1. Chapter 1: Accounting Information Systems and the Accountant
Introduction
What Are Accounting Information Systems (AIS)?
What’s New in AIS?
Accounting and IT
Careers in AIS

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. 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

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

5. Information (versus Data)
Raw facts
No organization or meaning
Beginning of audit trail
Information
Processed data
Meaningful to users

6. AIS Components

7. Computerized Data Processing Problems
Information overload for users
Unable to identify input errors
Difficult to follow audit trails

8. AIS and ERP Accounting Information Systems
Internal and External users
Financial information
Enterprise Resource Planning Systems
Internal users
Financial and Nonfinancial information
Predictive analytics

9. AIS and ERP Overlapping of the Systems Provide same information
Emphasize business processes
Integration into seamless databases

10. Study Break #1
Which of the following is likely to be information rather than data?
Sales price
Customer number
Net profit
Employee name

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

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

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

14. 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

15. 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

16. What’s New in AIS? Cloud Computing Sustainability Reporting
Suspicious Activity Reporting
Forensic Accounting, Governmental Accountants, and Terrorism
Corporate Scandals and Accounting

17. Cloud Computing

18. Disadvantages of Cloud Computing
Reliability of Internet Connection
Data Security Measures of Provider
Quality of Service
Reliability of Service Provider

19. Sustainability Reporting
Reporting Nonfinancial Measures
Impacts on income, value, or future performance

20. Suspicious Activity Reporting

21. Forensic Accounting Forensic Accounting
Combines skills of investigation, accounting, and auditing
Provides evidence of criminal activity
Examples of AIS Uses in Forensic Accounting
Identifying and denying financial aid to terrorists
Tracing arms and chemical orders to final destination
Planning for catastrophic events
Controlling cyber terrorism
Detecting money laundering and illegal transfers

22. Corporate Scandals and Accounting
Enron (2001)
Manipulation of accounting records
Understate liabilities and inflate earnings
Bernard Madoff (2008)
Investment fund manager
Ponzi scheme
Resulted in billions of dollars in losses

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

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

25. Study Break #4 The acronym SAR stands for: Simple accounting receipts
Suspicious accounting revenue
Suspicious activity reporting
Standard accounts receivable

26. Study Break #4 - Answer The acronym SAR stands for:
Simple accounting receipts
Suspicious accounting revenue
Suspicious activity reporting
Standard accounts receivable

27. Accounting and IT

28. Objectives of Financial Accounting
External
Provide relevant information
Investors, Creditors
Financial Statements
Internal
Planning, decision making, and control activities
Division managers, product managers

29. The Accounting Cycle

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

31. Managerial Accounting
Objective
Provide relevant information
Internal users (Managers)
Components
Cost Accounting
Budgeting

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

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. 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. Business Intelligence and Dashboards

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

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

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

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

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

41. Auditing Traditional role Present 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. Taxation Taxation Software Professional Usage 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. 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. Careers in Accounting Information Systems
Certified Fraud Examiner
Professional certification
Association of Certified Fraud Examiners (ACFE)
IT Auditing and Security
Risk analysis with Information Systems
Aid financial auditors in evaluation of controls
Certified Information Systems Auditors (CISAs)
Penetration testing

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