Lecture 1 - Arif Sari

1 A I S405:A c c o u n t i n g I n f o r m a t i o nS y s t e m sIntroduction to AccountingInformation SystemsLecture 1 Introduction to AccountingInformation Systems Appreciate the complex, dynamic environment inwhich accounting is practiced. Relationship between the accounting InformationSystems and the organization s business processes. Attributes of quality information . Components of an information system How information is used for different types ofdecisions and at various levels in the organization. How the information system supports themanagement function. Role of accountant in relation to the currentenvironment for : Lecture 12 Tools of Trade3 AIS405: Lecture 1 Sarbanes-Oxley Act of 2002 Implications for both public and private accountants:Section 404 (as modified by PCAOB AuditingStandard No.)

2 5) Management must identify, document, andevaluate significant internal controls. Auditors must report on the effectiveness of theorganization s system of internal : Lecture 1 Sarbanes-Oxley Act of 2002 ..Implications for both public and private accountants:Section 409 Requires disclosure to the public on a rapid and current basis of material changes in anorganization s financial : Lecture 1 CICA 2009 Top Ten IT adequate controls during the security over moving of effective IT with information of IFRS on information requirements of the Payment Card activity by laid-off of Web applications in organizationalinformation of IT skills6 AIS405: Lecture 1 Business Environment7 IndustryThe CompanyCompetitorsTechnologiesCustomersE conomicForcesPeopleCapitalTechnologyValu e ChainProductsStructureObjectivesStrategi esMeasurementsAIS405: Lecture 1 Value Chain & Five Forces Model8 AIS405.

3 Lecture 19 Porter s Value ChainFIRM INFRASTRUCTUREINBOUNDLOGISTICSOPERATIONS OUTBOUNDLOGISTICMARKETING& SALESLOGISTICSERVICEHUMAN RESOURCE MANAGEMENTTECHNOLOGY DEVELOPMENTPROCUREMENTVALUECOSTMARGINAIS 405: Lecture 110 KNOWLEDGED atabasePROCESSI nformation ProcessingBusiness Rules, ProceduresINTERFACEI nput, OutputLocation, SecurityBUSINESSCONTEXTH ardwareSoftwareNetworkingTECHNOLOGY DRIVERSERP, Object, Mobile,Collaborative, DRIVERSBPR, CRM,SCM, e-Biz, ProcessingBusiness Rules, ProceduresINTERFACEI nput, OutputLocation, SecurityBusinessDataBusinessUsersHardwar eSoftwareNetworkingBUSINESSCONTEXTAIS405 : Lecture1 Elements in the Study of IS / AIS11 AIS405: Lecture 1 Systems and Subsystems .. system :a set of interdependent elements thattogether accomplish specific objectives. A systemmust have organization, interrelationships,integration, and central objectives.

4 Subsystem:a part of a system . Within limits, anysystem or subsystem can be divided into itscomponent : Lecture 1 Systems and Subsystems13 INPUTOUTPUTAIS405: Lecture 1 Systems and Subsystems ..14 AIS405: Lecture 1 Systems and Subsystems ..15 AIS405: Lecture 116 system Decomposition DiagramAIS405: Lecture 1 The information system (IS) Aninformation system (IS)ormanagementinformation system (MIS)is a manmade system thatconsists of an integrated set of computer-basedand manual components established to collect,store, and manage data and to provide outputinformation to users. (Gelinas et al.)17 AIS405: Lecture system information Technology(IT): A combination ofcomputer technology (hardware and software)with telecommunications technology (data, image,and voice networks) InformationSystem(IS):People, data, processes,and information technology that interact tocollectdata,store,process,and provide asoutputtheinformation needed to support and improveoperational, tactical, and strategic activities of anorganization (business).

5 AIS405: Lecture 119 InformationTechnology SystemCombinations ofhardware,software,andtelecomnetworksus e toprocess dataCombinations ofhardware,software,andtelecomnetworksth atpeoplebuild and usetocollect, create, anddistribute useful datain organizations (fordecision making)AIS405: Lecture 1 Functional Model of an information System20 AIS405: Lecture 1 accounting information system (AIS) accounting information system (AIS)is a specializedsubsystem of the IS. Collect, process and report information related tothefinancial aspectsof business events. Oftenintegratedand indistinguishable from theoverall information system . Like the IS, the AIS may be divided into componentsbased on the operational functions are calledbusiness : Lecture 1 Business Process in Enterprise Systems22 Abusiness processis a set of related steps orprocedures designed to produce a : Lecture 1 Business Process Components information process:portion of the overall IS relatedto a particular business process.

6 Operations process:man-made system consisting ofthe people, equipment, organization, policies, andprocedures whose objective is to accomplish thework of the organization. Management process:man-made system consistingof the people, authority, organization, policies, andprocedures whose objective is to plan and controlthe operations of the : Lecture 1 Business Process Activities (Events)24 Decision /managementeventsOperatingeventsInformat ioneventsDefine &TriggerTriggerTriggerAIS405: Lecture 1 Transforming Data into information ..25 AIS405: Lecture 1 Basic system Model26 AIS405: Lecture 1 Example: Architecture of A Payroll System27 AIS405: Lecture 1 information Qualities28 AIS405: Lecture 1 Key information Qualities Validity: information about actual authorized eventsand objects. Accuracy:correspondence or agreement betweenthe information and the actual events or objectsthat the information represents.

7 Completeness:degree to which informationincludes data about every relevant object or eventnecessary to make a decision and includes thatinformation only : Lecture 1 Management Decision Making Intelligence: Searching the environment forconditions calling for a decision. Design: Inventing, developing, and analyzingpossible courses of action. Choice: Selecting a course of : Lecture 1 Decision Making Process31 AIS405: Lecture 132 information Systems in OrganizationSTRATEGICOPERATIONALEXECUTIV E information SYSTEMSMANAGEMENT information SYSTEMSTRANSACTION PROCESSING SYSTEMSACCTFINANCEHRPRODCTNSALESOTHERSTA CTICALVALUE CHAINAIS405: Lecture 1 Business ProcessReengineering/Redesign33IT/IS contributes to Business ProcessReengineering / Redesign (BPR) : Efficient: Do thing right (cheaper) Effective: Do right thing (better) Competitive: Do thing differently(faster/newer)AIS405: Lecture 134 Decision-Making in an OrganizationAIS405.

8 Lecture 135 Decision-Making Levelsin an Organization Executive Level Long-term decisions (Strategies) Unstructured decisions (Competitions) Managerial Level Decisions covering weeks and months (Tactics) Semi-structured decisions (Effectiveness) Operational Level Day-to-day / repetitive decisions (Operations) Structured decisions (Efficiency)AIS405: Lecture 1 Management Problem Structureand information Requirements36 AIS405: Lecture 1 Structure of Decisions Structured decisions:those for which all threedecision phases (intelligence, design, and choice)are relatively routine or repetitive. Unstructured decisions:thosefor which none of thedecision phases (intelligence, design, or choice) areroutine or repetitive. Semi-structured decisions Risk Factors in Judgments:No-risk, risky, high-riskDecisions37 AIS405: Lecture 1 Horizontal vs.

9 Vertical information Flows Horizontalinformation flows relate to specificbusiness events, such as one shipment, or toindividual inventory items. The information movesthrough operational units such as sales, thewarehouse, and accounting . Verticalinformation flows service a multi-levelmanagement function from operations andtransaction processing through tactical, operations,and strategic : Lecture 139 Organizational information SystemsAIS405: Lecture 1 Operational Level40 AIS405: Lecture 1 Operational Level41 Day-to-day business processes Interactions with customers information systems used to: Automate repetitive tasks Improve efficiency Decisions: Structured Recurring Can often be automated using ISAIS405: Lecture 1 Architecture42 AIS405: Lecture 1 Data Processing Online processing Batch processing Data Input Manual data entry Semi-automated data entry (bar-code + manual) Fully automated data entry (bar-code)Transaction Processing Systems.

10 43 AIS405: Lecture 1 Managerial Level44 AIS405: Lecture 1 Managerial Level45 Functional managers Monitoring and controlling operational-levelactivities Providing information to executive level Midlevel managers-Focus on effectively utilizing and deploying resources-Goal of achieving strategic objectives Managers decisions Semi-structured Contained within business function Moderately complex Time horizon of few days to few monthsAIS405: Lecture 1 Architecture46 AIS405: Lecture 1 Executive Level47 AIS405: Lecture 1 Executive Level48 The president, CEO, vice presidents, boardof directors Decisions Long-term strategic issues Complex and non-routine problems Unstructured decisions Long-term ramificationsAIS405: Lecture 1 Architecture49 AIS405: Lecture 1 information SystemsSupportingthe Functional Areas50 AIS405: Lecture 1 information Systemsthat Span Organizational Boundaries51 AIS405: Lecture 1 information system Stakeholders52 AIS405: Lecture 1 information system Stakeholders53 AIS405: Lecture 1 Role of Accountantin Current Business Environment Designer application of accounting principles,auditing principles, IS techniques, and systemsdevelopment methods to design an AIS.