3 ais accountants perspective

8/11/2019 3 AIS Accountants Perspective

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ISMPhilip Tim KiD Cajes

Accounting Information System (James Hall)


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Internal & ExternalInformation Flows


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Horizontal flows of information usedprimarily at the operations level to capturetransaction and operations data

Vertical flows of informationdownward flows instructions, quotas, andbudgetsupward flows aggregated transaction


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Each user group has unique informationrequirements.The higher the level of the organization, thegreater the need for more aggregatedinformation and less need for detail.


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Information is a business resource

that :needs to be appropriatelymanaged

is vital to the survival ofcontemporary businesses


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A transaction is a business event .Financial transactions

economic events that affect the assets and

equities of the organizatione.g., purchase of an airline ticketNonfinancial transactions

all other events processed by the organizationsinformation systeme.g., an airline reservation no commitment bythe customer


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Financial

Transactions

Nonfinancial

Transactions

InformationSystem

UserDecisionMakingInformation


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Accounting as an information system.It identifies, collects, processes, andcommunicates economic informationabout a firm using a wide variety oftechnologies.It captures and records the financialeffects of the firms transactions. It distributes transaction information tooperations personnel to coordinatemany key tasks.


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Accounting Information Systems (AIS)process

financial transactions; e.g., sale of goodsand nonfinancial transactions that directly affectthe processing of financial transactions; e.g.,addition of newly approved vendors

Management Information Systems (MIS)process

nonfinancial transactions that are not normallyprocessed by traditional AIS; e.g., trackingcustomer complaints


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IS

AIS MIS

GLS/FRS TPS MRS Finance Marketing Production HRS Distribution


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Transaction processing system (TPS) supports daily business operations

General Ledger/ Financial Reporting

System (GL/FRS) produces financial statements and reports

Management Reporting System (MRS)produces special-purpose reports for internal use


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The General AIS Model


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Data sources are financial transactions thatenter the information system from internal andexternal sources.

External financial transactions are the most commonsource of data for most organizations.

E.g., sale of goods and services, purchase of inventory,receipt of cash, and disbursement of cash (including payroll).

Internal financial transactions involve the exchange or

movement of resources within the organization.E.g., movement of raw materials into work-in-process (WIP),application of labor and overhead to WIP, transfer of WIP intofinished goods inventory, and depreciation of equipment.


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Functions for transforming data into

information according to the general AISmodel:1. Data Collection2. Data Processing

3. Data Management4. Information Generation


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Capturing transaction dataRecording data onto formsValidating and editing the data


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Classifying

TranscribingSortingBatching

MergingCalculating

Summarizing

Comparing


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Storing

RetrievingDeleting


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Compiling

ArrangingFormattingPresenting


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The goal of an information systemis to support

the stewardship function ofmanagementmanagement decision makingthe firms day -to-day operations


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Transaction processing, information processing,and accounting are physically performed bypeople, usually using paper documents.

Useful to study because:helps link AIS courses to other accounting coursesoften easier to understand business processes whennot shrouded in technology

facilitates understanding internal controls


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Data Storage - excessive storage costs ofpaper documents and/or magnetic formData Updating - changes or additionsmust be performed multiple timesCurrency of Information - potentialproblem of failing to update all affectedfilesTask-Data Dependency - users inabilityto obtain additional information as needschangeData Integration - separate files aredifficult to integrate across multiple users


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Accountants must be able to clearly convey

their needs to the systems professionals whodesign the system.The accountant should actively participatein systems development projects to ensureappropriate systems design.


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The accounting function is responsible for theconceptual system , while the computerfunction is responsible for the physical system.The conceptual system determines the natureof the information required, its sources, itsdestination, and the accounting rules that mustbe applied.


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External Auditorsattest to fairness of financial statementsassurance service: broader in scope than

traditional attestation auditIT Auditors

evaluate IT, often as part of external auditInternal Auditors

in-house IS and IT appraisal services

Fin

3 ais accountants perspective

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