Why need to study AIS (p. xvii)

1. Why need to study AIS (p. xvii) • The focus is on how IT affects business processes and controls. New IT development not only bring new capabilities, but also create new threats and affect the overall level of risk. Example, RFID replace bar code. • How accountants can improve the design and functioning of the AIS so that AIS adds value to the organization. • How Sarbanes Oxley Act affects the AIS?

2. Key Learning Objectives (p. xvii) • 1) The business activities performed in the major business cycles (what cycles?) G/L, A/R, A/P, CASH • 2)The collection and processing of data (data?) • 3) The use of IT development to improve the efficiency and effectiveness of business activities. • 4) AIS must provide the information needed to make key business decisions (information?) • 5) E-business? • 6) Internal control against fraud in AIS. • 7) The COSO and COSO-ERM models for internal control and risk management*** COBIT • 8) AICPA Trust Services – certification of safety, non-breakdown of website, and free from fraud • 9) Database technology, data modeling, REA diagrams, data flow diagrams, and flowcharting. Fundamentals of communicating with Computer Science and computer information systems people. Terminology/technology ONLY, so you can tell them what you need. • 10) Auditing information system.

3. AICPA Examination • Business Environment & Concepts • 25% of this paper deals with information technology implications in the business environment. • www.cpa-exam.org click getting started click candidate bulletin. • www.adobe.com/prodindex/acrobat/readstep.html

4. Chapter 1 (p. 5-7) • What is the definition of terms like ‘system’, ‘data’, ‘information’ ‘AIS’ • Data = facts that are processed by an IS • Information = data that have been organized and processed to provide a meaning to a user. • Value of information = benefit produced by the information minus the cost of producing it. • Information has to be relevant, reliable, complete, timely, understandable, verifiable, accessible. • Statement of Financial Accounting Concepts No.2 defined that accounting is an information system

5. Chapter 1 (p.6-7) • AIS = a system that collects, records, stores, process data to produce information for decision makers. • 6 components of AIS 1) People, 2) Procedures and instructions, 3) Data, 4) software, 5) Information technology infrastructure including computers, peripheral devices, and network communications devices used to collect, store, process, and transmit data and information, 6) The internal control and security measures that safeguard the data in AIS.

6. Chapter 1 (p.7) • The 6 components of AIS enable AIS to fulfill functions: • 1) Collect and store data. • 2) Transform data into information for decision making • 3) Provide adequate controls to safeguard the organization’s assets, including its data, to ensure that the assets and data are available when needed and data are accurate and reliable. • 4) Financial information reporting. • (That’s why we need to study) The nature, design, use and implementation of an AIS

7. Chapter 1 (p. 10) • An organization’s value chain consists of 5 primary activities: 1) inbound logistics, 2) operations, 3) outbound logistics, 4) marketing and sales, 5) services. • To support the 5 primary activities: 1) firm infrastructure including AIS, 2) Human resources, 3) technology including R/D, website, product design 4) purchasing.

8. Chapter 1 (p. 12-13) • AIS add value by: • 1) Improving quality and reducing the cost of products/services (Management Information System). • 2) Improving efficiency (just in time needs timely information). • 3) Sharing knowledge (best practice). • 4) Improving the efficiency and effectiveness of supply chain (on line order entry). • 5) Improving the internal control structure • 6) Improving decision making by providing information timely, identifying situations requiring management action, provide information for choosing among alternative actions (reduce uncertainty), providing feedback on prior decisions (MIS) = Semi-structured decision (subjective incomplete decision rule). Unstructured decision (non-routine). Structure(rule based).

9. Chapter 1 (p.15) • Porter’s business strategy: 1) Product differentiation strategy, 2) low cost strategy. • Porter’s 3 basic strategic positions: 1) Variety based strategic position (producing a subset of the industry’s products), 2) Needs- based strategic position (servicing most of the needs of a target market), 3) Access-based strategic position (servicing a subset of customers like geographic location). • AIS help an organization to adopt and maintain a strategic position. Example, predictive analysis by data warehousing (algorithms).