Chapter 1 - Introduction to Accounting Information

Systems

Accounting Information Systems 8eUlric J. Gelinas and Richard Dull

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Learning Objectives• Appreciate the complex, dynamic environment in

which accounting is practiced.

• Know the relationship between the AIS and the organization’s business processes.

• Know the attributes of information.

• Recognize how information is used for different types of decisions and at various levels in the organization.

• Recognize how the information system supports the management function.

• Recognize the accountant’s role in relation to the current environment for the AIS.

• Understand how to use this textbook effectively to learn AIS.

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Textbook Themes1. Enterprise Systems — integrates business

process functionality and information from all of an organization’s functional areas (marketing and sales, cash receipts, purchasing, cash disbursements, human resources, production and logistics, and business and financial reporting).

2. E-business — use of networks to undertake business processes.

3. Internal Control — a system of integrated elements that provide reasonable assurance that a business will reach its business process goals.

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Sarbanes-Oxley Act of 2002Section 404 –

• Management must identify, document, and evaluate significant internal controls.

• Auditors must report on management’s assertions regarding internal controls.

Section 409 –

• Requires disclosure to the public on a “rapid and current” basis of material changes in an organization’s financial condition.

Implications for both public and private accountants

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Elements in the Study of AIS

2008 Top Technology Initiatives1. Information Security

Management

2. IT Governance

3. Business Continuity Management and Disaster Recovery Planning

4. Privacy Management

5. Business Process Improvement, Workflow and Process Exception Alerts

6. Identity and Access Management

7. Conforming to Assurance and Compliance Standards

8. Business Intelligence

9. Mobile and Remote Computing

10. Document, Forms, Content, and Knowledge Management

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Accounting Systems and Sub-systems

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Accounting Systems and Sub-systems

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Accounting Systems and Subsystems

• A system is a set of interdependent elements that together accomplish specific objectives.

• A subsystem is the interrelated parts that have come together, or integrated, as a single system, which we have named System 1.0.

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Information System Model

• An information system (IS) or management information system (MIS) is a manmade system that consists of an integrated set of computer-based and manual components established to collect, store, and manage data and to provide output information to users.

• The figure on the next slide depicts the functional components of an information system.

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Information System Model

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Purpose of AIS

• Collect, process and report information related to the financial aspects of business events.

• Often integrated and indistinguishable from the overall information system.

• Like the IS, the AIS may be divided into components based on the operational functions supported.

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A Logical Model of a Business Process

1. Management hires personnel and establishes the means foraccomplishing

the work of the organization.

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A Logical Model of a Business Process

2. Management establishes broad marketing objectives and assigns specific sales quotas by which progress toward the long-run objective can be measured. In addition, management designs the IS procedures for facilitatingoperations, such as the procedures used to pick and ship goods to thecustomer.

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A Logical Model of a Business Process

3. Normal operations begin with the IS receiving a customer’s order topurchase goods.

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A Logical Model of a Business Process

4. The IS acknowledges the customer’s purchase order.

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A Logical Model of a Business Process

5. The IS sends a request to the warehouse to ship goods to the customer. This request identifies the goods and their location in the warehouse.

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A Logical Model of a Business Process

6. A document (i.e., a packing slip) identifying the customer and the goods is attached to the goods.

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A Logical Model of a Business Process

7. The goods are shipped to the customer.

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A Logical Model of a Business Process

8. The shipping department reports to the IS that the goods have beenshipped.

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A Logical Model of a Business Process

9. The IS prepares an invoice and sends it to the customer.

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A Logical Model of a Business Process

10. The IS sends management a report comparing actual sales to previouslyestablished sales quotas.

Transforming Data into Information

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Transforming Data into Information

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Information Qualities

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Information Qualities Control Matrix

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Management Decision Making

1. Intelligence: Searching the environment for conditions calling for a decision.

2. Design: Inventing, developing, and analyzing possible courses of action.

3. Choice: Selecting a course of action.

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Management Decision Making

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Management Problem Structure and Information Requirements

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Management Problem Structure and Information Requirements

• Horizontal flows relate to specific business events, such as one shipment, or to individual inventory items. The information moves through operational units such as sales, the warehouse, and accounting.

• Vertical flows relate to the flow of information to and from strategic management through tactical management, operations management, and operations and transaction processing.

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Accountant’s Role in Current Business Environment

• Designer — application of accounting principles, auditing, information systems, and systems development.

• User — participate in design.

• Auditor — provide audit and assurance services.