1. Introduction to
Accounting
Information Systems

2. Learning Objectives Introduction to Accounting Information Systems
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 understand decision making
Recognize how information is used at various organizational levels
Recognize how information supports management functions
Appreciate the influence of strategic planning on success
Understand the importance of the IS strategic plan
To recognize the accountant’s role in relation to the current environment for AIS.
To understand how to use this textbook effectively to learn AIS.
Introduction
to Accounting
Information
Systems

3. Textbook Themes
Enterprise systems— integrate the business process functionality and information from all of an organization’s functional areas, such as marketing and sales, cash receipts, purchasing, cash disbursements, human resources, production and logistics, and business reporting (including financial reporting).
E-Business—use of networks to undertake business processes
Internal control— a system of integrated elements that provide reasonable assurance that a business will reach its business process goals

4. Enterprise System
Integrates business processes and information from entire enterprise
Best of Breed
Event Driven Architecture
ERP
Helps coordinate the operation of business functions
ERP systems are software packages that can be used for the core systems necessary to support enterprise systems

5. Electronic Business
Electronically exchanging information and linking business processes, individuals and organizations
Transactions completed more quickly, more efficiently, and more effectively
Eliminates paper trail (eventually)

6. E-business Record electronic business events
Interconnects back-office processes and/or front office processes of two or more organizations
elimination of sales staff, normally intermediary between two parties to transactions
Is this a good idea?
Save costs, but...
Efficiency gains
Including price efficiencies
Ease at which purchasing agents get access prices

7. Methods of Conducting E-Business
Electronic communication of non-Standardized messages via communication network
Requires human interpretation
Electronic Document Management
capture and storage of document images instead of paper
Electronic Data Interchange
computer-to-computer exchange of business data in structured formats that allow direct processing of those electronic documents by the receiving computer system.

8. Challenges and Opportunities
Technological Changes
Accounting Changes
No Longer Paper & Pencil
Auditing Changes
Where are the Audit Trails
Internal Controls now automated
Attest Changes
Financial Information (Historical)
Non-financial
Use of Information Technology
Assurance
Risk Assessment
Business Performance Measurement
Information Systems Reliability
E-Commerce
Health Care Performance Measurement
ElderCare Services
New Accreditation
Certified Information Technology Professional

9. Top 10 Technology List for 2008
Sarbanes-Oxley (404)
“CPAs now have a new professional opportunity—to document and test companies' internal controls for the managements of nonaudit clients.”

10. Assurance and Compliance (2007)
applications that enable stakeholders
to monitor, document, assess, test and report on compliance with specified controls (e.g. SOX)

11. Implications for both public and private accountants
Sarbanes-Oxley Act of 2002
Section 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

12. Elements in the Study of AIS

13. AIS Elements Technology - foundation
Databases – variety, private and public, data, retrieval methods
Reporting – what is needed
Control – make sure goal happens
SAD – process of planning, designing and implementing systems
Business Processes
Business Operations – work performed
Events Processing – data captured about work, when it happens
Management Decision Making
Communications – oral, written, evaluative
Accounting & Auditing - standards

14. 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, which we have named System 1.0.

15. Accounting System and Sub-systems

16. Information System Model
An information system (IS) (or management information system [MIS]) is a man made 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.

17. Information System Model

18. 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.

19. Business as a System
“We must know a business organizations objectives to understand that business as a system and to understand the actions and interactions of that business[‘s] components or subsystems”

20. Business Process Components
Information Process
Information System; AIS
Operations Process
People, Equipment, Policies, Procedures
Accomplish the work of the organization
Management Process
People, Authority, Policies, Procedures
Plan and Control: Operations
Decision Making: Operations

21. Components of Business Process Customer Order / Sales Event
1. Management hires personnel and establishes the means for accomplishing
the work of the organization.

22. Components of Business Process
2. Management establishes broad marketing objectives and assigns sales quotas to measure progress toward the long-run objectives.
Management also designs the IS procedures for facilitating
operations, such as the procedures used to pick and ship goods to the
customer.

23. Components of Business Process
3. The IS receives the customer’s purchase order.

24. Components of Business Process
4. The IS acknowledges the customer’s purchase order (send order acknowledgement).

25. Components of Business Process
5. The IS sends a request to ship goods to warehouse. This request identifies the goods and their location in the warehouse.

26. Components of Business Process
6. A document (i.e., a packing slip) identifying the customer and the goods is attached to the goods.

27. Components of Business Process
7. Goods are shipped to customer.

28. Components of Business Process
8. The shipping department reports to the IS that the goods have been
shipped.

29. Components of Business Process
9. The IS prepares an invoice and sends it to the customer.

30. Components of Business Process
10. The IS sends management a report comparing actual sales to previously
established sales quotas.

31. Summary of Business Process
Management Process
Designs Operations and Information Processes
Operations Process
Integrated with Accounting
Information Process
Facilitates Operations
Inventory Data, Customer Data
Executes Business Events
Facilitates Management Monitoring
Users
Management, Operations Personnel, External People

32. Management Uses of Information
Information System
Support Management
Decision Making (Monitor Current Operations)
Processing, Recording and Reporting Business Events
Set Goals on behalf of Stakeholders
Recognize and Adapt to changes in Environment

33. Information Qualities
Understandable – usable by decision maker
Relevance – Reducing Uncertainty or Increasing Knowledge, make a difference
Reliability – Appropriate for the decision that is being made
Comparability – Ability to compare alternatives
Neutrality – free from bias

34. Information Qualities
Effectiveness depends on
Decision to be made
Method of decision making
Information decision maker already has
Decision makers ability to process information
Understandability
What is this information and how can it help me
Relevance
Makes a difference in the decision making process
Timeliness
Predictability and Feedback
Verifiable
Comparability
Examine similarities and differences

35. Information Qualities Control Matrix

36. Data vs. Information
I mog di narrisch gern

37. Transaction Processing
Strategic
Management
Vertical information flows
Tactical Management
Operations
Management
Operations and
Transaction Processing
Horizontal information flows

38. Management Problem Structure and Information Requirements
Horizontal flows relate to specific business events, such as one shipment, or to individual inventory items.
Transactional data flows
the information moves through operational units such as sales, the warehouse, and accounting.
Vertical Flows relate to the flow of information to and from strategic management through tactical management, operations management, and operations and transaction processing

39. Management Problem Structure and Information Requirements
Higher up the pyramid, the less structured the decision
Less defined
External orientation
More summarized information
Future oriented
Less frequent
Less accurate
Lower down the pyramid, the more structured the decision
More defined
Internal orientation
More detailed information
Historical
More frequent
More accurate

40. Who Care’s or Why Should we Care?
Business Processes
Data vs. Information
Information Quality
Management Decision Making
Strategic Planning

41. Accountant’s Role
Designer—application of accounting principles, auditing, information systems, and systems development
User—participate in design
Auditor—provide audit and assurance services