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Course : Z0257 Accounting InformationSystem And Internal Control (2/2)

!ecti"e #eriod : Se$tem%er 20&5

Accounting InformationSystem: An Overview

Session 1

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These slides have been adapted from:

Romney B !arshall and Steibart " #aul $%&1%'Accounting Information System 1%th edition #earson

(ducation )ondon ISB*:+,-&%,.,/0.,0

hapter 1

Acknowledgement

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Learning Objectives

Distinguish between data and information.

Discuss the characteristics of useful information.

Explain how to determine the value of information.

Explain the decisions an organization makes and the information needed to make them.

Identif the information that passes between internal and external parties and an !I".

Describe the major business processes present in most companies.

Explain what an accounting information sstem #!I"$ is and describe its basic functions.

Discuss how an !I" can add value to an organization.

Explain how an !I" and corporate strateg a%ect each other.

Explain the role an !I" plas in a compan&s value chain.

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1hat Is a "stem2

System

! set of two or more

interrelated componentsinteracting to achieve agoal

Goal Confict

Occurs when componentsact in their own interestwithout regard for overall

goal

Goal Congruence

Occurs when componentsacting in their own interestcontribute toward overallgoal

,rocess+

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Data vs. Information

Dataare facts that arerecorded and stored.

Insu4cient for decisionmaking.

Inormationis processeddata used in decisionmaking.

5oo much informationhowever- will make it

more- not less- di4cultto make decisions. 5hisis known asInormationOverload.

Information

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7alue of Information

8ene9ts

:educe ;ncertaint

Improve Decisions

Improve ,lanning

Improve "cheduling

'osts

5ime < :esources

,roduce Information

Distribute Information

+/=

8ene9t >&s ? 'ost >&s

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1hat @akes Information ;seful2

Aecessar characteristicsB Relevant

C5he capacit of information to make a di%erence in adecision b helping users to form predictions about theoutcomes of past- present- and future events or to

con9rm or correct prior expectations. Reliable

C5he ualit of information that assures thatinformation is reasonabl free from error and bias andfaithfull represents what it purports to represent.

Comlete

C5he inclusion in reported information of everthingmaterial that is necessar for faithful representation ofthe relevant phenomena.

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1hat @akes Information ;seful2

!imely

Caving information available to a decision makerbefore it loses its capacit to inGuence decisions.

"nderstandable

C5he ualit of information that enables users to

perceive its signi9cance. #eri$able

C5he abilit through consensus among measurers toensure that information represents what it purports torepresent or that the chosen method of measurementhas been used without error or bias.

Accessible

!vailable when needed #see 5imel$ and in a usefulformat #see ;nderstandable$.

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8usiness ,rocess

"stems working towardorganizational goals

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8usiness ,rocess 'cles

:evenue

Expenditure

,roduction

uman :esources

Jinancing

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8usiness 5ransactions

KiveKet exchanges

8etween two entities

@easured in economic terms

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8usiness 'cle KiveKet

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!ccounting Information "stems

'ollect- process- store- and report data and information

If !ccounting M language of business

!I" M information providing vehicle

!ccounting M !I"

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'omponents of an !I"

,eople using the sstem

,rocedures and Instructions

Jor collecting- processing- and storing data

Data

"oftware

Information 5echnolog #I5$ Infrastructure

'omputers- peripherals- networks- and so on

Internal 'ontrol and "ecurit

"afeguard the sstem and its data

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!I" and 8usiness Junctions

'ollect and store data about organizationalB

!ctivities- resources- and personnel

5ransform data into information enabling

@anagement toB

,lan- execute- control- and evaluate

!ctivities- resources- and personnel

,rovide adeuate control to safeguard

!ssets and data

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!I" 7alue !dd

Improve Nualit and :educe 'osts

Improve E4cienc

Improve "haring nowledge

Improve "uppl 'hain

Improve Internal 'ontrol

Improve Decision @aking

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Improve Decision @aking

Identif situations that reuire action.

,rovide alternative choices.

:educe uncertaint.

,rovide feedback on previous decisions.

,rovide accurate and timel information.

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7alue 'hain

5he set of activities a product or service moves alongbefore as output it is sold to a customer

!t each activit the product or service gains value

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7alue 'hainP,rimar !ctivities

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7alue 'hainP"upport !ctivities

Jirm Infrastructure

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7alue 'hain

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!I" and 'orporate "trategOrganizations have limitedresources- thusinvestments to !I" shouldhave greatest impact on

:OI.

Organizations need tounderstandB

I5 developments

8usiness strateg

Organizational culture

1ill e%ect and be e%ectedb new !I"

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5hank Qou

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