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Accounting Information Systems and Business Processes - Part II

Accounting Information Systems and Business Processes - Part II. Chapter 11. Chapter 11: Accounting Information Systems and Business Processes - Part II. Introduction The Resource Management Process The Production Process The Financing Process Business Processes In Special Industries

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Accounting Information Systems and Business Processes - Part II

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  1. Accounting Information Systems and Business Processes - Part II Chapter 11

  2. Chapter 11: Accounting Information Systems and Business Processes - Part II Introduction The Resource Management Process The Production Process The Financing Process Business Processes In Special Industries Business Processes Reengineering

  3. Introduction • Business Processes • Sales and Purchasing • Resource Management, Production, and Financing • Information Needs • Typical AIS requirements • Specialized information

  4. Human Resource Management • Personnel function • Hire, train, and employ appropriately qualified employees • Business Process Management Software Packages • Automate the core processes • Payroll Processing Information Systems • Process payroll activities and reporting

  5. Human ResourceManagement Objectives Hiring, training, and employing workers Maintaining employee earnings records Complying with regulatory reporting requirements Reporting on payroll deductions Making timely and accurate payments to employees Providing an interface for personnel and payroll activities

  6. Personnel Function Flowchart

  7. Payroll Function Flowchart

  8. Human ResourceManagement Inputs • Personnel Action Forms • Documents hiring or changes in employee status • Time Sheets • Tracks hours worked • Payroll Deduction Authorizations • Authorization to deduct certain amounts • Tax Withholding Forms • Authorization to withhold appropriate tax amounts

  9. Human ResourceManagement Outputs • Financial Statement Information • Employee Listings • Current employees • May contain employee-specific information • Paychecks • Final documents; subject to strict internal controls • Check Registers • Used to make journal entries for salary and payroll tax expenses

  10. Human ResourceManagement Outputs • Deduction Reports • Summaries of deductions for employees as a group • Payroll Summaries • Used to analyze expenses • Tax Reports • Government required information • Income tax, social security tax, unemployment tax

  11. Human ResourceManagement Summary

  12. Study Break #1 • All of the following activities are common to the Human Resource Management function except: • Hiring, training, and employing workers • Reporting on payroll deductions • Maintaining employee earnings records • Certified financial planning for employees

  13. Fixed Asset Management • Fixed Asset Management Function • Long-term Assets • Purchase, maintenance, valuation, disposal • Enterprise Asset Management System • Automate management of assets

  14. Fixed Asset Management Objectives Tracking purchases of fixed assets Recording fixed asset maintenance Valuing fixed assets Allocating fixed asset costs (recording depreciation) Tracking disposal of fixed assets

  15. Fixed Asset Management Function Flowchart

  16. Fixed Asset Management Inputs • Purchase Requisition • Requires approval by management • Receiving Report • Identifies receipt of fixed asset • Supplier Invoice • Sent when asset is shipped

  17. Fixed Asset Management Inputs • Construction Work Order • If asset is built by company • Fixed Asset Change Form • Transfer of fixed asset • Locations, sale, trade, or retirement • Repair and Maintenance Form • Notification to update expense and asset accounts

  18. Fixed Asset Management Outputs • Financial Statement Information • Fixed Asset Register • Identification numbers • Location • Depreciation Register • Depreciation Expense • Accumulated Depreciation

  19. Fixed Asset Management Outputs • Repair and Maintenance Reports • Current period expenses • Historical expenses • Report on Retired Assets • Disposal of fixed assets

  20. Fixed Asset Management Summary

  21. Study Break #2 • What is the objective of the fixed asset management function? • To track purchases of fixed assets • To manage the purchase, management, valuation, and disposal of an organization’s fixed assets • To record maintenance and depreciation of fixed assets • To keep a current listing of approved vendors

  22. Study Break #3 • Why do companies use BPM solutions for the fixed asset management function? • Decrease machine downtime and maintenance costs • Reduce inventory • Integrate data and coordinate logistics • All of the above

  23. The Production Process • Process • Begins with request for raw materials • Ends with transfer of finished goods to warehouses • Primary Objectives • Converting raw materials to finished goods efficiently • Collecting and reporting of information

  24. Production Process Flowchart

  25. Production Process Objectives Trackpurchases and sales of inventories Monitorand controlmanufacturing costs Controlinventory Control and coordinatethe production process Provideinput for budgets

  26. Cost Accounting Subsystem • Job Costing Information System • Tracks costs for specific “jobs” • Raw materials, labor, and overhead • Process Costing Information System • Used for manufacturers of homogeneous products • Produced on a regular and continuous basis • Activity-based Costing Systems • Emphasis on cost drivers of business processes

  27. Just-in-Time Inventory Systems • A make-to-order inventory system • Attempts to minimize inventory at all levels • Dependent upon AIS • Timely and accurate processing of information • Ensure continuous work flow by providing adequate raw materials

  28. Lean Production/ Manufacturing • Concept • Eliminate waste throughout the organization • Focus on reduction of non-value-added waste • Lean Accounting • Necessary in order to have lean manufacturing • Data collection

  29. Non-Value-Added Waste

  30. Production Process Inputs • Material Requisition Form • Request to acquire materials from storeroom or warehouse • Bill of Materials • Identifies types and quantities of parts needed • Master Production Schedule • Displays quantities of goods needed to meet sales demands

  31. Production Process Inputs • Production Order • Authorizes the manufacture of goods • Incorporates data from sales projections and inventory levels • Dictates the production schedule • Job Time Card • Identifies the distribution of labor costs to specific jobs or production orders

  32. Production Process Outputs • Financial Statement Information • Details of the costs and pricing • Materials Price List • Prices charged for raw materials • Periodic Usage Report • Provides information on use of raw materials • Inventory Reconciliation Report • Reconciles physical inventory with book balances

  33. Production Process Outputs • Inventory Status Report • Allows managers to monitor inventory levels • Production Cost Report • Details the actual costs for production items • Production operation, cost element, and/or separate jobs • Manufacturing Status Report • Provides information about the status of various jobs

  34. Production Process Summary

  35. Study Break #4 • Which of the following automated systems help minimize inventory costs? • JIT systems • ABC systems • Job order costing systems • Process costing systems

  36. Study Break #5 • Lean accounting is: • An AIS that is generally considered low cost (i.e., an entry- level system) • Designed to support traditional financial performance measures • New performance measures that support decision-making by managers and operational improvement leaders • None of these

  37. The Financing Process • Process • How a company acquires and uses financial resources • Cash, other liquid assets, investments • Acquisition • Sales of goods and services • Borrowing cash or selling ownership shares

  38. The Financing Process

  39. Financing Process Objectives • Effective cash management • Lockbox systems and electronic funds transfer • Cost of capital optimization • Earn maximum return on investments • Project cash flows

  40. Benefits of a Lockbox System

  41. Financing Process Inputs • Remittance Advices • Accompanies a customer’s payment on account • Deposit Slips • Documents account deposits • Bank Statements • Used to reconcile company balance with bank balance

  42. Financing Process Outputs Financial Statement Information Cash Budget Investment Reports Debt and Interest Reports Financial Ratios Financial Planning Model Reports

  43. Financing Process Summary

  44. Business Processes inSpecial Industries • Professional Service Organizations • Accounting, Law, Engineering, Consulting • Utilize time and billing information systems • Tracks billable hours and creates client bill • Not-for-Profit Organizations • Provide services for the betterment of society • Emphasize fund accounting systems • Utilize budgetary AIS for evaluation measures

  45. Professional Service Organization Bill

  46. Business Processes inSpecial Industries • Health Care Organizations • Provide health care to patients • Emphasize third-party billing • Standardized codes provide efficiency in billing • Rely on AIS to maintain patient information

  47. Mini-based Hospital System

  48. Business Process Reengineering • Purpose • Inefficient or ineffective processes exist • Redesign to improve efficiency and effectiveness • Potential Failure of Reengineering • Unrealistic expectations • Employee resistance to change • Lack of top management support

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