I need help with explaining of the benefits of adopting an REA approach to information systems compared to a traditional approach.
Discuss the general functionality and key elements of ERP systems and understand of the key considerations and risks associated with ERP implementation.
Discuss the use of computer assisted auditing techniques within GAAS, PCAOB, and COSO requirements for audits of publicly traded companies.
The REA approach gives a different view of accounting by creating a central database. The key elements of REA model are resources, events and agents (Hall, 2004).
Resources: These are assets possessed by an organization
Events: These are economic phenomenon which has an impact on resources
Agents: These are individuals that participate in an economic event
In the traditional approach, accounting remains an independent and non-integrated process because it is not compatible with non-accounting decision making. Also, there is an inability to serve diverse enterprise-wide needs through traditional approach.
On the other hand, REA accounting model is a part of enterprise database system and supports enterprise-wide planning. It encompasses both operational and accounting transactions, thereby expanding the scope and usefulness of accounting information system to provide both financial and non-financial information. Outputs from REA are subsequently produced by assembling the data required from various sources which means that output is more useful for decision making.
Enterprise Resource Planning systems integrate different processes of an organization so that a single system can serve the information needs of all functional areas (Hall, 2004). Key ...
The document provides advantages of REA over traditional accounting process, discusses ERP implementation, internal controls and role of CAAT in auditing.