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Week 1

Week 1. What we will cover in this course. General place of AIS in accounting Conceptual place of AIS Values and assumptions Documentation techniques Accounting controls Concepts—COSO/COBIT and ERM based SOX, in general and as related to controls Database Concepts of data modeling

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Week 1

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  1. Week 1

  2. What we will cover in this course • General place of AIS in accounting • Conceptual place of AIS • Values and assumptions • Documentation techniques • Accounting controls • Concepts—COSO/COBIT and ERM based • SOX, in general and as related to controls • Database • Concepts of data modeling • What do accountants need to know • Business cycles and accounting systems • Special topics in accounting systems • Intangibles, formatting, impacts and implications

  3. Announcements • Send me an email. Put ACTG335 in the subject line. • Send it from all the email addresses you may rely on for class info • Send it by Friday, September 28th • You will be held responsible for materials I send out by email • Many readings will be put on my website.

  4. How does an AIS fit in an organization?

  5. AIS objectives • Collect and store data • Support efficiency and effectiveness • Provide adequate controls • Provide information for decision making

  6. Factors influencing AIS design • Strategy • Information technology • Organizational culture • Societal demands • …what do we need to account FOR

  7. Measurement issues • What to measure • Measurement attributes • What to report • Abstractions • What basis for measuring? For whom? To meet what objective(s)? • Accountants are professionals, with a responsibility to serve the public interest. • Accounting Abstraction Model—what does accounting DO?

  8. AIS as a filter

  9. Valuation theory v. Events theory—intro to DB in AIS

  10. Characteristics of information • Useful • Relevant • Reliable • Complete • Usable • Understandable • Verifiable • Credible • Timely • Accessible

  11. Useful—Relevant • Connected to business objectives • Logical, supportable thread from metrics to objectives • Meaningful for the purpose intended, valid • Predictive value (leading) • Training, investment in IT, advertising • Feedback value (lagging) • ROI, net income, productivity

  12. Lagging Indicators • Measures of output, end-process measures, record effects • Reflect past performance • Generally quantitative • Example: Quantity of toxic emission; last year’s percentage of on-time deliveries • Strength: Easy to quantify and understand, preferred by regulators and public—deterministic rather than probabilistic • Weakness: Time lag in feedback, ignore present activities

  13. Leading Indicators • In-process metrics of performance, proactive • Reflect current status/activities—for future performance • Quantitative or qualitative • Example: percent of facilities conducting self-audit; training of logistics managers • Strength: Represent current actions and future trends • Weakness: Harder to build support for use, harder to track to performance—probabilistic rather than deterministic

  14. Useful—Reliable • Accurate for the purpose intended • Representational faithfulness • Verifiable • Neutral • meaning objective, but not purposeless • relieves us of the need to assess “values” of the data/information • Acknowledge inherent bias in any metric/measure

  15. Usable • Credible • What users value and trust • Assess and report on the accuracy of key sources • Institute a data-quality program for key data • Timeliness • Accessibility • Physically • Cognitively

  16. Information attributes Information context • Information attributes relate to the specific characteristics of individual units of information (data, really) • Information context relates to understanding how information, as defined, relates to the world in which we live and work. Definition of context, from Merriam-Webster online dictionary: 1: the parts of a discourse that surround a word or passage and can throw light on its meaning 2: the interrelated conditions in which something exists or occurs

  17. Abstractions

  18. Abstraction model—how do we (society/stakeholders) know what happens in an organization?

  19. Values and assumptions • Public interest • Stakeholders—what does this mean? • Center for Professional Integrity and Accountability—See Values and Assumptions from the syllabus • What to measure, how to report— influences the interests that are privileged

  20. Chapter 2—AIS processes • Transaction processing system • Database

  21. Business cycles • Real business activities for the AIS to capture, process, report • Revenue • Expenditure • HR • Production • Financing

  22. Basic Business Processes A set of Give-Get exchanges

  23. Collect data • Transactions: agreement between two parties to exchange economically measurable goods • Capture the data • Implement control procedures • Record in journals • General for rare or EOP • Specialized for standardized • Post to ledgers • Prepare reports

  24. Computer processing • Master/transaction files • Batch/real-time/on-line • Queries/reports • I am going to spend little time on this, but expect you to use the terms and concepts pretty readily…ask questions if you need to.

  25. Waren Distributing • Get started. • Quiz on October 15th.

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