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how does information technology effects in business organization
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What is business organization
??????
A business organization is an individual or group of people that collaborate to achieve
goals
Some business organizations are formed to earn income for
owner
Other business organization called non-profit, are formed for public purpose (support
people)
The Function of IT in
business cycle
Information technology has become very
general & is therefore touched every part of
business as well as personnel’s lives
How does IT gives productivity advantages:
Speed of Processing
On-Line storage Quick access
10 days equals to A day
Impact of IT can be summarized in the following manner:Business Process transform
Business Network Transform
Business Scope transform
and the reduction in stock from one month to just in time
reducing time required to process insurance from one month to one day
Reduction of cycle time for production from 50 days to 10 days
Is the use of IT for significant improving the business process.
Business Process Transform
Business Network Transform
consisting of
customers,
suppliers & other business partner
the level of trustSharing of
information& clearness helps in network as a
whole to respond faster & better
Business Scope Transform
rangecan create a globally competitive business
with global reach
REVENUE
CYCLE
Provides goods/services
Collects cash in payments for the services
In the right time and
right place
Provide the right product
Sales order entry
shipping
billing
Cash collection
Sales order entry:
Take order- Paper form - Electronic
form Information about number, quantities, prices and other terms of sales needed .
Check and approved credit
Sales made on credit for business to
business transaction, most are
uncollectable.Authorization: credit limitsAuthorization: sale (beyond credit limits)
Check inventory availability To ensure the availability of enough inventories
SHIPPING:
Picking And
Packing
Transferring the item from the inventory (deliver)
Picking tickets: to identify which item are to be removed
To reduce the time and cost: ( where house uses )- Bar code scanner- Radio frequency identification (RFID)
Picking Slip: list of quantities and description of each items
included in the shipment.
Bill Of Landing: a legal contract that proves the responsibility for
the GOOD IN TRANSIT
AND THERE HAVE TO BE A COPY OF PACKING SLIP AND BILL OF SHIPMENT FOR THE CUSTOMERS AS REFERANCE
BILLING:
Open-invoice method
Customer pay for each invoice
2 copies will be sent and one copy is required to be returned
Balance forward method
Customer pay monthly
Rather than by invoice
Helpful to offer early payments
More difficult to maintain Its more convenience for customer to make monthly remittance .
Reduces the cost
CASH COLLECTION: Normally it’s the cashier who is
responsible for customers remittance, and to deposit them
into the back
Because cash/checks are defenseless, so
control should be place to
discourage theft
Account receivable personnel must
not have access to cash with checks
( together )
Possible approach in collecting
cash ?
Turn around document forward to account receivable.
Lockbox arraignment
Electronic lockbox
Financial electronic data exchange
Expenditure cycle
Ordering material, supplies, and service
Receiving material, supplies, and service
Approving supplier invoice
Cash payment
Ordering:
What to purchase When to
purchase How to
purchase
From whom to purchase
3 alternate approaches to inventory control:
- Acting right away after the order from customer.- Suppliers provides the materials right away - But quiet costy
- Seeks (find) to reduce inventory levels - By improving their forecasting techniques
- A traditional approach to manage the inventory.
- Maintain enough stock.- So no happing of shortages
1
3
2
Economic Order Quantity
Materials requirements planning
Just in time inventory
Who is demanding the goods
Purchase
Demands Could
be either in
Paper form OR
Electronic form
Where good should be delivered
When they are needed of goods
Item number, quantities, description and prices
Department number or an account number to be charged
RECEIVING:When the deliveries
are accepted, it
will be stored
Need to be reported to
the warehouse manager !!
Decide whether to accept the deliveries
Verify the quantity/quality
of the goods delivered
Based on valid
orders
To make sure the company pays for
the goods received
Payments for these items:
1 2
Non-voucher system
Voucher system
frds
Approve the supplier invoice :
2 basic majors 21
Non- voucher voucher
Each improved invoices are posted to supplier
Net amount to be paid of after deducting (discount) if any
When its marked as PAID.- Identifies the suppliers
- Lists the out standing invoice
Payment voucher created after supplier invoice is approved .
Than its stored in the paid invoice FILE
Cash payment
- payment of invoice is done by the cahier, who reports to the banker.
THREATS AND CONTROL:
Too much or too less stock:
Organization may bare loss because of less stock
Organization may bare excess carrying cost because of too many stock
1
2
How to prevent these
threats:
A Perfect inventory control method
To insure all the information about stocks are correct
Barcode technologies for an easier way of finding
Receive and store goods threats Accepting
unordered items :
Errors in counting goods:
Paying for undeceived goods
A barcode of ordered good would improve the efficiency fix
Approved invoicing threats:
Failing to catch errors in invoice
voucher Mistake
OVER PAYING FOR MERCHANDIES
FIXInvoice should be verifies
and compared
Paying for undeceived
good
Mistake
FIX
Payment already made in mistake
Compare the invoice with received
• An IT control is a
procedure or policy that
provides a reasonable
assurance that the
information technology (IT
) used by an organization
operates as intended
• Data is reliable.
• The organizatio
n is in
compliance with valid
laws and prin
ciples.
The effect of (IT)control procedure:
IT General Controls
IT applicatio
n controls
IT control procedure:
1
2
IT General Controls:
Control environment
Change management procedures
Software update
Incident management
Problem management
Technical support
IT application controls:
Totality checks
Validity checks
Identification
Authentication
Authorization
Forensic controls