Page 56 - Accounting Information Systems

C H A P TER 1 The Information System: An Accountant’s Perspective 27

Flat Files Limit Data Integration
The flat-file approach is a single-view model. Files are structured, formatted, and arranged to suit the spe-
cific needs of the owner or primary user of the data. Such structuring, however, may exclude data attri-
butes that are useful to other users, thus preventing successful integration of data across the organization.
For example, because the accounting function is the primary user of accounting data, these data are often
captured, formatted, and stored to accommodate financial reporting and generally accepted accounting
principles. This structure, however, may be useless to the organization’s other (nonaccounting) users of
accounting data (GAAP), such as the marketing, finance, production, and engineering functions. These
users are presented with three options: (1) do not use accounting data to support decisions; (2) manipulate
and massage the existing data structure to suit their unique needs; or (3) obtain additional private sets of
the data and incur the costs and operational problems associated with data redundancy.
In spite of these inherent limitations, many large organizations still use flat files for their general ledger
and other financial systems. Most members of the data processing community assumed that the end of
the century would see the end of legacy systems. Instead, corporate America invested billions of dollars
making these systems year-2000 (Y2K) compliant. Legacy systems continue to exist because they add
value for their users, and they will not be replaced until they cease to add value. Students who may have
to work with these systems in practice should be aware of their key features.

THE DATABASE MODEL
An organization can overcome the problems associated with flat files by implementing the database
model to data management. Figure 1-13 illustrates how this approach centralizes the organization’s data
into a common database that is shared by other users. With the organization’s data in a central location,
all users have access to the data they need to achieve their respective objectives. Access to the data
resource is controlled by a database management system (DBMS). The DBMS is a special software sys-
tem that is programmed to know which data elements each user is authorized to access. The user’s pro-
gram sends requests for data to the DBMS, which validates and authorizes access to the database
in accordance with the user’s level of authority. If the user requests data that he or she is not authorized
to access, the request is denied. Clearly, the organization’s procedures for assigning user authority are
an important control issue for auditors to consider.
The most striking difference between the database model and the flat-file model is the pooling of data into
a common database that all organizational users share. With access to the full domain of entity data, changes

FI G U R E
1-13 DATABASE MODEL

Integration
User User View Software Shared Database

Customer Sales
(Current
Accounting
Accounts
Receivable)
Customer Sales D Customer Data
Marketing (Historic/ B Sales Invoices
Demographic M Cash Receipts
Orientation) S Product Service
Schedule
Customer Sales Other Entity Data
Product Services (Historic/
Product
Orientation)