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Chapter 3 Electronic Business System

The document discusses electronic commerce systems and topics related to internet commerce. It defines electronic commerce and describes three aspects: intraorganizational networks, EDI, and internet commerce. It also discusses internet addresses, protocols, benefits of internet commerce, risks, security, and the implications for auditing.

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Marc Geoffrey Habab
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76 views

Chapter 3 Electronic Business System

The document discusses electronic commerce systems and topics related to internet commerce. It defines electronic commerce and describes three aspects: intraorganizational networks, EDI, and internet commerce. It also discusses internet addresses, protocols, benefits of internet commerce, risks, security, and the implications for auditing.

Uploaded by

Marc Geoffrey Habab
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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ELECTRONIC COMMERCE

SYSTEMS
Chapter 3
Learning Objectives
• After studying this chapter, you should:

• Be acquainted with the topologies that are employed to achieve


connectivity across the Internet.
• Possess a conceptual appreciation of protocols and understand the
specific purposes that several Internet protocols serve.
• Understand the business benefits associated with Internet commerce
• and be aware of several Internet business models.
• Be familiar with the risks associated with intranet and Internet
electronic commerce.
• Understand issues of security, assurance, and trust pertaining to
electronic commerce.
• Be familiar with the electronic commerce implications for the
accounting profession.
Electronic Commerce
• Electronic commerce involves the electronic processing
and transmission of data.

• This broad definition encompasses many diverse


activities, including the electronic buying and selling of
goods and services, online delivery of digital products,
electronic funds transfer (EFT), electronic trading of
stocks, and direct consumer marketing.
Three aspects of electronic commerce

• (1) the intraorganizational use of networks to support


distributed data processing;
• (2) business-to-business transactions conducted via
Electronic Data Interchange (EDI) systems; and
• (3) Internet-based commerce including business-to-
consumer and business to-business relationships.
Intraorganizational Networks and EDI
• Local area networks (LANs), wide area networks (WANs),
and EDI are electronic commerce technologies that have
been with us for decades.

• A local area network (LAN) is a group of computers and


peripheral devices that share a common communications
line or wireless link to a server within a distinct geographic
area.
• A wide area network (WAN) is a large computer network
that connects groups of computers over large distances
Electronic Data Interchange (EDI)
• Electronic Data Interchange (EDI) is the electronic
interchange of business information using a standardized
format;

• a process which allows one company to send information


to another company electronically rather than with paper.
Internet Commerce
• Internet commerce has enabled
thousands of business enterprises
of all sizes, as well as millions of
consumers, to congregate and
interact in a worldwide virtual
shopping mall.

• Example: Shopee, Lazada, E-bay


Terminologies in Internet Commerce
• A virtual private network (VPN) is a private network
within a public network

• Extranets are used to provide access between trading


partner internal databases.

• World Wide Web - is an Internet facility that links user


sites locally and around the world.

• Internet is a vast network that connects computers all


over the world.
Internet Addresses
• The Internet uses three types of addresses for
communications:

• (1) e-mail addresses,


• (2) Web site URL addresses, and
• (3) Internet protocol (IP) addresses of individual
computers attached to a network.
1. E-MAIL ADDRESS.
• The format for an e-mail address is USER
NAME@DOMAIN NAME.
• For example, the address of the author of this textbook is
[email protected].

• .com commercial
• .net network provider
• .org nonprofit organization
• .edu education and research
• .gov government
• .mil military agency
• .int international intergovernmental
2. URL ADDRESS.
• The URL is the address that defines the path to a facility
or file on the Web.

• URLs are typed into the browser to access Web site home
pages and individual Web pages and can be embedded in
Web pages to provide hypertext links to other pages

• http://www.flyfish.com/equipment/rods/brand_name.html
• http:// protocol prefix (most browsers default to HTTP if a prefix is not typed)
• www.flyfish.com/ domain name
• equipment/ subdirectory name
• rods/ subdirectory name
• brand_name.html document name (Web page)
3. IP ADDRESS
• Every computer node and host attached to the Internet
must have a unique Internet Protocol (IP) address. For a
message to be sent, the IP addresses of both the sending
and the recipient nodes must be provided.

• To illustrate the coding technique, the IP address


• 128.180.94.109 translates into:
• 128.180 Lehigh University
• 94 Business Department faculty server
• 109 A faculty member’s office computer (node)
PROTOCOLS
• Protocols are the rules and standards governing the
design of hardware and software that
• permit users of networks, which different vendors have
manufactured, to communicate and share data.
What Functions Do Protocols Perform?
• Protocols serve network functions in several ways.
• First, they facilitate the physical connection between the
network devices.
• Second, protocols synchronize the transfer of data
between physical devices
• Third, protocols provide a basis for error checking and
measuring network performance
• Fourth, protocols promote compatibility among network
devices
• Finally, protocols promote network designs that are
flexible, expandable, and cost-effective.
BENEFITS FROM INTERNET COMMERCE
• Access to a worldwide customer and/or supplier base.
• Reductions in inventory investment and carrying costs.
• The rapid creation of business partnerships to fill market
niches as they emerge.
• Reductions in retail prices through lower marketing costs.
• Reductions in procurement costs.
• Better customer service.
Dynamic Virtual Organizations
• Electronic partnering of business enterprises forms a
dynamic virtual organization that benefits all parties
involved.

• A temporary or permanent coalition of geographically.


dispersed individuals, groups, enterprise units or entire.
organizations that pool resources, facilities, and.
information to achieve common business objectives.
Risks Associated with Electronic Commerce
• 1. Intranet Risk
• 2. Interception of Network Messages
• 3. Access to Corporate Databases
• 4. Risk to Consumer
• 5. THEFT OF CREDIT CARD NUMBERS
• 6. THEFT OF PASSWORDS.
• 7. CONSUMER PRIVACY.
Security, Assurance, and Trust
• Trust is the catalyst for sustaining electronic commerce.
Both consumers and businesses are drawn to
organizations that are perceived to have integrity.

• Organizations must convey a sense that they are


competent and conduct business fairly with their
customers, trading partners, and employees
Solution
• First, the company must implement the technological
infrastructure and controls needed to provide for adequate
security.

• Second, the company must assure potential customers


and trading partners that adequate safeguards are in
place and working.
FIREWALLS
• A firewall is a system used to
insulate an organization’s intranet
from the Internet.

• It can be used to authenticate an


outside user of the network, verify his
or her level of access authority, and
then direct the user to the program,
data, or service requested
CONTINUOUS AUDITING
• Continuous auditing techniques need to be developed that
will enable the auditor to review transactions at frequent
intervals or as they occur.

• To be effective, such an approach will need to employ


intelligent control agents (computer programs) that
embody auditor-defined heuristics that search electronic
transactions for anomalies.
AUDIT SOLUTION
• 1. ELECTRONIC AUDIT TRAILS
• 2. CONFIDENTIALITY OF DATA
• 3. AUTHENTICATION
• 4. NONREPUDIATION
• 5. DATA INTEGRITY
• 6. ACCESS CONTROLS
• END OF PRESENTATION

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