chapter

1 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.
2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides prepared by Kaye Watson.

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key 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

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

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System
Has an objective/purpose Made up of several subsystem (distinguishable parts or elements) which are interrelated and contribute towards the systems purpose Has some form of input and output The combined input of the whole system becomes the systems output.
2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides prepared by Kaye Watson.

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System
Super system System interfaces Closed system Open system

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

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Information 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.

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

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Information System
Characteristics of information that are useful for decision making:
Accurate Complete Flexible Relevant Understandable Timely Verifiable

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

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Accounting 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 prepared by Kaye Watson.

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Accounting information systems

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

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

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Accounting information systems

External reporting Internal reporting

Financial accounting system

Management accounting system

Produces financial statements

Produces budgets & other reports for management

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

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Levels within the AIS super system

Expert system

Decision support system Management information system

Transaction processing system

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

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AIS super system another view

Comprises only three systems: 1. Transaction processing system
Records transactions Produces control information used by management

2. Budgeting system
3. Responsibility reporting system
Summarises historical data and provides reports to compare with budgets or set management targets 1-11

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

Strategic planning

Management control
Trends in balance of accounts receivable Budget preparation Personnel management

Operational control
Accounts receivable balances Production scheduling Cash management

Structured Semistructured
New products Opening a factory site Mergers and acquisitions

Unstructured

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

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Transaction cycle interconnection

Finance cycle

Payroll cycle

Expenditure cycle

General ledger & reporting system

Conversion cycle

Revenue cycle

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

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Why Study AIS?

To understand how the accounting system works. How to collect data about an organizations 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.

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

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Why Study AIS?

Auditors need to understand the systems that are used to produce a companys 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.

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

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How An AIS Can Add Value To 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.

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

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