507 IMPLICATIONS FOR INTERNAL CONTROL AND AUDITING 507 Transaction Authorization 507 Segregation of Duties 508 Supervision 508 Accounting Records 508 Independent Verification 508 Access Controls 509 Internal Control Issues Related to ERP Roles 509 Contingency Planning 511 SUMMARY 512 APPENDIX 512 Chapter 12 Electronic Commerce Systems 523 INTRAORGANIZATIONAL NETWORKS AND EDI 524 INTERNET COMMERCE 524 Internet Technologies 524 xi xii Contents Protocols 527 Internet Protocols 528 Benefits from Internet Commerce 530 RISKS ASSOCIATED WITH ELECTRONIC COMMERCE 532 Intranet Risks 532 Internet Risks 533 Risks to Consumers 533 SECURITY, ASSURANCE, AND TRUST 539 Encryption 539 Digital Authentication 540 Firewalls 542 Seals of Assurance 542 IMPLICATIONS FOR THE ACCOUNTING PROFESSION 543 Privacy Violation 543 Continuous Auditing 544 Electronic Audit Trails 545 Confidentiality of Data 545 Authentication 545 Nonrepudiation 545 Data Integrity 545 Access Controls 545 A Changing Legal Environment 546 SUMMARY 546 APPENDIX 546 Part IV Chapter 13 Systems Development Activities 571 Managing the Systems Development Life Cycle 573 THE SYSTEMS DEVELOPMENT LIFE CYCLE 574 Participants in Systems Development 575 SYSTEMS STRATEGY 576 ASSESS STRATEGIC INFORMATION NEEDS 576 Strategic Business Needs 576 Legacy Systems 577 User Feedback 577 DEVELOP A STRATEGIC SYSTEMS PLAN 580 CREATE AN ACTION PLAN 580 The Learning and Growth Perspective 581 The Internal Business Process Perspective 582 Contents The Customer Perspective 582 The Financial Perspective 582 Balanced Scorecard Applied to IT Projects 582 PROJECT INITIATION 583 SYSTEMS ANALYSIS 583 The Survey Step 583 The Analysis Step 586 CONCEPTUALIZATION OF ALTERNATIVE DESIGNS 587 How Much Design Detail Is Needed? 587 SYSTEMS EVALUATION AND SELECTION 589 Perform a Detailed Feasibility Study 589 Perform Cost-Benefit Analysis 590 Prepare Systems Selection Report 595 Announcing the New System Project 596 User Feedback 597 THE ACCOUNTANT’S ROLE IN MANAGING THE SDLC 597 How Are Accountants Involved with SDLC? 597 The Accountant’s Role in Systems Strategy 598 The Accountant’s Role in Conceptual Design 598 The Accountant’s Role in Systems Selection 598 SUMMARY 598 Chapter 14 Construct, Deliver, and Maintain Systems Project 605 IN-HOUSE SYSTEMS DEVELOPMENT 606 Tools for Improving Systems Development 606 CONSTRUCT THE SYSTEM 610 The Structured Design Approach 610 The Object-Oriented Design Approach 610 System Design 615 Data Modeling, Conceptual Views, and Normalized Tables 615 Design Physical User Views 615 Design the System Process 622 Design System Controls 625 Perform a System Design Walk-Through 625 Program Application Software 626 Software Testing 627 DELIVER THE SYSTEM 628 Testing the Entire System 628 Documenting the System 628 Converting the Databases 630 Converting to the New System 630 xiii xiv Contents Postimplementation Review 631 The Role of Accountants 633 COMMERCIAL PACKAGES 633 TRENDS IN COMMERCIAL PACKAGES 633 Advantages of Commercial Packages 635 Disadvantages of Commercial Packages 635 CHOOSING A PACKAGE 635 MAINTENANCE AND SUPPORT 639 User Support 639 Knowledge Management and Group Memory 639 SUMMARY 640 APPENDIX 640 Part V Chapter 15 Computer Controls and Auditing 663 IT Controls Part I: Sarbanes-Oxley and IT Governance 665 OVERVIEW OF SOX SECTIONS 302 AND 404 666 Relationship between IT Controls and Financial Reporting 666 Audit Implications of Sections 302 and 404 667 IT GOVERNANCE CONTROLS 671 ORGANIZATIONAL STRUCTURE CONTROLS 671 Segregation of Duties within the Centralized Firm 672 The Distributed Model 674 Creating a Corporate IT Function 675 Audit Objectives Relating to Organizational Structure 676 Audit Procedures Relating to Organizational Structure 676 COMPUTER CENTER SECURITY AND CONTROLS 677 Computer Center Controls 677 DISASTER RECOVERY PLANNING 679 Providing Second-Site Backup 680 Identifying Critical Applications 681 Performing Backup and Off-Site Storage Procedures 681 Creating a Disaster Recovery Team 682 Testing the DRP 683 Audit Objective: Assessing Disaster Recovery Planning 683 Audit Procedures for Assessing Disaster Recovery Planning 683 OUTSOURCING THE IT FUNCTION 683 Risks Inherent to IT Outsourcing 684 Audit Implications of IT Outsourcing 685 SUMMARY 687 APPENDIX 687 Contents Chapter 16 IT Controls Part II: Security and Access 703 CONTROLLING THE OPERATING SYSTEM 704 Operating System Objectives 704 Operating System Security 704 Threats to Operating System Integrity 705 Operating System Controls and Test of Controls 705 CONTROLLING DATABASE MANAGEMENT SYSTEMS 710 Access Controls 710 Backup Controls 712 CONTROLLING NETWORKS 713 Controlling Risks from Subversive Threats 713 Controlling Risks from Equipment Failure 721 ELECTRONIC DATA INTERCHANGE (EDI) CONTROLS 722 Transaction Authorization and Validation 723 Access Control 724 EDI Audit Trail 724 SUMMARY 726 APPENDIX 726 Chapter 17 IT Controls Part III: Systems Development, Program Changes, and Application Controls 737 SYSTEMS DEVELOPMENT CONTROLS 738 Controlling Systems Development Activities 738 Controlling Program Change Activities 740 Source Program Library Controls 740 The Worst-Case Situation: No Controls 741 A Controlled SPL Environment 741 APPLICATION CONTROLS 745 Input Controls 745 Processing Controls 747 Output Controls 750 TESTING COMPUTER APPLICATION CONTROLS 752 Black Box Approach 753 White Box Approach 753 White Box Testing Techniques 756 The Integrated Test Facility 759 Parallel Simulation 760 SUBSTANTIVE TESTING TECHNIQUES 761 The Embedded Audit Module 761 Generalized Audit Software 763 SUMMARY 766 xv This page intentionally left blank Preface Welcome to the Seventh Edition T he seventh edition of Accounting Information Systems includes a full range of new and revised homework assignments and up-to-date content changes, as well as several reorganized chapters. All of these changes add up to more student and instructor enhancements than ever before. As this preface makes clear, we have made these changes to keep students and instructors as current as possible on issues such as business processes, systems development methods, IT governance and strategy, security, internal controls, and relevant aspects of Sarbanes-Oxley legislation. Focus and Flexibility in Designing Your AIS Course Among accounting courses, accounting information systems (AIS) courses tend to be the least standardized. Often the objectives, background, and orientation of the instructor, rather than adherence to a standard body of knowledge, determines the direction the AIS course takes. Therefore, we have designed this text for maximum flexibility: • • • • • This textbook covers a full range of AIS topics to provide instructors with flexibility in setting the direction and intensity of their courses. At the same time, for those who desire a structured model, the first nine chapters of the text, along with the chapters on electronic commerce and computer controls, provide what has proven to be a successful template for developing an AIS course. Earlier editions of this book have been used successfully in introductory, advanced, and graduate-level AIS courses. The topics in this book are presented from the perspective of the managers’ and accountants’ AIS-related responsibilities under the Sarbanes-Oxley Act. Although this book was written primarily to meet the needs of accounting majors about to enter the modern business world, we have also developed it to be an effective text for general business and industrial engineering students who seek a thorough understanding of AIS and internal control issues as part of their professional education. Key Features CONCEPTUAL FRAMEWORK This book employs a conceptual framework to emphasize the professional and legal responsibility of accountants, auditors, and management for the design, operation, and control of AIS applications. This responsibility pertains to business events that are narrowly defined as financial transactions. Systems that process nonfinancial transactions are not subject to the standards of internal control under Sarbanes-Oxley legislation. Supporting the information needs of all users in a modern organization, however, requires systems that integrate both accounting and nonaccounting functions. While xvii xviii Preface providing the organization with unquestioned benefit, a potential consequence of such integration is a loss of control due to the blurring of the lines that traditionally separate AIS from non-AIS functions. The conceptual framework presented in this book distinguishes AIS applications that are legally subject to specific internal control standards. EVOLUTIONARY APPROACH Over the years, accounting information systems have been represented by a number of different approaches or models. Each new model evolved because of the shortcomings and limitations of its predecessor. An interesting feature in this evolution is that older models are not immediately replaced by the newest technique. Thus, at any point in time, various generations of legacy systems exist across different organizations and often coexist within a single enterprise. Modern accountants need to be familiar with the operational characteristics of all AIS approaches that they are likely to encounter. Therefore, this book presents the salient aspects of five models that relate to both legacy and state-of-the-art systems: 1. 2. 3. 4. 5. manual processes flat-file systems the database approach the resources, events, and agents (REA) model enterprise resource planning (ERP) systems EMPHASIS ON INTERNAL CONTROLS The book presents a conceptual model for internal control based on Statement on Auditing Standards no. 78 (SAS 78) and the Committee of Sponsoring Organizations of the Treadway Commission (COSO) frameworks. This SAS 78/COSO model is used to discuss control issues for both manual processes and computer-based information systems (CBIS). Three chapters (Chapters 15, 16 and 17) are devoted to the control of CBIS. Special emphasis is given to the following areas: • • • • • • • • • computer operating systems database management systems electronic data interchange (EDI) electronic commerce systems ERP systems systems development and program change processes the organization of the computer function the security of data processing centers verifying computer application integrity EXPOSURE TO SYSTEMS DESIGN AND DOCUMENTATION TOOLS This book examines various approaches and methodologies used in systems analysis and design, including: • • • • structured design object-oriented design computer-aided software engineering (CASE) prototyping Preface In conjunction with these general approaches, professional systems analysts and programmers use a number of documentation techniques to specify the key features of systems. The modern auditor works closely with systems professionals during IT audits and must learn to communicate in their language. The book deals extensively with documentation techniques such as data flow diagrams (DFDs) and entity relationship diagrams (ERDs), as well as system and program flowcharts. It contains numerous systems design and documentation cases and assignments intended to develop students’ competency with these tools. Significant Changes in the Seventh Edition Chapter 2, ‘‘Introduction to Transaction Processing’’ This chapter has been updated to include a discussion of data coding schemes and their role in transaction processing and AIS as a means of coordinating and managing a firm’s transactions. The chapter presents the advantages and disadvantages of the major types of numeric and alphabetic coding schemes. In the sixth edition, this material was included in Chapter 8; it was moved in this edition because of its relevance as an element of transaction processing. Chapter 3, ‘‘Ethic, Fraud, and Internal Control’’ This chapter has been revised to include the most recent research results published by the Association of Certified Fraud Examiners (ACFE). The ACFE study provides estimates of losses due to fraud, categorizes fraud by various factors, and creates a profile of fraud perpetrators. In addition, the chapter presents an expanded discussion of common fraud schemes. Chapter 4, ‘‘The Revenue Cycle’’; Chapter 5 ‘‘The Expenditure Cycle Part I: Purchases and Cash Disbursements Procedures’’; Chapter 6, ‘‘The Expenditure Cycle Part II: Payroll Processing and Fixed Asset Procedures’’ The end-of-chapter material for these chapters has been significantly revised. This entailed revising all the end-of-chapter internal control cases and creating several new ones, In particular, great attention was given to internal control case solutions to ensure consistency in appearance and an accurate reflection of the cases in the text. In the seventh edition, all case solution flowcharts are numerically coded and cross-referenced to text that explains the internal control issues. This approach, which has been classroom tested, facilitates effective presentation of internal control case materials. Chapter 8, ‘‘Financial Reporting and Management Reporting Systems’’ This chapter has been revised to include a discussion of the expanding role of XBRL (Extendable Business Reporting Language). The chapter outlines the technological features of XBRL and points to the advantages it offers organizations for which online reporting of financial data has become a competitive necessity. It also presents a number of internal control and audit implications that accountants should recognize. Chapter 11, ‘‘Enterprise Resource Planning Systems’’ A significant change to this chapter has been the addition of a SAP internal control case, available online to all schools that are members of the SAP University Alliance Program. This case teaches students how to navigate the SAP system and allows them to process revenue, expenditure, and conversion cycle transactions for a hypothetical company that manufactures and sells classic sports car parts and accessories. Important aspects of the case are its focuses on internal controls and on the establishment of roles in a SAP environment. xix