week 1. what we will cover in this course general place of ais in accounting conceptual place of ais...
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What we will cover in this course
General place of AIS in accounting Conceptual place of AIS Values and assumptions
Documentation techniques Accounting controls
Concepts—COSO/COBIT and ERM based SOX, in general and as related to controls
Database Concepts of data modeling What do accountants need to know
Business cycles and accounting systems Special topics in accounting systems
Intangibles, formatting, impacts and implications
Announcements
Send me an email. Put ACTG335 in the subject line. Send it from all the email addresses
you may rely on for class info Send it by Friday, September 28th You will be held responsible for
materials I send out by email
Many readings will be put on my website.
AIS objectives
Collect and store data Support efficiency and effectiveness
Provide adequate controls Provide information for decision making
Factors influencing AIS design
Strategy Information technology Organizational culture Societal demands
…what do we need to account FOR
Measurement issues
What to measure Measurement attributes What to report Abstractions
What basis for measuring? For whom? To meet what objective(s)?
Accountants are professionals, with a responsibility to serve the public interest.
Accounting Abstraction Model—what does accounting DO?
Characteristics of information
Useful Relevant Reliable Complete
Usable Understandable Verifiable Credible Timely Accessible
Useful—Relevant
Connected to business objectives Logical, supportable thread from
metrics to objectives Meaningful for the purpose
intended, valid Predictive value (leading)
• Training, investment in IT, advertising
Feedback value (lagging)• ROI, net income, productivity
Lagging Indicators
Measures of output, end-process measures, record effects
Reflect past performance Generally quantitative Example: Quantity of toxic emission; last
year’s percentage of on-time deliveries Strength: Easy to quantify and understand,
preferred by regulators and public—deterministic rather than probabilistic
Weakness: Time lag in feedback, ignore present activities
Leading Indicators
In-process metrics of performance, proactive Reflect current status/activities—for future
performance Quantitative or qualitative Example: percent of facilities conducting self-
audit; training of logistics managers Strength: Represent current actions and future
trends Weakness: Harder to build support for use, harder
to track to performance—probabilistic rather than deterministic
Useful—Reliable
Accurate for the purpose intended Representational faithfulness Verifiable Neutral
• meaning objective, but not purposeless• relieves us of the need to assess “values”
of the data/information• Acknowledge inherent bias in any
metric/measure
Usable
Credible What users value and trust Assess and report on the accuracy of key
sources Institute a data-quality program for key data
Timeliness Accessibility
Physically Cognitively
Information attributes Information context
Information attributes relate to the specific characteristics of individual units of information (data, really)
Information context relates to understanding how information, as defined, relates to the world in which we live and work.
Definition of context, from Merriam-Webster online dictionary:
1 : the parts of a discourse that surround a word or passage and can throw light on its meaning
2 : the interrelated conditions in which something exists or occurs
Values and assumptions
Public interest Stakeholders—what does this mean?
Center for Professional Integrity and Accountability—See Values and Assumptions from the syllabus
What to measure, how to report— influences the interests that are privileged
Business cycles
Real business activities for the AIS to capture, process, report
Revenue Expenditure HR Production Financing
Basic Business Processes
Get Cash
Give Cash
Get Ship
Give Cash
GetEmployeeService
Give Cash
Get Silk
Give Cash
Get Cash
Give SilkA set of
Give-Get exchanges
Collect data
Transactions: agreement between two parties to exchange economically measurable goods Capture the data Implement control procedures Record in journals
• General for rare or EOP• Specialized for standardized
Post to ledgers Prepare reports
Computer processing
Master/transaction files Batch/real-time/on-line Queries/reports
I am going to spend little time on this, but expect you to use the terms and concepts pretty readily…ask questions if you need to.