Ais200- Uitm

© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides

prepared by Kaye Watson.1-1

chapter

Information systems

Learning objectives–To understand the concept of systems.–To learn the systems that comprise an accounting information system.

–To identify the relationship between an accounting information system and value-adding activities.

–To understand the various types of decisions made in businesses, and the structure and scope of such decisions.

–To understand what a computer-based accounting information system is.

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key termskey terms• accounting information

system (AIS)• boundary• closed system• data• economic event• information• information system• input• interface• management information

system

• open system• output• subsystem• super system• system• transaction• transaction processing

system• value chain• value system



SystemSystem• Has an objective/purpose• Made up of several subsystem

(distinguishable parts or elements) which are interrelated and contribute towards the system’s purpose

• Has some form of input and output• The combined input of the whole system

becomes the system’s output.



SystemSystem• Super system• System interfaces• Closed system• Open system



Information SystemsInformation Systems• All decisions require some information• Some information only can be derived by

implementing a set of procedures (system)• Therefore, a system that is used to obtain

information for decision making is an Information System.



Information SystemInformation System• Characteristics of information that are useful for

decision making:– Accurate– Complete– Flexible– Relevant– Understandable– Timely– Verifiable



Accounting information systemsAccounting information systems• AIS is information system that is specially designed

for accounting and finance.• AIS provides information using accounting methods:

– Management reports for decision making– Reports for regulatory bodies– Special reports for potential creditors including financial

institutions and suppliers of goods and services



Accounting information systemsAccounting information systems• Record • Process• Report

events in monetary terms using generally accepted accounting principles (GAAP)



Accounting information systemsAccounting information systems

Financial accounting

system

Managementaccounting

system

External reporting

Internal reporting

Produces financial

statements

Produces budgets & other reports for management



Levels within the AIS super systemLevels within the AIS super system

Expert system

Decision support system

Management information system

Transaction processing system



AIS super system – AIS super system – another view

Comprises only three systems:1. Transaction processing system

• Records transactions

2. Budgeting system• Produces control information used by management

3. Responsibility reporting system• Summarises historical data and provides reports to

compare with budgets or set management targets



Strategic planning

Management control

Operational control

Structured•Trends in balance of accounts receivable

•Accounts receivable balances

Semistructured•Budget preparation•Personnel management

•Production scheduling •Cash management

Unstructured

•New products•Opening a factory site•Mergers and acquisitions



Transaction cycle interconnectionTransaction cycle interconnectionFinance cycle

Payroll cycle Expenditure cycle

General ledger & reporting system

Conversion cycle

Revenue cycle



Why Study AIS?Why Study AIS?• To understand how the accounting system works.

– How to collect data about an organization’s activities and transactions

– How to transform that data into information that management can use to run the organization

– How to ensure the availability, reliability, and accuracy of that information

• Required by Accounting Board.



• Auditors need to understand the systems that are used to produce a company’s financial statements.

• One of the popular consulting services currently is about the design, selection, and implementation of new Accounting Information Systems.

• A survey conducted by the Institute of Management Accountants (IMA) stated that work relating to accounting systems was the most important activity performed by corporate accountants.

Why Study AIS?Why Study AIS?



How An AIS Can Add ValueHow An AIS Can Add ValueTo An OrganizationTo An Organization

• by providing accurate and timely information so that activities can be performed more effectively and efficiently

• Improving the quality and reducing the costs of products or services.

• Improving decision making capabilities.• Increasing the sharing of knowledge.

Ais200- Uitm

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