CH01 Accounting Information Systems - An Overview

Accounting
Information
Systems: An
Overview
Chapter 1
2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood
11
Learning Objective 1
Understand the related concepts

of transaction cycles and
internal control structure.
12
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
13
Information and Decisions

Who are the two main users
of accounting information?
External users
Internal users
14

Who are the external users
of accounting information?
Stockholders
Investors
Creditors
Government agencies
Customers and vendors

15

Hierarchy of Internal Users
Top-Level
Management
Middle
Management
Lower-Level
Management
Strategic
Tactical
Summarization
and Filtration
Operational
Transaction oriented
16
Information Systems
The term information system suggests the use
of computer technology in an organization.
Hardware
Data
Information
Software
17
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)

18
Business Processes
Data
Organizational
units
Logical time
sequence
19
Business Processes
Primary Business Processes
Inbound
sales
logistics
Outbound
sales
logistics
Marketing
Operations
Service
1 10
Business Processes
Supporting Business Processes

Procurement
Technology
development
Human
resources
Firm
infrastructure
1 11
Transaction Processing Cycles

1. Revenue cycle
2. Expenditure cycle
3. Production cycle
4. Finance cycle
1 12
Internal Control Process

Reliability of financial reporting
Effectiveness and efficiency
Compliance
1 13

What are the elements of internal control?
Control environment
Risk assessment
Control activities
Information and communication
Monitoring
1 14

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.
1 15
Describe the organizational

structure of the information
system function in organizations.
1 16
The Information System

Function
Chief
Information
Officer
Steering
Committee
Manager
Systems
Analysis
Manager
Programming
Manager
Operations
Manager
Technical
Support
Manager
User
Support
1 17

Function
Manager
Systems
Analysis
Manager
Programming
Application
Analysts
Application
Programmers
1 18

Function
Manager
Operations
Maintenance
Programmers
File
Librarian
Data
Entry
Operators
Computer
Operators
1 19

Function
Manager
Technical
Support
Systems
Programmers
Communication
Analysts
Database
Administration
1 20

Function
Project organizations
Analysts
Programmers
Application projects
1 21
Discuss applications of
information technology
in organizations.
1 22
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.
1 23
EUC: Mainframe Application
Database
Database
Accounts
AccountsReceivable
Receivable
Data
Data
User
UserReport
Report
Query
QueryLanguage
Language
Processor
Processor
User
UserSubmits
Submits
Query
QueryLanguage
Language
Job
Job
Database
Database
Access
AccessControl
Control
Software
Software
1 24
Data Processing for the End

User
Traditional Approach
User
Information System
Specialists
Data
Processing
1 25
Data Processing for the End

User
End-User Computing Approach
User
Database Software or
Personal Computer
Data
Processing
1 26
EUC: Stand-Alone PC
Application
Mainframe Data
or Report
User Prepared
Data
Personal
Computer
Report
1 27
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.

1 28
Hardware and software standardization
Electronic data interchange (EDI)
Universal product code (UPC) bar

code identification of products
and scanning technologies
1 29
Retailers Computer System
Retail
Retail Sale
Sale
of
of Product
Product
Scan
Scan Bar
Bar
Code
Code
Electronic
Electronic Data
Data
Interchange
Interchange
Ship
Ship Order
Order
Vendors Computer System
1 30
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
1 31
Electronic Data Interchange
Purchase Order
Retailer
Eliminates
paper
Supplier
Saves
time
1 32
Extensible Business
Reporting Language
XBRL is a language that facilitates the

exchange over the Internet of all kinds of
business documents and financial statements.
1 33
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

1 34
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.
1 35
Characterize the development

of information systems.
1 36
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.
1 37
The Accountant and

Systems Development
Systems analysis
Systems design
Systems implementation
1 38
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
1 39
The Accountant and

Systems Development
Systems design is the process of

specifying the details of the solution
selected by the systems analysis process.
1 40
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

1 41
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?
1 42
Systems Approach
1
Statement of system objective(s)
Creation of alternatives
Systems analysis
Systems design
Systems implementation
Systems evaluation
1 43
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.
1 44
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.
1 45
End of Chapter
1
1 46

CH01 Accounting Information Systems - An Overview

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Accounting

Understand the related concepts

Information and Decisions

Information and Decisions

Customers and vendors

Information and Decisions

Accounting Information System (AIS)

Supporting Business Processes

Transaction Processing Cycles

Internal Control Process

Internal Control Process

Internal Control Process

Describe the organizational

The Information System

The Information System

The Information System

The Information System

The Information System

Functional end users do their own

EUC: Mainframe Application

Data Processing for the End

Data Processing for the End

TQP emphasizes customer satisfaction.

Universal product code (UPC) bar

Vendors Computer System

What are some benefits?

Electronic Data Interchange

XBRL is a language that facilitates the

Order and inventory control system

Electronic Payment Systems

Banks can interface with

Characterize the development

The Accountant and

Systems development activities are

The Accountant and

The Accountant and

To minimize cost, where appropriate

The Accountant and

Systems design is the process of

The Accountant and

Reviewing the system

What are the six steps of the

Statement of system objective(s)

It creates changes in job content

A philosophy of user-oriented design fosters

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