1 introduction to ais

Presented by:Presented by:Mr. Jhaun Paul G. Enriquez

CE104 (Accounting Information Systems / CE104 (Accounting Information Systems / Computerized Auditing and Accounting Computerized Auditing and Accounting Systems)Systems)

Introduction to Accounting Introduction to Accounting Information SystemsInformation Systems

Source: Barganoff, Nancy A. Core Concepts of Accounting Information Systems 11 th edition. John Wiley & Sons, Inc., 2010

What is an AIS?What is an AIS?

Accounting Information System is a collection of data and processing procedures that creates

needed information for its users.

2Computer Studies Program

Source: Barganoff, Nancy A. Core Concepts of Accounting Information Systems 11 th edition, 2010

What is an AIS?What is an AIS?

Accounting Information System is the information subsystem within an organization that accumulates and processes information (both financial and non-financial) from the entity’s various subsystems and communicates this information to the organization’s

users.3Computer Studies Program

Source: Barganoff, Nancy A. Core Concepts of Accounting Information Systems 11 th edition, 2010

Accounting in an AISAccounting in an AIS

AIS help accountants maintain general ledger information, create spreadsheets for strategic planning, and distribute financial reports.


Determine how best to provide the information required to support business and government processes.

Create information that is useful to non-accountants such as marketing, production and human relations

Which to purchase?

Information vs. DataInformation vs. Data

Data are raw facts about events that have little organization or meaning.


Information is data that have been processed and is meaningful and useful to users

Model for Information System Components

Raw data are also important because they mark the starting point of an audit trail

Systems in an AISSystems in an AIS

A system is an entity consisting of interacting parts or components that are attempt to achieve one or more goals.


An Information System is a set of interrelated subsystems that work together to collect, process, store, transform, and distribute information for planning, decision making, and control

Firms depend on information systems in order to stay competitive.

The Information AgeThe Information Age

In the information age, fewer workers are making products, and a large segment of the employee population is involved in producing, analyzing, and distributing information.


Knowledge workers comprise much of the labor force.

A major contributor to the information age is the Internet

The increasing importance and growth of e-business and e-commerce

Current Trends in AISCurrent Trends in AIS

Suspicious Activity Reporting (SAR)report questionable financial transactions which may include money laundering, bribes, or wire transfers to terrorist organizationsActs to prevent criminal or terrorist activities


Countering TerrorismTrace flow of funds across international bordersIdentify and deny financial aids to terroristsIdentifying unauthorized purchasesHelp to plan for catastrophic eventsSecurity measures to control cyber terrorism

Current Trends in AISCurrent Trends in AIS

Enterprise Resource Planning (ERP) Systemsincludes software packages to integrate information subsystems into one application

Integrate data and functions to obtain information needed for planning, decision making and control


Examples of ERPs include SAP, Oracle, Sage, Microsoft, and e-business (amazon.com)

Enterprise Resource PlanningEnterprise Resource Planning

Source: http://www.arhun.com/wp-content/uploads/2011/03/erp-system.jpg


Accounting and ITAccounting and ITFinancial Accounting

provide relevant information to individuals and groups outside an organization’s boundaries

users include investors, federal and state tax agencies, and creditors

Objectives are achieved through preparation of financial statements

Financial reports are used for planning, decision-making and control activities


Accounting and ITAccounting and ITFinancial Accounting Audit Trail

An audit trail enables information users to follow the flow of data through the system


Accounting and ITAccounting and ITFinancial Accounting Audit Trail

The basic inputs to and outputs from are usually expressed in monetary unitsAudit trail parallels the accounting cycle, which begins with a transaction and ends with producing financial statements and closing temporary accounts.

A good audit trail permits managers to follow source document data from input through processing to the data’s location on an output report (and vice versa).


Accounting and ITAccounting and ITImpact of IT in Financial Accounting

Non-Financial DataThe need to store important non-financial information about resources, events and agents in databases (REA accounting)



Real-Time ReportingTiming of inputs, processing, and outputsFinancial statements are either done periodically, quarterly, or annually

Advances in IT that allow transactions to be captured immediately and possibly produce financial statements in real-time.



Interactive Data and XBRLInteractive data are data that can be reused and carried seamlessly among a variety of applications or reportsExtensible business reporting language (XBRL) is emerging as the language for standardization that ‘‘tags’’ the data at its most basic levelIncorporate XBRL for creating, transforming, and communicating financial information


Accounting and ITAccounting and IT

Managerial Accountingprovide relevant information to organizational managers who are internal to a company or government agency

Three components of Managerial Accounting:

Cost Accounting

Budgeting

Systems Study



Features of Managerial Accountingproviding accounting information for internal parties

information is mostly forward-looking

not regulated by generally accepted accounting principles (GAAP) nor is it mandatory to prepare it

reports include both non-monetary and financial data

influenced by many business and non-business disciplines

information is flexible and frequently involves non-routine reporting


Accounting and ITAccounting and ITManagerial Accounting

Cost Accountingassists management in measuring and controlling the costs associated with an organization’s various acquisition, processing, distribution, and selling activitiesActivity-based costing (ABC) systems assign overhead to products based on cost driversResponsibility accounting systems help managers trace unfavorable performance to the department or individual that caused the inefficiencies



Cost AccountingPerformance measurement are being used for long-term profitability and to encourage certain employee behaviorBalance scorecard is an approach that uses performance measurements in four categories

Financial Performance

Customer knowledge

Internal business process

Learning and growth20Computer Studies Program

to evaluate and promote certain

activities and behaviors.


Cost Accounting (Business Intelligence Tools)

Key Performance Indicators (KPIs) to measure and evaluate activities in each quadrant of the balanced scorecard


FP CK

IBP L & G

Return of investment

Track new customers per month

Speed up business transactions

Increase productivity

Lessen company expense


Budgetingfinancial projection for the future and is thus a valuable managerial planning aid

Short-range projections – 12 month period

Long-range projections – 5 or more years

A good budgetary system is a useful managerial control mechanism

attempt to predict future financial expectations

Compare actual and budgeted results



Systems StudyPerformed by managerial accountants since they understand internal financial systemsUsually employs a team approach

marketing specialists,

computer experts,

production managers,

engineers and

industrial psychologists.



Steps in Systems Study


develop strategic plansPlanning

System Analysis

System Design

Implementation and Follow-up

review current system

create new system

apply and monitor system

Accounting and ITAccounting and ITAuditing

evaluate the accuracy and completeness of a corporation’s financial statements

Accountants are focusing on additional assurance services in arenas other than financial reporting


CPA Trust Services set of professional service areas built around a set of common principles and criteria related to the risks and opportunities presented by IT environments.


CPA Trust Services include online privacy evaluations, security audits, testing the integrity of information processing systems, assessing availability of IT services, and systems confidentiality testing

Assurance Services identified by the AICPA Special CommitteeRisk Assessment

Business Performance Measurement

Information Systems Reliability

Electronic Commerce

Health Care Performance Measurement

Eldercare Plus


Accounting and ITAccounting and ITTaxation

Information Technology enables the automation of income tax returns (ITR)

Use of spreadsheets or tax preparation software that enables users to create and store copies of trial tax returns

Information technology can also help tax professionals research challenging tax questions

Electronic tax libraries and on-line tax services make it easier for accountants to perform tax research.



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1 introduction to ais