AKN4509 Accounting Information Systems
AKN4509 Accounting Information Systems
4.
5. 6.
environment. Describe the differences between AIS and MIS. Discuss the importance of studying AIS. Know the principle features of the general model for AIS. Describe how AIS can improve decision-making Describe the relationship between external auditing, internal auditing, and IT auditing.
operations level to capture transaction and operations data Vertical flows of information
downward flows instructions, quotas, and budgets upward flows aggregated transaction and operations
data
Information Requirements
Each user group has unique information requirements. The higher the level of the organization, the greater
the need for more aggregated information and less need for detail. E.g. Strategic planning at upper level requires information from accounting, finance, production, marketing, human resource, etc for determining the future plan of an organisation.
Information in Business
Information is a business resource that:
needs to be appropriately managed
(correct and precise information) is vital to the survival of contemporary businesses (e.g. computer business needs to update their information as to keep them in business)
What is a System?
A group of interrelated multiple components or
component of a larger system (e.g. payroll system which include punchcard, EPF, Socso, etc is a subsystem of accounting information system) A subsystem is considered a system when it is the focus of attention (e.g. inventory system is considered a system in business that concentrate on inventory in order to make profit)
Transactions
A transaction is a business event. Financial transactions economic events that affect the assets and equities of the organization e.g., purchase of an airline ticket Nonfinancial transactions all other events processed by the organizations information system e.g., an airline reservation no commitment by the customer
Transactions
Financial Transactions Nonfinancial User Decision Making
Information System
Information
Transactions
communicates economic information about a firm using a wide variety of technologies. It captures and records the financial effects of the firms transactions. It distributes transaction information to operations personnel to coordinate many key tasks.
AIS
MIS
GLS/FRS
TPS
MRS
Finance
Marketing
Production
HRS
Distribution
financial information
Now, the two systems overlap to provide the same information focusing on business processes.
MIS
Financial Nonfinancial
To internal users
AIS
Financial
AIS Subsystems
Transaction processing system (TPS)
supports daily business operations
courses.
Other systems courses focus on design and implementation of information systems, databases, expert systems, and telecommunications. AIS courses focus on accountability and control.
courses. AIS topics are tested on the new CPA exam. AIS topics impact corporate strategy and culture.
AIS design is affected by information technology, the organizations strategy, and the organizations culture.
AIS
Information Technology
Information technology affects the companys choice of business strategy. To perform cost-benefit analyses on IT changes, you need to understand business strategy.
AIS
Information Technology
Although culture affects the design of the AIS, its also true that the AIS affects culture by altering the dispersion and availability of information.
AIS
Information Technology
Data Sources
Data sources are financial transactions that enter the information system from internal and external sources.
External financial transactions are the most common
E.g., sale of goods and services, purchase of inventory, receipt of cash, and disbursement of cash (including payroll).
E.g., movement of raw materials into work-in-process (WIP), application of labor and overhead to WIP, transfer of WIP into finished goods inventory, and depreciation of equipment.
1. Data Collection
Capturing transaction data Recording data onto forms
2. Data Processing
Classifying Transcribing Sorting Batching
3. Data Management
Storing Retrieving Deleting
4. Information Generation
Compiling Arranging Formatting Presenting
it supports Accuracy: free from material errors Completeness: all information essential to a decision or task is present Summarization: aggregated in accordance with the users needs
support
the stewardship function of management
management decision making the firms day-to-day operations
Organizational Structure
The structure of an organization helps to allocate responsibility authority accountability Segmenting by business function is a very common
method of organizing.
Functional Areas
Inventory/Materials Management
purchasing, receiving and stores
Production
production planning, quality control, and
Accounting Independence
Information reliability requires accounting independence.
Accounting activities must be separate and
independent of the functional areas maintaining resources. Accounting supports these functions with information but does not actively participate. Decisions makers in these functions require that such vital information be supplied by an independent source to ensure its integrity.
Reorganizing the computer services function into small information processing units that are distributed to end users and placed under their control
user level Backup of data can be improved through the use of multiple data storage sites
accounting are physically performed by people, usually using paper documents. Useful to study because:
helps link AIS courses to other accounting courses
often easier to understand business processes when not
documents and/or magnetic form Data Updating - changes or additions must be performed multiple times Currency of Information - potential problem of failing to update all affected files Task-Data Dependency - users inability to obtain additional information as needs change Data Integration - separate files are difficult to integrate across multiple users
E
M
A
1
Party to
Sales
M M
Sales person
Pays for
M
Made to
1
Customer
Cash
Increases
Cash Collections M
1 Cashier
34
REA Model
The REA model is an accounting framework for
modeling an organizations
economic resources; e.g., assets economic events; i.e., affect changes in resources economic agents; i.e., individuals and departments
that participate in an economic event Interrelationships among resources, events and agents
to the systems professionals who design the system. The accountant should actively participate in systems development projects to ensure appropriate systems design.
conceptual system, while the computer function is responsible for the physical system. The conceptual system determines the nature of the information required, its sources, its destination, and the accounting rules that must be applied.
SUMMARY
What weve learned so far:
1. 2. 3. 4. 5. 6.
Information flows within the business environment. Differences between AIS and MIS. The importance of studying AIS. The principle features of the general model for AIS. How AIS improve decision-making Role of accountants - relationship between external auditing, internal auditing, and IT auditing.