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Impact of Information Age

fewer workers are making products, and

a large segment of the employee

population is involved in producing,

analyzing, and distributing information. Knowledge workerscomprise much of

the labor force.

A major contributor to the informationage is the Internet.

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WA! I" A "#"!$%&

A group of interrelated multiple components or subsystems that

serve a common purpose/ goal

Characteristics of a system

Has parts / subsystem that related

Has goal /purpose

There will be input and output

Has an environment that it resides

Has a boundary that separate it from environment and/or other system

There is limit to what it can accomplish A systemis called a subsystem when it is viewed as a component of

a larger system. A subsystemis considered a system when it is the

focus of attention.

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"#"!$% I'!$()A*$

Interface occurs at the connecting pointwhere the boundaries of two systems meet.

Interface acting as connecting point for two

systems, it eases the flow of one systemsoutput into another system.

The designers of a system should plan for

an interface which copes with the waitingperiod between two processes

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+efinition Information "ystem

An Information systemis a set of interrelated

subsystems that work together to collect, process,

store, transform, and distribute information for

planning, decision making, and control.

)irms depend on information systems in order to

stay competitive.

Thus, Information is a business resource that:needs to be appropriately managed

is vital to the survival of contemporary businesses

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!#$" -) "#"!$%

"ystems have been classified in different ways.

*ommon calcification are/

01 hysical or abstract.

21 -pen or closed.

31'atural or man/made informationsystems

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!H"#ICA$ %# AT'ACT

hysical systems tangible entities that may be staticor dynamicin operation.

(g, the physical parts of the computer center are the offices, des)s,and chairs that facilitate operation of the computer *static+. A

programmed computer is a dynamic system. ata, programs,

output, and applications change as the users demands or thepriority of the information re-uested changes

Abstract systems

are conceptual or nonphysical entities.

A model is an easier way for the analyst to visualie relationshipsin the system under study.

The obective is to point out the significant elements and the )eyinterrelationships of a comple0 system.

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1!(2 1' C$1#( #"#T(3#

systems is based on their degree of independence. An open system

has many interfaces with environment.

It receives inputs from and delivers outputs to the outside.

must adapt to the changing demands of the user.

A closed system does not interface with its environment, i.e. it has no input or

output.

more relevant to scientific systems than to social systems.

Completely closed system is very rare. The nearest we can get to aclosed social system would be a completely self4containedcommunity that provides all its own food, materials and power,and that does not trade, communicate or come into contact withother communities.

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*oncept of *losed and open "ystem

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+ataare raw facts about events

that have no organization ormeaning.

Information is data that havebeen processed and is

meaningful and useful to users.

+ata versus Information

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CHA'ACT('I#TIC 15 6#(56$

I251'3ATI12

(elevance It reduces uncertainty by helping you predict what will happen or

confirm what already has happened.

(eliability It4s dependable, i.e., free from error or bias and faithfully portrays

events and activities.

*ompleteness It doesn4t leave out anything that4s important.

!imeliness #ou get it in time to make your decision.

5nderstandability

It4s presented in a manner you can comprehend and use 6erifiability

A consensus notion7 nature of the information is such thatdifferent people would tend to produce the same result

Accessibility

#ou can get to it when you need it and in a format you can use

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AI" A**-5'!I'8 A'+ I"&

Accounting

Information

#ystems

AccountingInformation

#ystems

Accounting isan information system. It identifies, collects, processes, and communicates economic

information about a firm using a wide variety of technologies.

It captures and records the financial effects of the firmstransactions.

It distributes transaction information to operations personnel to

coordinate many )ey tas)s.

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Accounting Information "ystems

An Accounting Information "ystem 9AI"1is the

information subsystem within an organization

that accumulates information from the entity4s

various subsystems and communicates it to theorganization4s information processing subsystem.

)unctions of AI"

!o *ollect and store data on business activities and

transactions in more efficient : effective

!o rovide useful information for decision making

!o provide ade;uate control, data recorded accurately

Well organized business

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An Accounting Information "ystem

Inputs7 ata/Information from

Internal/(0ternal sources

!rocesses7 #ort, 1rganie,

Calculate

1utputs7 Information for Internal/

(0ternal ecision 3a)ers

ata'epository/

5iles,

atabases,

(tc.

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6A

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%I" versus AI"

%anagement Information"ystem9%I"1

Historically, provided financial and nonfinancial

information to internal users.

e.g., trac)ing customer complaints

Accounting Information "ystem

Traditionally provided financial information to

both e0ternal and internal users. 'ow, the two systems overlap and provide much

of the same information focusing on

business processes.

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IS

AIS MIS

GLS/

FRS TPS MRS Finance Marketing Production HRS Logistic

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)inancial Accounting "ystem

!he objective of financial accountingis to provide

relevant information to individuals and groups

outsidean organization4s boundaries.

%ainly to e=ternal users include investors, ta=agencies, and creditors. 'ot forgetting to internal

users.

-bjectives achieved through preparation of

financial statements by using 8AA.

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%anagerial Accounting "ystem

-bjective of %anagerial Accountingis to

provide relevant information to a company4s

managers, who are internal users.

%ain components of managerial accounting

are *ost Accounting, >udgeting, "ystems study

whereby using their own guidelines.

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!(A'"A*!I-' (-*$""I'8 "#"!$%

incorporated into structure of AI#, records every economic event ortransactions.

0.(evenue8transactions of selling goods and services

2.$=penditure/ payments for goods and services received and

procurement system3.roduction4 processing data of manufacturing goods.

?.uman resource management/ recording personnel information

of an organiation such as attendance, award systems and pay

calculation

@. (eporting4 cores the maintenance of general ledger andsubse-uently, production basic report

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AI# *super system+

0. !ransaction processing system'ecord transactions carried out by an organiation and provide

information to personnel at various operational levels.

2. >udgeting system6ses information from the T!# and operational plans of the

organiation to produce control, information which will be used

by the management of an organiation.

3. (esponsibility reporting system#ummaries historical data and provides reports comparing

these data with the budget or target set for managers.

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AI# H($!# ACC162TA2T#9

As 5sersAccountants must be able to clearly convey their needs to

the systems professionals who design the system.

The accountant should actively participate in systems

development proects to ensure appropriate systemsdesign.

As "ystem Auditors

(0ternal Auditors 4 attest to fairness of financial

statements, assurance service7 broader in scope thantraditional attestation audit

IT Auditors 4 evaluate IT, often as part of e0ternal audit

Internal Auditors 4 in4house I# and IT appraisal services

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IS ND DECISION M KING

%arious activities in the decision4ma)ing0. "trategic planning activities*#enior management+

2. %anagement control activities*middle management, sales

manager, production managers+

3. -perational control activities*lower4level management+

Activity levels and decision types

0. "tructured decisions* are repetitive and routine for lowest

management level+

2. 5nstructured decision*are non recurring and non4routine forhigher level management+

3. "emistructured decision*combine the characteristics of both

structured and unstructured decision+

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IS and Value-added activities

@ primary business groups0. Inbound logistics

Involves receiving, storing and distributing materials.

2. -perational activities

Convert the material input into a finished product or service.3. -utbound logistics

Involves distributing finished products or services to customers.

?. %arketing and sales activities

!romote the organiation product s or services.

@. "erviceInvolves the provision of after sales repair and maintenance of

products sold.

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IS and Value-added activities

? support groups of business process0. uman resources

Including of hiring and training employees.

2. rocurement

Including negotiating prices, and ordering and purchasing.3. -rganization infrastructure

:eneral activities such as accounting and legal and finance.

3. !echnology

';, product design, which are aimed at improving products

or services.

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3A

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TR NS CTION

PROCESSING CYCLES

0. (evenue cycle4 deals with the income.2. $=penditure cycle4 deals with the e0penses.

3. *onversion cycle / deal with converting raw

materials into finished products.

?. ayroll cycle4 deal with the human resources.

@. )inancial cycle / deals with the ac-uisition and

use of capital.