Accounting Information
Systems: An Overview
Chapter 1
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Learning Objective 1
Understand the related concepts
of transaction cycles and
internal control structure.
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Overview
An accounting information system (AIS)
is a collection of resources designed to
transform data into information.
Accounting information systems
perform this transformation.
Manual
Computerized
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Information and Decisions
Who are the two main users
of accounting information?
External users
Internal users
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Information and Decisions
Who are the external users
of accounting information?
Stockholders
Investors
Creditors
Government agencies
Customers and vendors
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Information and Decisions
Hierarchy of Internal Users
Top-Level
Management
Middle
Management
Lower-Level
Management
Strategic
Tactical
Summarization
and Filtration
Operational
Transaction oriented
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Information Systems
The term information system suggests the use
of computer technology in an organization.
Hardware
Data
Information
Software
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Information Systems
Electronic Data Processing System (EDP)
Data Processing System (DP)
Management Information System (MIS)
Decision Support System (DSS)
Expert System (ES)
Executive Information System (EIS)
Accounting Information System (AIS)
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Business Processes
Data
Organizational
units
Logical time
sequence
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Business Processes
Primary Business Processes
Inbound
sales
logistics
Outbound
sales
logistics
Marketing
Operations
Service
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Business Processes
Supporting Business Processes
Procurement
Technology
development
Human
resources
Firm
infrastructure
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Transaction Processing Cycles
1. Revenue cycle
2. Expenditure cycle
3. Production cycle
4. Finance cycle
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Internal Control Process
Reliability of financial reporting
Effectiveness and efficiency
Compliance
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Internal Control Process
What are the elements of internal control?
Control environment
Risk assessment
Control activities
Information and communication
Monitoring
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Internal Control Process
Segregation of Duties:
No individual or department should
control the accounting records
relating to its own operation.
Internal Auditing:
It is an independent appraisal
activity within the organization.
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Learning Objective 2
Describe the organizational
structure of the information
system function in organizations.
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The Information System Function
Chief
Information
Officer
Steering
Committee
Manager
Systems
Analysis
Manager
Programming
Manager
Operations
Manager
Technical
Support
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Manager
User
Support
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The Information System Function
Manager
Systems
Analysis
Manager
Programming
Application
Analysts
Application
Programmers
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The Information System Function
Manager
Operations
Maintenance
Programmers
File
Librarian
Data
Entry
Operators
Computer
Operators
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The Information System Function
Manager
Technical
Support
Systems
Programmers
Communication
Analysts
Database
Administration
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The Information System Function
Project organizations
Analysts
Programmers
Application projects
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Learning Objective 3
Discuss applications of
information technology
in organizations.
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End-User Computing
End-user computing (EUC) is the
hands-on use of computers by end users.
Functional end users do their own
information processing activities.
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EUC: Mainframe Application
Database
Accounts Receivable
Data
User Report
Query Language
Processor
User Submits
Query Language
Job
Database
Access Control
Software
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Data Processing for the End User
Traditional Approach
User
Information System
Specialists
Data
Processing
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Data Processing for the End User
End-User Computing Approach
User
Database Software or
Personal Computer
Data
Processing
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EUC: Stand-Alone PC Application
Mainframe Data
or Report
User Prepared
Data
Personal
Computer
Report
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Quick-Response Technology
Quick-response systems are essential
to the total quality performance
(TQP) movement in business.
TQP is also called TQM or
total quality management.
TQP emphasizes customer satisfaction.
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Quick-Response Technology
Hardware and software standardization
Electronic data interchange (EDI)
Universal product code (UPC) bar
code identification of products
and scanning technologies
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Quick-Response Technology
Retailer’s Computer System
Retail Sale
of Product
Scan Bar
Code
Electronic Data
Interchange
Ship Order
Vendor’s Computer System
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Web Commerce
Sales via the World Wide Web are
an integral part of the economy.
What are some benefits?
Consumers
No waiting in line
Merchants
Cost savings
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Electronic Data Interchange
Purchase Order
Retailer
Eliminates
paper
Supplier
Saves
time
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Extensible Business
Reporting Language
XBRL is a language that facilitates the
exchange over the Internet of all kinds of
business documents and financial statements.
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Computer-Integrated
Manufacturing
What are the components of a CIM system?
Computer-aided design (CAD) workstations
Real-time production monitoring
and control systems
Order and inventory control system
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Electronic Payment Systems (EFT)
Electronic funds transfer systems are
electronic payment systems in which
processing and communication are
primarily or totally electronic.
Banks can interface with
corporate EDI applications.
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Learning Objective 4
Characterize the development
of information systems.
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The Accountant and
Systems Development
Accountants may undertake systems
development activities either
internally or externally.
Systems development activities are
often encountered by internal and
external auditors during reviews
of information systems controls.
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The Accountant and
Systems Development
Systems analysis
Systems design
Systems implementation
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The Accountant and
Systems Development
What are the general objectives
of systems analysis?
To improve the quality of information
To improve internal control
To minimize cost, where appropriate
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The Accountant and
Systems Development
Systems design is the process of
specifying the details of the solution
selected by the systems analysis process.
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The Accountant and
Systems Development
Systems implementation is the process of
placing the revised or newly designed
procedures and methods into operations.
Testing the solution prior to implementation
Documenting the solution
Reviewing the system
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Systems Approach
What is the systems approach?
It is a general procedure for the
administration of a systems project.
Its purpose is to assist in the orderly
development of effective systems.
What are the six steps of the
systems approach process?
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Systems Approach
1
Statement of system objective(s)
2
Creation of alternatives
3
Systems analysis
4
Systems design
5
Systems implementation
6
Systems evaluation
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Behavioral Considerations
A new information system
creates new work relationships
among existing personnel.
It creates changes in job content
and perhaps a change in the
formal organizational structure.
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Behavioral Considerations
The user cooperation needed to operate
the system successfully should be ensured
during the design of a system, not afterward.
A philosophy of user-oriented design fosters
a set of attitudes and an approach to systems
development that consciously considers
the organizational context.
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End of Chapter 1
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