LOGO Accounting information system A Business process approach FREDERICK L. JONES DASARATHA V. RAMA Jones Rama

LOGO INTRODUCTION TO ACCOUNTING INFORMATION SYSTEMS King Saud University Hanan H. Almarhabi

Contents Business processes and (AIS) Scope of an accounting information system (AIS) Accounting Applications and Software Role of Accountants in Relation to (AIS)

Business Processes and (AIS) Two terms are central here (1) BUSINESS PROCESS (2) INFORMATION SYSTEMS

Business Processes and (AIS) BUSINESS PROCESS 1 business process is a sequence of activities performed by a business for acquiring, producing, and selling goods and services. There are several models of business process have been developed, the useful model is that which views a company’s business process in terms of its transaction cycles. There are three main transaction cycles: (1) An acquisition cycle. (2) A conversion cycle. (3) A revenue cycle.

Business Processes and (AIS) Accounting Information system (AIS) is A subsystem of an organization’s management information system (MIS). An organization’s business process and its (MIS) are closely related. Data are captured by (MIS) from the organization’s business process to produce information that help the organization monitor and control its business process. 2 INFORMATION SYSTEMS Management Information System (MIS) is a set of subsystems that captures data about an organization, stores, and maintains the data, and provides meaningful information for management.

Scope of an (AIS) Production Marketing Accounting & Finance Human Resources Figure demonstrates the substantial overlap in the information system requirements of these four subsystems. Overlap of Subsystems All subsystems of (MIS) are important and different information is needed to carry out their respective function, And substantial overlaps in the information system requirements have arose between these subsystems because they use data about the same underlying business processes. (AIS) is a subsystem that provides accounting and financial information, as well as other information obtained in the routine processing of accounting transaction. Scope of an (AIS)

Uses of (AIS) Producing External Reports Supporting Routine Activities Businesses use (AIS) to produce special reports that follow a required structure established by organizations such as (FASB). These reports include financial statements, tax returns, etc Managers need an (AIS) for handling routine operating activities during the firm’s operating cycle. Computer systems excel at handling repetitive transaction by many accounting software support these routine functions. Producing External Reports Decision Support Supporting Routine Activities Planning and Control Decision Support Information is needed for nonroutine decision support at all levels of an organization. Some information are critical for planning, deciding, marketing functions. Planning and Control An information system is required for planning and control activities as well. Historical data can be extracted from the database and used to forecast growth and cash flows. Planners can use data mining to reveal long-term trends and relationships.

Uses of (AIS) Implementing Internal Control Internal control includes the policies, procedures, and information system used to protect a company’s assets from loss and to maintain accurate financial data. It is possible to build controls into a computerized accounting information system to help reach these goals. Producing External Reports Decision Support Supporting Routine Activities Planning and Control Implementing Internal Control [Image Info] - Note to customers : This image has been licensed to be used within this PowerPoint template only. You may not extract the image for any other use.

Accounting Applications and Software Accounting Applications Applications are computer programs that are used to serve particular purpose. Accounting applications provide the information needed for the five uses mentioned. Accounting applications are organized according to transaction cycles. Interaction between (AIS) and a user consists primarily of (1) Recording events (2) Intering Information (4) Printing reports (3) Printing documents About suppliers, customers, employees, and product. Often using on-screen forms. (5) Conducting ad hoc inquiries Such as purchase orders and sales invoices. Such as financial statement and sales analyses. Conducting special inquiries

Accounting Applications and Software Commercial software that is ready made and available for sale to the general public. Applications developed using database management system software. (2)Developed using (DBMS) (1) Off-the- shelf

Role of Accountants in Relation to (AIS) Accountant as User Role of accountants Manager Consultant As routine transaction processing becomes automated, accountants are spending less time on routine functions (such as producing external reports, decision support, etc). Instead, they are leveraging their understanding for strategic decision making and planning. Accounting managers in the larger firms work closely with the chief information officer and they understand the content of the database, the information needs of many users, and techniques for internal control. This understanding make them a valuable member of executive committees. Experience can give accounting professionals a competitive advantages in consulting about the acquisition, design, installation, and modification of accounting systems. They understand how information systems support business processes and they know about financial reporting requirement and internal control risk. The relation to the (AIS)

Role of Accountants in Relation to (AIS) Accountant as Role of accountants We consider the accountant as an Accountant s use accounting software to provide financial statements for small clients and tax software to provide tax services for their clients. The relation to the (AIS) Evaluator Provider of Accounting and Tax Services Internal Auditors They evaluate various units within an organization to determine whether those units are effectively pursuing their mission. Internal auditors must understand the business processes and the information system itself to retrieve data needed for their audits and evaluate internal control. External Auditors They audits financial statements to meet legal requirements. They must evaluate the reliability of the (AIS) that used to prepare these financial statement.

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