AIS REPORT

Exhibit 2-9: Payroll System Flowchart

This section SHOWS how payroll is processed step by step.

1. Time Cards (Input)

Employees record their work hours on time cards. This serves as input for
payroll processing.

2. Keying Time Cards (Manual Input)

The payroll staff enters timecard data into the payroll system.

If errors are found, they go to the "Correct Errors" process before moving
forward.

3. Payroll Data Processing (Main Process)

Once the time data is entered, the system processes payroll information. This
step includes retrieving data from tax tables and employee databases to
apply salary calculations, tax deductions, and other withholdings.

Tax Table → Determines tax deductions.

Employee Database → Stores salary, tax, and other employee details.

4. Payroll Transactions (Storage)

The system generates payroll transactions, which include salary calculations,
tax deductions, and benefits.

5. Payroll Check Processing

The system processes payroll checks, finalizing salaries for employees.

6. Outputs
Payroll Summary Report → A document summarizing payroll details for
management.

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 Payroll Checks → The final payment issued to employees, either as checks or
direct deposits.

DOCUMENT FLOWCHART
BASICALLY, A diagram showing how documents (paper or digital) move
between departments.

A document flowchart visually represents how documents and information

move within an organization. It shows the origin of a document, its path
through different departments, and its final destination. These flowcharts
are divided into columns, with each column representing a department or unit,
making it easy to track the movement of paperwork.

Document flowcharts also show what happens to each document at every

stage—whether it’s approved, modified, stored, or forwarded. If a document
has multiple copies, the chart traces the flow of each one separately. For
example, an invoice approval process may involve the sales department
creating the invoice, accounting verifying it, management approving it, and
finance processing payment.

EXAMPLE
1. Write Customer Order (Server)
The server writes down the customer's order on an order ticket.

Two copies of the order ticket are generated:

Order Ticket 1 is sent to the kitchen for preparation.

Order Ticket 2 is sent to accounting for record-keeping.

2. Cook Order and Forward Ticket (Kitchen)

The kitchen receives Order Ticket 1 and prepares the food.

After cooking, the order ticket is forwarded back to the server to confirm
completion.

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 3. Prepare Customer Bill (Server)
Once the order is complete, the server prepares the customer bill.

Two copies of the customer bill are created:

Customer Bill 1 is given to the customer for payment.

Customer Bill 2 is sent to the accounting department.

4. Reconcile and Update Accounting Records (Accounting)

The accounting department receives:

Customer Bill 2 (record of the transaction).

Order Ticket 2 (original order record).

These documents are used to update financial records and ensure the
restaurant's sales data is accurate.

Final Step: Completion of the Process

The restaurant now has all financial records updated based on customer
orders and payments.

The flowchart ends with the proper filing of Customer Bill 2 and Order Ticket
2.

DATA FLOW DIAGRAM

represent how data moves within a system.

It helps systems professionals design systems logically by breaking down

complex processes into clear, understandable steps.

One of the biggest advantages of DFDs is their simplicity—they use only four
basic symbols, making them easy to read.

Starts at a high level (broad overview).

Becomes more detailed as needed to show every data movement.

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 the diagram is “exploded” into more detailed levels, breaking down each
process step by step until every task is clearly outlined.

DFDs are widely used in industries that handle large amounts of data, such as
banking, healthcare, e-commerce, government services, and corporate
management systems.

EXAMPLE
provides a more structured and logical representation of how data moves
within the system, focusing on processes rather than documents.

The diagram begins with the customer, who places an order. This order
initiates the first process, “Receive Order” (1.0), which records the customer’s
request. From there, the order flows into the next process, “Write Order
Ticket” (2.0), which ensures that the order is properly documented and sent
to the kitchen and accounting records.

Once the order is fulfilled, the system moves to “Bill Customer” (3.0), where
the total amount is calculated based on the order. The customer is then
provided with a customer bill, representing the payment request. After the
payment is processed, the final step, “Update Accounting Records” (4.0),
ensures that all financial transactions are recorded properly in the Accounting
Records system.

SYMBOLS
Square (Terminator) – This symbol represents the starting or ending point of
data. It is used to indicate the sources (such as customers) and destinations
(such as accounting records) of data. In Exhibit 2-12, the Customer and
Accounting Records are terminators.

Rounded Rectangle (Process) – This shape represents a task or function in

the system. Any activity that transforms data, such as receiving an order,
writing an order ticket, billing the customer, or updating records, is
represented by a rounded rectangle. These processes help in organizing and
managing data flow efficiently.

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 Open-ended Rectangle (Data Store) – This symbol represents stored data,
which can be manual records or computer files. In the restaurant DFD (Exhibit
2-12), Accounting Records serve as a data store where financial transactions
are recorded.

Arrow (Data Flow Direction) – Arrows indicate the movement of data

between different elements in the system. They show how information flows
from the customer to various processes and ultimately to the accounting
records.

Entity-Relationship (ER) Diagrams

Entities are the core elements of an ER diagram, representing the people,
objects, or concepts in a system. In accounting, entities could include
employees, customers, vendors, and inventory items. Each entity has
attributes, which are the specific characteristics that describe it. For example,
an employee entity might have attributes such as first name, last name, pay
rate, and tax withholdings.

Cardinality in database relationships

number of instances na pwedeng iassociate ang one entity sa another entity

1. One-to-One (1:1) Relationship

This means that each entity in set A is related to only one entity in set B, and vice
versa.

Example: Employee & Personnel File

An employee has exactly one personnel file, which contains their records, job
history, and HR details.

A personnel file belongs to exactly one employee and does not store
information about multiple employees.

Other Examples:

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 A passport is assigned to exactly one person, and each person can have only
one valid passport at a time.

A social security number (SSN) is unique to one individual, and each

individual has only one SSN.

2. One-to-Many (1:M) Relationship

This means that a single entity in set A can be related to multiple entities in set B,
but each entity in set B is related to only one entity in set A.

Example: Supervisor & Employees

A supervisor manages many employees.

An employee reports to only one supervisor.

Other Examples:
A teacher teaches multiple students, but each student is assigned to only one
homeroom teacher.

A bank account holder may have multiple transactions, but each transaction
belongs to only one account.

3. Many-to-Many (M:M) Relationship

This means that multiple entities in set A can be related to multiple entities in set
B, and vice versa.

Example: Vendors & Items

A vendor can sell many different items.

An item can be supplied by many different vendors.

Other Examples:
Students enroll in multiple courses, and each course can have multiple
students.

Authors can write multiple books, and each book may have multiple authors.

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 Symbols Section
1. Entity (Rectangle)

A rectangle represents an entity, which is an object or concept in a

database that stores information.

Example: Customer, Employee, Product, Vendor.

2. Relationship (Diamond)

A diamond represents a relationship between entities, showing how they

are connected.

Example: A "purchases" relationship between a Customer and a

Product.

3. Attribute (Oval)

An oval represents an attribute, which describes an entity.

Example: For an Employee entity, attributes could be Name, Salary, and

Job Title.

3. Many (M)
Each entity in Set A can relate to multiple entities in Set B, and vice versa.

Example:
A customer can place multiple orders, and an order can contain multiple
products.

A movie can have multiple actors, and each actor can act in multiple movies.

4. One or More (1:M, at least one required)

An entity in Set A must have at least one related entity in Set B, but can have
many.

Example:
A company must have at least one employee, but can have many.

A university must have at least one department, but usually has several.

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 5. One and Only One (Mandatory) (1:1 Required)
Each entity in Set A is strictly linked to exactly one entity in Set B.

Example:
A driver’s license is issued to exactly one person, and a person can hold only
one valid license at a time.

A country has only one president at a time.

6. Zero or One (Optional) (0:1)

An entity in Set A may or may not have a related entity in Set B, but if it does,
there’s only one.

Example:
A person may or may not have a middle name.

A student may or may not have a scholarship.

7. Zero or Many (Optional) (0:M)

An entity in Set A may or may not have a related entity in Set B, but if it does, it
can have many.

Example:
A customer may place multiple orders, or none at all.

A blog may have many comments, or none at all.

Step-by-Step Breakdown with Cardinality

1. Customer Places an Order (One-to-Many: 1:M)
A customer can place many orders (1:M).

Each order is placed by one customer (M:1).

Cardinality Notation: 1 |—< Orders >—| M

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 🔹 Example: A customer may order multiple times, but each order belongs to one
customer.

2. Customer Has a Credit Card (One-to-One: 1:1)

A customer has one credit card (1:1).

Each credit card belongs to one customer (1:1).

Cardinality Notation: 1 |— Has —| 1

🔹 Example: Each customer can register only one credit card for payment in the
system.

3. Credit Card is Verified (One-to-One: 1:1)

Each credit card is verified once per transaction (1:1).

The verification process happens for one credit card at a time (1:1).

Cardinality Notation: 1 |— Verifies —| 1

🔹 Example: When a customer makes a payment, their credit card goes through a
verification process once.

4. E-commerce Processes the Order (One-to-Many: 1:M)

The e-commerce system processes many orders (1:M).

Each order is processed by one e-commerce system (M:1).

Cardinality Notation: 1 |— Processes —< M

🔹 Example: The online platform handles multiple customer orders daily.

5. Order Contains Items (Many-to-Many: M:M)
Each order can contain multiple items (M:M).

Each item can appear in multiple orders (M:M).

Cardinality Notation: M |— Contains —| M

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 🔹 Example: A customer might order a phone, laptop, and charger in one order,
while another order might also contain the same charger.

6. Shopping Cart Contains Items (Many-to-Many: M:M)

A shopping cart can contain many items (M:M).

Each item can be in many shopping carts (M:M).

Cardinality Notation: M |— Contains —| M

🔹 Example: A customer can add multiple items to their cart, and the same items
can exist in other customers' carts.

7. Shopping Cart Creates an Order (One-to-One: 1:1)

Each shopping cart creates one order (1:1).

Each order is created from one shopping cart (1:1).

Cardinality Notation: 1 |— Creates —| 1

🔹 Example: When a customer proceeds to checkout, their shopping cart is

converted into an order.

8. Shipping Ships Items to Customers (One-to-Many: 1:M)

A shipping process can ship many items (1:M).

Each item is shipped by one shipping process (M:1).

Cardinality Notation: 1 |— Ships Item —< M

🔹 Example: One shipping batch may contain multiple items from different orders,
but each item is shipped once per order.

9. E-commerce Forwards Order to Shipping (One-to-One: 1:1)

The e-commerce system forwards one order at a time (1:1).

Each order is forwarded once to the shipping system (1:1).

Cardinality Notation: 1 |— Forwards —| 1

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 🔹 Example: Once an order is confirmed, the system sends shipping details to the
logistics team.

10. Company Produces Items (One-to-Many: 1:M)

A company produces many items (1:M).

Each item is produced by one company (M:1).

Cardinality Notation: 1 |— Produces —< M

🔹 Example: Apple manufactures many products, but each iPhone is produced by

Apple.

Fraud detection is more challenging in computerized systems.

Unlike sa traditional paper-based processes, mas madali ma manipulate

ang digital transactions or ma conceeal within automated workflows,
making fraud harder to identify.

A small IT team increases the risk of undetected fraud.

If gamay lang nga employees may access sa systems, there’s less

oversight. This makes it easier for fraud to go unnoticed, especially if
those employees are involved or unaware of security risks.

Complex software can make fraud harder to detect.

Advanced accounting systems require specialized knowledge. If bilang

lang nga employees makaintindi how the system operates, they may
exploit gaps for unethical purposes without others noticing.

Legacy systems with limited trained personnel pose a security risk.

Tung mga older systems amo na sha kulang sa modern security features.
If gamay lang nga employees kabalo magmanage sina, higher possibility
na ma hindi ma detect tung mga fraudulent activities due to the lack of
expertise or oversight.

Accountants must recognize risks within business processes.

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 Since accounting systems can be used to commit or conceal fraud,
accountants should actively monitor for vulnerabilities, ensuring proper
controls and fraud prevention measures are in place. When selecting
accounting system features, companies should prioritize fraud prevention
and internal controls.

accounting systems are mostly computerized, which brings both

advantages and risks. Since digital records can be manipulated,
accountants need to be cautious about potential fraud. A major
issue is that only a few IT personnel ang may access sa mga
critical systems, making it difficult to spot unethical activities. If a
company uses outdated software, fraud detection becomes even
harder due to a lack of trained staff. To prevent this, accountants
should be aware of vulnerabilities and take active steps to ensure
security. When selecting accounting system features, companies
should prioritize fraud prevention and internal controls.

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