The 1st 15 slides was discussed in Sysdev

Accounting Information Systems

“Inaccurate accounting records often contribute to business failures. Failure to understand accounting information can result to

poor business decision.” -G.V.Lising Jr.

Information System

Information Non-quantitative Information Quantitative Information

Non-accounting Information Accounting Information

Operating Information Financial Accounting Management Accounting Tax Accounting

The need for information

quantitative – is information that is expressed in numbers

non quantitative – samples are visual impressions, conversations, television progs etc

accounting is primarily concerned with QUANTITATIVE INFO

Accounting is one of the several types of quantitative information

Four categories of information operating information financial accounting information management accounting information tax accounting information

INFORMATION

Non-quantitative information Quantitative information

Accounting information

Operating information

Financial accounting

Management accounting

Tax accounting

Non accounting information

OPERATING INFORMATION constitutes by far the largest quantity of accounting information.

FINANCIAL ACCOUNTING INFORMATION is intended for both managers and also for the use of parties external to the organization, including shareholders (and trustees) in profit organizations), banks, and other creditors, government agencies, investment advisers, and the general public.

MANAGEMENT ACCOUNTING INFORMATION – accounting information specifically prepared to aid managers. This information is used in three management functions

planning implementation control

PLANNINGis the process of deciding what actions should be taken care in the

future.

An important form of planning is BUDGETING – the process of planning overall activities of the organization for a specified period of time, usually a year. A primary objective of budgeting is to coordinate the separate plans made for various segments of the organization so as to ensure that these plans harmonize with each other

Planning involves making DECISIONS recognizing the problem specifying and ranking the criteria to be used to determine the

best solutions identifying alternative ways of addressing the problem or

opportunity analyzing the consequences of each alternative comparing these cosequences

IMPLEMENTATION – making plans does not itself ensure that managers will implement the plans. Each manager also must make more detailed implementation plans to encompassed in the budget

CONTROL – manage / perform properly

Accounting information is used in the control process

as means of communication motivation attention getting appraisal

System

Set of detailed methods, procedures, and routines established or formulated to carry out a specific activity, perform a duty, or solve a problem. –BusinessDictionary.com

Elements of System

Inputs and outputs Processor Control Environment Feedback Boundaries/interface

Planning Implementation Control

Plan revision

Appropriate actionFeedback

Objectives

To appreciate the complex, dynamic environment in which accounting is practiced.

To know the AIS, its relationship to the organizations business processes

To know the attributes of information To recognize how information is used for

different types of decisions and at various levels in the organization

To recognize how the information system supports the management function

To recognize the accountant’s role in relation to the current environment for AIS

Key Terms

System Subsystem Information system (IS) Management information system

(MIS) Accounting information system (AIS) Operations Process Management process

Key Terms

Information Data Understandability Relevance Timeliness Predictive value Feedback value

Key Terms

Verifiability Neutrality Freedom from bias Comparability Consistent Validity Accuracy Completeness

Key Terms

Decision making Structured decisions Unstructured decisions Enterprise database Effectiveness Efficiency

Key Terms

Confidentiality Integrity Availability Compliance Reliability of information

Elements in the Study of AIS

Dull, Gelinas and Wheeler, Accounting Information System 2nd Edition, Page 31

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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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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.

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Information System Model

An information system (IS) (or management information system [MIS]) is a manmade system that generally 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.

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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 overall information system

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

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Management Decision Making1. 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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Horizontal information flows

Verti

cal in

formati

on flo

ws

StrategicManagement

TacticalManagementOperations

Management

Operations andTransaction Processing

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Accountant’s Role

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

User—participate in design Auditor—provide audit and

assurance services

2012 Top Technology Priorities http://www.aicpa.org/INTERESTAREAS/I

NFORMATIONTECHNOLOGY/RESOURCES/TOPTECHNOLOGYINITIATIVES/Pages/2012TTI.aspx

1. Securing the IT environment2. Managing and retaining data3. Managing risk and compliance4. Ensuring privacy5. Leveraging emerging technologies6. Managing system implementation7. Enabling decision support and managing

performance8. Governing and managing IT

investment/spending9. Preventing and responding to fraud10.Managing vendors and service providers

2012 Top Technology Priorities

YOU

Catalyst of change and improvement Enabler Decision maker

Acknowledgement and Sources: Fundamentals of Accounting by Agamata &

Berbano Accounting: Text and Cases by Robert N.

Anthony Accounting Principles by Kieso and Weygant Basic Accounting by G.V.Lising Jr BDO International Deloitte (www.iasplus.com) Wikipedia (http://en.wikipedia.org) BusinessDictionary.com

Thank you!