Accounting Information Systems

The 1st 15 slides was discussed in Sysdev

Inaccurate accounting records often contribute to business failures. Failure to understand accounting information can result to poor business decision. -G.V.Lising Jr.

 Information
System

Information
Non-quantitative Information Quantitative Information
Non-accounting Information Accounting Information Operating Information Financial Accounting Management Accounting Tax Accounting

The need for information

quantitative is information

that is expressed in numbers non quantitative samples are visual impressions, conversations, television progs etc accounting is primarily concerned with QUANTITATIVE INFO

Accounting is one of the several types of quantitative information Four categories of information operating information financial accounting information management accounting information tax accounting information

INFORMATION

Non-quantitative information

Quantitative information

Accounting information

Non accounting information

Operating information

Financial accounting

Management accounting

Tax accounting

 OPERATING INFORMATION constitutes by far

the largest quantity of accounting information.

FINANCIAL ACCOUNTING INFORMATION is

intended for both managers and also for the use of parties external to the organization, including shareholders (and trustees) in profit organizations), banks, and other creditors, government agencies, investment advisers, and the general public.

MANAGEMENT ACCOUNTING INFORMATION accounting information specifically prepared to aid managers. This information is used in three management functions planning implementation control

PLANNING is the process of deciding what actions should be taken care in the future.

An important form of planning is BUDGETING the process of planning overall activities of the organization for a specified period of time, usually a year. A primary objective of budgeting is to coordinate the separate plans made for various segments of the organization so as to ensure that these plans harmonize with each other

Planning involves making DECISIONS recognizing the problem specifying and ranking the criteria to be used to determine the best solutions identifying alternative ways of addressing the problem or opportunity analyzing the consequences of each alternative comparing these cosequences

 IMPLEMENTATION making plans does not

itself ensure that managers will implement the plans. Each manager also must make more detailed implementation plans to encompassed in the budget
CONTROL manage / perform properly

Accounting information is used in the control process

as means of communication motivation

attention getting
appraisal

System
Set of detailed methods, procedures, and

routines established or formulated to carry out a specific activity, perform a duty, or solve a problem. BusinessDictionary.com

Elements of System
Inputs and outputs
Processor Control Environment Feedback Boundaries/interface

Planning

Implementation
Appropriate action

Control

Feedback Plan revision

Key Terms
System
Subsystem Information system (IS) Management information system (MIS) Accounting information system (AIS) Operations Process Management process

Key Terms
Information
Data Understandability Relevance Timeliness Predictive value Feedback value

Key Terms
Verifiability
Neutrality Freedom from bias Comparability Consistent Validity Accuracy Completeness

Key Terms
Decision making
Structured decisions Unstructured decisions Enterprise database Effectiveness Efficiency

Key Terms
Confidentiality
Integrity Availability Compliance Reliability of information

Elements in the Study of AIS

Dull, Gelinas and Wheeler, Accounting Information System 2nd Edition, Page 31

Sarbanes-Oxley Act of 2002

Section 404 Management must identify, document, and evaluate significant internal controls Auditors must report on managements assertions regarding internal controls Section 409 Requires disclosure to the public on a rapid and current basis of material changes in an organizations financial condition.
Implications for both public and private accountants
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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.

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Information System Model

An information system (IS) (or management

information system [MIS]) is a manmade 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.

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Information System Model

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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.

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Management Decision Making

1. Intelligence: Searching the environment for conditions calling for a decision. 2. Design: Inventing, developing, and analyzing possible courses of action. 3. Choice: Selecting a course of action.

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Management Decision Making

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Strategic Management

Tactical Management
Operations Management Operations and Transaction Processing Horizontal information flows
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Accountants Role
Designerapplication of accounting

principles, auditing, information systems, and systems development Userparticipate in design Auditorprovide audit and assurance services

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YOU
Catalyst of change and improvement
Enabler Decision maker

Acknowledgement and Fundamentals of Accounting by Agamata & Berbano Sources:

Accounting: Text and Cases by Robert N. Anthony Accounting Principles by Kieso and Weygant Basic Accounting by G.V.Lising Jr BDO International Deloitte (www.iasplus.com) Wikipedia (http://en.wikipedia.org) BusinessDictionary.com

Thank you!