acct 325 - systems instructor: glenn mcguigan email: [email protected]
TRANSCRIPT
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Accounting Information Systems and Business Processes Overview
Lecture 1(Chapter 1 & 2)
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Lecture 01-3
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Introduction This lecture defines an accounting information
system (AIS). It discusses why AIS is an important topic. It describes how an AIS adds to an
organization’s value chain. It describes and contrasts the basic strategies
that a business can pursue. It also discusses the types of information
reports that can be produced by the AIS.
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Lecture 01-4
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
What is an AIS? A system is a set of two or more interrelated
components that interact to achieve a goal. Systems are almost always composed of smaller
subsystems, each performing a specific function supportive of the larger system.
An accounting information system (AIS) consists of: People Procedures Data Software Information technology
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Lecture 01-5
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Functions of an AIS?
What important functions does the AIS perform in an organization?1 It collects and stores data about
activities and transactions.2 It processes data into information that
is useful for making decisions.3 It provides adequate controls to
safeguard the organization’s assets.
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Lecture 01-6
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
The Three Basic Functions Performed by an AIS
1 The efficient and effective processing of data about a company’s transactions: Capture transaction data on source
documents. Record transaction data in journals, which
present a chronological record of what occurred.
Post data from journals to ledgers, which sort data by account type.
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Lecture 01-7
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
The Three Basic Functions Performed by an AIS
2 To provide management with information useful for decision making:In manual systems, this information is
provided in the form of reports that fall into two main categories:
– financial statements– managerial reports
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Lecture 01-8
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
The Three Basic Functions Performed by an AIS
3 To provide adequate internal controls:Ensure that the information produced
by the system is reliable.Ensure that business activities are
performed efficiently and in accordance with management’s objectives.
Safeguard organizational assets.
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Basic Subsystems in the AIS
ExpenditureCycle
HumanResources
ProductionCycle
RevenueCycle
FinancingCycle
General Ledger & Reporting System
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Factors InfluencingDesign of the AIS
OrganizationalCulture
Strategy
InformationTechnology
AIS
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Lecture 01-11
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
The Value Chain
The ultimate goal of any business is to provide value to its customers.
A business will be profitable if the value it creates is greater than the cost of producing its products or services.
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Lecture 01-12
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
The Value Chain
An organization’s value chain consists of nine interrelated activities that collectively describe everything it does.
The five primary activities consist of the activities performed in order to create, market, and deliver products and services to customers and also to provide post-sales services and support.
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Lecture 01-13
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
The Value Chain
Primary Activities
InboundLogistics
OutboundLogistics
Operations
Marketingand Sales
Service
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Lecture 01-14
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
The Value Chain
The four support activities in the value chain make it possible for the primary activities to be performed efficiently and effectively.
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Lecture 01-15
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
The Value Chain
Support Activities
Infrastructure
HumanResources
Technology
Purchasing
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Lecture 01-16
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
The Supply Chain
The value chain concept can be extended by recognizing that organizations must interact with suppliers, distributors, and customers.
An organization’s value chain and the value chains of its suppliers, distributors, and customers collectively form a Supply Chain.
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Lecture 01-17
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
How An AIS Can Add ValueTo An Organization
An AIS adds value...– by providing accurate and timely
information so that five primary value chain activities can be performed more effectively and efficiently. This is done by:– improving the quality and reducing the costs
of products or services.
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Lecture 01-18
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
How An AIS Can Add ValueTo An Organization
An AIS can…– improve efficiency.– improve decision making capabilities.– increase the sharing of knowledge.– Improve decision making.– Improve the internal control structure. A well-designed AIS can also help an
organization profit by improving the efficiency and effectiveness of its supply chain.
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Lecture 01-19
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Information and Decision Making
What is information? The term data refers to any and all of
the facts that are collected, stored, and processed by an information system.
Information is data that has been organized and processed so that it is meaningful.
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Lecture 01-20
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Information and Decision MakingCharacteristics of Useful Information
Understandable
Verifiable
TimelyRelevant
Reliable
Complete
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Lecture 01-21
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Information and Decision Making
What is decision making? Decision making involves the
following steps:1 Identify the problem.2 Select a method for solving the problem.3 Collect data needed to execute the decision
model.4 Interpret the outputs of the model.
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Lecture 01-22
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Information and Decision Making5 Evaluate the merits of each alternative.6 Choose and execute the preferred solution. Decisions can be categorized as follows:– in terms of the degree of structure that
exists– by the scope of the decision
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Lecture 01-23
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Decision Structure
Structured decisions are repetitive, routine, and understood well enough that they can be delegated to lower-level employees in the organization.
An example is:Extending credit to customers.
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Lecture 01-24
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Decision Structure
Semistructured decisions are characterized by incomplete rules for making the decision and the need for subjective assessments and judgments to supplement formal data analysis.
An example is:Setting a marketing budget for a new
product.
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Lecture 01-25
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Decision Structure
Unstructured decisions are nonrecurring and nonroutine.
An example is:Choosing the cover for a magazine.
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Lecture 01-26
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Information Technologyand Corporate Strategy
Develop a basic understanding of…– corporate strategies.– how IT developments can be used to
implement existing organizational strategies.
– how IT developments can be used to create an opportunity to modify existing strategies.
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Lecture 01-27
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Information Technologyand Corporate Strategy
Because an AIS functions within an organization, it should be designed to reflect the values of that organizational culture.
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Lecture 01-28
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Strategy and Strategic Positions
Two Basic Strategies
To be a lower-cost producer than competitors
To differentiate products and services fromcompetitors
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Lecture 01-29
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Strategy and Strategic Positions
Three Basic Strategic Positions
Variety-based strategic position
Need-based strategic position
Access-based strategic position
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Lecture 01-30
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Strategy and Strategic Positions
What role does the AIS play in helping organizations adopt and maintain a strategic position?
– data collection about each activity– transforming data into information that
can be used by management to coordinate those activities
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Lecture 01-31
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
What is the Value of Information?
The value of information is the benefit produced by the information minus the cost of producing it.
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Lecture 01-32
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
What is an Audit Trail?
An audit trail provides a means to check the accuracy and validity of ledger postings.
Observe that the posting reference for $2,400 credit to the sales account in the general ledger, SJ5, refers back to page 5 of the sales journal.
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Lecture 01-33
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
What is the Chart of Accounts?
The chart of accounts is a list of all general ledger accounts used by an organization.
It is important that the chart of accounts contains sufficient detail to meet the information needs of the organization.
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Lecture 01-34
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Financial Statements
The preparation of financial statements consists of a sequence of activities.
What are these activities?
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Lecture 01-35
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Financial Statements
Prepare a trial balance. Make adjusting entries. Prepare the adjusted trial balance. Produce the income statement. Make closing entries. Produce the balance sheet. Prepare the statement of cash flows.
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Lecture 01-36
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Managerial Reports
The AIS must also be able to provide managers with detailed operational information about the organization’s performance.
What reports does management need?– inventory status– budgets– performance reports
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Lecture 01-37
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Managerial Reports
What is a budget? A budget is the formal expression of
goals in financial terms. What are some types of budgets?
– cash– operating– capital
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Lecture 01-38
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Managerial Reports
What is a performance report? A performance report lists the
budgeted and actual amounts of revenues and expenses and also shows the variances, or differences, between these two amounts.
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Lecture 01-39
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Internal Control Considerations
An AIS must provide adequate internal controls to accomplish three basic objectives:
1 Ensure that the information is reliable.2 Ensure that business activities are
performed efficiently.3 Safeguard organizational assets.
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Lecture 01-40
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
Internal Control Considerations
What are two important methods for accomplishing these objectives?
1 Provide for adequate documentation of all business activities.
2 Design the AIS for effective segregation of duties.
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Lecture 01-41
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
What is Segregation of Duties? Segregation of duties refers to
dividing responsibility for different portions of a transaction among several people.
What functions should be performed by different people?– authorizing transactions– recording transactions– maintaining custody of assets
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Lecture 01-42
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
The Future of AIS
The Internet makes strategy more important than ever
Enterprise resource planning (ERP) systems are a recent development that integrate all aspects of a company’s operations with its traditional AIS.
The important point underlying ERP systems is the need for and value of cross-functional integration of financial data and other nonfinancial operating data.
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Lecture 01-43
©2003 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, Romney/Steinbart
End of Lecture 1