Page 1
© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides
prepared by Kaye Watson.1-1
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.
11
Page 2
© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides
prepared by Kaye Watson.1-2
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
Page 3
© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides
prepared by Kaye Watson.1-3
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.
Page 4
© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides
prepared by Kaye Watson.1-4
SystemSystem• Super system• System interfaces• Closed system• Open system
Page 5
© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides
prepared by Kaye Watson.1-5
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.
Page 6
© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides
prepared by Kaye Watson.1-6
Information SystemInformation System• Characteristics of information that are useful for
decision making:– Accurate– Complete– Flexible– Relevant– Understandable– Timely– Verifiable
Page 7
© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides
prepared by Kaye Watson.1-7
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
Page 8
© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides
prepared by Kaye Watson.1-8
Accounting information systemsAccounting information systems• Record • Process• Report
events in monetary terms using generally accepted accounting principles (GAAP)
Page 9
© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides
prepared by Kaye Watson.1-9
Accounting information systemsAccounting information systems
Financial accounting
system
Managementaccounting
system
External reporting
Internal reporting
Produces financial
statements
Produces budgets & other reports for management
Page 10
© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides
prepared by Kaye Watson.1-10
Levels within the AIS super systemLevels within the AIS super system
Expert system
Decision support system
Management information system
Transaction processing system
Page 11
© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides
prepared by Kaye Watson.1-11
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
Page 12
© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides
prepared by Kaye Watson.1-12
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
Page 13
© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides
prepared by Kaye Watson.1-13
Transaction cycle interconnectionTransaction cycle interconnectionFinance cycle
Payroll cycle Expenditure cycle
General ledger & reporting system
Conversion cycle
Revenue cycle
Page 14
© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides
prepared by Kaye Watson.1-14
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.
Page 15
© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides
prepared by Kaye Watson.1-15
• 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?
Page 16
© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides
prepared by Kaye Watson.1-16
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.