Accounting Information Systems: An Overview

1. Accounting InformationSystems: An Overview Chapter 1

2. Understand the related concepts of transaction cycles and internal control structure. Learning Objective 1

3. Overview An accounting information system (AIS) is a collection of resources designed to transform data into information. Accounting information systems perform this transformation. Manual Computerized

4. Information and Decisions Who are the two main users of accounting information? External users Internal users

5. Information and Decisions Who are the external users of accounting information? Stockholders Investors Creditors Government agencies Customers and vendors

6. Information and Decisions Hierarchy of Internal Users Top-Level Management Strategic Middle Management Summarization and Filtration Tactical Lower-Level Management Operational Transaction oriented

7. Data Information Information Systems The term information system suggests the use of computer technology in an organization. Hardware Software

8. Information Systems Electronic Data Processing System (EDP) Data Processing System (DP) Management Information System (MIS) Decision Support System (DSS) Expert System (ES) Executive Information System (EIS) Accounting Information System (AIS)

9. Data Organizational units Logical time sequence Business Processes Tasks:

10. Business Processes Primary Business Processes Inbound sales logistics Outbound sales logistics Operations Marketing Service

11. Business Processes Supporting Business Processes Procurement Technology development Human resources Firm infrastructure

12. Transaction Processing Cycles 1. Revenue cycle 2. Expenditure cycle 3. Production cycle 4. Finance cycle

13. Internal Control Process Reliability of financial reporting Effectiveness and efficiency Compliance

14. Internal Control Process What are the elements of internal control? Control environment Risk assessment Control activities Information and communication Monitoring

15. Internal Control Process Segregation of Duties: No individual or department should control the accounting records relating to its own operation. Internal Auditing: It is an independent appraisal activity within the organization.

16. Describe the organizational structure of the information system function in organizations. Learning Objective 2

17. Steering Committee Manager Systems Analysis Manager Programming Manager Operations Manager Technical Support Manager User Support The Information System Function Chief Information Officer

18. Application Analysts Application Programmers The Information System Function Manager Systems Analysis Manager Programming

19. Maintenance Programmers File Librarian Data Entry Operators Computer Operators The Information System Function Manager Operations

20. Systems Programmers Communication Analysts Database Administration The Information System Function Manager Technical Support

21. Analysts Programmers The Information System Function Project organizations Application projects

22. Discuss applications of information technology in organizations. Learning Objective 3

23. End-User Computing End-user computing (EUC) is the hands-on use of computers by end users. Functional end users do their own information processing activities.

24. Database Accounts Receivable Data User Report Query Language Processor User Submits Query Language Job Database Access Control Software EUC: Mainframe Application

25. User Information System Specialists Data Processing Data Processing for the End User Traditional Approach

26. Data Processing for the End User End-User Computing Approach User Database Software or Personal Computer Data Processing

27. Personal Computer Report EUC: Stand-Alone PC Application Mainframe Data or Report User Prepared Data

28. Quick-Response Technology Quick-response systems are essential to the total quality performance (TQP) movement in business. TQP is also called TQM or total quality management. TQP emphasizes customer satisfaction.

29. Quick-Response Technology Hardware and software standardization Electronic data interchange (EDI) Universal product code (UPC) bar code identification of products and scanning technologies

30. Electronic Data Interchange Ship Order Vendor’s Computer System Quick-Response Technology Retailer’s Computer System Retail Sale of Product Scan Bar Code

31. Consumers No waiting in line Merchants Cost savings Web Commerce Sales via the World Wide Web are an integral part of the economy. What are some benefits?

32. Purchase Order Supplier Retailer Eliminates paper Saves time Electronic Data Interchange

33. Extensible BusinessReporting Language XBRL is a language that facilitates the exchange over the Internet of all kinds of business documents and financial statements.

34. Computer-Integrated Manufacturing What are the components of a CIM system? Computer-aided design (CAD) workstations Real-time production monitoring and control systems Order and inventory control system

35. Electronic Payment Systems (EFT) Electronic funds transfer systems are electronic payment systems in which processing and communication are primarily or totally electronic. Banks can interface with corporate EDI applications.

36. Characterize the development of information systems. Learning Objective 4

37. The Accountant andSystems Development Accountants may undertake systems development activities either internally or externally. Systems development activities are often encountered by internal and external auditors during reviews of information systems controls.

38. The Accountant andSystems Development Systems Development Project: Systems analysis Systems design Systems implementation

39. The Accountant andSystems Development What are the general objectives of systems analysis? To improve the quality of information To improve internal control To minimize cost, where appropriate

40. The Accountant andSystems Development Systems design is the process of specifying the details of the solution selected by the systems analysis process.

41. The Accountant andSystems Development Systems implementation is the process of placing the revised or newly designed procedures and methods into operations. Testing the solution prior to implementation Documenting the solution Reviewing the system

42. Systems Approach What is the systems approach? It is a general procedure for the administration of a systems project. Its purpose is to assist in the orderly development of effective systems. What are the six steps of the systems approach process?

43. 2 Creation of alternatives 3 Systems analysis 4 Systems design 5 Systems implementation 6 Systems evaluation Systems Approach 1 Statement of system objective(s)

44. Behavioral Considerations A new information system creates new work relationships among existing personnel. It creates changes in job content and perhaps a change in the formal organizational structure.

45. Behavioral Considerations The user cooperation needed to operate the system successfully should be ensured during the design of a system, not afterward. A philosophy of user-oriented design fosters a set of attitudes and an approach to systems development that consciously considers the organizational context.

46. End of Chapter 1