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