A-I-S: AN OVERVIEW
MODUL 1 – SISTEM INFORMASI AKUNTANSI – DOSEN: TRI RAMARAYA KOROY, S.E., M.SI., AK. PH.D., CPA
INTRODUCTION
 Questions to be addressed in this
module:
 What is the meaning of system, data, and
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information?
What is an accounting information system (AIS)?
Why is the AIS an important topic to study?
What is the role of the AIS in the value chain?
How does the AIS provide information for
decision making?
What are the basic strategies and strategic
positions an organization can pursue?
SYSTEMS, DATA, AND INFORMATION
 A system is:
 A set of interrelated components
 That interact
 To achieve a goal
 Most systems are composed of smaller subsystems . .
.
 . . . And vice versa!
SYSTEMS, DATA, AND INFORMATION
 Every organization has goals.
 The susbsystems should be designed to
maximize achievement of the organization’s
goals
 Even to the detriment of the subsystem
itself
 Goal conflict occurs when the activity of a
subsystem is not consistent with another subsystem
or with the larger system.
 Goal congruence occurs when the subsystem’s
goals are in line with the organization’s goals.
 The larger and more complicated a system, the more
difficult it is to achieve goal congruence.
 EXAMPLE: The production department (a
subsystem) of a company might have to
forego its goal of staying within its budget in
order to meet the organization’s goal of
delivering product on time.
Organization’s
goals
Subsystem’s
goals
SYSTEMS, DATA, AND INFORMATION
 The systems concept encourages
integration (i.e., minimizing the duplication
of recording, storing, reporting and
processing).
 Data are facts that are collected, recorded,
stored, and processed by an information
system.
 Organizations collect data about:
 Events that occur
 Resources that are affected by those
events
 Agents who participate in the events
 Information is different from data.
 Information is data that have been organized
and processed to provide meaning to a user.
 Usually, more information and better
information translates into better decisions.
SYSTEMS, DATA, AND INFORMATION
 However, when you get more information than you
can effectively assimilate, you suffer from
information overload.

Example: Final exams week!
Costs and benefits of information are
often difficult to quantify, but you need to
try when you’re making decisions about
whether to provide information.
Benefits of information
- Cost of producing information
Value of information
 When you’ve reached the overload point, the quality
of decisions declines while the costs of producing
the information increases.
Costs may include time and resources spent:
• Collecting data
• Processing data
• Storing data
• Distributing information to users
Benefits of information may
include:
• Reduction of uncertainty
• Improved decisions
• Improved ability to plan and
schedule activities
CHARACTERISTICS THAT MAKE INFORMATION USEFUL
Relevance
• It reduces uncertainty by helping you predict what will happen or confirm what already has
happened.
Reliability
• It’s dependable, i.e., free from error or bias and faithfully portrays events and activities.
Completeness
Timeliness
Understandability
Verifiability
Accessibility
• It doesn’t leave out anything that’s important.
• You get it in time to make your decision.
• It’s presented in a manner you can comprehend and use.
• A consensus notion—the nature of the information is such that different people would tend
to produce the same result.
• You can get to it when you need it and in a format you can use.
INFORMATION IS PROVIDED TO BOTH:
External Users
• MANDATORY INFORMATION—Required by a
governmental entity, such as Form 10-K’s required by
the SEC; or
• ESSENTIAL INFORMATION—Required to conduct
business with external parties, such as purchase
orders.
• In providing this information the focus should be on:
• Minimizing costs
• Meeting regulatory requirements
• Meeting minimum standards of reliability and
usefulness
Internal Users
• Internal users primarily use discretionary information.
• The primary focus in producing this information is
ensuring that benefits exceed costs, i.e., the
information has positive value.
WHAT IS AN AIS?
 An AIS is an unified structure that employs
physical resources and components to
transform economic data into accounting
information for external and internal users.
 It can:
 Use advanced technology; or
 Be a simple paper-and-pencil system; or
 Be something in between.
 Technology is simply a tool to create, maintain,
or improve a system.
 The functions of an AIS are to:
 Collect and store data about events, resources,
and agents.
 Transform that data into information that
management can use to make decisions about
events, resources, and agents.
 Provide adequate controls to ensure that the
entity’s resources (including data) are:
 Available when needed
 Accurate and reliable
WHY STUDY ACCOUNTING INFORMATION SYSTEMS?
 Accounting is an information-providing
activity, so accountants need to
understand:
 Other accounting courses focus on how the
information is provided and used.
 How the system that provides that
information is designed, implemented
and used.
 How the data is collected and transformed
 How financial information is reported
 How information is used to make
decisions
 An AIS course places greater emphasis on:
 How the availability, reliability, and accuracy of the
data is ensured
 AIS courses are not number-crunching courses
WHY STUDY ACCOUNTING INFORMATION SYSTEMS?
 The skills are critical to career success.
Auditors
Tax accountants
In private industry
and not-for-profits
Management
consulting
• need to evaluate the accuracy and reliability of information produced by the
AIS.
• must understand the client’s AIS adequately to be confident that it is providing
complete and accurate information for tax planning and compliance work.
• systems work is considered the most important activity performed by
accountants.
• the design, selection, and implementation of accounting systems is a rapid
growth area.
WHY STUDY ACCOUNTING INFORMATION SYSTEMS?
 The AIS course complements other
 AIS topics impact corporate strategy and culture.
systems courses.

 Other systems courses focus on design
and implementation of information
systems, databases, expert systems, and
telecommunications.
In today’s highly competitive global marketplace
companies must not only be flexible and adaptive, but
also responsive to social, political and economic change.

One consequence of this is that corporate accounting
information systems as an essential part of a company’s
arsenal of competitive technologies have become
increasingly complex – a complexity directly related to
notions of security, control and risk reduction.
 AIS courses focus on accountability and
control.
WHY STUDY ACCOUNTING INFORMATION SYSTEMS?
Occupational
Culture
AIS design is
affected by
information
technology, the
organization’s
strategy, and the
organization’s
culture.
Strategy
AIS
Information
Technology
WHY STUDY ACCOUNTING INFORMATION SYSTEMS?
Occupational
Culture
Information
technology affects the
company’s choice of
business strategy. To
perform cost-benefit
analyses on IT
changes, you need to
understand business
strategy.
Strategy
AIS
Information
Technology
WHY STUDY ACCOUNTING INFORMATION SYSTEMS?
Occupational
Culture
While culture affects
the design of the AIS,
it’s also true that the
AIS affects culture by
altering the
dispersion and
availability of
information.
Strategy
AIS
Information
Technology
ROLE OF THE AIS IN THE VALUE CHAIN
 The objective of most organizations is
to provide value to their customers.
 What does it mean to deliver value?
 While “adding value” is a commonly used
buzzword, in its genuine sense, it means
making the value of the finished component
greater than the sum of its parts.
 It may mean:
 Making it faster
 Making it more reliable
 Providing better service or advice
 Providing something in limited supply (like O-
negative blood or rare gems)
 Providing enhanced features
 Customizing it
ROLE OF THE AIS IN THE VALUE CHAIN
 Value is provided by performing
a series of activities referred to
as the value chain. These
include:
 Primary activities
 Support activities
 These activities are sometimes
referred to as “line” and “staff”
activities respectively.
ROLE OF THE AIS IN THE VALUE CHAIN
Primary activities include:
Inbound
Logistics
• Receiving, storing, and
distributing the
materials that are
inputs to the
organization’s product
or service.
Operations
• Transforming
those inputs
into products or
services.
Outbound
Logistics
Marketing
and Sales
• Distributing
products or
services to
customers.
• Helping
customers to
buy the
organization’s
products or
services.
Service
• Post-sale
support
provided to
customers such
as repair and
maintenance
function.
ROLE OF THE AIS IN THE VALUE CHAIN
Support activities include:
Firm
Infrastructure
Human
Resources
Technology
Development
Procurement
/Purchasing
• Accountants, lawyers,
and administration.
Includes the company’s
accounting information
system.
• Involves recruiting and
hiring new employees,
training employees,
paying employees, and
handling employee
benefits.
• Activities to improve
the products or
services (e.g., R&D,
website development).
• Buying the resources
(e.g., materials,
inventory, fixed assets)
needed to carry out
the entity’s primary
activities.
ROLE OF THE AIS IN THE VALUE CHAIN
 Information technology can significantly
impact the efficiency and effectiveness
with which the preceding activities are
carried out.
 An organization’s value chain can be
connected with the value chains of its
customers, suppliers, and distributors.
ROLE OF THE AIS IN THE VALUE CHAIN
Smith Supply Co.
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
For example, the inbound logistics of
Pharmaceuticals, Inc., links to the outbound
logistics of its suppliers.
Pharmaceuticals, Inc.
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
Customer Pharmacy
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
ROLE OF THE AIS IN THE VALUE CHAIN
Smith Supply Co.
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
The linking of these separate value chains
creates a larger system known as a supply
chain.
Pharmaceuticals, Inc.
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
Customer Pharmacy
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
ROLE OF THE AIS IN THE VALUE CHAIN
Smith Supply Co.
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
Information
technology can
facilitate synergistic
linkages that improve
the performance of
each company’s value
chain.
The linking of these separate value chains
creates a larger system known as a supply
chain.
Pharmaceuticals, Inc.
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
Customer Pharmacy
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
ROLE OF THE AIS IN THE VALUE CHAIN
 There is variation in the degree of structure used to make decisions:
Structured Decisions
Semi structured Decisions
Unstructured Decisions
• Repetitive and routine
• Can be delegated to
lower-level employees
• EXAMPLE: Deciding
whether to write an
auto insurance policy for
a customer with a clean
driving history.
• Incomplete rules
• Require subjective
assessments
• EXAMPLE: Deciding
whether to sell auto
insurance to a customer
with a tainted driving
history.
• Non-recurring and nonroutine
• Require a great deal of
subjective assessment
• EXAMPLE: Deciding
whether to begin selling
a new type of insurance
policy.
ROLE OF THE AIS IN THE VALUE CHAIN
 There is also variation in the scope of a decision’s effect:
Occupational control
decisions
• Relate to performance of
specific tasks
• Often of a day-to-day nature
• EXAMPLE: Deciding whether
to order inventory
Management control
decisions
• Relate to utilizing resources
to accomplish organizational
objectives
• EXAMPLE: Budgeting
Strategic planning
decisions
• The “what do we want to be
when we grow up” types of
questions
• Involves establishing
• Organizational objectives
• Policies to achieve those
objectives
• EXAMPLE: Deciding whether
to diversify the company into
other product lines
ROLE OF THE AIS IN THE VALUE CHAIN
 In general, the higher a manager is in
the organization, the more likely he/she
is to be engaging in:
 Less structured decisions
 Broader scope (i.e., strategic
Top Management:
• Unstructured decisions
• Strategic planning decisions
Middle Management
• Semi-structured decisions
• Management control decisions
planning) decisions
Operational Management
• Structured decisions
• Occupational control decisions
THE AIS AND CORPORATE STRATEGY
 Corporations have:
 Unlimited opportunities to invest in
technology
 Limited resources to invest in technology
 Consequently, they must identify the
improvements likely to yield the highest
return.
 This decision requires an understanding of
the entity’s overall business strategy.
 Michael Porter suggests that there are
two basic business strategies companies
can follow:
 Product-differentiation strategy
 Low-cost strategy
THE AIS AND CORPORATE STRATEGY
A product differentiation
strategy
• involves setting your product
apart from those of your
competitors, i.e., building a
“better” mousetrap by offering
one that’s faster, has enhanced
features, etc.
A low-cost strategy
• involves offering a cheaper
mousetrap than your competitors.
The low cost is made possible by
operating more efficiently.
 Sometimes a company can do both, but they normally
have to choose.
THE AIS AND CORPORATE STRATEGY
• Porter also argues that companies must choose a strategic position among three
choices:
Variety-based strategic
position
Needs-based strategic
position
Access-based strategic
position
• Offer a subset of the industry’s
products or services.
• EXAMPLE: An insurance
company that only offers life
insurance as opposed to life,
health, property-casualty, etc.
• Serve most or all of the needs
of a particular group of
customers in a target market.
• EXAMPLE: The original Farm
Bureau-based insurance
companies provided a portfolio
of insurance and financial
services tailored to the specific
needs of farmers.
• Serve a subset of customers
who differ from others in terms
of factors such as geographic
location or size..
• EXAMPLE: Satellite Internet
services are intended primarily
for customers in rural areas
who cannot get DSL or cable
services.
These strategic positions are not mutually exclusive and can overlap.
THE AIS AND CORPORATE STRATEGY
 Choosing a strategic position is important
because it helps a company focus its efforts
as opposed to trying to be everything to
everybody.
 EXAMPLE: A radio station that tries to
play all types of music will probably fail.
 It’s critical to design the organization’s
activities so they reinforce one another in
achieving the selected strategic position.
The result is synergy, which is difficult for
competitors to imitate.
 The growth of the Internet has profoundly affected
the way value chain activities are performed:
 Inbound and outbound logistics can be streamlined for
products that can be digitized, like books and music.
 The Internet allows companies to cut costs, which
impacts strategy and strategic position.
 Because the Internet is available to everyone, intense
price competition can result. The outcome may be
that many companies shift from low-cost to productdifferentiation strategies.
 The Internet may impede access-based strategic
positions.
THE AIS AND CORPORATE STRATEGY
 The AIS should help a company adopt
 Accounting and information systems
and maintain its strategic position.
should be closely integrated.
 Requires that data be collected
 The AIS should be the primary
about each activity.
 Requires the collection and
integration of both financial and
nonfinancial data.
information system to provide users
with information they need to
perform their jobs.
THE END OF MODULE 1
THANK YOU
TRI@STIEI-KAYUTANGIBJM.AC.ID