1. Chapter 1-1

2. Chapter 1-2 Introduction Applying information technology (IT) to accounting systems  Financial accounting  Managerial accounting  Auditing  Taxation Increased career opportunities  Specialized employment  Combine accounting and advanced computer skills

3. Chapter 1-3 Chapter 1: Accounting Information Systems and the Accountant Introduction Accounting Information Systems (AIS) New Features in AIS Accounting and IT Careers in AIS

4. Chapter 1-4 AIS: The Intersection of Accounting and IS

5. Chapter 1-5 Accounting Information Systems An Accounting Information System (AIS)  Data and processing procedures  Creates needed information for users AIS Today  Financial and non-financial data  Enterprise-wide information system  Business process focused

6. Chapter 1-6 The Accountant’s Challenge Provide information to support decision-making Business and Government processes Accounting and Finance Non-Accountants

7. Chapter 1-7 Data  Raw facts  No organization or meaning  Beginning of audit trail Information  Processed data  Meaningful to users Information (versus Data)

8. Chapter 1-8 AIS Components

9. Chapter 1-9 Computerized Data Processing Problems Information overload for users Unable to identify input errors Difficult to follow audit trails

10. Chapter 1-10 AIS and ERP Accounting Information Systems  Internal and External users  Financial information Enterprise Resource Planning Systems  Internal users  Financial information  Nonfinancial information

11. Chapter 1-11 AIS and ERP Overlapping of the Systems  Provide same information  Emphasize business processes  Integration into seamless databases

12. Chapter 1-12 Which of the following is likely to be information rather than data? A.Sales price B.Customer number C.Net profit D.Employee name Study Break #1

13. Chapter 1-13 Which of the following is likely to be information rather than data? A.Sales price B.Customer number C.Net profit D.Employee name Study Break #1 - Answer

14. Chapter 1-14 With respect to computerized AIS, computers: A.Turn data into information in all cases B.Make audit trails easier to follow C.Cannot catch mistakes as well as humans D.Do not generally process information more quickly than humans Study Break #2

15. Chapter 1-15 With respect to computerized AIS, computers: A.Turn data into information in all cases B.Make audit trails easier to follow C.Cannot catch mistakes as well as humans D.Do not generally process information more quickly than humans Study Break #2 - Answer

16. Chapter 1-16 AIS: Role in Organizations Information Age  Impact of technology  Fewer workers producing goods Knowledge workers  Produce, analyze, manipulate, and distribute information  Focus on business activities

17. Chapter 1-17 AIS: Role in Organizations E-Business  Conducting business over the Internet  Increased importance and growth E-Commerce  Subset of e-business  Buying and selling transactions

18. Chapter 1-18 What’s New in AIS? Suspicious Activity Reporting Countering Terrorism Corporate Scandals and Accounting The Sarbanes-Oxley and Patriot Acts

19. Chapter 1-19 Suspicious Activity Reporting

20. Chapter 1-20 Corporate Scandals and Accounting Enron (2001)  Manipulation of accounting records  Understate liabilities and inflate earnings Bernard Madoff (2008)  Investment fund manager  Ponzi scheme  $50 billion in losses

21. Chapter 1-21 The Sarbanes-Oxley Act of 2002 CEOs must certify the accuracy and completeness of financial statements Public companies must hire independent, new auditors to review internal controls Section 404  Implement and assess internal controls  Auditors evaluate those assessments

22. Chapter 1-22 The Sarbanes-Oxley Act of 2002: A.Enables U.S. officers to wire tap corporate phones if required B.Has lead to a decrease in the amount of work done by auditors and accountants C.Forbids corporations from making personal loans to executives D.Requires the CEO of a public company to take responsibility for the reliability of its financial statements Study Break #3

23. Chapter 1-23 The Sarbanes-Oxley Act of 2002: A.Enables U.S. officers to wire tap corporate phones if required B.Has lead to a decrease in the amount of work done by auditors and accountants C.Forbids corporations from making personal loans to executives D.Requires the CEO of a public company to take responsibility for the reliability of its financial statements Study Break #3 - Answer

24. Chapter 1-24 The acronym SAR stands for: A.Simple accounting receipts B.Suspicious accounting revenue C.Suspicious activity reporting D.Standard accounts receivable Study Break #4

25. Chapter 1-25 The acronym SAR stands for: A.Simple accounting receipts B.Suspicious accounting revenue C.Suspicious activity reporting D.Standard accounts receivable Study Break #4 - Answer

26. Chapter 1-26 Accounting and IT

27. Chapter 1-27 Financial Accounting Objective of Financial Accounting  Provide relevant information  External parties (Investors, Creditors)  Financial Statements The Audit Trail  Traces the accounting cycle  Data flow from input to output

28. Chapter 1-28 A Financial Accounting Audit Trail

29. Chapter 1-29 Financial Accounting Non-Financial Data  REA Accounting  Resources, Events, and Agents Real-Time Reporting Interactive Data and XBRL  Reusable data in multiple applications  “Tagging” data

30. Chapter 1-30 Managerial Accounting Objective  Provide relevant information  Internal users (Managers) Components  Cost Accounting  Budgeting

31. Chapter 1-31 Features of Managerial Accounting

32. Chapter 1-32 Cost Accounting Measure and Control Costs  Acquisition, processing, distribution, and selling activities AIS Examples  Activity-Based Costing  Corporate Performance Measurement and Business Intelligence

33. Chapter 1-33 Activity-Based Costing Assigning of Overhead  Increased automation created difficulties  Lacked direct relationship between labor and overhead AIS Implementation  Easier assignment of overhead  Important aspect of strategic planning

34. Chapter 1-34 Corporate Performance Measurement Responsibility Accounting System  Trace unfavorable performance to responsible department or individuals  Immediate corrective action by managers Balanced Scorecard  Financial Performance  Customer Knowledge  Internal Business Processes  Learning and Growth

35. Chapter 1-35 Business Intelligence and Dashboards

36. Chapter 1-36 Budgeting Definition  Financial projection for the future  Short-range and long-range Usefulness  Managerial control  Compare actual and budgeted results

37. Chapter 1-37 A dashboard is: A.A computer screen used by data entry clerks for input tasks B.A physical device dedicated to AIS processing tasks C.A summary screen typically used by managers D.A type of blackboard used by managers to present useful information to others Study Break #5

38. Chapter 1-38 A dashboard is: A.A computer screen used by data entry clerks for input tasks B.A physical device dedicated to AIS processing tasks C.A summary screen typically used by managers D.A type of blackboard used by managers to present useful information to others Study Break #5 - Answer

39. Chapter 1-39 Assigning overhead costs based on the resources, rather than only direct labor, used in manufacturing is an example of: A.Activity-based costing (ABC) B.Budgeting C.Cost-plus accounting D.Financial, rather than managerial, accounting Study Break #6

40. Chapter 1-40 Assigning overhead costs based on the resources, rather than only direct labor, used in manufacturing is an example of: A.Activity-based costing (ABC) B.Budgeting C.Cost-plus accounting D.Financial, rather than managerial, accounting Study Break #6 - Answer

41. Chapter 1-41 Auditing Traditional role  Evaluate the accuracy and completeness of a corporation’s financial statements Present role  Evaluate client’s compliance with HIPAA laws  IT evaluations and audits (security, privacy)  Management consulting

42. Chapter 1-42 Taxation Taxation Software  Example of AIS  Create and evaluate tax strategies  Transmit completed forms Professional Usage  Research challenging questions  Access more up-to-date information  Database access

43. Chapter 1-43 Careers in Accounting Information Systems Traditional Accounting  Understanding of accounting and information systems  Certified Information Technology Professional Systems Consulting  Designing systems and reengineering processes  Software and hardware selection  Value-added resellers (VARs)

44. Chapter 1-44 Careers in Accounting Information Systems IT Auditing and Security  Risk analysis with Information Systems  Aid financial auditors in evaluation of controls  Certified Information Systems Auditors (CISAs)  Penetration testing

45. Chapter 1-45 AIS at Work: Consulting Work for CPAs Disaster Recovery Planning  Assures continuity of operations  Must test plan regularly IT Exposure  Viruses and Worms Auditing Standard No. 60  Report lack of disaster plan

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47. Chapter 1-47 Chapter 1