1. Accounting Information Systems: Introduction
Aristotle’s “Nicomachean Ethics”
Objectives:
To have an overview of Accounting Information Systems;
To understand the related concepts
of transaction cycles and
internal control structure;
To agree on a ‘foundational framework’ (aka ‘mother ideas’) for BA 121

2. Information Systems The term information system suggests the use
of computer technology in an organization.
Hardware
Data
Information
Software

3. Major Types of Systems in Organizations
Some of the major types of information systems

4. Information Systems Transactions Processing System (DP)
Management Information System (MIS)
Decision Support System (DSS)
Expert System (ES)
Executive Information System (EIS)
Accounting Information System (AIS)

5. A Framework for Information Systems

6. Transaction Processing Cycles
1. Revenue cycle
2. Expenditure cycle
3. Production cycle
4. Finance cycle

7. Internal Control Process
Reliability of financial reporting
Effectiveness and efficiency
Compliance

8. General Model for Accounting Information Systems
The External Environment
The business organization
The Information System
Database
Management
External
Sources
of Data
Data
Collection
Data
Processing
Information
Generation
External
End-
Users
FEEDBACK
Internal
Sources
of Data
Internal
End-
Users
FEEDBACK

9. Overarching theme/purpose:
Internal
Controls
Corporate
governance
Ethics
The business organization
‘Black box’
(IS / AIS)
External
Sources
of Data
External
End-
Users

10. Internal Control Process
What are the elements of internal control?
Control environment
Risk assessment
Control activities
Information and communication
Monitoring

11. Internal Control Process
Segregation of Duties:
No individual or department should
control the accounting records
relating to its own operation.
Internal Auditing:
It is an independent appraisal
activity within the organization.

12. The Accounting Function
2 impt. roles: 1) captures and records financial effects of transactions; 2) distributes transaction info to operations personnel to coordinate tasks.
The Value of Information:
 RELIABILITY
-- relevance -- completeness -- & timeliness
-- accuracy -- summarization
Accounting Independence:
 INDEPENDENCE
-- accounting activities must be separate from and independent of the functional areas that maintain custody of physical resources.

13. The I.T. Function Associated with the information resource.
Centralized Data Processing
Distributed Data Processing (DDP):
Disadvantages:
Lack of control of organizationwide resources
Hardware & software incompatibility
Redundant tasks
Consolidating incompatible activities
Hiring qualified professionals
Lack of Standards
Advantages:
Cost savings; improved cost control responsibility
Increased user satisfaction
Improved operational efficiency
Backup

14. Evolution of Information Systems Models
The Manual Process Model
The Flat-File Model
Data Storage
Data Updating
Currency of Information
Task-Data Dependency
The Database Model
The REA (Resources, Events, Agents) Model

15. The Role of the Accountant
Corporate
governance
Ethics
Accountants as Users
Accountants as System Designers
Accountants as System Auditors
External Auditing
Assurance
IT Auditing
Internal Auditing