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[Meer zien]Voorbeeld 4 van de 38 pagina's
Voorbeeld 4 van de 38 pagina's
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Voorbeeld van de inhoud
Lecture 1 - IntroductionThe essential things to understand accounting information systems
- COSO ICF (COSO Internal Control Framework)
- Internal Control model (Simons) -> Levers of control (We will use this for strategic control)
- Morris Tabaksblat (Corporate Governance in the Netherlands -> Internal Control codes)
- Spinning top model (To determine the information needs of management)
- Flowcharts (design of an administrative process of a certain department)
Subject 1: Accounting information systems
The core is the computer (software)
-> ERP system
-> Database
ERP = Data info files
Control activity (most important) =
segregation of duties
Basic pattern of information provided
Practice question: What is meant by input, processing,
procedures, output and data collections?
-> Input is input of data (done by people working in the
department -> entering of data)
Subject 2: Quality spectrum of information
In order to be useful for management in their
control role (plan/do/check/act), information
needs to be reliable and relevant.
The quality of information
Distinction between reliability and Relevance
- To get reliable info, we use COSO
- To get relevant info, we use spinning top model
Info is reliable if it reflects reality.
There can be tension between reliable info and
relevant info
The 2 most important aspects of information:
Reliability and Relevance
= most basic concepts
Practice question: Can you give an example of
information which is reliable but not relevant?
, Info about the temperature (relevant for beer brewery, but irrelevant for others)
Subject 3: Demand and supply of information (focus is on management information)
Different types of information for different purposes:
- Taking decisions
- To do your job
- To check if the organization (or part) is in control
Subject 4: To be in control
Start with a plan and compare it with actual results -> Differences
-> Achieving the goals set
Goals can vary:
- Strategic, tactical and operational goals
- Goals related to effectiveness and efficiency of operations
- Goals related to reliability of information
- Goals related to compliance and so on
- Therefore not one method to be in control but depending on the nature of the goals
Practice question: Are the information needs for the CEO from Aldi different from those of Albert Heijn? If so,
why do they differ? (depends on the strategy)
Aldi focuses on cost leadership (lowest costs -> focus on costs)
AH focuses on differentiation (being a general supermarket)
COSO ICF -> Internal Control Framework
Practice question: What is meant by strategy driven and transaction driven?
Subject 5: Spinning top model
The Spinning top model is an instrument used to determine (periodical) formal management info needs.
Practice question: What is the difference between formal and informal information and why is it important?
-> Formal is info on paper, informal info is collected when you talk with persons
Lecture 2 - COSO and Reliability
,Part 1: Internal control and COSO
Subject 1: What is control?
Subject 2: Simons levers of control
Subject 3: COSO ICF model
1. Control environment 2. Risk assessment 3. Control activities 4. Info & communication 5. Monitoring
Part 2: Control activities for reliability of information
Subject 4: Preventive and Detective control activities
Subject 1: What is control?
The cybernetic control concept uses:
- A plan for example: a production order from a manager for the production department
- The execution of the production activities (do)
- The check in what way the production activities deviate from the production plan
- The response based on this info which can lead to adjustment of plans, production activities or both
Deming circle
Information plays a crucial part in the plan,
do, check, act cyclus and should for
effective control be: Relevant /Reliable
Example ->
Practice question: Provide 4 possible reasons why the actual and planned
production results were different?
Limited view on reality
The cybernetic control concept is widely used in management accounting
- Provides only a limited view on reality
- Belongs to the group of “hard controls”
- Corporate governance scandals show “soft controls” are vital for effective control
Subject 2: Simons levers of control
In the spinning top model we were talking about (de)centralized
decision making.
Strongly decentralized company: How can we have confidence
that personnel will make decisions as they should? (defined by
management)
-> The way do to that is to define a set of core values, a set of risks to be avoided -> And both these
beliefs/boundary systems together define the way that the decisionmakers in your company make decisions in
freedom. But not total freedom, because the boundary systems define the boundaries. Both systems aim at
directly influencing behaviour.
-> The diagnostic control system can be viewed as the accounting info system -> Have critical performance
variables been met?
-> The interactive control system kicks in where management and personnel decide what is needed to optimize
performance of the organization.
(1) Diagnostic control systems: Can be compared with the traditional cybernetic management control system.
According to Simons these work like “the dials on the control panel of an airplane cockpit enabling the pilot to
scan for signs of abnormal functioning and to keep critical performance levels within pre-set limits.”
, -> Practice question: What are limitations of diagnostic control systems?
(2) Belief systems: The purpose of belief systems is “to inspire and promote commitment to an organization’s
core values.” They are related to the mission statement and have as such a strategic content. For belief systems
to be effective, it is necessary that they be credible and are communicated properly. Belief systems motivate
employees to think and act in the desired direction. As such “they can inspire employees to create new
opportunities” and “empower employees to generate new ideas and competitive advantage.”
(3) Boundary systems: According to Simons, the boundary systems are based on the “power of negative
thinking.” If one wants to encourage creative thinking, it is better to tell employees what not to do in broad and
clear terms than to exactly prescribe them what they should do. Boundaries are stated in negative terms or
minimum standards and are described as an organization’s brakes”. An example of such boundaries given by
Simons is the prohibition of large consulting firms to reveal any info about clients including even the names.
-> Practice question: Provide examples of boundaries and beliefs for an organization which is known to you.
(4) Interactive control systems: Structured meetings between management and representatives of
stakeholders “to explore the impact of emerging threats and opportunities”. These interactive control systems
thus differ from the traditional cybernetic diagnostic control systems in 4 ways:
1. Info needs are constantly changing based on what key managers have identified as strategic importance.
2. The interactive control system requires the frequent and regular attention of all operating managers.
3. The data from the interactive control system is best communicated in face to face dialogues instead of
formal written reports.
4. “The interactive control system is a catalyst for an ongoing debate about
underlying data, assumptions, and action plans.”
Subject 3: COSO ICF
Committee of Sponsoring Organizations of the Treadway Commission
Recommended in SOX and Dutch Corporate Governance Act to promote the
reliability of financial reporting
In this course we use the updated (2013) internal control framework
What is internal control?
Internal control is: a process (do it each
day), effected by an entity's board of
directors (RVC), management, and other
personnel, designed to provide reasonable
assurance regarding the achievement of
objectives relating to operations, reporting,
and compliance.
Practice question: What would be the most relevant limitation of internal control when you would audit the
annual report for an organization? -> Management override
The 5 components of the internal control framework (ICF)
(1) Control environment
The control environment is the foundation of the internal control system. It has the following principles:
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