BM JOBS

General Systems and

CLERICAL procedures in
Business
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K.N.Modi,FCA
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General Systems and clerical procedures in Business

First Organisation Establishes GOALS, OBJECTIVES, and STRATEGIES.

Second: SYSTEMS, POLICIES AND PROCEDURES to achieve aims, office produces and
financial control procedures its for effectiveness

SYSTEM: A system is a pre-determined plan or process for doing something standard,
predictable and dependable methods to help people to insure day to day transactions are
accurately recorded to generate up-to date information to management to control business and
its assets.

POLICIES: General statements or under standing management thinking in decision
making permit mangers to delegates authority and remains in control. It emphasise on rules
and stated in forms of directives. Existence on all levels, major or minor. It is guide to
decision-making with discretion, if not then rules.

PROCEDURES: Sequences of actions for performing certain tasks. Procedures implement
policies most efficient way of getting a job done, no discretion as routine task, easier for staff
task done in same way, procedural manual help to new comer, it reduces friction between
departments.

THE PRINCIPLES OF SYSTEMS AND PROCEDURES

1. Smooth flow if work, movement of staff at minimum, avoids duplication, use of
specialist at tributes (quality result), simplicity, machines for aid, facilitates
application of the management by exception principle, must cost effective.
2. Administrative systems: Ensure consistent, efficient and effective flow of information
by relationship structure with tasks, procedures, data and resources. Accounting,
communication, management information (MIS) and filling systems. Functions:
receipt of information, communication, and record and arrange storage and security of
information.
3. Designing Procedures: Factors to take in account: Plan as whole, simple and easy to
understand, use specialisation, correct design and avoid duplication, minimum
writing, work flow planned, allow control and provide exception principle, cost.
4. Effective Systems and Procedures: Effectiveness is achievement of objectives routine
work same standard advantages efficiency, no discretion, familiarity, continuity,
reduction in inter departmental friction, procedure manual for new ones .
1. Office Procedures: Office system, in essence, the systems, series of operation
necessary to perform tasks i.e. receipt, record, arrange, store, and communicate.
Analyse procedure How, When, Where subject to review periodically.
2. Clerical work procedures: Example: Accounts dept.
3. Establishing Office procedure: Need different administration Services to perform
function efficiency. These are receipt, record, average, storage, secure and
communicate. Review Existing procedures: General Review (purpose, happening,
who does what, techniques & methods and quality of performance). second part step
by step view purpose of review, examine present techniques, flow chart, each step
for effectiveness or inefficiency, alter chart, trial run for test purposes, develop new
re-design job specification, implement new procedures, monitor and modify, if,
necessary.
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4. Formalisation of Office Procedures: implementation of procedures and systems for
benefit to organisation. If in writing. Laid-down or established procedures
Advantages: examine systems and procedures carefully, supervision easier, area of
responsibilities pin pointed, written easier to adopt, Disadvantages: cost update. Rigid.
5. Procedure Manuals: Outline operation, title to person responsible, methods of dealing
with work, title / dept of member performing each stage, sample terms and entries,
sample of out put, distribution of final out put, methods of initialling changes,
separate manual for each procedure.

Accounting Systems and Procedures

1. Function and Purpose of accounting system: Traditional function keeping records,
preparing budgets, and final account preparation to social importance. The boundary
extended due to changing environment.
2. Purpose Help Managers: Control organisation, background the assets, prepare the
financial statement, and comply with relevant legislations.
3. Function: Specific needs Financial / management accounting
1. External users Internal Users
2. Financial statements as per law Report as per user
3. Best Transaction Actual figures to budget make future
prediction
It provides information to (1) investors, bankers, govt for taxation (2) internal
reporting, investment, product pricing, and plan for short / long term non routine
(3) Manager to use in controlling & planning routine operations.
Financial Accounting: forecast cash available, require * plan capital structure * cash
from outside * investment in fixed / current assets * debtor / creditor management *
invest surplus fund.
Management Accounting: budget & budget control * cost accounting * investment
appraisal * cash budgeting.


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Elements of Accounting System and Procedures
Formal method of gathering and communicating data for decision making. It is means to
ends, better decision making. Information may be classified in three types: problem solving
questions (decision lead to best out come), score card questions (performance) and
attention directing question (problem-). It may be qualified or non-qualified but to SERVE
business function for overall control. It represents the only way of assessing the results of the
organisation. In terms of single dimension. Prime Function: control and Secondary: score-
card.
1. Finance Functions: Areas of responsibility: Information processing, reporting
functions, custodian (cash, investment, debtors,) supervisory: internal audit /
budgetary control system
2. Accounting Procedures: Financial information is produced by the accounting
system Data is collected recorded processed (analysed-summarised) and
communicated i.e. Purchase procedure: invoice, record, analyse, summarise,
communicates.
3. Financial Accounting Procedures: (a) Day book is a prime entry book sales
day book, sales return day book, purchase day book, purchase return day book,
cash book, journal (b) record receipt and payment in cash book (c) Petty cash
book- imp rest system (d) bank reconciliation (e) posting-printing entry sales,
purchase, nominal ledger (f) pay roll wages salary (g) keeping asset register
(h) debt collection statements / reminder bad debts (i) credit rating (j) annual /
periodic stock taking
Cost accounting Procedures: (a) record expenditures / revenues as per cost / revenue
classification (b) price material issued from stores (c) record & cost labour time (d)
allocate, apportion and absorbs overheads (e) statements of unit-cost / batch cost / job
cost / process cost / (f) budget preparing (g) performance report preparation /
distribution and variance statements.

4. Reporting Transactions: cash or Credit Sales cycle / purchase cycle
Sales System: Order from custom, check creditworthiness, check stock
manufacture / order outside, supply, invoice, collect money.
Purchase System: Stock / requisition order (quotation) receiving
inspecting, storing, paying.
5. Business activities: requisition, order, record receipt of goods, check quality
/quantity, claim short delivery defective, store receipt of invoice validate,
process invoice, reconcile ledger a/c with supplier statement, approve invoice for
payment, prepare cheque & sign, entry cheque in cash book, post purchase
ledger, total to control a/c, agreeing control a/c.
6. sales Accounting system: order received goods despatched invoice raised
transaction recorded cash received.
7. cash System: Request for payment, authorisation of payment, payment made &
receipt / payment receipt recorded.
8. stock System: Goods received & despatched, record receipt and despatch,
posting to nominal ledger & stock cards
9. Payroll System: Maintenance of pay roll, authorisation of hours worked, payroll
preparation, distribution of pay, payroll approval, cheque / bank transfer, third
party liability payroll costs. Clock card / time sheet submission, gross pay /
deduction-net pay, other amendments sick, holiday, maternity pay with
authorisation, payroll to pay slips, payment to employees and inland revenue, pay
roll costs and payment recorded in book Wages control a/c.
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Co-ordination with Other Functional Areas

1. Financial and management functions of accounting are linked. Example New
machine, new market need to communicate with other functions marketing,
labour, production, stock, purchase and communicates back for control purpose.
Information from other functions for decision making new machine, out
sourcing.
2. Accountants as Co-ordinators: Budget controller functions develop budgets,
transmits non-financial budget (production estimates) in to financial terms, all
budgets interrelated and co-ordinating all budgets in to one master budget. Link
with other functions.
The Monthly Management Information: Designed in a standard format and
content for performance evaluation *motivation * historical purpose. It enable
management to report deviations from business plan, analyse causes, suggest
corrective measures and re-forecast the future trend of results.
Producing Ad-hoc Reports for Management: Make or buy decisions, special
contracts for marginal business maximise short run revenue, evaluate financial
effect of action-closure of dept.

Manual and Computerised Accounting Systems

1. Manual system: Prime entry cash & petty cash book, sales, sales return day book,
purchase and purchase return day book, journal, double entry system nominal or
general ledger, debtor & creditors ledger or cards.
2. Computerise System: Sales ledger, Purchase ledger, nominal ledger, entries of
sales / purchase / cash.
Advantages: Data processing cost reduced, other cost saving fewer errors, faster
processing, greater accuracy, staff shortage, improved control, communication,
quantitative techniques, and computer facilities.
Disadvantages: Lack of intelligence, quantifiable decisions value judgement,
initial cost, inflexibility, vulnerability.
Integrated Accounting Packages: Usually on a piecemeal basis sales, purchase,
payroll. Not now: cash book system without credit, provides service, small
number of supplies on cash or credit.
Basic Bookkeeping system: Small business, cash transaction basic facilities
sales, purchase and nominal ledger producing VAT returns.
Bookkeeping & Accountancy System: Above + number of customer, supplier,
generates and print invoices, statements advanced packages for stock controlling
facilities.
Advantages: Data input update all parts of system. Use of common data
decision consistent, users learn new components more quickly
Disadvantages: complex, more expensive, failure of one module may render the
whole package imperative.


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Internal Control and Auditing

1. Control System: Organisational control emphasis on effectiveness and
efficiency of the system design. Whereas Operational control ensures that
specific tasks are carried out effectively and efficiently.
2. Control Process: Deviation from standards are identified and corrected.
Purpose is to standardised performance, prevent losses, correct deviances,
define and limit authority define and direct performance.
Main stages: Determine objectives, translate objectives into plan /
performance standard communicates to concerned, measure actual with
standard, as certain reasons for deviations, take corrective actions.
3. Characteristics of Control Procedures: Relevance, Flexibility, Focus on
critical points, timeliness and reporting speed, simplicity and clarity, cost
effectiveness suitability for corrective actions.

Internal Control

1. Need: Safeguard assets, secure completeness and accuracy of the records,
promote operational efficiency and monitor adherence to policies and
directives. Connection between Accounting system and internal control.
2. Types of Internal Controls: (i) Organisation: structure segregates authority
& responsibilities (ii) Segregation of duties: no one person fully record and
process transaction. (iii) Physical: assets (cash) records kept at secure place
(iv) Authorisation and approval (v) Arithmetical and accounting (vi) Personnel
motivated (vii) Supervision (viii) Management: budgetary control inter
audit.
3. Control Categories: (i) Financial control legitimacy of expenditure and
security of assets and income budgetary control, Legitimacy of income and
expenditure, security of assets, accounting control correct record, processed
and control account (ii) Management control: Objectives methods reviewed
procedures, organisation, management information, supervision and reviews
of operational effectiveness.
4. Specific Control Procedures: (a) approval and control documents (b) control
over computerised application (c) checking the arithmetical accuracy (d)
Marinating & reviewing control accounts and T/B (e) comparing results with
physical access to assets and records
5. Internal Check: Objective to prevent or early detection. These designed to
assure all transactions recorded, errors highlighted, assets / liabilities recorded
do actually exist and in correct amount, Example: wage office: separation of
the functions.



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Management of Control

1. Responsibility of Management: Internal control are management control. It
goes beyond finance and accounting dept. i.e. attendance
2. Management of Internal Control: Management to decide on extent of
internal control. Depends on size, nature of activities and geographical
3. Weakness on Internal Controls: No guarantee weakness (i) cost of internal
control VS potential loss, (ii) directed to routine transaction (iii) human errors
(iv) depends on segregation of duties two or more colliding (v) authorisation
abused (vi) override by management (vii) procedures may become inadequate
due change in conditions.
4. Feature of Effective Control Procedure: Staff must possess the expected
integrity, ethical value and competence practices include recruiting policies,
screening prospective employees, developing training policies, exercising
disciplinary actions, evaluating, counselling and promoting people on periodic
performance appraisals, implementing compensation programmes motivate,
reward.


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Role of Internal and External Auditors

1. Relationship between External & Internal auditor: IA- employee duties
management.
2. Role of internal Auditor: co-ordination, (direct control supervision of
management) bridge between management and shop floor to see policies and
systems are carried out. Independent check on accounting records and other
operation of organisation, no external duties, investigate any area of
organisation activities, fully conversant with clerical methods systems,
responsible to management.
3. Functions of IA: reviewing systems and controls, special investigation,
prevention and detections of errors and fraud, depth examination, review non-
financial controls, review implementation of corporate policies, plan and
procedures compliance with rules, regulations, law.
4. External Auditors: He is not responsible for preparation of accounts, setting
up control system, evaluating the efficiency of systems and procedures,
competence report to management detecting frauds and errors.
5. Auditor and Internal Audit: substantive testing, compliance tests.
6. Reliance on Internal Audit: how independent is the internal auditor, scope
and objective of function, due professional care-audit plan, manual, technical
competence, reports.


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Identifying and Preventing Fraud in an Accounting System

Fraud: The use of deception with the intention of obtaining an advantage,
avoiding an obligation or causing loss to another party. If relates the Theft,
False Accounting, Bribery & Corruption. It is embezzlement, corruption,
concealment of material facts, collusion.
Prerequisites of fraud: weakness in system, potential reward out weight risk to
caught: Dishonesty, opportunity, and motive. Dishonesty screen staff, check
references, opportunity: separation of duties, physical security assets /
hardware, hardware, internal control, control cheques, documents, input /
output control on computer processing, testing of new computer programme
Motive: good pay, instant dismissal, sympathetic grievance procedures. There
is prevention but detection is required: An audit trail logging to access to files,
good accounting procedures and programs.


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Common Types of Fraud:

1. It is criminal deception, a theft involving dishonesty opportunistic or
organised. People involved supplier / buyer, competitors, third party. It
normally involves staff removing cash from coy but other methods are
fictitious supplier a/c, bribery on tender / supplier decision, incoming cheques
misappropriated, unauthorised discounts to customers, stock losses, short
delivering, and fictitious staff on the payroll.
2. Theft: Small amount from cash pen papers, skimming small amount from
wages - 410.95 vs. 410.90 / cheques book last cheque purchase excess of
supply, organisation assets for personal gain, stealing fully depreciated asset,
overtime hours manipulation, phone calls, remitting takings, price of product,
transfer of money to abroad.
3. False Accounting: Fictitious customers, bribery, misappropriation of
incoming checks, fictions supplier, unauthorised discounts, stock losses , short
delivery, fictitious staff by owners / managers; misuse of pension funds, assets
overvalued, bad debts not written off, understating depreciation, understating
expenses, buying own shares illegally.
4. Collusion: Window dressing: cash book open y/e, creditors issued cheque
but not sent customer & staff, price, quality, quantity, credit notes, supplier
over stating / fictitious.

Implication of Fraud

1. Fraud for different reasons: Not only money but power, prestige, states,
employee to friend / relative.
2. Targets of Fraud: P/L a/c income / exp. reduce tax liability / in assets or
liability target may be shareholders, customer, suppliers, bankers and
external auditors. Fraud against shareholders / employees Commercial
espionage, theft of goods or cheques / bribery / threat.
3. Attitude Towards fraud: tolerated, institutionalised small offence to grow
manager feels employees honest, not cost effective, controls ineffective,
socially unacceptable security system, believes auditor to detect all criminal
activity.
4. computer Systems vs. Manual Systems: Data not easily visible,
responsibility can not be located, hardware failure a disaster, no visible trail,
specialise technical expertise needed, in online terminal can manipulate,
computer virus, software high cost of correction . Logic bombs, Trap door or
Hacking.





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Fraud Discovery and Prevention

1. Discovery: Ask question i.e. money defrauding: who, why, how, where.
2. conditions for Fraud: High staff turn over, understaffing, change in legal
advisor, inadequate segregation of duties, low staff moral, key staff
excessive work, - insufficient delegation of duties, ineffective procedure in
HR, credit control, inventory consol, purchasing or a/c debt, loss of documents
secret dealing with clients / suppliers, budget or forecast earning pressure,
holiday entitlement, change of password, joint signature on cheques, access to
sensitive area.
3. Prevention of Fraud: Why it occurs, External Factors Building industry,
Credit card / internal factors general / specific areas, potential areas new
personnel, new technology, new product, operating environment changed, new
upgraded MIS, rapid growth.
4. warning Signs: suspicions raised: unusual increase in demand of certain
products, turnover goes up without increase in cost, under / over performing
compare to competition, increasing activity in investment Staff showing sign
of stress, late working, reluctance to take leave / holidays, refusal to accept
change of post, fraudulent activity, new staff suddenly resigns, intimacy with
suppliers and contractors, morale low.
5. Physical Security.
6. Access.
7. Auditors role in Dealing Fraud: IA duty & responsibility to review,
appraisal and report.
8. the Responsibility of Management: Responsible discharged through
effective accounting system and operation of a system of internal control.
9. Measures Employed: Strict internal controls, segregation of duties and
separation of code of ethics, manager role model.
10. Audit Trails: tracing of all transactions through a system of from start to
finish.
11. Fraud Policy Statement: It is fraud control culture development. It includes
individual responsibilities on fraud control established to point accountability,
manual of formal procedures to which staff must adhere if a fraud is
discovered.


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Control Procedures within the Accounting system

1. Accounting System and Controls: Depends on the size and nature of the
organisation. It helps to control the organisation, safeguards the assets, prepare
the financial statements and comply with the relevant legislation. Day to day
transactions are properly recorded and management has up to date
information.
2. Control Objectives, Procedures and tests of control: If no control then
what happens.
3. Payroll: paying only for the work done, correct rate, tax liabilities accurate to
avoid fines. Easy to falsify. Check overtime (authorisation).
4. cash: Mostly by two one receives and another records. Segregation of
duties, cheques a/c payee.
5. Fixed assets and Stocks: stock theft by employees rather than by customers.
Fixed assets register to be maintained and periodically checked. Stock
reconciliation by purchase and sales register.
6. Sales: Make orders numbered otherwise not filled at all or filled twice.
Invoices and despatch notes must match.

Payroll

1. Payroll System: It involves engagement, promotion, transfer and discharges
of employees. Time attended and job recording, preparation of payroll and
analysis of wages and salaries, make up and payment of wages and salaries.
Aim is to pay correct amount to its employees and Inland Revenue in respect
of deduction. Clock card submit, gross pay, deductions, other: holiday / sick /
overtime/ final pay payslip / payment to employee & Inland Revenue,
payroll cost recorded in book.
2. Control Objective: Only employees and authorised rate, record time, out
put, commission, payroll accuracy, PAYE & NHI.
3. Control Procedures: Approval and control of documents: dismissal,
employee, rate change, overtime, wages cheques signed by two, personal cards
Arithmetic Accuracy, control a/c/ on deduction, Access to assets & records.
4. control Procedures: Salaries:

Purchases:

1. Purchase System: Main steps: order placed, goods recd. Invoice recd,
transactions recorded, payment.
2. control Objectives: Ensure; order under proper authorisation and procedures,
ordered as necessary and from suitable suppliers, inspected for quality,
quantity and condition, invoices checked and recorded.
3. Control Procedures over Purchase and Creditors: Orders, receipt of goods,
invoicing and returns Purchase ledger and suppliers.
4. assessing the Effectiveness of Controls: Test for purchase order, goods recd
note, goods return note, purchase invoice, credit note, purchase ledger, control
a/c.


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Sales:

1. Sales System: Sales of goods or service to customers at a profit. It ensures
that the procedure adopted in respect of each individual sale with be the same.
2. Control Objectives: Customise orders, goods shipped, goods return, invoices
& credits, validated debtors transactions, sales invoices paid, provision for
doubtful debts.
3. achievement of Objectives: Segregation of duties, - accepting customers
order, despatch dept, invoicing the goods, control over credit notes.
4. Control Procedures over Sales & Debtors: Orders, Despatch, Invoicing &
credit notes, returns, debtors, bad debts.
5. assessing the Effectiveness of controls: Carry out sequences test checks,
check the authorisation, seek evidence of checking of the arithmetical
accuracy of invoice, credit notes and VAT, check despatch notes and goods
return notes, check control account reconciliations, ensure that batch total
control applied.

Cash:
1. Avoid Misappropriation risk.
2. Control Objectives: Recd and accounted for not paid which should have been
paid and all receipt and payments are promptly and accurately recorded,
transactions by cheques or other banking mode are preferred.
3. cash Receipt by Post: Mail box / post box secure key, opening post by
responsible official, if, volume big then two people required. All cheques and
postal orders crossed a/c payee. A record made of cash and cheque / postal
order received without participation of Cashier / Sales ledger personnel. Post
should be date stamped teeming and lading (present on larger numbers)
received and banks different day.
4. Cash collected by salesman and travellers:
5. Cash Sales
6. Control over banking.
7. Cheque payments.
8. Bank reconciliation
9. Petty Cash Floats Imprest I
10. Integrated System: Updating of subsystems (purchase, sales, payroll, and cash)
records within the organisation. A single transaction in a sub system is
automatically updated in the main system. Stock may be included. Non-
integrated system requires two input events for the same invoice. Credit to
purchase ledger and debit to nominal ledger at different time.


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Management Information and Reporting Systems

1. Information System and Decision making: Data means fact information is
processed data which has meaning to recipient i.e. cost data reporting
information arises from inside (production \ cost) and outside (demand market
research and competitors price and policy market intelligence Internal /
External Internal source of information, accounting system is most powerful
as input and output are expressed in same unit: money. Informal system is
meeting with employees etc. External: legal and regulatory update
information, Research Intelligence, market intelligence.
2. System Output: The result is processing dates but must decide what output
(report) is required to design the system.
Routine reports or transaction documents i.e. payslips, invoices,
purchase orders, standard letters.
Management information inform of reports i.e. labour cost analysis,
stock reports. There performance report produced from many
transactions is a feed back to management to take decision and
exercise control.
3. Management Levels and Information Needs: dissemination of information
what information How: collect When & Where collect.
4. Structured and Unstructured Decisions: Distinguish between problems and
decisions structured problem defined number of elements and solve in a
systematic way whereas unstructured problem is not easy to analysis and leeks
logical underlying procedure to solve. Structured decision or Programmable is
repetitive and well defined i.e. inventory replenishment it can e made by the
system itself rejecting order if credit not sufficient but attenuate payment?
Only part decision quantity of each inventory but manager Lead-time
delivery, quality and price. Unstructured decision or non-programmable
requires managers experience and intuition as information needed for policy
formation to allocate resources is unpredictable, no fixed methodology exists,
multiple alternatives are involved, decision variables and relationship are too
complex to fully specific. Semi Structured Decisions: information
requirement and methodology known but decision still lies with manager e.g.
location for new warehouse land cost, shipping cost are known but altitudes
of local labour or natural hazards to judged and evaluated by the manager.
5. Level of decision making: Strategic Information: Alternative course of action
available senior or director level consists of forecasts and estimates:
profitability, present and potential markets prospects, investment appraisal,
cash requirement, raising long term fund. It is prepared irregularly, decision
making unstructured.
Tactical Information: tactical planning management control activities price,
purchase distribution, stocking. Information, sales analysis, stock levels,
productivity measures, current purchase requirement, budgetary control and
variance reports, labour turnover. It is prepared regularly, decision making
semi-structure as reliance on managers Skill.
Operational Information: Operation level foreman / section head routine
tasks properly planned and controlled all managers do have some
operational task, i.e. debtors / creditors list, payroll details, raw material
requirement and usual, listing of customer companies, machine out put
statistics, delivery schedules. These one Structured and repetitive. Regular:
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Different Information Systems

1. Levels of Hierarchy: MIS for various levels and aspects of management
activities. The levels represent three types of decisions Strategic Planning
instructed decisions, Managerial control and operational control decisions
(structured)
2. Transaction Processing System (TPS): They are basic inputs to database. A
failure is disaster. Reservation system of airline / railways fails. It is most
basic use of information with an organisation and is integral part. It is historic
information and automated E.G. sales record for invoice, a/c.
3. Management Information System (MIS): It is formalised procedures
providing managers of all levels with appropriate information from internal /
external sources to enable to take timely and effective decision for Planning &
Controlling activities under their responsibility.
To strengthen operation of business requires routine data processing, TPS,
DDS (decision oriented support systems). These generate information to
monitor performance productivity information, maintaining coordination
purchase and account payable. MIS extract, process, and summarise data from
TPS and provide periodic reports to managers. These can be classified by
content or time.
Contact: Comprehensive, summary or exception time: historic (compare),
states, predictive format depends on the ability and use foe the user.
Operational Planning: tightly defined information in details. Control requires
limited performance index for action. Decision making: processing of
information is easy when presented.
4. Management Support systems: MIS DSS (decision support system) EIS
(executive information system) and ES (expert system).
DSS computer system as an aid foe semi-structured or unstructured
problems. It enables them to move through phases of decision making
Intelligence (gathering and identifying situations) design of possible
solutions and choice of solution.
EIS easy access to key internal and external duties.
ES Holds specialist / expert knowledge taxation, banking granting credit,
diagnosis of symptom.

Information Flow within the Accounting System

MIS provides the information to support most types of decision. Manager
considers internal and environmental information to establish objectives at
strategically levels. Feedback on the output of the system in quality, quantity
and cost. Control system consists of flow of information to implement change
based on feedback from the operating system. Summary and exception reports
generated are of interest to high level review and evaluation leading to
adjustments or innovation of goals.


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Management Reports

1. Types of Report: Regular Reports, - payroll, sales ledger process, Exception
reports: unusual occurrence to take corrective action. Analysis: item of data
grouped Forecasts: failure based on past.
2. Typical Reports: Manufacturing company (i) Production and material control
(ii) Marketing / distribution: market survey, discount, product service, support
cost, transport (iii) Personal: number, overtime, absenteeism, recruitment (iv)
Financial and management accounting: annual, monthly, budgets, forecasts,
cash, Information needed, provided, different users, different times and
frequency, internal / external. It is required for decision making, planning,
and control. Different MIS components generate there typical reports: TPS,
DSS (decision Support system) management reporting: monthly, quarterly,
executive information: deals in strategic decisions.

Processing and Storing Data in the System

1. Elements of the management Information System: Any business event
provides material for MIS. It is recorded, appropriately stored, transmitted,
combined with other raw materials and presented in some appropriate way.
2. Types of Processing: System consists of different processing approaches:
Batch Processing payroll per dept, demand processing mode transaction
process instant credit report batch demand process mix: file enquiry and up
dating on line mode input in organisation and out put transmitted to users
end. It is data communication. Real time banking system, prompt and early,
high cost, high level of security required, system failure cause great problems.


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Hardware and Equipment Security

1. Physical Threats to a Computer Installation: Fire, flood, natural disasters
(earthquake) and terrorist attack, weather (lightning electrical installation
uncontrolled physical environment dust, heat, cold, humidity spillages tea,
static electricity, magnetic fields, power failures, deliberate physical attack &
fraud hardware sabotage, theft, software piracy, blackmail & extortion, copied
/ stolen data, unauthorised alteration of program, false transactions, loss of
confidentiality, physical interception of data communication.

Types of Risks

1. Software Security Breaches: Hardware impaired has severe impact on
software the effect of poor security is: deliberate physical attack (files taken
away), malicious damage: inside / outside (hackers), fraudulent attack /
transactions, loss of confidentiality.
2. Risk to Information: Damaged, lost or stolen: information on customers /
employees protected under data protection Acts of 1984 & 1998, critical
information about business, security details: access codes, transmitting,
sending and destroying confidential information.
3. Fraudulent Activities: criminal deception: collusions, concealments, by
creation of factious suppliers account, corruption and bribery,
misappropriation of incoming cheques, unauthorised discounts, and stock
losses short supply, fictitious staff on payroll.
4. Hacking: Gaining of unauthorised access
5. Computer Viruses: Computer misuse act 1990 covers unauthorised access,
unauthorised access with the intention of committing another offence i.e. fraud
and unauthorised modification of data or programs: Introduction of viruses
crime.

Preventing Physical Intrusion

1. Elements of Business security: Actions against physical threats - preventing,
detective and corrective measures. Preventive: security fences, locks, cctv
alarms, personnecs with commitment, effective physical measures: visitors,
cash handing, protection of valuables.
2. controlling Physical access to Building: Locks, surveillance camera, security
guards.
3. physical Security within the computer Dept.: Intruders, site secure part of
bldg., separate access and reception, locked door with Pin, closed circuit TV.

Protecting Hardware and Equipment:
Access physical risks and put control.
1. Physical Controls: Fire systems and procedures, location of equipments away
from sources of risk, regular bldg. maintenance: roofm window doors, training
to staff: evacuation, fire control fighting, safe behaviour, first aid, bomb threat,
general risk identification and management, physical access control.
2. data Security: First defence is physical control on entry. Next is to prevent an
intruder to access & view data & damage it. (i) sound testing of new programs
BMJOBS
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for bugs (ii) theft of disks not valuable but with data (iii) backing up (iv)
theft of print out (v) unauthorised access (vi) passwords & pins:
3. Protection Against fire: training of staff, fire drills, combustible material
control, smoke & heat detectors, fire alarms, fire doors, extinguishers
insurance cover.
4. protection Against Floods and Weather: (i) careful sifting of hardware:
away from danger (ii) regular and maintenance (iii) shield cabling (iv) current
isolators (v) back-up generators (vi) shatter proof glass.
5. environmental Control: Extreme temperatures, excessive humidity, power
supply interruption inconsistencies (i) separate or segregated area (ii) smooth
power supply (iii) ups (uninterruptible power supplies) (iv) generators (v)
dedicated cirduits (vi) static control mats dissipate static electricity (vii)
separate electrical supply (viii) restricted access
6. Protection Against Fraud and Data Theft: Restrict access, strict control
over duties segregation, internal audit review systems, audit trail.

Reducing the Risk of Software Security breach

1. Staff Functions: Staff functions must be specifically degined & documented
to control or prevent or minimise or lead to detections of (i) fraudulent
manidulation of data during processing, destruction of data, accidental,
incorrect processing or unauthorised access to personal ot confidential data
data protecting act 1984.
2. Controls to Help Prevent Hacking: Physical security, contents of certain
files remain confidential only for authorised staff, on line systems: terminal
security, pass words. Data encryption: decoding passwords. System logs, -
exception report, audit trails, sensitive users, random checks, shielding of
VDUS transmission if radiation.
3. Preventing steps against Computer Viruses: Sentinel software, control on
the use of external software, use of tested disks, restricted access to floppy
disk and CDs on all PCs, passwords and user number to limit change of
unauthorised persons access.