Chapter
1-1
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
Chapter
1-2
Chapter 1:
Accounting Information Systems
and the Accountant
Introduction
Accounting Information Systems (AIS)
New Features in AIS
Accounting and IT
Careers in AIS
Chapter
1-3
AIS: The Intersection of
Accounting and IS
Chapter
1-4
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
Chapter
1-5
The Accountant’s Challenge
Provide information to support decision-making
Business and Government processes
Accounting and Finance
Non-Accountants
Chapter
1-6
Information (versus Data)
Data



Raw facts
No organization or meaning
Beginning of audit trail
Information


Processed data
Meaningful to users
Chapter
1-7
AIS Components
Chapter
1-8
Computerized Data
Processing Problems
Information overload for users
Unable to identify input errors
Difficult to follow audit trails
Chapter
1-9
AIS and ERP
Accounting Information Systems


Internal and External users
Financial information
Enterprise Resource Planning Systems



Internal users
Financial information
Nonfinancial information
Chapter
1-10
AIS and ERP
Overlapping of the Systems

Provide same information

Emphasize business processes

Integration into seamless databases
Chapter
1-11
Study Break #1
Which of the following is likely to be information rather than
data?
A.
B.
C.
D.
Sales price
Customer number
Net profit
Employee name
Chapter
1-12
Study Break #1 - Answer
Which of the following is likely to be information rather than
data?
A.
B.
C.
D.
Sales price
Customer number
Net profit
Employee name
Chapter
1-13
Study Break #2
With respect to computerized AIS, computers:
A.
B.
C.
D.
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
Chapter
1-14
Study Break #2 - Answer
With respect to computerized AIS, computers:
A.
B.
C.
D.
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
Chapter
1-15
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
Chapter
1-16
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
Chapter
1-17
What’s New in AIS?
Suspicious Activity Reporting
Countering Terrorism
Corporate Scandals and Accounting
The Sarbanes-Oxley and Patriot Acts
Chapter
1-18
Suspicious Activity Reporting
Chapter
1-19
Corporate Scandals and
Accounting
Enron (2001)


Manipulation of accounting records
Understate liabilities and inflate earnings
Bernard Madoff (2008)



Investment fund manager
Ponzi scheme
$50 billion in losses
Chapter
1-20
The Sarbanes-Oxley Act of 2002
CEOs must certify the accuracy and completeness of
financial statements
Public companies must hire independent, new auditors to
review internal controls
Section 404

Implement and assess internal controls
 Auditors evaluate those assessments
Chapter
1-21
Study Break #3
The Sarbanes-Oxley Act of 2002:
A. Enables U.S. officers to wire tap corporate phones if
required
B. Has lead to a decrease in the amount of work done by
auditors and accountants
C. Forbids corporations from making personal loans to
executives
D. Requires the CEO of a public company to take
responsibility for the reliability of its financial statements
Chapter
1-22
Study Break #3 - Answer
The Sarbanes-Oxley Act of 2002:
A. Enables U.S. officers to wire tap corporate phones if
required
B. Has lead to a decrease in the amount of work done by
auditors and accountants
C. Forbids corporations from making personal loans to
executives
D. Requires the CEO of a public company to take
responsibility for the reliability of its financial statements
Chapter
1-23
Study Break #4
The acronym SAR stands for:
A.
B.
C.
D.
Simple accounting receipts
Suspicious accounting revenue
Suspicious activity reporting
Standard accounts receivable
Chapter
1-24
Study Break #4 - Answer
The acronym SAR stands for:
A.
B.
C.
D.
Simple accounting receipts
Suspicious accounting revenue
Suspicious activity reporting
Standard accounts receivable
Chapter
1-25
Accounting and IT
Chapter
1-26
Financial Accounting
Objective of Financial Accounting



Provide relevant information
External parties (Investors, Creditors)
Financial Statements
The Audit Trail


Traces the accounting cycle
Data flow from input to output
Chapter
1-27
A Financial Accounting
Audit Trail
Chapter
1-28
Financial Accounting
Non-Financial Data


REA Accounting
Resources, Events, and Agents
Real-Time Reporting
Interactive Data and XBRL


Reusable data in multiple applications
“Tagging” data
Chapter
1-29
Managerial Accounting
Objective


Provide relevant information
Internal users (Managers)
Components


Cost Accounting
Budgeting
Chapter
1-30
Features of Managerial
Accounting
Chapter
1-31
Cost Accounting
Measure and Control Costs

Acquisition, processing, distribution, and selling
activities
AIS Examples


Activity-Based Costing
Corporate Performance Measurement and Business
Intelligence
Chapter
1-32
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
Chapter
1-33
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
Chapter
1-34
Business Intelligence and
Dashboards
Chapter
1-35
Budgeting
Definition

Financial projection for the future
 Short-range and long-range
Usefulness


Managerial control
Compare actual and budgeted results
Chapter
1-36
Study Break #5
A dashboard is:
A. A computer screen used by data entry clerks for input
tasks
B. A physical device dedicated to AIS processing tasks
C. A summary screen typically used by managers
D. A type of blackboard used by managers to present useful
information to others
Chapter
1-37
Study Break #5 - Answer
A dashboard is:
A. A computer screen used by data entry clerks for input
tasks
B. A physical device dedicated to AIS processing tasks
C. A summary screen typically used by managers
D. A type of blackboard used by managers to present useful
information to others
Chapter
1-38
Study Break #6
Assigning overhead costs based on the resources, rather
than only direct labor, used in manufacturing is an example
of:
A.
B.
C.
D.
Activity-based costing (ABC)
Budgeting
Cost-plus accounting
Financial, rather than managerial, accounting
Chapter
1-39
Study Break #6 - Answer
Assigning overhead costs based on the resources, rather
than only direct labor, used in manufacturing is an example
of:
A.
B.
C.
D.
Activity-based costing (ABC)
Budgeting
Cost-plus accounting
Financial, rather than managerial, accounting
Chapter
1-40
Auditing
Traditional 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

Chapter
1-41
Taxation
Taxation Software

Example of AIS
 Create and evaluate tax strategies
 Transmit completed forms
Professional Usage



Research challenging questions
Access more up-to-date information
Database access
Chapter
1-42
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)
Chapter
1-43
Careers in Accounting
Information Systems
IT Auditing and Security

Risk analysis with Information Systems
 Aid financial auditors in evaluation of controls
 Certified Information Systems Auditors (CISAs)
 Penetration testing
Chapter
1-44
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
Chapter
1-45
Copyright
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information contained herein.
Chapter
1-46
Chapter 1
Chapter
1-47