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Detailed information on the ACCA technology

ACCA technology

ACCA technology:Founded in 1904, the Association of Chartered Certified Accountants (ACCA) is the global professional accounting body offering the Chartered Certified Accountant qualification (ACCA or FCCA). From June 2016, ACCA recorded that it has 188,000 members and 480,000 students in 178 countries. ACCA’s headquarters are in London with principal administrative office in Glasgow. ACCA works through a network of 100 offices and centres and more than 7,100 Approved Employers worldwide, who provide employee development.

The term ‘Chartered’ in ACCA qualification refers to the Royal Charter granted in 1974.

Chartered Certified Accountant is a legally protected term. Individuals who describe themselves as Chartered Certified Accountants must be members of ACCA and if they carry out public practice engagements, must comply with additional regulations such as holding a practising certificate, carrying liability insurance and submitting to inspections.

The Association of Authorised Public Accountants (AAPA), one of the British professional bodies for public accountants, has been a subsidiary of ACCA since 1996.

ACCA works in the public interest, assuring that its members are appropriately regulated. It promotes principles-based regulation. ACCA actively seeks to enhance the value of accounting in society through international research. It takes progressive stances on global issues to ensure accountancy as a profession continues to grow in reputation and influence.

ACCA technology

INFORMATION TECHNOLOGY 

1. Principles of information technology 

(a) Advise on the basic hardware and software infrastructure required to support business information systems.
(b) Identify and analyse general information technology controls and application controls required for effective accounting information systems.
(c) Analyse the adequacy of general information technology controls and application controls for relevant application systems.
(d) Evaluate controls over the safeguarding of information technology assets to ensure the organisational ability to meet business objectives.

ACCA technology

INFRASTRUCTURES TO SUPPORT BUSINESS
INFORMATION SYSTEMS

Very large companies began to use of computers in the 1960s. The first applications were for wages and salaries processing, the production of sales invoices and receivables ledger accounting. These applications automated existing operations allowing greater accuracy, more speed and cheaper processing. At this time the IT operations would have been called ‘data processing’.

Once transactions are processed by computer it is easy to analyse those transactions to produce information that could be useful for management. For example, once the sales ledger is computerised it is easy to produce aged receivables listings. These additional management reports became common in the 1970s (and are still important) and IT operations became known as ‘management information systems’ (MIS). The systems could also be programmed to make simple decisions such as comparing inventory levels to production plans to enable automatic stock ordering. The simple decisions are known as programmable or structured decisions, meaning that there is a well-defined way of getting to the correct answer. MIS primarily allows companies to keep their costs down, helping them to move towards cost leadership, through a combination of automation and rationalisation.

At the beginning of the 1980s, spreadsheets were invented and this allowed computers to be used to help managers make unstructured (non-programmable) decisions. For these decisions there is no definitively right answer. For example, what should next year’s budget look like? At what price should a new product be launched? Financial models on spreadsheets allow managers to try out ‘what if?’ experiments where they try out different combinations of assumptions and try to home in on a credible answer. These systems are known ‘decision support systems’ (DSS): they do not make the decision but help managers make decisions.

More sophisticated DSS systems can combine, for example, computer aided design and computer aided manufacturing systems to enable new products to be brought to market more quickly: data warehousing (recording historical transaction data) and data mining (trawling through that data to learn more about customers’ preferences and buying patterns). Both of these techniques can help with differentiation and focus strategies.

Somewhat later, around the 1990s, executive information systems were developed. These were of particular use to senior managers and they have a particular emphasis on giving access to external information that is needed for operational and strategic planning. It was, of course, in the 1990s that the Internet began to expand rapidly and much more external information became available. Executive information systems also emphasise flexibility so that executives can see company data in a wide variety of ways. Typically, such systems would initially present sales for the group, but upon double-clicking on that figure, it would split into sales by division. Double-clicking on one of those figures might show the sales to the division’s 10 key customers, compared to the comparable period last year. This process is known as drilling down.

Databases are by far the preferred way to hold data. Databases allow a wide range of users and applications to use the data flexibly and to update it. Each user can be given a unique, personalised and relevant view of the data which they can easily search and manipulate.

The increasing reliance on computers by all levels within a company requires careful design of the information technology (IT) infrastructure. IT usually refers to the hardware: computers, connections, disk storage.

ACCA technology

NETWORKS

Only the very smallest of businesses will have stand-alone computers, computers not connected to other computers. Even in small businesses employees need to share data and very soon after personal computers were invented networks of computers were introduced. There are two main types:

  • Local area network (LAN): Here the network extends over only a relatively small area, such as an office, a university campus or a hospital. The small area means that these networks use specially installed wiring to connect the machines.
  • Wide area networks (WAN): Here the network can extend between several cities and countries. Each office would have its LAN, but that connects to LANs in other offices and countries using commercial, public communications systems. At one time this would have been done by the organisation leasing telephone lines for their private use to transmit data from office to office. However, this is expensive and inflexible and the common system now used is known as a virtual private network (VPN)

VPN’s allow data to be transmitted securely over the internet between any two locations. For example, an employee working from home or a hotel can access the company system as though being in the office. Information will pass over many different circuits and connections but the system gives the impression that you are operating over a dedicated, private communications link. Hence, the name: virtual private network. Because data is being transmitted over public systems it is particularly vulnerable to interception and it is very important that adequate security measures are in place to safeguard the data. There are three essential steps in the security measures:

  1. Access control and authentication – this ensures that unauthorised users do not access the system. Typically this will be accomplished through a log-in procedure. Many organisations, such as banks, may require a password, answers to security questions (such as ‘What is the fourth letter of your secret word?’), and also a code number generated by a security device that has been issued to the user. Use of the latter technique means that anyone logging on has both to know a password and to be in possession of the security device.
  2. Confidentiality – this ensures that data cannot be intercepted and read by a third party whilst being transmitted. This is achieved using encryption.
  3. Data integrity – this ensures that the data has not been altered or distorted whilst in transit. To ensure this, the message could have special check digits added to ensure that the data complies with a mathematical rule.

ACCA technology

CENTRALISED AND DECENTRALISED (DISTRIBUTED) ARCHITECTURES

Consider an office local area network. There are three main ways in which the data and processing can be arranged: centralised, decentralised (distributed) and hybrid.

Centralised systems
In these systems there is a powerful central computer which holds the data and which carries out the processing. The main advantages of such systems are:

  • Security: all data can be stored in a secure data centre so that, for example, access to the data and back-up routines are easier to control.
  • One copy of the data: all users see the same version of the data.
  • Lower capital and operational costs: minimal hardware is needed at each site. There is also less administrative overhead.
  • The central computer can be very powerful:  this will suit in processing-intensive applications.
  • They allow a centralised approach to management. For example, a chain of shops needs to keep track of inventory in each shop and to transfer it as needed. There is little point in a shop that is running low ordering more of a product if another branch already has a surplus of that product.

The main disadvantages of such systems are:

  • Highly dependent on links to the centralised processing facility. If that machine fails or communication is disrupted then all users are affected.
  • Processing speed: will decrease as more users log-on
  • Lack of flexibility: local offices are dependent on suitable software and data being loaded centrally.

Decentralised (distributed) systems
In these systems, each user has local processing power and will hold data locally.

ACCA technology

The main advantages of such systems are:

  • Resilience: if one machine breaks down, others are unaffected.
  • Easy expansion: simply add another computer.
  • Flexibility: local users can decide which programs and software should be installed to meet local needs.
  • They are more useful where each location can operate more or less separately from others.

The main disadvantages are:

  • More difficult to control: data storage and processing are in many locations and correct access, processing and back-up of data are more difficult to enforce.
  • Multiple versions of data: users might have their own version of data that should be uniform.
  • Potentially higher costs: each local computer has to have sufficient processing power and each location might require an IT expert.

ACCA technology

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