Ais200- Uitm

© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides

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chapter

Information systems

Learning objectives–To understand the concept of systems.–To learn the systems that comprise an accounting information system.

–To identify the relationship between an accounting information system and value-adding activities.

–To understand the various types of decisions made in businesses, and the structure and scope of such decisions.

–To understand what a computer-based accounting information system is.

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© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides

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key termskey terms• accounting information

system (AIS)• boundary• closed system• data• economic event• information• information system• input• interface• management information

system

• open system• output• subsystem• super system• system• transaction• transaction processing

system• value chain• value system

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SystemSystem• Has an objective/purpose• Made up of several subsystem

(distinguishable parts or elements) which are interrelated and contribute towards the system’s purpose

• Has some form of input and output• The combined input of the whole system

becomes the system’s output.

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SystemSystem• Super system• System interfaces• Closed system• Open system

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Information SystemsInformation Systems• All decisions require some information• Some information only can be derived by

implementing a set of procedures (system)• Therefore, a system that is used to obtain

information for decision making is an Information System.

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Information SystemInformation System• Characteristics of information that are useful for

decision making:– Accurate– Complete– Flexible– Relevant– Understandable– Timely– Verifiable

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Accounting information systemsAccounting information systems• AIS is information system that is specially designed

for accounting and finance.• AIS provides information using accounting methods:

– Management reports for decision making– Reports for regulatory bodies– Special reports for potential creditors including financial

institutions and suppliers of goods and services

© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides

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Accounting information systemsAccounting information systems• Record • Process• Report

events in monetary terms using generally accepted accounting principles (GAAP)

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Accounting information systemsAccounting information systems

Financial accounting

system

Managementaccounting

system

External reporting

Internal reporting

Produces financial

statements

Produces budgets & other reports for management

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Levels within the AIS super systemLevels within the AIS super system

Expert system

Decision support system

Management information system

Transaction processing system

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AIS super system – AIS super system – another view

Comprises only three systems:1. Transaction processing system

• Records transactions

2. Budgeting system• Produces control information used by management

3. Responsibility reporting system• Summarises historical data and provides reports to

compare with budgets or set management targets

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Strategic planning

Management control

Operational control

Structured•Trends in balance of accounts receivable

•Accounts receivable balances

Semistructured•Budget preparation•Personnel management

•Production scheduling •Cash management

Unstructured

•New products•Opening a factory site•Mergers and acquisitions

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Transaction cycle interconnectionTransaction cycle interconnectionFinance cycle

Payroll cycle Expenditure cycle

General ledger & reporting system

Conversion cycle

Revenue cycle

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Why Study AIS?Why Study AIS?• To understand how the accounting system works.

– How to collect data about an organization’s activities and transactions

– How to transform that data into information that management can use to run the organization

– How to ensure the availability, reliability, and accuracy of that information

• Required by Accounting Board.

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• Auditors need to understand the systems that are used to produce a company’s financial statements.

• One of the popular consulting services currently is about the design, selection, and implementation of new Accounting Information Systems.

• A survey conducted by the Institute of Management Accountants (IMA) stated that work relating to accounting systems was the most important activity performed by corporate accountants.

Why Study AIS?Why Study AIS?

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How An AIS Can Add ValueHow An AIS Can Add ValueTo An OrganizationTo An Organization

• by providing accurate and timely information so that activities can be performed more effectively and efficiently

• Improving the quality and reducing the costs of products or services.

• Improving decision making capabilities.• Increasing the sharing of knowledge.